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KKR & Co. Inc. - Quarter Report: 2023 June (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
 Form 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2023 
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Transition period from           to           . 
Commission File Number 001-34820
kkrlogoa16.jpg
KKR & CO. INC.
(Exact name of Registrant as specified in its charter) 
Delaware 88-1203639
(State or other Jurisdiction of
Incorporation or Organization)		 (I.R.S. Employer
Identification Number)
  30 Hudson Yards
New York, New York 10001
Telephone: (212) 750-8300
(Address, zip code, and telephone number, including
area code, of registrant's principal executive office.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock
KKRNew York Stock Exchange
6.00% Series C Mandatory Convertible Preferred Stock
KKR PR CNew York Stock Exchange
4.625% Subordinated Notes due 2061 of KKR Group Finance Co. IX LLCKKRSNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer ☐
Non-accelerated filer ☐Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2023, there were 857,679,856 shares of common stock of the registrant outstanding.

Table of Contents

KKR & CO. INC.
FORM 10-Q
For the Quarterly Period Ended June 30, 2023
TABLE OF CONTENTS
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Item 1.
  
Item 2.
Item 3.
  
Item 4.
  
Item 1.
  
Item 1A.
 
Item 2.
 
Item 3.
  
Item 4.
  
Item 5.
  
Item 6.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believe," "think," "expect," "potential," "continue," "may," "should," "seek," "approximately," "predict," "intend," "will," "plan," "estimate," "anticipate," the negative version of these words, other comparable words or other statements that do not relate strictly to historical or factual matters. Without limiting the foregoing, statements regarding the declaration and payment of dividends on common or preferred stock of KKR & Co. Inc.; the timing, manner and volume of repurchase of common stock pursuant to its repurchase program; expansion and growth opportunities and other synergies resulting from acquisitions, reorganizations or strategic partnerships; the return of balance sheet capital if a fund has a successful fundraise; investment opportunities offered to individual investors to continue to grow and to represent a larger percentage of our assets under management; the estimate of the amounts expected to be owed under the tax receivable agreement; the ability of core private equity investments to generate earnings that compound over a long period of time; and the timing and completion of certain transactions contemplated by the Reorganization Agreement (as defined below) may constitute forward-looking statements. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements or cause the anticipated benefits and synergies from transactions to not be realized. We believe these factors include those described in the section entitled "Business Environment" in this report and "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission ("SEC") on February 27, 2023 (our "Annual Report"). These factors should be read in conjunction with the other cautionary statements that are included in this report and in our other filings with the SEC. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

CERTAIN TERMS USED IN THIS REPORT
In this report, references to "KKR," "we," "us" and "our" refer to KKR & Co. Inc. and its subsidiaries, including The Global Atlantic Financial Group LLC ("TGAFG" and, together with its subsidiaries, "Global Atlantic"), unless the context requires otherwise.
References to the “Series I preferred stockholder” or “KKR Management” are to KKR Management LLP, the holder of the sole outstanding share of our Series I preferred stock. References to our “senior principals” are to our senior employees who hold interests in the Series I preferred stockholder, including Mr. Henry Kravis and Mr. George Roberts (our "Co-Founders"). References to "principals" are to our current and former employees who formerly held interests in KKR Holdings L.P. ("KKR Holdings"), which we acquired on May 31, 2022, pursuant to the Reorganization Agreement, as discussed below. References to “carry pool participants” are to our current and former employees who hold interests in our “carry pool,” which refers to the carried interest generated by KKR’s business that is allocated to KKR Associates Holdings L.P. (“Associates Holdings”), in which carry pool participants are limited partners. Associates Holdings is currently not a subsidiary of KKR & Co. Inc.
KKR Group Partnership L.P. ("KKR Group Partnership") is the intermediate holding company that owns the entirety of KKR’s business. Unless otherwise indicated, references to equity interests in KKR’s business, or to percentage interests in KKR’s business, reflect the aggregate equity interests in KKR Group Partnership, and are net of amounts that have been allocated to carry pool participants and any other holders of minority interests in KKR Group Partnership. References to “KKR Group Partnership” for periods prior to January 1, 2020 refer to KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, which were combined on that date to form KKR Group Partnership. References to a “KKR Group Partnership Unit” refer to (i) one Class A partner interest in each of KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, for periods prior to prior to January 1, 2020, and (ii) one Class A partner interest in KKR Group Partnership for periods on and after January 1, 2020. “Exchangeable securities” refers to securities that have the right to acquire KKR Group Partnership Units and to exchange them for our shares of common stock. As of the date of this report, our only outstanding exchangeable securities are vested restricted holdings units issued under the Amended and Restated KKR & Co. Inc. 2019 Equity Incentive Plan (the "2019 Equity Incentive Plan"). In the future, we may issue securities other than restricted holdings units that may constitute exchangeable securities.
On October 8, 2021, KKR entered into a Reorganization Agreement (the "Reorganization Agreement") with KKR Holdings, KKR Management, Associates Holdings, and the other parties thereto. Pursuant to the Reorganization Agreement, the parties agreed to undertake a series of integrated transactions to effect a number of transformative structural and governance changes, including (a) the acquisition by KKR of KKR Holdings and all of the KKR Group Partnership Units held by it (which
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as noted below was completed), (b) the future elimination of voting control by KKR Management and the Series I preferred stock held by it, (c) the future establishment of voting rights for all common stock on a one vote per share basis, including with respect to the election of directors, and (d) the future control of the carry pool by KKR. On May 31, 2022, KKR completed the acquisition of KKR Holdings and the 258.3 million KKR Group Partnership Units held by it, and in exchange KKR issued and delivered 266.8 million shares of common stock to our principals. On the "Sunset Date" (which will occur no later than December 31, 2026), KKR will cancel the Series I preferred stock, establish voting rights for all common stock on a one vote per share basis, and acquire control of the carry pool. For more information about the Reorganization Agreement, see "Certain Relationships and Related Transactions, and Director Independence—Reorganization Agreement" in this report.
KKR’s asset management business is conducted by Kohlberg Kravis Roberts & Co. L.P. and various other subsidiaries of KKR & Co. Inc. other than Global Atlantic. KKR’s insurance business is operated by Global Atlantic, which KKR acquired (the "GA Acquisition") on February 1, 2021 (the "GA Acquisition Date"). KJR Management ("KJRM") is a Japanese real estate asset manager, which KKR acquired on April 28, 2022.
References to our "funds" or "vehicles" refer to a wide array of investment funds, vehicles and accounts that are advised, managed or sponsored by one or more subsidiaries of KKR, including collateralized loan obligations ("CLOs") business development companies (each, a "BDC"), and certain operating companies, unless the context requires otherwise. These references do not include the investment funds, vehicles or accounts of any hedge fund partnership or any other third-party manager with which we have formed a strategic partnership or have acquired a minority ownership interest. Unless the context requires otherwise, references to “fund investors” refers to the third-party investors in our funds and vehicles. References to “strategic investor partnerships” refers to separately managed accounts with certain investors, which typically have investment periods longer than our traditional funds and typically provide for investments across different investment strategies. References to “hedge fund partnerships” refers to strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake.
Unless otherwise indicated, references in this report to our outstanding common stock on a fully exchanged and diluted basis reflect (i) actual shares of common stock outstanding, (ii) shares of common stock into which all outstanding shares of Series C Mandatory Convertible Preferred Stock are convertible, and (iii) shares of common stock issuable pursuant to equity awards actually granted pursuant to the Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan" and, together with the 2019 Equity Incentive Plan, our "Equity Incentive Plans"). Our outstanding common stock on a fully exchanged and diluted basis does not include shares of common stock available for issuance pursuant to the Equity Incentive Plans for which equity awards have not yet been granted.
In this report, the term "GAAP" refers to accounting principles generally accepted in the United States of America. We disclose certain financial measures in this report that are calculated and presented using methodologies other than in accordance with GAAP, including after-tax distributable earnings, distributable operating earnings, fee related earnings ("FRE"), asset management segment revenues, book value and book value per adjusted share. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall performance of KKR's businesses. These non-GAAP financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable, are included under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures." This report also uses the terms assets under management ("AUM"), fee paying assets under management ("FPAUM") and capital invested. You should note that our calculations of these and other operating metrics may differ from the calculations of other investment managers and, as a result, may not be comparable to similar metrics presented by other investment managers. These non-GAAP and operating metrics are defined in the section "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Non-GAAP Performance Measures and Other Operating Measures."
The use of any defined term in this report to mean more than one entity, person, security or other item collectively is solely for convenience of reference and in no way implies that such entities, persons, securities or other items are one indistinguishable group. For example, notwithstanding the use of the defined terms "KKR," "we" and "our" in this report to refer to KKR & Co. Inc. and its subsidiaries, each subsidiary of KKR & Co. Inc. is a standalone legal entity that is separate and distinct from KKR & Co. Inc. and any of its other subsidiaries. Any KKR entity (including any Global Atlantic entity) referenced herein is responsible for its own financial, contractual and legal obligations. Additionally, references to "including" are for the purpose of illustration and shall be read to mean "including but not limited to."
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Website and Availability of SEC Filings
Our website address is www.kkr.com. Information on our website is not incorporated by reference herein and is not a part of this report. We make available free of charge on our website or provide a link on our website to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the "Stockholders (KKR & Co. Inc.)" section of our "Investor Center" page on our website, then click on "SEC Filings." In addition, these reports and the other documents we file with the SEC are available at a website maintained by the SEC at www.sec.gov.
From time to time, we may use our website as a channel of distribution of material information. Financial and other material information regarding our company is routinely posted on and accessible at www.kkr.com. Financial and other material information regarding Global Atlantic is routinely posted on and accessible at www.globalatlantic.com. In addition, you may automatically receive e-mail alerts and other information about our company by enrolling your e-mail address by visiting the "Contacts & Email Alerts" section under the "Investor Center" page at www.kkr.com.

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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Amounts in Thousands, Except Share and Per Share Data)
June 30, 2023December 31, 2022
Assets  
Asset Management
Cash and Cash Equivalents$5,885,308 $6,705,325 
Restricted Cash and Cash Equivalents102,620 253,431 
Investments101,878,868 92,375,463 
Due from Affiliates1,573,430 1,663,303 
Other Assets5,027,922 5,197,626 
114,468,148 106,195,148 
Insurance
Cash and Cash Equivalents$4,421,172 $6,118,231 
Restricted Cash and Cash Equivalents339,618 308,383 
Investments129,599,964 124,199,176 
Reinsurance Recoverable26,127,424 26,022,081 
Insurance Intangible Assets2,436,633 2,331,494 
Other Assets6,119,403 6,041,329 
Separate Account Assets4,182,437 4,130,794 
173,226,651 169,151,488 
Total Assets$287,694,799 $275,346,636 
Liabilities and Equity  
Asset Management
Debt Obligations$43,693,384 $40,598,613 
Due to Affiliates421,256 466,057 
Accrued Expenses and Other Liabilities6,754,786 6,471,775 
50,869,426 47,536,445 
Insurance
Policy Liabilities (market risk benefit liabilities: $828,364 and $682,038, respectively)
$141,429,215 $137,780,929 
Debt Obligations2,356,162 2,128,166 
Funds Withheld Payable at Interest23,251,757 22,739,417 
Accrued Expenses and Other Liabilities4,192,354 4,600,375 
Reinsurance Liabilities819,014 1,059,820 
Separate Account Liabilities4,182,437 4,130,794 
176,230,939 172,439,501 
Total Liabilities227,100,365 219,975,946 
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June 30, 2023December 31, 2022
Commitments and Contingencies (See Note 25)
Redeemable Noncontrolling Interests (See Note 24)$183,413 $152,065 
Stockholders' Equity  
Series C Mandatory Convertible Preferred Stock, $0.01 par value. 22,998,802 and 22,999,974 shares, issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.
$1,115,792 $1,115,792 
Series I Preferred Stock, $0.01 par value. 1 share authorized, 1 share issued and outstanding as of June 30, 2023 and December 31, 2022.
— — 
Common Stock, $0.01 par value. 3,500,000,000 shares authorized, 857,987,641 and 861,110,478 shares, issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.
8,580 8,611 
Additional Paid-In Capital16,186,898 16,284,057 
Retained Earnings7,592,571 6,701,107 
Accumulated Other Comprehensive Income (Loss) ("AOCI")(4,922,274)(5,301,800)
Total KKR & Co. Inc. Stockholders' Equity19,981,567 18,807,767 
Noncontrolling Interests (See Note 23)40,429,454 36,410,858 
Total Equity60,411,021 55,218,625 
Total Liabilities and Equity$287,694,799 $275,346,636 

See notes to financial statements.
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (CONTINUED)
(Amounts in Thousands)
 
The following presents the portion of the consolidated balances provided in the consolidated statements of financial condition attributable to consolidated variable interest entities ("VIEs"). As of June 30, 2023 and December 31, 2022, KKR's consolidated VIEs consist primarily of (i) certain collateralized financing entities ("CFEs") holding collateralized loan obligations ("CLOs"), (ii) certain investment funds, and (iii) certain VIEs formed by Global Atlantic. The noteholders, creditors and equity holders of these VIEs have no recourse to the assets of any other KKR entity.
With respect to consolidated CLOs and certain investment funds, the following assets may only be used to settle obligations of these consolidated VIEs and the following liabilities are only the obligations of these consolidated VIEs and not generally to KKR. Additionally, KKR has no right to the benefits from, nor does KKR bear the risks associated with, the assets held by these VIEs beyond KKR's beneficial interest therein and any income generated from the VIEs. There are neither explicit arrangements nor does KKR hold implicit variable interests that would require KKR to provide any material ongoing financial support to the consolidated VIEs, beyond amounts previously committed to them, if any.
With respect to certain other VIEs consolidated by Global Atlantic, Global Atlantic has formed certain VIEs to hold investments, including fixed maturity securities, consumer and other loans, renewable energy, transportation and real estate. These VIEs issue beneficial interests primarily to Global Atlantic’s insurance companies.
June 30, 2023
 Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther
VIEs		Total
Assets 
Asset Management
Cash and Cash Equivalents$940,326 $1,390,247 $— $2,330,573 
Restricted Cash and Cash Equivalents— 91,600 — 91,600 
Investments24,514,439 61,993,547 — 86,507,986 
Other Assets333,546 538,353 — 871,899 
25,788,311 64,013,747 — 89,802,058 
Insurance
Cash and Cash Equivalents— — 765,011 765,011 
Investments— — 23,899,222 23,899,222 
Other Assets— — 1,295,670 1,295,670 
— — 25,959,903 25,959,903 
Total Assets$25,788,311 $64,013,747 $25,959,903 $115,761,961 
  
Liabilities 
Asset Management
Debt Obligations$24,261,260 $8,608,846 $— $32,870,106 
Accrued Expenses and Other Liabilities681,749 471,866 — 1,153,615 
24,943,009 9,080,712 — 34,023,721 
Insurance
Accrued Expenses and Other Liabilities— — 383,125 383,125 
Total Liabilities$24,943,009 $9,080,712 $383,125 $34,406,846 
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December 31, 2022
 Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther
VIEs		Total
Assets 
Asset Management
Cash and Cash Equivalents$920,821 $2,936,937 $— $3,857,758 
Restricted Cash and Cash Equivalents— 155,521 — 155,521 
Investments22,492,366 54,507,084 — 76,999,450 
Other Assets182,487 652,031 — 834,518 
23,595,674 58,251,573 — 81,847,247 
Insurance
Cash and Cash Equivalents— — 619,264 619,264 
Investments— — 24,732,042 24,732,042 
Other Assets— — 1,420,933 1,420,933 
— — 26,772,239 26,772,239 
Total Assets$23,595,674 $58,251,573 $26,772,239 $108,619,486 
Liabilities 
Asset Management
Debt Obligations$22,273,242 $7,306,625 $— $29,579,867 
Accrued Expenses and Other Liabilities620,200 742,384 — 1,362,584 
22,893,442 8,049,009 — 30,942,451 
Insurance
Accrued Expenses and Other Liabilities— — 461,812 461,812 
Total Liabilities$22,893,442 $8,049,009 $461,812 $31,404,263 

See notes to financial statements.
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in Thousands, Except Share and Per Share Data)
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Revenues
Asset Management
Fees and Other $754,447 $615,264 $1,431,463 $1,395,775 
Capital Allocation-Based Income (Loss)696,897 (923,474)1,145,915 (1,869,217)
1,451,344 (308,210)2,577,378 (473,442)
Insurance
Net Premiums626,429 (225,502)1,100,053 146,642 
Policy Fees315,382 319,030 629,184 632,812 
Net Investment Income1,311,055 931,889 2,611,752 1,744,494 
Net Investment-Related Gains (Losses)(117,550)(426,326)(241,383)(795,006)
Other Income39,858 32,512 77,016 67,256 
2,175,174 631,603 4,176,622 1,796,198 
Total Revenues3,626,518 323,393 6,754,000 1,322,756 
Expenses
Asset Management
Compensation and Benefits657,114 250,876 1,232,784 534,548 
Occupancy and Related Charges23,593 18,861 45,742 37,010 
General, Administrative and Other289,586 253,832 503,275 488,497 
970,293 523,569 1,781,801 1,060,055 
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $(75,286), $(198,225), $71,024 and $(393,908), respectively)
1,736,014 (256,179)3,263,068 256,999 
Amortization of Policy Acquisition Costs170 (23,254)44,381 (11,832)
Interest Expense39,832 18,970 80,093 32,189 
Insurance Expenses172,121 130,338 397,439 246,141 
General, Administrative and Other204,052 171,251 415,783 338,875 
2,152,189 41,126 4,200,764 862,372 
Total Expenses3,122,482 564,695 5,982,565 1,922,427 
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities570,085 (1,885,469)410,676 (971,208)
Dividend Income246,939 147,355 395,106 809,705 
Interest Income850,061 391,549 1,578,677 744,105 
Interest Expense(720,108)(328,726)(1,296,446)(610,485)
Total Investment Income (Loss)946,977 (1,675,291)1,088,013 (27,883)
Income (Loss) Before Taxes1,451,013 (1,916,593)1,859,448 (627,554)
Income Tax Expense (Benefit)324,955 (102,511)473,702 (65,860)
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Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Net Income (Loss)1,126,058 (1,814,082)1,385,746 (561,694)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests (1,740)8 (9,043)(55)
Net Income (Loss) Attributable to Noncontrolling Interests266,086 (1,096,715)193,083 148,272 
Net Income (Loss) Attributable to KKR & Co. Inc.861,712 (717,375)1,201,706 (709,911)
Series C Mandatory Convertible Preferred Stock Dividends17,249 17,250 34,499 34,500 
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders$844,463 $(734,625)$1,167,207 $(744,411)
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock
Basic$0.98 $(1.08)$1.36 $(1.17)
Diluted$0.94 $(1.08)$1.32 $(1.17)
Weighted Average Shares of Common Stock Outstanding
Basic861,553,274 680,747,047 861,332,121 636,719,538 
Diluted912,147,881 680,747,047 913,068,567 636,719,538 


See notes to financial statements.
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(Amounts in Thousands)
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Net Income (Loss) $1,126,058 $(1,814,082)$1,385,746 $(561,694)
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Gains (Losses) on Available-For-Sale Securities and Other(220,665)(3,564,862)912,087 (7,103,900)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities13,551 585,352 (123,550)1,309,938 
Foreign Currency Translation Adjustments(106,615)(119,373)(124,853)(141,654)
Comprehensive Income (Loss)812,329 (4,912,965)2,049,430 (6,497,310)
Comprehensive Income (Loss)
Attributable to Redeemable Noncontrolling Interests		(1,740)8 (9,043)(55)
Comprehensive Income (Loss)
Attributable to Noncontrolling Interests		188,936 (2,643,182)483,121 (3,018,667)
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.$625,133 $(2,269,791)$1,575,352 $(3,478,588)

 
See notes to financial statements.
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KKR & CO. INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(Amounts in Thousands, Except Share and Per Share Data)
Three Months Ended
June 30, 2023		Six Months Ended
June 30, 2023
AmountsSharesAmountsShares
Series C Mandatory Convertible Preferred Stock
Beginning of Period$1,115,792 22,999,974 $1,115,792 22,999,974 
Conversion of Series C Mandatory Convertible Preferred Stock— (1,172)— (1,172)
End of Period1,115,792 22,998,802 1,115,792 22,998,802 
Series I Preferred Stock
Beginning of Period— 1 — 1 
End of Period— 1 — 1 
Common Stock
Beginning of Period8,611 861,104,000 8,611 861,110,478 
Clawback of Transfer Restricted Shares— (6,153)— (19,777)
Net Delivery of Common Stock20 1,974,782 20 1,981,928 
     Conversion of Series C Mandatory Convertible Preferred Stock— 1,366 — 1,366 
Repurchases of Common Stock(51)(5,086,354)(51)(5,086,354)
End of Period8,580 857,987,641 8,580 857,987,641 
Additional Paid-In Capital
Beginning of Period (as previously reported for the prior period)16,339,472 16,190,407 
Adoption of New Accounting Standard (See Note 2)— 93,650 
Beginning of Period (as revised for the prior period)16,339,472 16,284,057 
Net Delivery of Common Stock(31,775)(31,775)
Repurchases of Common Stock(272,224)(272,224)
Equity-Based Compensation41,537 96,952 
Change in KKR & Co. Inc.'s Ownership Interest (See Note 23)107,241 107,241 
Tax Effects of Changes in Ownership and Other 2,647 2,647 
End of Period16,186,898 16,186,898 
Retained Earnings
Beginning of Period (as previously reported for the prior period)6,890,381 6,315,711 
Adoption of New Accounting Standard (See Note 2)— 385,396 
Beginning of Period (as revised for the prior period)6,890,381 6,701,107 
Net Income (Loss) Attributable to KKR & Co. Inc.861,712 1,201,706 
Series C Mandatory Convertible Preferred Stock Dividends ($0.75 and $1.50 per share for the three and six months ended June 30, 2023, respectively)
(17,249)(34,499)
Common Stock Dividends ($0.165 and $0.32 per share)
(142,273)(275,743)
End of Period7,592,571 7,592,571 
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period (as previously reported for the prior period)(4,691,575)(5,901,701)
Adoption of New Accounting Standard (See Note 2)— 599,901 
Beginning of Period (as revised for the prior period)(4,691,575)(5,301,800)
Other Comprehensive Income (Loss)(236,579)373,646 
Change in KKR & Co. Inc.'s Ownership Interest (See Note 23)5,880 5,880 
End of Period(4,922,274)(4,922,274)
Total KKR & Co. Inc. Stockholders' Equity19,981,567 19,981,567 
Noncontrolling Interests (See Note 23)40,429,454 40,429,454 
Total Equity$60,411,021 $60,411,021 
Redeemable Noncontrolling Interests (See Note 24)$183,413 $183,413 
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (CONTINUED)
(Amounts in Thousands, Except Share and Per Share Data)
Three Months Ended
June 30, 2022		Six Months Ended
June 30, 2022
AmountsSharesAmountsShares
Series C Mandatory Convertible Preferred Stock
Beginning of Period$1,115,792 23,000,000 $1,115,792 23,000,000 
Conversion of Series C Mandatory Convertible Preferred Stock— (26)— (26)
End of Period1,115,792 22,999,974 1,115,792 22,999,974 
Series I Preferred Stock
Beginning of Period— 1 — 1 
End of Period— 1 — 1 
Series II Preferred Stock
Beginning of Period2,587 258,726,163 2,587 258,726,163 
Cancellation of Series II Preferred Stock - Holdings Merger (See Note 1)(2,582)(258,259,143)(2,582)(258,259,143)
Cancellation of Series II Preferred Stock(5)(467,020)(5)(467,020)
End of Period— — — — 
Common Stock
Beginning of Period5,905 590,472,444 5,957 595,663,618 
Exchange of KKR Holdings Units5 467,020 5 467,020 
Holdings Merger (See Note 1)2,667 266,759,143 2,667 266,759,143 
Net Delivery of Common Stock21 2,134,807 21 2,134,807 
Conversion of Series C Mandatory Convertible Preferred Stock— 30 — 30 
Repurchases of Common Stock— — (52)(5,191,174)
End of Period8,598 859,833,444 8,598 859,833,444 
Additional Paid-In Capital
Beginning of Period8,729,544 8,997,435 
Exchange of KKR Holdings Units14,811 14,811 
Holdings Merger (See Note 1)8,213,182 8,213,182 
Tax Effects - Holdings Merger and Other (See Note 1)(1,092,750)(1,065,970)
Net Delivery of Common Stock(34,895)(34,895)
Repurchases of Common Stock— (346,599)
Equity-Based Compensation47,800 99,728 
Change in KKR & Co. Inc.'s Ownership Interest151,837 151,837 
End of Period16,029,529 16,029,529 
Retained Earnings
Beginning of Period (as previously reported)7,510,671 7,670,182 
Adoption of New Accounting Standard (See Note 2)129,914 65,930 
Beginning of Period (as revised)7,640,585 7,736,112 
Net Income (Loss) Attributable to KKR & Co. Inc.(717,375)(709,911)
Series C Mandatory Convertible Preferred Stock Dividends ($0.75 and $1.50 per share for the three and six months ended June 30, 2022, respectively)
(17,250)(34,500)
Common Stock Dividends ($0.155 and $0.30 per share for the three and six months ended June 30, 2022, respectively)
(91,854)(177,595)
End of Period6,814,106 6,814,106 
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period (as previously reported)(1,650,212)(209,789)
Adoption of New Accounting Standard (See Note 2)234,503 10,341 
Beginning of Period (as revised)(1,415,709)(199,448)
Other Comprehensive Income (Loss)(1,552,416)(2,768,677)
Exchange of KKR Holdings Units(1,946)(1,946)
Holdings Merger (See Note 1)(1,015,317)(1,015,317)
Change in KKR & Co. Inc.'s Ownership Interest3,447 3,447 
End of Period(3,981,941)(3,981,941)
Total KKR & Co. Inc. Stockholders' Equity19,986,084 19,986,084 
Noncontrolling Interests (See Note 23)34,239,969 34,239,969 
Total Equity$54,226,053 $54,226,053 
Redeemable Noncontrolling Interests (See Note 24)$81,167 $81,167 
See notes to financial statements.
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in Thousands)
 Six Months Ended June 30,
20232022
Operating Activities
Net Income (Loss)$1,385,746 $(561,694)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Equity-Based and Other Non-Cash Compensation331,667 385,508 
Net Realized (Gains) Losses - Asset Management289,920 (829,588)
Change in Unrealized (Gains) Losses - Asset Management (700,596)1,800,796 
Capital Allocation-Based (Income) Loss - Asset Management (1,145,915)1,869,217 
Net Investment and Policy Liability-Related (Gains) Losses - Insurance1,464,930 (382,663)
Net Accretion and Amortization37,449 231,074 
Interest Credited to Policyholder Account Balances (net of Policy Fees) - Insurance1,332,504 778,569 
Other Non-Cash Amounts69,461 26,284 
Cash Flows Due to Changes in Operating Assets and Liabilities:
Reinsurance Transactions and Acquisitions, Net of Cash Provided - Insurance263,170 124,102 
Change in Premiums, Notes Receivable and Reinsurance Recoverable, Net of Reinsurance Premiums Payable - Insurance (16,926)566,581 
Change in Deferred Policy Acquisition Costs - Insurance (244,503)(240,183)
Change in Policy Liabilities and Accruals, Net - Insurance (113,745)(427,293)
Change in Due from / to Affiliates109,539 (342,109)
Change in Other Assets354,029 1,493,427 
Change in Accrued Expenses and Other Liabilities(308,920)(2,404,702)
Investments Purchased - Asset Management(19,797,968)(23,387,850)
Proceeds from Investments - Asset Management12,118,149 18,153,852 
Net Cash Provided (Used) by Operating Activities(4,572,009)(3,146,672)
Investing Activities
Acquisition of KJRM, Net of Cash Acquired (See Note 3)— (1,690,702)
Purchases of Fixed Assets(61,762)(34,173)
Investments Purchased - Insurance(13,862,413)(27,921,806)
Proceeds from Investments - Insurance 10,308,946 22,592,321 
Other Investing Activities, Net - Insurance(3,915)(37,678)
Net Cash Provided (Used) by Investing Activities(3,619,144)(7,092,038)
Financing Activities
Series C Mandatory Convertible Preferred Stock Dividends(34,499)(34,500)
Common Stock Dividends(275,743)(177,595)
Distributions to Redeemable Noncontrolling Interests(1,785)(1,270)
Contributions from Redeemable Noncontrolling Interests69,997 — 
Distributions to Noncontrolling Interests(3,737,866)(3,615,901)
Contributions from Noncontrolling Interests7,404,393 7,346,788 
Net Delivery of Common Stock (Equity Incentive Plans) (31,755)(34,874)
Repurchases of Common Stock(272,275)(346,651)
Proceeds from Debt Obligations8,711,285 13,066,084 
Repayment of Debt Obligations(5,815,835)(9,867,818)
Financing Costs Paid(11,220)(31,446)
Additions to Contractholder Deposit Funds - Insurance7,527,948 10,931,742 
Withdrawals from Contractholder Deposit Funds - Insurance(8,096,042)(5,480,678)
Reinsurance Transactions, Net of Cash Provided - Insurance79,903 54,749 
Other Financing Activity, Net - Insurance10,798 496,375 
Net Cash Provided (Used) by Financing Activities5,527,304 12,305,005 
Effect of exchange rate changes on cash, cash equivalents and restricted cash27,197 (220,350)
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 Six Months Ended June 30,
20232022
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash$(2,636,652)$1,845,945 
Cash, Cash Equivalents and Restricted Cash, Beginning of Period13,385,370 10,526,304 
Cash, Cash Equivalents and Restricted Cash, End of Period$10,748,718 $12,372,249 
Cash, Cash Equivalents and Restricted Cash are comprised of the following:
Beginning of the Period
Asset Management
Cash and Cash Equivalents$6,705,325 $6,699,668 
Restricted Cash and Cash Equivalents253,431 134,298 
Total Asset Management6,958,756 6,833,966 
Insurance
Cash and Cash Equivalents$6,118,231 $3,391,934 
Restricted Cash and Cash Equivalents308,383 300,404 
Total Insurance6,426,614 3,692,338 
Cash, Cash Equivalents and Restricted Cash, Beginning of Period$13,385,370 $10,526,304 
End of the Period
Asset Management
Cash and Cash Equivalents$5,885,308 $6,720,983 
Restricted Cash and Cash Equivalents102,620 170,374 
  Total Asset Management5,987,928 6,891,357 
Insurance
Cash and Cash Equivalents$4,421,172 $5,130,193 
Restricted Cash and Cash Equivalents339,618 350,699 
  Total Insurance4,760,790 5,480,892 
Cash, Cash Equivalents and Restricted Cash, End of Period$10,748,718 $12,372,249 
 
See notes to financial statements.
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KKR & CO. INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
(Amounts in Thousands)
 Six Months Ended June 30,
 20232022
Supplemental Disclosures of Cash Flow Information  
Payments for Interest$1,229,610 $717,582 
Payments for Income Taxes$598,252 $383,655 
Payments for Operating Lease Liabilities$28,896 $23,697 
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Non-Cash Contribution from Noncontrolling Interests$— $85,260 
Debt Obligations - Net Gains (Losses), Translation and Other$(437,029)$2,482,700 
Tax Effects - Exchange of KKR Holdings L.P. Units and Other (See Note 1)$— $(1,065,970)
Tax Effects of Changes in Ownership and Other$2,647 $— 
Right-of-Use Assets obtained in Exchange for new Operating Lease Liabilities$17,167 $28,962 
Investments Acquired through Reinsurance Agreements$788,095 $2,697,956 
Contractholder Deposit Funds Acquired through Reinsurance Agreements$43,968 $2,544,504 
Change in Consolidation
Investments - Asset Management$(126,889)$— 
Investments - Insurance$(93,545)$— 
Accrued Expenses and Other Liabilities$(103)$— 
Noncontrolling Interests$(165,607)$— 
Redeemable Noncontrolling Interests$(27,821)$— 
 
See notes to financial statements.

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KKR & CO. INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(All Amounts in Thousands, Except Share and Per Share Data, and Except Where Noted)

1. ORGANIZATION
KKR & Co. Inc. (NYSE: KKR), through its subsidiaries (collectively, "KKR"), is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of The Global Atlantic Financial Group LLC ("TGAFG" and, together with its subsidiaries, "Global Atlantic").
KKR & Co. Inc. is the parent company of KKR Group Co. Inc., which in turn owns KKR Group Holdings Corp., which is the general partner of KKR Group Partnership L.P. ("KKR Group Partnership"). KKR & Co. Inc. both indirectly controls KKR Group Partnership and indirectly holds Class A partner interests in KKR Group Partnership ("KKR Group Partnership Units") representing economic interests in KKR's business. As of June 30, 2023, KKR & Co. Inc. held indirectly approximately 99.5% of the KKR Group Partnership Units. The remaining balance is held indirectly by KKR employees through vested restricted holdings units representing an ownership interest in KKR Group Partnership Units, which may be exchanged for shares of common stock of KKR & Co. Inc. ("exchangeable securities"). As limited partner interests, these KKR Group Partnership Units are non-voting and do not entitle anyone other than KKR to manage our business and affairs. KKR Group Partnership also has outstanding limited partner interests that provide for a carry pool provided by KKR Associates Holdings L.P. ("Associates Holdings") and preferred units with economic terms that mirror the Series C Mandatory Convertible Preferred Stock issued by KKR & Co. Inc.
References to "KKR" in these financial statements refer to KKR & Co. Inc. and its subsidiaries, including Global Atlantic, unless the context requires otherwise, especially in sections where "KKR" is intended to refer to the asset management business only. References in these financial statements to "principals" are to KKR's current and former employees who held interests in KKR's business through KKR Holdings prior to the Reorganization Mergers (as defined below). References to "Global Atlantic" in these financial statements includes the insurance companies of Global Atlantic, which are consolidated by KKR.
Reorganization Agreement
On October 8, 2021, KKR entered into a Reorganization Agreement (the "Reorganization Agreement") with KKR Holdings L.P. ("KKR Holdings"), KKR Management LLP (which holds the sole outstanding share of Series I preferred stock), Associates Holdings, and the other parties thereto. Pursuant to the Reorganization Agreement, the parties agreed to undertake a series of integrated transactions to effect a number of transformative structural and governance changes, some of which were completed on May 31, 2022, and other changes to be completed in the future. On May 31, 2022, KKR completed the merger transactions ("Reorganization Mergers") contemplated by the Reorganization Agreement pursuant to which KKR acquired KKR Holdings (which changed its name to KKR Group Holdings L.P.) and all of the KKR Group Partnership Units held by it.
Pursuant to the Reorganization Agreement, the following transactions will occur in the future on the Sunset Date (as defined below):
i.the control of KKR & Co. Inc. by KKR Management LLP and the Series I Preferred Stock held by it will be eliminated,
ii.the voting rights for all common stock, including with respect to the election of directors, will be established on a one vote per share basis, and
iii.KKR will acquire control of Associates Holdings, the entity providing for the allocation of carry proceeds to KKR employees, also known as the carry pool.
The “Sunset Date” will be the earlier of (i) December 31, 2026 and (ii) the six-month anniversary of the first date on which the death or permanent disability of both Mr. Henry Kravis and Mr. George Roberts (collectively, "Co-Founders") has occurred (or any earlier date consented to by KKR Management LLP in its sole discretion). In addition, KKR Management LLP agreed not to transfer its ownership of the sole share of Series I Preferred Stock, and, the changes to occur effective on the Sunset Date are unconditional commitments of the parties to the Reorganization Agreement.
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Notes to Financial Statements (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements of KKR & Co. Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to this Quarterly Report on Form 10-Q. The condensed consolidated financial statements (referred to hereafter as the "financial statements"), including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) such that the financial statements are presented fairly and that estimates made in preparing the financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. Except for balances affected by the adoption of new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) noted in Note 2—”Summary of Significant Accounting Policies”, the consolidated balance sheet data as of December 31, 2022 were derived from audited financial statements included in KKR & Co. Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission ("SEC") on February 27, 2023 (our "Annual Report"), and the financial statements should be read in conjunction with the audited financial statements included therein. Additionally, in the accompanying financial statements, the condensed consolidated statements of financial condition are referred to hereafter as the "consolidated statements of financial condition" the condensed consolidated statements of operations are referred to hereafter as the "consolidated statements of operations" the condensed consolidated statements of comprehensive income (loss) are referred to hereafter as the "consolidated statements of comprehensive income (loss)" the condensed consolidated statements of changes in equity and redeemable noncontrolling interests are referred to hereafter as the "consolidated statements of changes in equity" and the condensed consolidated statements of cash flows are referred to hereafter as the "consolidated statements of cash flows."
KKR consolidates the financial results of KKR Group Partnership and its consolidated entities, which include the accounts of KKR's investment management and capital markets companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds, Global Atlantic’s insurance companies and certain other entities including CFEs.
The presentations in the consolidated statement of financial condition and consolidated statement of operations reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, 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 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 between KKR's Asset Management business and Global Atlantic are eliminated in consolidation; however, KKR's allocated share of the net income from the consolidation of Global Atlantic is increased by the amount of fees earned from and decreased by the amount of interest expense incurred from noncontrolling interest holders in Global Atlantic. Accordingly, the elimination of these fees and interest impacts the net income (loss) attributable to KKR and KKR stockholders' equity for the pro-rata ownership of the noncontrolling interests in Global Atlantic.
All intercompany transactions and balances have been eliminated.
For a detailed discussion about KKR’s significant accounting policies and for further information on accounting updates adopted in the prior year, see Note 2 to the financial statements in the Annual Report. Other than the items listed below, during the six months ended June 30, 2023, there were no significant updates to KKR’s significant accounting policies.
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Notes to Financial Statements (Continued)
Deferral and amortization of certain revenues and expenses
Deferrals
Deferred policy acquisition costs ("DAC") consist of commissions and other costs that are directly related to the successful acquisition of new or renewal life insurance or annuity contracts. DAC is estimated using a group approach, instead of on an individual contract level. DAC groups, or cohorts, are by product type and issue year and consistent with the groups used in estimating the associated insurance liability. DAC is recorded in insurance intangibles in the consolidated statements of financial condition.
Value of business acquired ("VOBA") represents the difference between the carrying value of the purchased insurance contract liabilities at the time of the business combination and the estimated fair value of insurance and reinsurance contracts. VOBA can be either positive or negative. Positive VOBA is recorded in insurance intangibles. Negative VOBA is recorded in the same financial statement line in the consolidated statement of financial condition as the associated reserves.
For limited-payment products (e.g., payout annuities), gross premiums received in excess of net premiums are deferred at initial recognition as a deferred profit liability (“DPL”). DPL is measured using assumptions consistent with those used in the measurement of the liability for future policy benefits, including discount rate, mortality, lapses, and expenses. DPL is recorded in policy liabilities in the consolidated statements of financial condition.
For certain preneed contracts, the gross premium is in excess of the benefit reserve plus additional insurance liability. An unearned front-end load ("UFEL") is established to defer the recognition of this front-end load. UFEL is recorded in policy liabilities in the consolidated statements of financial condition.
Amortization
DAC is amortized on a constant level basis for the grouped contracts over the expected economic life of the related contracts. Global Atlantic amortizes DAC for all products on a constant level basis based on policy count, except for DAC for traditional life products that are amortized on a constant level basis based on face amount. The constant level bases used for amortization are projected using mortality and lapse assumptions that are based on Global Atlantic’s experience, industry data, and other factors and are consistent with those used for the liability for future policy benefits. If those projected assumptions change in future periods, they will be reflected in the cohort level amortization basis at that time. Unexpected lapses, due to higher mortality and lapse experience than expected, are recognized in the current period as a reduction of the capitalized balances.
Amortization of DAC is included in amortization of policyholder acquisition costs in the consolidated statements of operations.
VOBA is generally amortized using the same methodology and assumptions used to amortize DAC.
DPL is amortized and recognized in proportion to insurance in force for life insurance contracts and expected future benefit payments for annuity contracts. Interest is accreted on the balance of the DPL using the discount rate determined at contract issuance. Global Atlantic reviews and updates its estimates of cash flows for the DPL at the same time as the estimates of cash flows for the liability for future policy benefits. When cash flows are updated, the updated estimates are used to recalculate the DPL at contract issuance. The recalculated DPL as of the beginning of the current reporting period is compared to the carrying amount of the DPL as of the beginning of the current reporting period, and any difference is recognized as either a charge or credit to net policy benefits and claims.
UFEL is amortized consistent with the amortization of DAC on preneed contracts.
The key assumptions used in the calculation of the amortization of these balances are reviewed quarterly and updated if actual experience or other evidence suggests that current assumptions should be revised. In addition, Global Atlantic formally reviews assumptions annually as part of the assumptions review process. The effects of changes in assumptions are recorded in net income in the period in which the changes are made.
Internal replacements
An internal replacement is a modification in product benefits, features, rights, or coverages that occurs by the legal extinguishment of one contract and the issuance of another contract (a contract exchange), or by amendment, endorsement, or rider to a contract, or by the election of a benefit, feature, right, or coverage within a contract. If the modification does not substantially change the contract, the unchanged contract is viewed as a prospective revision and the unamortized DAC is
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Notes to Financial Statements (Continued)
adjusted prospectively. As such, unamortized DAC and other associated balances from the unchanged contract are retained and acquisition costs incurred to modify the contract are not deferred but expensed as incurred. Other balances associated with the unchanged contract, such as any liability for future policyholder benefit or market risk benefits, should similarly be accounted for as if the unchanged contract is a continuation of the original contract. If an internal replacement represents a substantial change, the original contract is considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new deferrable costs associated with the replacement contract are deferred.
Separate accounts
Separate account assets and liabilities represent segregated funds administered and invested by Global Atlantic for the benefit of variable annuities and variable universal life insurance contractholders and certain pension funds. Global Atlantic reports separately, as assets and liabilities, investments held in the separate accounts and liabilities of separate accounts if: (1) such separate accounts are legally recognized; (2) assets supporting the contract liabilities are legally insulated from Global Atlantic’s general account liabilities; (3) investments are directed by the contract owner or participant; and (4) all investment performance, net of contract fees and assessments, is passed through to the contract owner.
Separate account assets consist principally of mutual funds at fair value. The investment income and gains and losses of these accounts generally accrue to the contractholders and therefore, are not included in Global Atlantic’s net income. However, Global Atlantic’s net income reflects fees assessed and earned on fund values of these contracts which are presented as a component of policy fees in the consolidated statements of operations. Realized investment gains and losses related to separate accounts that meet the conditions for separate account reporting accrue to and are borne by the contractholder.
Policy liabilities
Policy liabilities, or collectively, “reserves,” are the portion of past premiums or assessments received that are set aside to meet future policy and contract obligations as they become due. Interest accrues on these reserves and on future premiums, which may also be available to pay for future obligations. Global Atlantic establishes reserves to pay future policyholder benefits, claims, and certain expenses for its life policies and annuity contracts.
Reserves are estimates based on models that include many actuarial assumptions and projections. These assumptions and projections, which are inherently uncertain, involve significant judgment, including assumptions as to the levels and/or timing of premiums, benefits, claims, expenses, interest credits, investment results (including equity market returns), mortality, longevity, and persistency.
The assumptions on which reserves are based are intended to represent an estimation of experience for the period that policyholder benefits are payable. The adequacy of these reserves and the assumptions underlying those reserves are reviewed at least annually. Global Atlantic cannot, however, determine with precision the amount or the timing of actual policyholder benefit payments. If actual experience is better than or equal to the assumptions, then reserves would be adequate to provide for future policyholder benefits and expenses. If experience is worse than the assumptions, additional reserves may be required to meet future policy and contract obligations. This would result in a charge to Global Atlantic’s net income during the period in which excess policyholder benefits are paid or an increase in reserves occurs.
For a majority of Global Atlantic’s in-force policies, including its universal life policies and most annuity contracts, the base policy reserve is equal to the account value. For these products, the account value represents Global Atlantic’s obligation to repay to the policyholder the amounts held on deposit. However, there are several significant blocks of business where additional policyholder reserves are explicitly calculated, including fixed-indexed annuities, variable annuities, universal life with secondary guarantees, indexed universal life and preneed policies.
Annuity contracts
Fixed-indexed annuities ("FIA")
Policy liabilities for fixed-indexed annuities earning a fixed rate of interest and certain other fixed-rate annuity products are computed under a retrospective deposit method and represent policyholder account balances before applicable surrender charges. For certain fixed-rate annuity products, an additional reserve was established for above market interest rate guarantees upon acquisition. These reserves are amortized on a straight-line basis over the remaining guaranteed interest rate period.
Certain of Global Atlantic’s fixed-indexed annuity products enable the policyholder to allocate contract value between a fixed crediting rate and strategies which reflect the change in the value of an index, such as the S&P 500 Index or other indices. These products are accounted for as investment-type contracts. The liability for these products consists of a combination of the
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Notes to Financial Statements (Continued)
underlying account value and an embedded derivative value. The liability for the underlying account value is primarily based on policy guarantees and its initial value is the difference between the premium payment and the fair value of the embedded derivative. Thereafter, the account value liability is determined in a manner consistent with the accounting for a deposit liability under the “effective yield method” (previously referred to in our Annual Report as the "constant yield method"). All future host balances are determined as: (1) the initial host balance; (2) plus interest; (3) less applicable policyholder benefits. The interest rate used in the prior roll forward is re-determined on each valuation date, per the effective yield method. The embedded derivative component’s fair value is based on an estimate of the policyholders’ expected participation in future increases in the relevant index. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected withdrawal and surrender activity, benefit utilization and the level and limits on contract participation in any future increases in the respective index option. The account value liability and embedded derivative are recorded in policy liabilities in the consolidated statements of financial condition, with changes in value of the liabilities recorded in policy benefits and claims in the consolidated statements of operations.
Contractholder deposit funds reserves for certain assumed blocks of fixed-indexed and fixed-rate annuity products are accounted for as investment-type contracts. A net liability (consisting of the benefit reserve plus deferred revenue liability less ceding commission paid between a ceding and assuming reinsurance company) is established at inception and amortized under the effective yield method.
Global Atlantic issues registered index-linked annuity ("RILA") contracts, which are similar to FIAs in offering the policyholder the opportunity to participate in the performance of a market index, subject to a cap or adjusted for a participation rate. In contrast to the FIA, the RILA enables policyholders to earn higher returns but with the risk of loss to principal and related earnings. In particular, if performance of the market indices is negative, the policyholder may potentially absorb losses, subject to downside protection in the form of either a “buffer” or a “floor” specified in the contract. A “buffer” is protection from downside performance up to a certain percentage, typically 10 percent, with uncapped losses thereafter. A “floor” is protection from downside performance in excess of the “floor,” e.g., if the floor is 10% then the policyholder absorbs losses up to 10% but not in excess.
The RILA is accounted for similar to the FIA. The RILA host contract is calculated at the inception of the contract as the value of the initial premium minus the value of the index option, which is an embedded derivative. That initial host value is then accreted to the guaranteed surrender value at the end of the surrender charge period. The RILA index option, which is an embedded derivative, is required to be measured at fair value. Fair value represents the policyholders’ expected participation in future increases in the relevant index and is calculated as the excess cash flows from the indexed crediting feature above the guaranteed cash flows. The excess cash flows are based on the option budget methodology whereby the indexed account is projected to grow by the option budget. A key difference from a standard FIA product is that the RILA policyholder can lose principal on this investment. Therefore, it is possible that the embedded derivative can become negative. The option budget will be calculated depending on the product type and strategy. The growth in the indexed account will be projected based on the value of the options dependent upon the strategy and associated hedge construction. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected withdrawal and surrender activity, benefit utilization and the level and limits on contract participation in any future increases in the respective index option. The account value liability and embedded derivative are recorded in policy liabilities in the consolidated statements of financial condition, with changes in value of the liabilities recorded in policy benefits and claims in the consolidated statements of operations.
Variable annuities
Global Atlantic issues and assumes variable annuity contracts for which the liabilities are included in policy liabilities in the consolidated statements of financial condition. The change in the liabilities for these benefits is included in policy benefits and claims in the consolidated statements of operations. Variable annuity contracts may have certain guarantees that are accounted for as market risk benefits, which are discussed in more detail below.
Funding agreements
Global Atlantic issues funding agreements to certain unaffiliated special purpose entities that have issued debt securities for which payment of interest and principal is secured by such funding agreements. Global Atlantic also has similar obligations to federal home loan banks. Global Atlantic’s funding agreements are considered investment type contracts and liabilities are net deposits plus accrued and unpaid interest. Global Atlantic's obligation is reported in policy liabilities in the consolidated statements of financial condition. Interest expense is calculated using the effective interest method and recorded in policy benefits and claims in the consolidated statements of operations.
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Notes to Financial Statements (Continued)
Interest-sensitive life products
For universal life policies, the base policy reserve is the policyholder account value.
Policy liabilities for indexed universal life with returns linked to the performance of a specified market index are equal to the sum of two components: (1) the fair value of the embedded derivative; and (2) the host (or guaranteed) component. The fair value of the embedded derivative component is based on the fair value of the policyholders’ expected participation in future increases in the relevant index over the life of the contract. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected benefits, benefit utilization and the level and limits on contract participation in any future increases in the respective index option.
The initial host balance is established at the time of premium payment and is equal to the total account value less the embedded derivative component. Thereafter, the balance of the host component is determined in a manner consistent with the accounting for a deposit liability under the “effective yield method.” All future host balances are determined as: (1) the initial host balance; (2) plus interest; (3) less applicable policyholder benefits. The interest rate used in the prior roll forward is re-determined on each valuation date, per the effective yield method.
Preneed policies
Global Atlantic’s preneed life insurance contracts are accounted for as universal life-type contracts which require that the retrospective deposit method be used. That accounting method establishes a liability for policyholder benefits in an amount determined by the account or contract balance that accrues to the benefit of the policyholder. This account value is deemed to be equal to the contract’s statutory cash surrender value. The majority of Global Atlantic’s preneed insurance contracts feature death benefits with a discretionary death benefit growth rate. Global Atlantic has the discretion to adjust these rates up or down. Global Atlantic has established an additional reserve for expected future discretionary benefits which is reflected as policy liabilities in the consolidated statements of financial condition. Global Atlantic has also issued preneed insurance contracts with crediting rates tied to inflation as measured by the U.S. Consumer Price Index.
Traditional life and limited payment contracts
Liability for future policy benefits
A liability for future policy benefits, which is the present value of estimated future policy benefits to be paid to or on behalf of policyholders and certain related expenses less the present value of estimated future net premiums to be collected from policyholders, is accrued as premium revenue is recognized. The liability is estimated using current assumptions that include mortality, lapses, and expenses. These current assumptions are based on judgments that consider Global Atlantic’s historical experience, industry data, and other factors.
For nonparticipating traditional and limited-payment contracts, contracts are grouped into cohorts by contract type and issue year. The liability is adjusted for differences between actual and expected experience. With the exception of the expense assumption, Global Atlantic reviews its historical and future cash flow assumptions quarterly and updates the net premium ratio used to calculate the liability each time the assumptions are changed. Global Atlantic has elected to use expense assumptions that are locked in at contract inception and are not subsequently reviewed or updated.
Each quarter, Global Atlantic updates its estimate of cash flows expected over the entire life of a group of contracts using actual historical experience and current future cash flow assumptions. These updated cash flows are discounted using the discount rate or curve on the original contract issue date to calculate the revised net premiums and net premium ratio, which are used to derive an updated liability for future policy benefits. This amount is then compared to the carrying amount of the liability before the updating of cash flow assumptions to determine the current period change in liability estimate. This current period change in the liability is the liability remeasurement gain or loss and is presented parenthetically as a separate component of benefit expense in the consolidated statements of operations.
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Notes to Financial Statements (Continued)
For nonparticipating traditional and limited-payment contracts, the discount rate assumption is a spot rate yield curve that is derived based on upper medium grade (low credit risk) fixed-income instruments with similar duration to the liability. Global Atlantic uses one or more external indices of corporate credit issues as its proxy for these instruments. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change in the discount rate reflected in other comprehensive income. For liability cash flows between two market observable points on the yield curve, Global Atlantic interpolates the effective yield by holding the marginal rates constant. For liability cash flows that are projected beyond the last market-observable point on the yield curve, Global Atlantic uses the last market-observable yield level.
Payout annuities
Payout annuities include single premium immediate annuities, annuitizations of deferred annuities, pension risk transfer and structured settlements. These contracts subject the insurer to risks over a period that extends beyond the period or periods in which premiums are collected. These contracts may be either non-life contingent or life contingent. Non-life contingent annuities are accounted for as investment contracts. For life contingent annuities, Global Atlantic records a liability at the present value of future annuity payments and estimated future expenses calculated using expected mortality and costs, and expense assumptions. Any gross premiums received in excess of the net premium is the DPL and is recognized separately in income in a constant relationship with the discounted amount of the insurance in-force or expected future benefit payments. These liabilities are recorded in policy liabilities in the consolidated statements of financial condition.
Also included under payout annuities are liabilities for disability income benefits which pertain primarily to disability income policies that are already in claim payout status. Liabilities for disability income benefits are calculated as the present value of future disability payments and estimated future expenses using expected mortality and costs, and interest assumptions. The liabilities are recorded in policy liabilities in the consolidated statements of financial condition.
Whole and term life
Global Atlantic has established liabilities for amounts payable under insurance policies, including whole life insurance and term life insurance policies. These policies provide death benefits in exchange for a guaranteed level premium for a specified period of time and, in the case of whole life, a guaranteed minimum cash surrender value. Generally, liabilities for these policies are calculated as the present value of future expected benefits to be paid reduced by the present value of future expected net premiums. Current assumptions are used in the establishment of liabilities for future policyholder benefits including mortality, policy lapse, renewal, investment returns, inflation, expenses and other contingent events as appropriate for the respective product. Each quarter, Global Atlantic updates its estimate of cash flows using actual historical experience and current future cash flow assumptions. These updated cash flows are discounted using the discount rate or curve on the original contract issue date to calculate the revised net premiums and net premium ratio, which are used to derive an updated liability for future policy benefits. This amount is then compared to the carrying amount of the liability before the updating of cash flow assumptions to determine the current period change in liability estimate. This current period change in the liability is the liability remeasurement gain or loss and is presented parenthetically as a separate component of benefit expense in the consolidated statement of operations.
Policy liabilities for participating whole life insurance policies are equal to the aggregate of: (1) net level premium reserves for death and endowment policyholder benefits (calculated based upon the non-forfeiture interest rate, and mortality rated guarantee in calculating the cash surrender values described in such contracts); and (2) the liability for terminal dividends.
Product guarantees
Market risk benefits
Market risk benefits are contracts or contract features that both provide protection to the policyholder from other-than-nominal capital market risk and expose Global Atlantic to other-than-nominal capital market risk.
Market risk benefits include certain contract features on fixed annuity and variable annuity products. These features include minimum guarantees to policyholders, such as guaranteed minimum death benefits (GMDBs), guaranteed minimum withdrawal benefits (GMWBs), and long-term care benefits (i.e., capped at the return of account value plus one or two times the account value). Market risk benefits are measured at fair value using a non-option and option valuation approach based on current net amounts at risk, market data, experience, and other factors. Changes in fair value are recognized in net income each period with the exception of the portion of the change in fair value due to a change in the instrument-specific credit risk, which is recognized in other comprehensive income.
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Notes to Financial Statements (Continued)
Additional liability for annuitization, death, or other insurance benefits
Global Atlantic establishes additional liabilities for contracts or contract features that provide for potential benefits in addition to the account balance but are not market risk benefits or embedded derivatives. These benefits include annuitization benefits and death or other insurance benefits (e.g., universal life secondary guarantees). For these benefits, the liability is the sum of the current benefit ratio multiplied by cumulative assessments and accreted interest, less excess payments.
In particular, Global Atlantic holds additional liabilities for universal life products with secondary guarantees, sometimes referred to as no-lapse guarantees. The additional liabilities are measured using the benefit ratio approach where excess benefits are spread over the life of the contract based on assessments collected from the policyholder. Generally, total expected excess benefit payments are the aggregate of death claims after the policyholder account value is exhausted. The exception is when the cost of insurance charges are insufficient to produce consistently positive earnings in the future. In this case, all death benefits are deemed to be excess benefits. For annuitization benefits, the benefit ratio is the present value of expected annuitization payments to be made less the accrued account balance at the expected annuitization date divided by the present value of expected assessments during the accumulation phase of the contract, discounted at the contract rate. Expected annuitization payments and related incremental claim adjustment expenses, expected assessments, and expected excess payments are calculated using discount rate, mortality, lapse, and expense assumptions.
Global Atlantic recognizes a shadow reserve adjustment for the additional insurance liabilities when unrealized gains and losses are included in the investment margin while calculating the present value of expected assessments for the benefit ratios. Shadow reserve adjustments are recognized in other comprehensive income.
For additional liabilities for death or other insurance benefits, the discount rate assumption is based on the contract rate at inception. The mortality, lapse, and expense assumptions are based on Global Atlantic’s experience, industry data, and other factors. Assumptions are reviewed and updated, if necessary, at least annually. When those assumptions are updated, the benefit ratio and the liability are remeasured, with the resulting gain or loss reflected in total benefits expense.
Outstanding claims
Outstanding claims include amounts payable relating to in course of settlement and incurred but not reported claim liabilities. In course of settlement, claim liabilities are established for policies when Global Atlantic is notified of the death of the policyholder, but the claim has not been paid as of the reporting date. Incurred but not reported claim liabilities are determined using studies of past experience and are estimated using actuarial assumptions of historical claims expense, adjusted for current trends and conditions. These estimates are continually reviewed, and the ultimate liability may vary significantly from the amounts initially recognized, which are reflected in net income in the period in which they are determined. Changes in policyholder and contract claims are recorded in policy benefits and claims in the consolidated statements of operations.
Closed blocks
Through its insurance companies, Global Atlantic has acquired several closed blocks of participating life insurance policies. Global Atlantic has elected to account for the closed block policy liabilities using the fair value option.
The assets and cash flow generated by the closed blocks inure solely to the benefit of the holders of policies included in the closed blocks. All closed block assets will ultimately be paid out as policyholder benefits and through policyholder dividends. In the event that the closed blocks’ assets are insufficient to meet the benefits of the closed blocks’ benefits, general assets of Global Atlantic would be used to meet the contractual benefits to the closed blocks’ policyholders.
The closed block liabilities are measured at fair value, which comprises the fair value of the closed block assets plus the present value of projected expenses including commissions and the cost of capital charges associated with the closed blocks. In calculating the present value, Global Atlantic used a discount rate based on current U.S. Treasury rates, with a risk margin to reflect uncertainties in the closed block liability and a provision for Global Atlantic’s instrument-specific credit risk.
Reinsurance
Consistent with the overall business strategy, Global Atlantic assumes certain policy risks written by other insurance companies on a coinsurance, modified coinsurance or funds withheld coinsurance basis. Reinsurance accounting is applied for ceded and assumed transactions when risk transfer provisions have been met. To meet risk transfer requirements, a long-duration reinsurance contract must transfer mortality or morbidity risks, and subject the reinsurer to a reasonable possibility of a significant loss. Those contracts that do not meet risk transfer requirements are accounted for using deposit accounting. Global Atlantic seeks to diversify risk and limits its overall financial exposure through reinsurance.
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Notes to Financial Statements (Continued)
With respect to ceded reinsurance, Global Atlantic values reinsurance recoverables on reported claims at the time the underlying claim is recognized in accordance with contract terms. For future policyholder benefits, Global Atlantic estimates the amount of reinsurance recoverables based on the terms of the reinsurance contracts and historical reinsurance recovery information. The reinsurance recoverables are based on what Global Atlantic believes are reasonable estimates and the balance is reported as an asset in the consolidated statements of financial condition. However, the ultimate amount of the reinsurance recoverable is not known until all claims are settled.
The cost of reinsurance, which is the difference between the amount paid for a reinsurance contract and the amount of the liabilities for policy benefits relating to the underlying reinsured contracts, is deferred and amortized over the reinsurance contract period for short-duration contracts, or over the terms of the reinsured policies on a basis consistent with the reporting of those policies for long-duration contracts. Generally, Global Atlantic amortizes cost of reinsurance based on policy count or effective yield method, retrospectively calculated based on actual and projected future cash flows. Cost of reinsurance assets and liabilities are reported in insurance intangibles and policy liabilities in the consolidated statements of financial condition, respectively. Reinsurance contracts do not relieve Global Atlantic from its obligations to policyholders, and failure of reinsurers to honor their obligations could result in losses to Global Atlantic; consequently, allowances are established for expected credit losses, via a charge to policy benefits and claims in the consolidated statements of operations. Global Atlantic’s funds withheld receivable at interest and reinsurance recoverable assets are reviewed for expected credit losses by considering credit ratings for each reinsurer, historical insurance industry specific default rate factors, rights of offset, expected recovery rates upon default and the impact of other terms specific to the reinsurance arrangement.
For funds withheld and modified coinsurance agreements, Global Atlantic has the right to receive or obligation to pay the total return on assets supporting the funds withheld receivable at interest or funds withheld payable at interest. This indirectly exposes Global Atlantic to the credit risk of the underlying assets. As a result, funds withheld coinsurance and modified coinsurance agreements are viewed as total return swaps and accounted for as embedded derivatives. Embedded derivatives are required to be separated from the host contracts and measured at fair value with changes in fair value recognized in net income. Generally, the embedded derivative is measured as the difference between the fair value of the underlying assets and the carrying value of the host contract at the balance sheet date. The fair value of the embedded derivative is included in the funds withheld receivable at interest or the funds withheld payable at interest on the consolidated statements of financial condition. Changes in the fair value of the embedded derivative are reported in operating activities on the consolidated statements of cash flows.
Recognition of insurance revenue and related benefits
Premiums related to whole life and term life insurance contracts and payout contracts with life contingencies are recognized in premiums in the consolidated statements of operations when due from the contractholders.
Amounts received as payment for universal life and investment-type contracts are reported as deposits to contractholder account balances and recorded in policy liabilities in the consolidated statements of financial condition. Amounts received as payment for Global Atlantic’s fixed fund variable annuities are reported as a component of policy liabilities in the consolidated statements of financial condition. Revenues from these contracts consist primarily of fees assessed against the contractholder account balance for mortality, policy administration, separate account administration and surrender charges, and are reported in policy fees in the consolidated statements of operations. Additionally, Global Atlantic earns investment income from the investment of contract deposits in Global Atlantic’s insurance companies' general account portfolio, which is reported in net investment income in the consolidated statements of operations.
Fees assessed that represent compensation to Global Atlantic for benefits to be provided in future periods and certain other fees are established as an unearned revenue reserve liability and amortized into revenue over the expected life of the related contracts in proportion to estimated gross profits in a manner consistent with DAC for these contracts. Unearned revenue reserves are reported in policy liabilities in the consolidated statements of financial condition and amortized into policy fees in the consolidated statements of operations. Benefits and expenses for these products include claims in excess of related account balances, expenses for contract administration and interest credited to contractholder account balances in the consolidated statements of operations.

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Notes to Financial Statements (Continued)
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and investment income (loss) during the reporting periods. Such estimates include but are not limited to (i) the valuation of investments and financial instruments, (ii) the determination of the income tax provision, (iii) the impairment of goodwill and intangible assets, (iv) the impairment of available-for-sale investments, (v) the valuation of insurance policy liabilities, including market risk benefits, (vi) the valuation of embedded derivatives in policy liabilities and funds withheld, (vii) the determination of the allowance for loan losses, and (viii) amortization of deferred revenues and expenses associated with the insurance business.
Certain events particular to each industry and country in which the portfolio companies conduct their operations, as well as general economic, political, regulatory and public health conditions, may have a significant negative impact on KKR’s investments and profitability. Such events are beyond KKR’s control, and the likelihood that they may occur and the effect on KKR's use of estimates cannot be predicted. Actual results could differ from those estimates, and such differences could be material to the financial statements.
Adoption of new accounting pronouncements
Targeted improvements to the accounting for long-duration contracts
Effective January 1, 2023, Global Atlantic adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”), on February 1, 2021 ("GA Acquisition Date"), on a full retrospective basis, coinciding with the acquisition of Global Atlantic by KKR ("GA Acquisition").
The following table summarizes the balance of, and changes in the liability for future policy benefits as of February 1, 2021 due to the adoption of LDTI.
Liability for future policy benefitsPayout annuitiesOtherTotal
Balance, as of February 1, 2021$12,785,557 $592,242 $13,377,799 
Change in discount rate assumptions151,651 20,930 172,581 
Adjusted balance, as of February 1, 2021$12,937,208 $613,172 $13,550,380 

The increase to the liability for future policy benefits as of February 1, 2021, was primarily due to remeasuring the liability using a discount rate based on a spot rate yield curve that is derived based on upper medium grade (low credit risk) fixed-income instruments with similar duration to the liability.
The following table summarizes the balance of, and changes in, the net liability position of market risk benefits (previously recorded as product guarantees included within policy liabilities in the consolidated statement of financial condition) as of February 1, 2021 due to the adoption of LDTI.
Market risk benefitsFixed-indexed annuitiesVariable- and other annuitiesTotal
Balance, as of February 1, 2021(1)
$895,114 $325,311 $1,220,425 
Adjustment for the difference between prior carrying amount and market risk benefit value282,354 87,733 370,087 
Adjusted balance, as of February 1, 2021$1,177,468 $413,044 $1,590,512 
(1)The $1,220.4 million balance associated with market risk benefits prior to transition was previously recorded as product guarantees either as an embedded derivative in contractholder deposits of $236 million, or as an additional liability for insurance benefits of $984.4 million under policy liabilities extinguished at transition, and remeasured as market risk benefits.

The transition approach for market risk benefits requires assessing products to determine whether contracts or contract features expose Global Atlantic to other than nominal capital market risk. The balance at February 1, 2021 reflects the population of market risk benefits identified. The increase to the carrying value of the market risk benefit liability as of February 1, 2021, reflects the required adjustment to remeasure the liability at fair value using current net amounts at risk, market data, experience, and other factors. The change primarily reflects the impact of discount rates and instrument-specific credit risk as of the transition date.
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Notes to Financial Statements (Continued)
The following table summarizes the balance of, and changes in, reinsurance recoverable as of February 1, 2021 due to the adoption of LDTI.
Reinsurance recoverableFixed indexed annuitiesPayout annuitiesOtherTotal
Balance, as of February 1, 2021$4,487,850 $7,100,198 $4,164,982 $15,753,030 
Change in discount rate assumptions— 75,708 — 75,708 
Adjusted balance, as of February 1, 2021, net of reinsurance$4,487,850 $7,175,906 $4,164,982 $15,828,738 
The following table summarizes the balance of, and changes in value of business acquired, net as of February 1, 2021 due to the adoption of LDTI.
VOBAFixed indexed annuitiesFixed-rate annuitiesPayout annuitiesInterest-sensitive lifeVariable annuitiesOtherTotal
Balance, as of February 1, 2021$474,165 $56,563 $— $307,216 $186,576 $— $1,024,520 
Adjustment to reflect transition impact to balance established as part of purchase accounting upon the GA Acquisition282,354 — 101,338 692 108,411 — 492,795 
Adjusted balance, as of February 1, 2021$756,519 $56,563 $101,338 $307,908 $294,987 $— $1,517,315 

The following table summarizes the balance of, and changes in negative value of business acquired, net as of February 1, 2021 due to the adoption of LDTI.
Negative VOBAFixed indexed annuitiesFixed-rate annuitiesPayout annuitiesInterest-sensitive lifeVariable annuitiesOtherTotal
Balance, as of February 1, 2021$222,135 $180,769 $— $549,983 $119,122 $201,405 $1,273,414 
Adjustment to reflect transition impact to balance established as part of purchase accounting upon the GA Acquisition— — 25,395 755 — (315)25,835 
Adjusted balance, as of February 1, 2021$222,135 $180,769 $25,395 $550,738 $119,122 $201,090 $1,299,249 
As a result of the GA Acquisition, Global Atlantic established a new accounting basis to reflect the fair value of assets and liabilities on the GA Acquisition Date, including resetting retained earnings, deferred acquisition costs and accumulated other comprehensive income to zero. As a result of the transition coinciding with the acquisition by KKR, the transition impact of the adoption was recorded as a change to the present value of future profits reflected in the value of business acquired insurance intangible asset recognized as part of purchase accounting.
The following table presents the effect of transition adjustments on the value of business acquired assets and liabilities due to the adoption of LDTI.
February 1, 2021
VOBANegative VOBA
Reinsurance recoverable$(75,708)$— 
Liability for future policy benefits198,416 (25,835)
Market risk benefits370,087 — 
Total transition adjustments$492,795 $(25,835)

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Notes to Financial Statements (Continued)
As a result of the retrospective application of the LDTI adoption, KKR adjusted certain previously reported amounts in its consolidated statements of financial condition, consolidated statements of operations, consolidated statements of comprehensive income, and consolidated statements of cash flows, as follows:
Consolidated statement of financial condition as of December 31, 2022As previously reportedAdjustmentAs revised
Reinsurance recoverable$27,919,591 $(1,897,510)$26,022,081 
Insurance intangibles1,722,681 608,813 2,331,494 
Other assets6,483,187 (441,858)6,041,329 
Total assets$277,077,191 $(1,730,555)$275,346,636 
Policy liabilities141,223,287 (3,442,358)137,780,929 
Accrued Expenses and Other Liabilities4,600,377 (2)4,600,375 
Total liabilities$223,418,306 $(3,442,360)$219,975,946 
Additional Paid-In Capital16,190,407 93,650 16,284,057 
Retained earnings6,315,711 385,396 6,701,107 
Accumulated other comprehensive income (loss)(5,901,701)599,901 (5,301,800)
Noncontrolling interest35,778,000 632,858 36,410,858 
Total equity$53,506,820 $1,711,805 $55,218,625 
The cumulative impact of the retrospective application of the LDTI adoption increased net income attributable to shareholders by $319.5 million and $65.9 million for each of the periods ended December 31, 2022 and 2021, respectively ($385.4 million cumulatively), and increased other comprehensive income by $589.6 million and $10.3 million for each of the periods ended December 31, 2022 and 2021, respectively ($599.9 million cumulatively). These increases were primarily as a result of an increase in discount rates and Global Atlantic’s instrument-specific credit risk during each of the respective periods.
Consolidated statement of operations for the three months ended June 30, 2022
As previously reportedAdjustmentAs revised
Policy fees$325,707 $(6,677)$319,030 
Net policy benefits and claims(1)
(45,407)(210,772)(256,179)
Amortization of policy acquisition costs13,204 (36,458)(23,254)
Insurance expenses131,065 (727)130,338 
General, Administrative and Other170,892 359 171,251 
Income tax expense (benefit)(153,104)50,593 (102,511)
Net Income (Loss)(2,004,410)190,328 (1,814,082)
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders(827,934)93,309 (734,625)
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock – Basic		(1.22)0.14 (1.08)
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock – Diluted
(1.22)0.14 (1.08)
_________________
(1)Includes adjustment for market risk benefit gain for the three months ended June 30, 2022 of $(198.2) million.
Consolidated statement of operations for the six months ended June 30, 2022
As previously reportedAdjustmentAs revised
Policy fees$644,143 $(11,331)$632,812 
Net policy benefits and claims(1)
680,653 (423,654)256,999 
Amortization of policy acquisition costs5,471 (17,303)(11,832)
Insurance expenses247,808 (1,667)246,141 
General, Administrative and Other338,106 769 338,875 
Income tax expense (benefit)(156,270)90,410 (65,860)
Net Income (Loss)(901,808)340,114 (561,694)
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders(901,704)157,293 (744,411)
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock – Basic		(1.42)0.25 (1.17)
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock – Diluted
(1.42)0.25 (1.17)
_________________
(1)Includes adjustment for market risk benefit gain for the six months ended June 30, 2022 of $(393.9) million.

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Notes to Financial Statements (Continued)
Consolidated statement of comprehensive income for the three months ended June 30, 2022
As previously reportedAdjustmentAs revised
Unrealized Gains (Losses) on Available-For-Sale Securities and Other$(3,422,234)$(142,628)$(3,564,862)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities— 585,352 585,352 
Comprehensive Income (Loss)(5,546,017)633,052 (4,912,965)
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.(2,580,147)310,356 (2,269,791)
Consolidated statement of comprehensive income for the six months ended June 30, 2022
As previously reportedAdjustmentAs revised
Unrealized Gains (Losses) on Available-For-Sale Securities and Other$(6,761,445)$(342,455)$(7,103,900)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities— 1,309,938 1,309,938 
Comprehensive Income (Loss)(7,804,907)1,307,597 (6,497,310)
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.(4,077,090)598,502 (3,478,588)
Consolidated statement of cash flow for the six months ended June 30, 2022
As previously reportedAdjustmentAs revised
Net realized (gains) losses on insurance operations$11,246 $(393,909)$(382,663)
Other non-cash amounts8,949 17,335 26,284 
Change in policy liabilities and accruals, net(374,241)(53,052)(427,293)
Change in other assets1,403,016 90,411 1,493,427 
Change in accrued expenses and other liabilities(2,403,802)(900)(2,404,702)
Troubled debt restructurings and vintage disclosures
In March 2022, the FASB issued new guidance regarding the modification of receivables, which affects their recognition and measurement. The guidance eliminates the concept of troubled debt restructurings and instead requires all modifications to be analyzed to determine whether they result in a new receivable or a continuation of an existing receivable. The guidance also makes related updates to the measurement of expected credit losses for receivables. The new guidance requires additional disclosures for receivable modifications involving borrowers experiencing financial difficulty as well as disclosure of loan charge-offs by origination year (vintage). For entities that have already adopted ASC 326 (addressing credit losses on financial instruments), the guidance was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. KKR adopted this accounting standard effective January 1, 2023. Refer to Note 8 — “Investments–Loan modifications” for additional information.
Business combinations - Accounting for contract assets and contract liabilities from contracts with customers
In October 2021, the FASB issued new guidance (ASU 2021-08) to add contract assets and contract liabilities from contracts with customers acquired in a business combination to the list of exceptions to the fair value recognition and measurement principles that apply to business combinations, and instead require them to be accounted for in accordance with revenue recognition guidance. KKR adopted this accounting standard effective January 1, 2023 and its adoption did not have any material impact on KKR's consolidated financial statements.
Future application of accounting standards
Fair value measurement of equity security subject to contractual sale restriction
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. According to ASU 2022-03, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value and an entity is not allowed to recognize a contractual sale restriction as a separate unit of account.
ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. KKR is currently evaluating the impact of this accounting standard update on its consolidated financial statements.
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Notes to Financial Statements (Continued)
Accounting for Investments in Tax Credit Structures
In March 2023, the FASB issued new guidance to expand the population of investments in tax credit structures that may be eligible to apply the proportional amortization method (“PAM”), if certain criteria are met. The election to use the PAM can be made on a tax credit program-by-program basis. Under the new guidance, certain disclosures are required for investments in tax credit programs for which the PAM is elected. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. KKR is currently evaluating the impact of this guidance on its consolidated financial statements.

3. ACQUISITIONS
Acquisition of Mitsubishi Corp-UBS Realty Inc.
On March 17, 2022, KKR entered into an agreement to acquire all of the outstanding shares of Mitsubishi Corp.-UBS Realty Inc. (“MC-UBSR”) from Mitsubishi Corporation and UBS Asset Management in an all-cash transaction valued at ¥227 billion (which was approximately $1.7 billion at such time) (the “KJRM Acquisition”). On April 28, 2022, KKR completed the acquisition of MC-UBSR, which changed its name to KJR Management ("KJRM"). KJRM is a real estate asset manager in Japan that manages two Tokyo Stock Exchange-listed real estate investment trusts ("REITs"): Japan Metropolitan Fund Investment Corporation, which is primarily focused on retail, offices, hotels and other assets located in urban areas in Japan, and Industrial & Infrastructure Fund Investment Corporation, which is primarily focused on industrial and infrastructure properties in Japan. The KJRM Acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").
KKR plans to continue the existing strategy and business of KJRM. The acquisition is expected to enhance KJRM’s leading real estate asset management business with potential opportunities for organic and inorganic growth and scale in Japan.
In connection with the acquisition, KKR allocated an amount of $1,733 million to the fair value of KJRM’s investment management contracts and recognized approximately $530 million of deferred tax liabilities resulting from the difference in book and tax basis of such intangible assets as of the acquisition date. Intangibles are based upon third-party valuations using the excess earnings method, which derives value based on the present value of the cash flow attributable to the investment management contracts, less returns for contributory assets. The significant assumptions used in the valuation of the intangible assets acquired are unobservable and include (i) the asset's estimated useful life, (ii) the projected assets under management, (iii) the projected revenue growth rates, and (iv) the discount rate.
KJRM’s investment management contracts were determined to have indefinite useful lives at the time of the KJRM Acquisition and are not subject to amortization. The assignment of indefinite lives to such investment management contracts is primarily based upon (i) the assumption that there is no foreseeable limit on the contract period to manage KJRM’s listed REITs; (ii) KKR expects to have the ability to continue to operate these products indefinitely; (iii) the products have multiple investors and are not reliant on a single investor or small group of investors for their continued operation; (iv) current competitive factors and economic conditions do not indicate a finite life; and (v) there is a high likelihood of continued renewal based on historical experience.
The carrying value of goodwill associated with the KJRM Acquisition was $509 million as of the acquisition date and is entirely allocated to the asset management segment. The goodwill is attributable primarily to the assembled workforce of KJRM and expected synergies. The goodwill recorded is not expected to be deductible for tax purposes.
KKR finalized the purchase price allocation in December 2022. No measurement period adjustments to reflect new information obtained about facts and circumstances that existed as of the acquisition date were recorded.
Pro forma results of operations would not be materially different as a result of the acquisition and therefore are not presented.
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Notes to Financial Statements (Continued)
4. REVENUES - ASSET MANAGEMENT
For the three and six months ended June 30, 2023 and 2022, respectively, Asset Management revenues consisted of the following:
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Management Fees$446,809 $418,229 $899,902 $816,275 
Fee Credits(49,612)(63,574)(107,143)(251,319)
Transaction Fees269,416 177,861 479,255 644,827 
Monitoring Fees34,796 30,522 64,649 69,922 
Incentive Fees12,158 7,141 18,571 14,198 
Expense Reimbursements16,840 25,576 32,384 66,879 
Consulting Fees24,040 19,509 43,845 34,993 
Total Fees and Other754,447 615,264 1,431,463 1,395,775 
Carried Interest540,615 (738,309)883,685 (1,521,997)
General Partner Capital Interest156,282 (185,165)262,230 (347,220)
Total Capital Allocation-Based Income (Loss)696,897 (923,474)1,145,915 (1,869,217)
Total Revenues - Asset Management$1,451,344 $(308,210)$2,577,378 $(473,442)

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Notes to Financial Statements (Continued)
5. NET GAINS (LOSSES) FROM INVESTMENT ACTIVITIES - ASSET MANAGEMENT
Net Gains (Losses) from Investment Activities in the consolidated statements of operations consist primarily of the realized and unrealized gains and losses on investments (including foreign exchange gains and losses attributable to foreign denominated investments and related activities) and other financial instruments, including those for which the fair value option has been elected. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments during a period. Upon disposition of an investment or financial instrument, previously recognized unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.
The following table summarizes total Net Gains (Losses) from Investment Activities:
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
Net Realized Gains (Losses)Net Unrealized Gains (Losses)TotalNet Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)
$(27,156)$507,346 $480,190 $225,585 $(1,663,216)$(1,437,631)
Credit (1)
(276,849)316,985 40,136 (42,011)(309,990)(352,001)
Investments of Consolidated CFEs (1)
(44,865)251,101 206,236 205 (1,474,681)(1,474,476)
Real Assets (1)
51,620 (183,635)(132,015)263,324 (72,768)190,556 
Equity Method - Other (1)
18,817 233,278 252,095 40,009 (245,626)(205,617)
Other Investments (1)
(210,136)188,596 (21,540)35,160 (352,215)(317,055)
Foreign Exchange Forward Contracts and Options (2)
61,106 (70,072)(8,966)50,952 228,930 279,882 
Securities Sold Short (2)
2,519 (5,669)(3,150)23,470 10,163 33,633 
Other Derivatives (2)
16,070 (8,419)7,651 (4,617)22,191 17,574 
Debt Obligations and Other (3)
19,574 (270,126)(250,552)(42,118)1,421,784 1,379,666 
Net Gains (Losses) From Investment Activities$(389,300)$959,385 $570,085 $549,959 $(2,435,428)$(1,885,469)
Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Net Realized Gains (Losses)Net Unrealized Gains (Losses)TotalNet Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)
$171,925 $470,682 $642,607 $423,965 $(1,928,542)$(1,504,577)
Credit (1)
(299,812)421,760 121,948 (53,466)(498,964)(552,430)
Investments of Consolidated CFEs (1)
(49,882)568,982 519,100 3,154 (1,744,229)(1,741,075)
Real Assets (1)
61,054 (509,544)(448,490)260,563 1,224,502 1,485,065 
Equity Method - Other (1)
58,036 262,783 320,819 54,293 (318,268)(263,975)
Other Investments (1)
(322,799)188,077 (134,722)36,903 (367,230)(330,327)
Foreign Exchange Forward Contracts and Options (2)
2,471 (33,803)(31,332)141,842 81,923 223,765 
Securities Sold Short (2)
(956)(3,428)(4,384)59,552 20,344 79,896 
Other Derivatives (2)
13,948 5,911 19,859 (16,622)42,328 25,706 
Debt Obligations and Other (3)
76,095 (670,824)(594,729)(80,596)1,687,340 1,606,744 
Net Gains (Losses) From Investment Activities$(289,920)$700,596 $410,676 $829,588 $(1,800,796)$(971,208)
(1)See Note 8 "Investments."
(2)See Note 9 "Derivatives" and Note 15 "Other Assets and Accrued Expenses and Other Liabilities."
(3)See Note 17 "Debt Obligations."
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Notes to Financial Statements (Continued)
6. NET INVESTMENT INCOME - INSURANCE
Net investment income for Global Atlantic is comprised primarily of interest income, including amortization of premiums and accretion of discounts, based on yields that change due to expectations in projected cash flows, dividend income from common and preferred stock, earnings from investments accounted for under equity method accounting, and lease income on other investments.
The components of net investment income were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Fixed maturity securities – interest and other income$1,086,016 $745,346 $2,136,812 $1,436,639 
Mortgage and other loan receivables472,074 373,563 931,220 697,704 
Investments in transportation and other leased assets78,727 66,714 154,915 134,393 
Investments in renewable energy17,346 44,419 37,929 69,637 
Investments in real estate43,360 29,954 79,461 33,857 
Short-term and other investment income54,678 29,800 132,294 50,497 
Income assumed from funds withheld receivable at interest25,681 23,497 47,782 43,102 
Policy loans8,424 7,055 18,701 14,966 
Income ceded to funds withheld payable at interest(317,260)(238,761)(618,483)(418,463)
Gross investment income1,469,046 1,081,587 2,920,631 2,062,332 
Less investment expenses:
Investment management and administration80,137 95,656 165,478 208,787 
Transportation and renewable energy asset depreciation and maintenance57,226 48,856 106,388 102,809 
Interest expense on derivative collateral and repurchase agreements20,628 5,186 37,013 6,242 
Net investment income$1,311,055 $931,889 $2,611,752 $1,744,494 

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Notes to Financial Statements (Continued)
7. NET INVESTMENT-RELATED GAINS (LOSSES) - INSURANCE
Net investment-related gains (losses) from insurance operations primarily consists of (i) realized gains and (losses) from the disposal of investments, (ii) unrealized gains and (losses) from investments held for trading, equity securities, real estate investments accounted for under investment company accounting, and investments with fair value remeasurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains and (losses) on funds withheld at interest, (iv) unrealized gains and (losses) from derivatives not designated in an hedging relationship, and (v) allowances for credit losses, and other impairments of investments.
Net investment-related gains (losses) were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Realized gains (losses) on available-for-sale fixed maturity debt securities$(55,471)$(287,373)$(52,039)$(530,723)
Credit loss allowances on available-for-sale securities(30,622)(6,442)(106,940)(17,044)
Credit loss allowances on mortgage and other loan receivables(30,580)(12,298)(94,691)(38,383)
Allowances on unfunded commitments39,594 (10,168)31,594 (3,378)
Impairment of available-for-sale fixed maturity debt securities due to intent to sell— — (26,741)— 
Unrealized gains (losses) on fixed maturity securities classified as trading(66,627)(989,678)309,663 (2,028,124)
Unrealized losses on investments recognized under the fair-value option(3,440)(38,435)(59,213)(40,928)
Unrealized (losses) gains on real estate investments recognized at fair value under investment company accounting(43,371)45,396 19,821 123,088 
Net (losses) gains on derivative instruments78,244 855,366 (269,981)1,715,100 
Realized gains on funds withheld at interest payable portfolio3,632 28,727 7,612 2,340 
Realized (losses) gains on funds withheld at interest receivable portfolio(12,020)(22,162)5,713 3,438 
Other realized gains (losses)3,111 10,741 (6,181)19,608 
Net investment-related gains (losses)$(117,550)$(426,326)$(241,383)$(795,006)
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Notes to Financial Statements (Continued)
Allowance for credit losses
Available-for-sale fixed maturity securities
The table below presents a roll-forward of the allowance for credit losses recognized for fixed maturity securities held by Global Atlantic:
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
CorporateStructuredTotalCorporateStructuredTotal
Balance, as of beginning of period$1,449 $199,665 $201,114 $1,298 $127,034 $128,332 
Initial impairments for credit losses recognized on securities not previously impaired20,586 1,808 22,394 20,737 47,008 67,745 
Accretion of initial credit loss allowance on PCD securities— 336 336 — 687 687 
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities previously identified as credit impaired— (2,774)(2,774)— (6,661)(6,661)
Net additions / reductions for securities previously impaired916 7,312 8,228 916 38,279 39,195 
Balance, as of end of period$22,951 $206,347 $229,298 $22,951 $206,347 $229,298 
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
CorporateStructuredTotalCorporateStructuredTotal
Balance, as of beginning of period$5,000 $91,908 $96,908 $3,238 $84,895 $88,133 
Initial impairments for credit losses recognized on securities not previously impaired— 20,197 20,197 122 35,955 36,077 
Initial credit loss allowance recognized on purchased credit deteriorated ("PCD") securities— 567 567 — 707 707 
Accretion of initial credit loss allowance on PCD securities— 391 391 — 868 868 
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities previously identified as credit impaired— (2,015)(2,015)— (4,459)(4,459)
Net additions / reductions for securities previously impaired2,842 (16,597)(13,755)4,482 (23,515)(19,033)
Balance, as of end of period$7,842 $94,451 $102,293 $7,842 $94,451 $102,293 
Mortgage and other loan receivables
Changes in the allowance for credit losses on mortgage and other loan receivables held by Global Atlantic are summarized below:
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Commercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotalCommercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotal
Balance, as of beginning of period$247,426 $134,447 $207,227 $589,100 $227,315 $125,824 $207,089 $560,228 
Net provision (release)6,440 7,218 16,922 30,580 26,551 17,534 50,606 94,691 
Charge-offs(14,000)(1,729)(34,576)(50,305)(14,000)(3,422)(69,948)(87,370)
Recoveries of amounts previously charged-off— — 8,674 8,674 — — 10,500 10,500 
Balance, as of end of period$239,866 $139,936 $198,247 $578,049 $239,866 $139,936 $198,247 $578,049 
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Notes to Financial Statements (Continued)
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Commercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotalCommercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotal
Balance, as of beginning of period$81,536 $87,583 $231,043 $400,162 $65,970 $72,082 $236,025 $374,077 
Net provision (release)22,408 8,611 (18,721)12,298 37,974 24,112 (23,703)38,383 
Charge-offs— — (575)(575)— — (575)(575)
Balance, as of end of period$103,944 $96,194 $211,747 $411,885 $103,944 $96,194 $211,747 $411,885 

Proceeds and gross gains and losses from voluntary sales
The proceeds from voluntary sales and the gross gains and losses on those sales of available-for-sale ("AFS") fixed maturity securities were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
AFS fixed maturity securities:
Proceeds from voluntary sales$1,728,403 $3,933,957 $3,135,328 $10,062,242 
Gross gains15,101 1,254 30,565 10,196 
Gross losses(70,812)(286,576)(80,856)(532,447)
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Notes to Financial Statements (Continued)
8. INVESTMENTS
Investments consist of the following:
 June 30, 2023December 31, 2022
Asset Management
Private Equity$29,884,522 $26,607,688 
Credit7,962,238 7,804,392 
Investments of Consolidated CFEs24,514,439 22,492,366 
Real Assets21,142,323 17,976,366 
Equity Method - Other6,572,739 6,838,541 
Equity Method - Capital Allocation-Based Income7,810,797 6,862,712 
Other Investments3,991,810 3,793,398 
Investments - Asset Management$101,878,868 $92,375,463 
Insurance
Fixed maturity securities, available-for-sale, at fair value(1)
$67,034,371 $61,939,529 
Mortgage and other loan receivables35,907,563 35,090,698 
Fixed maturity securities, trading, at fair value(2)
12,585,845 12,038,847 
Other investments10,453,844 11,374,656 
Funds withheld receivable at interest2,727,317 2,868,036 
Policy loans871,422 868,911 
Equity securities at fair value19,602 18,499 
Investments - Insurance$129,599,964 $124,199,176 
Total Investments$231,478,832 $216,574,639 
(1)Amortized cost of $77.7 billion and $73.6 billion, net of credit loss allowances of $229.3 million and $128.3 million, respectively.
(2)Amortized cost of $15.0 billion and $14.8 billion, respectively.

As of both June 30, 2023 and December 31, 2022, there were no investments which represented greater than 5% of total investments.
Fixed maturity securities
The cost or amortized cost and fair value for AFS fixed maturity securities were as follows:
Cost or amortized cost
Allowance for Credit Losses (1)(2)
Gross unrealizedFair value
As of June 30, 2023gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$491,921 $— $445 $(69,685)$422,681 
U.S. state, municipal and political subdivisions5,442,438 — 8,257 (1,066,857)4,383,838 
Corporate46,533,475 (22,951)98,029 (7,397,857)39,210,696 
Residential mortgage-backed securities, or “RMBS”8,200,045 (153,009)14,105 (696,380)7,364,761 
Commercial mortgage-backed securities, or “CMBS”7,499,573 (14,577)417 (801,183)6,684,230 
Collateralized bond obligations, or “CBOs”2,995,905 (906)— (213,268)2,781,731 
CLOs3,515,267 (25,765)1,684 (144,320)3,346,866 
Asset-backed securities, or “ABSs”3,050,641 (12,090)9,349 (208,332)2,839,568 
Total AFS fixed maturity securities$77,729,265 $(229,298)$132,286 $(10,597,882)$67,034,371 
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Notes to Financial Statements (Continued)
(1)Represents the cumulative amount of credit impairments that have been recognized in the consolidated statements of operations (as net investment (losses) gains) or that were recognized as a gross-up of the purchase price of PCD securities. Amount excludes unrealized losses related to non-credit impairment.
(2)Includes credit loss allowances on purchase-credit deteriorated fixed-maturity securities of $(21.3) million.
Cost or amortized cost
Allowance for Credit Losses (1)(2)
Gross unrealizedFair value
As of December 31, 2022gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$438,931 $— $304 $(72,494)$366,741 
U.S. state, municipal and political subdivisions5,638,252 — 6,582 (1,233,874)4,410,960 
Corporate44,253,062 (1,298)49,509 (7,984,341)36,316,932 
RMBS7,307,526 (100,554)12,052 (834,212)6,384,812 
CMBS7,269,662 (14,490)36 (834,735)6,420,473 
CBOs3,051,850 (426)— (217,773)2,833,651 
CLOs2,726,888 (6,165)127 (200,160)2,520,690 
ABSs2,914,617 (5,399)4,702 (228,650)2,685,270 
Total AFS fixed maturity securities$73,600,788 $(128,332)$73,312 $(11,606,239)$61,939,529 
(1)Represents the cumulative amount of credit impairments that have been recognized in the consolidated statements of operations (as net investment (losses) gains) or that were recognized as a gross-up of the purchase price of PCD securities. Amount excludes unrealized losses related to non-credit impairment.
(2)Includes credit loss allowances on purchase-credit deteriorated fixed-maturity securities of $(29.9) million.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or Global Atlantic may have the right to put or sell the obligations back to the issuers. Structured securities are shown separately as they have periodic payments and are not due at a single maturity.
The maturity distribution for AFS fixed maturity securities is as follows:
As of June 30, 2023Cost or
amortized cost (net of allowance)		Fair value
Due in one year or less$1,364,257 $1,343,976 
Due after one year through five years12,602,956 12,001,680 
Due after five years through ten years9,394,459 8,602,514 
Due after ten years29,083,211 22,069,045 
Subtotal52,444,883 44,017,215 
RMBS8,047,036 7,364,761 
CMBS7,484,996 6,684,230 
CBOs2,994,999 2,781,731 
CLOs3,489,502 3,346,866 
ABSs3,038,551 2,839,568 
Total AFS fixed maturity securities$77,499,967 $67,034,371 
Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Global Atlantic may have the right to put or sell the obligations back to the issuers. Structured securities are shown separately as they have periodic payments and are not due at a single maturity.
Purchased credit deteriorated securities
Certain securities purchased by Global Atlantic were assessed at acquisition as having experienced a more-than-insignificant deterioration in credit quality since their origination. These securities are identified as PCD, and a reconciliation of the difference between the purchase price and the par value of these PCD securities is below:
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Notes to Financial Statements (Continued)
Six Months Ended June 30,
20232022
Purchase price of PCD securities acquired during the current period$— $15,951 
Allowance for credit losses at acquisition— 707 
Discount attributable to other factors— 1,057 
Par value$— $17,715 
Securities in a continuous unrealized loss position
The following tables provide information about AFS fixed maturity securities that have been continuously in an unrealized loss position:
Less than 12 months12 months or moreTotal
As of June 30, 2023Fair
value		Unrealized lossesFair
value		Unrealized lossesFair
value		Unrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$177,322 $(2,918)$198,376 $(66,767)$375,698 $(69,685)
U.S. state, municipal and political subdivisions321,202 (13,832)3,766,538 (1,053,025)4,087,740 (1,066,857)
Corporate8,821,425 (339,357)25,974,990 (7,058,500)34,796,415 (7,397,857)
RMBS1,633,807 (49,552)4,845,271 (646,828)6,479,078 (696,380)
CBOs— — 2,781,731 (213,268)2,781,731 (213,268)
CMBS545,960 (59,584)6,045,832 (741,599)6,591,792 (801,183)
CLOs688,364 (4,229)2,258,563 (140,091)2,946,927 (144,320)
ABSs886,866 (42,113)1,525,227 (166,219)2,412,093 (208,332)
Total AFS fixed maturity securities in a continuous loss position$13,074,946 $(511,585)$47,396,528 $(10,086,297)$60,471,474 $(10,597,882)
Less than 12 months12 months or moreTotal
As of December 31, 2022Fair
value		Unrealized lossesFair
value		Unrealized lossesFair
value		Unrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$122,272 $(52,639)$108,498 $(19,855)$230,770 $(72,494)
U.S. state, municipal and political subdivisions2,321,404 (605,698)1,780,984 (628,176)4,102,388 (1,233,874)
Corporate14,792,384 (2,114,695)17,943,907 (5,869,646)32,736,291 (7,984,341)
RMBS3,998,737 (442,543)2,068,529 (391,669)6,067,266 (834,212)
CBOs1,351,552 (103,499)1,482,099 (114,274)2,833,651 (217,773)
CMBS4,054,053 (445,168)2,338,517 (389,567)6,392,570 (834,735)
CLOs1,862,608 (139,766)636,014 (60,394)2,498,622 (200,160)
ABSs1,610,876 (113,285)832,635 (115,365)2,443,511 (228,650)
Total AFS fixed maturity securities in a continuous loss position$30,113,886 $(4,017,293)$27,191,183 $(7,588,946)$57,305,069 $(11,606,239)
Unrealized gains and losses can be created by changing interest rates or several other factors, including changing credit spreads. Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $721.3 million and $836.3 million as of June 30, 2023 and December 31, 2022, respectively. The single largest unrealized loss on AFS fixed maturity securities was $56.5 million and $60.4 million as of June 30, 2023 and December 31, 2022, respectively. Global Atlantic had 6,483 and 6,328 securities in an unrealized loss position as of June 30, 2023 and December 31, 2022, respectively.
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As of June 30, 2023, AFS fixed maturity securities in an unrealized loss position for 12 months or more consisted of 5,193 debt securities. These debt securities primarily relate to Corporate, RMBS, and U.S. state, municipal and political subdivisions fixed maturity securities, which have depressed values due primarily to an increase in interest rates since the purchase of these securities. Unrealized losses were not recognized in net income on these debt securities since Global Atlantic neither intends to sell the securities nor does it believe that it is more likely than not that it will be required to sell these securities before recovery of their cost or amortized cost basis. For securities with significant declines in value, individual security level analysis was performed utilizing underlying collateral default expectations, market data, and industry analyst reports.
Mortgage and other loan receivables
Mortgage and other loan receivables consist of the following:
June 30, 2023December 31, 2022
Commercial mortgage loans(1)
$19,623,670 $18,830,780 
Residential mortgage loans(1)
11,451,908 10,688,972 
Consumer loans4,797,741 5,228,534 
Other loan receivables(2)
612,293 902,640 
Total mortgage and other loan receivables36,485,612 35,650,926 
Allowance for credit losses(3)
(578,049)(560,228)
Total mortgage and other loan receivables, net of allowance for credit losses$35,907,563 $35,090,698 
(1)Includes $768.3 million and $787.5 million of loans carried at fair value using the fair value option as of June 30, 2023 and December 31, 2022, respectively. The fair value option was elected for these loans for asset-liability matching purposes. These loans had unpaid principal balances of $847.1 million and $871.2 million as of June 30, 2023 and December 31, 2022, respectively.
(2)As of June 30, 2023 and December 31, 2022, other loan receivables consisted primarily of loans collateralized by aircraft of $266.0 million and $282.3 million, respectively.
(3)Includes credit loss allowances on purchase-credit deteriorated mortgage and other loan receivables of $(99.8) million and $(106.2) million as of June 30, 2023 and December 31, 2022, respectively.
The maturity distribution for residential and commercial mortgage loans was as follows as of June 30, 2023:
YearsResidentialCommercialTotal mortgage loans
Remainder of 2023$80,155 $1,112,763 $1,192,918 
2024370,707 2,066,110 2,436,817 
202515,373 3,647,053 3,662,426 
2026865,712 4,381,877 5,247,589 
2027861,384 2,897,827 3,759,211 
2028130,047 1,381,665 1,511,712 
2029 and thereafter9,128,530 4,136,375 13,264,905 
Total$11,451,908 $19,623,670 $31,075,578 
Actual maturities could differ from contractual maturities, because borrowers may have the right to prepay (with or without prepayment penalties) and loans may be refinanced.
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Global Atlantic diversifies its mortgage loan portfolio by both geographic region and property type to reduce concentration risk. The following tables present the mortgage loans by geographic region and property type:
Mortgage loans – carrying value by geographic regionJune 30, 2023December 31, 2022
Pacific$7,772,463 25.0 %$7,197,110 24.4 %
West South Central4,095,311 13.2 %3,582,648 12.1 %
South Atlantic8,403,005 27.0 %8,051,653 27.3 %
Middle Atlantic3,711,831 11.9 %3,590,530 12.2 %
East North Central1,162,564 3.7 %1,240,264 4.2 %
Mountain3,227,895 10.4 %3,152,895 10.7 %
New England1,326,697 4.3 %1,414,897 4.8 %
East South Central736,473 2.4 %712,886 2.4 %
West North Central356,590 1.1 %349,079 1.2 %
Other regions282,749 1.0 %227,790 0.7 %
Total by geographic region$31,075,578 100.0 %$29,519,752 100.0 %
Mortgage loans – carrying value by property typeJune 30, 2023December 31, 2022
Residential$11,451,908 36.9 %$10,688,972 36.2 %
Office building4,548,586 14.6 %4,594,238 15.6 %
Multi-family10,058,850 32.4 %9,698,728 32.9 %
Industrial3,455,341 11.1 %3,139,163 10.6 %
Retail540,899 1.7 %630,455 2.1 %
Other property types790,795 2.5 %582,479 2.0 %
Warehouse229,199 0.8 %185,717 0.6 %
Total by property type$31,075,578 100.0 %$29,519,752 100.0 %
As of June 30, 2023 and December 31, 2022, Global Atlantic had $204.8 million and $192.3 million of mortgage loans that were 90 days or more past due or in the process of foreclosure, respectively, and have been classified as non-income producing. Global Atlantic ceases accrual of interest on loans that are more than 90 days past due and recognizes income as cash is received.
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Credit quality indicators
Mortgage and loan receivable performance status
The following table represents the portfolio of mortgage and loan receivables by origination year and performance status as of June 30, 2023 and December 31, 2022:
By year of origination
Performance status as of June 30, 2023
20232022202120202019PriorTotal
Commercial mortgage loans
Current-period gross charge-offs$— $— $— $— $(14,000)$— $(14,000)
Current$1,007,089 $6,241,717 $6,890,616 $728,767 $1,489,734 $3,232,200 $19,590,123 
30 to 59 days past due— — — — — — — 
60 to 89 days past due— — — — — 33,547 33,547 
90 days or more past due— — — — — — — 
Total commercial mortgage loans$1,007,089 $6,241,717 $6,890,616 $728,767 $1,489,734 $3,265,747 $19,623,670 
Residential mortgage loans
Current-period gross charge-offs$— $(247)$(420)$(175)$(1,253)$(1,327)$(3,422)
Current$884,306 $2,034,999 $4,703,496 $1,714,490 $248,569 $1,447,905 $11,033,765 
30 to 59 days past due17,059 23,739 39,798 701 6,585 69,442 157,324 
60 to 89 days past due2,770 4,494 18,167 3,158 925 26,523 56,037 
90 days or more past due— 10,051 55,863 10,722 11,187 116,959 204,782 
Total residential mortgage loans$904,135 $2,073,283 $4,817,324 $1,729,071 $267,266 $1,660,829 $11,451,908 
Consumer loans
Current-period gross charge-offs$— $(6,077)$(37,268)$(10,414)$(6,636)$(9,553)$(69,948)
Current$40,157 $500,041 $1,955,018 $776,939 $674,950 $722,964 $4,670,069 
30 to 59 days past due33 4,686 32,464 5,388 4,581 13,933 61,085 
60 to 89 days past due— 2,349 14,721 3,310 1,860 6,765 29,005 
90 days or more past due— 4,269 16,273 5,167 4,663 7,210 37,582 
Total consumer loans$40,190 $511,345 $2,018,476 $790,804 $686,054 $750,872 $4,797,741 
Total mortgage and consumer loan receivables$1,951,414 $8,826,345 $13,726,416 $3,248,642 $2,443,054 $5,677,448 $35,873,319 
    
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By year of origination
Performance status as of December 31, 2022
20222021202020192018PriorTotal
Commercial mortgage loans
Current$6,081,261 $6,845,839 $809,254 $1,529,897 $1,260,593 $2,303,936 $18,830,780 
30 to 59 days past due— — — — — — — 
60 to 89 days past due— — — — — — — 
90 days or more past due— — — — — — — 
Total commercial mortgage loans$6,081,261 $6,845,839 $809,254 $1,529,897 $1,260,593 $2,303,936 $18,830,780 
Residential mortgage loans
Current$1,855,038 $4,802,333 $1,879,606 $264,050 $13,670 $1,485,244 $10,299,941 
30 to 59 days past due10,534 49,169 6,144 6,471 — 80,357 152,675 
60 to 89 days past due796 13,143 2,016 955 — 27,114 44,024 
90 days or more past due7,598 35,978 11,483 8,389 2,438 126,446 192,332 
Total residential mortgage loans$1,873,966 $4,900,623 $1,899,249 $279,865 $16,108 $1,719,161 $10,688,972 
Total mortgage loans$7,955,227 $11,746,462 $2,708,503 $1,809,762 $1,276,701 $4,023,097 $29,519,752 
The following table represents the portfolio of consumer loan receivables by performance status:
Performance statusDecember 31, 2022
Consumer loans
Current$5,113,507 
30 to 59 days past due62,742 
60 to 89 days past due31,371 
90 days or more past due20,914 
Total consumer loans$5,228,534 
Loan-to-value ratio on mortgage loans
The loan-to-value ratio is expressed as a percentage of the current amount of the loan relative to the value of the underlying collateral. The following table summarizes Global Atlantic's loan-to-value ratios for its commercial mortgage loans as of June 30, 2023 and December 31, 2022:
Loan-to-value as of June 30, 2023, by year of origination
Carrying value loan-to-value 70% and lessCarrying value loan-to-value 71% - 90%Carrying value loan-to-value over 90%Total carrying value
2023$1,007,089 $— $— $1,007,089 
20225,838,036 403,681 — 6,241,717 
20215,021,450 1,653,636 215,530 6,890,616 
2020599,616 94,027 35,124 728,767 
20191,338,401 151,333 — 1,489,734 
2018906,284 19,025 178,714 1,104,023 
Prior2,099,976 — 61,748 2,161,724 
Total commercial mortgage loans$16,810,852 $2,321,702 $491,116 $19,623,670 
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Loan-to-value as of December 31, 2022, by year of origination
Carrying value loan-to-value 70% and lessCarrying value loan-to-value 71% - 90%Carrying value loan-to-value over 90%Total carrying value
2022$5,677,763 $403,498 $— $6,081,261 
20214,971,346 1,758,748 115,745 6,845,839 
2020650,825 123,343 35,086 809,254 
20191,211,523 215,050 103,324 1,529,897 
20181,061,566 18,885 180,142 1,260,593 
2017699,144 — 18,160 717,304 
Prior1,586,632 — — 1,586,632 
Total commercial mortgage loans$15,858,799 $2,519,524 $452,457 $18,830,780 
Changing economic conditions and updated assumptions affect Global Atlantic's assessment of the collectability of commercial mortgage loans. Changing vacancies and rents are incorporated into the analysis that Global Atlantic performs to measure the allowance for credit losses. In addition, Global Atlantic continuously monitors its commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events or have deteriorating credit.
The weighted average loan-to-value ratio for Global Atlantic's residential mortgage loans was 63% and 64% as of June 30, 2023 and December 31, 2022, respectively.
Loan modifications
Global Atlantic may modify the terms of a loan when the borrower is experiencing financial difficulties, as a means to optimize recovery of amounts due on the loan. Modifications may involve temporary relief, such as payment forbearance for a short period time (where interest continues to accrue) or may involve more substantive changes to a loan. Changes to the terms of a loan, pursuant to a modification agreement, are factored into the analysis of the loan’s expected credit losses, under the allowance model applicable to the loan.
For commercial mortgage loans, modifications for borrowers experiencing financial difficulty are tailored for individual loans and may include interest rate relief, maturity extensions or, less frequently, principal forgiveness. For both residential mortgage loans and consumer loans, the most common modifications for borrowers experiencing financial difficulty, aside from insignificant delays in payment, typically involve deferral of missed payments to the end of the loan term, interest rate relief, or maturity extensions.
The table below presents the carrying value of loans to borrowers experiencing financial difficulty, for which modifications have been granted during the three and six months ended June 30, 2023.
Three months ended June 30, 2023 by loan type
Deferral of Amounts DueInterest Rate ReliefMaturity Extension
Combination(1)
TotalPercentage of total carrying value outstanding
Commercial mortgage loans$— $— $— $133,668 $133,668 0.68 %
Residential mortgage loans517 847 17,207 1,762 20,333 0.18 %
Consumer loans3,149 1,395 44,074 9,513 58,131 1.21 %
Total$3,666 $2,242 $61,281 $144,943 $212,132 
(1)Includes modifications involving deferral of amounts due, interest rate relief and/or maturity extension.

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Six months ended June 30, 2023 by loan type
Deferral of Amounts DueInterest Rate ReliefMaturity Extension
Combination(1)
TotalPercentage of total carrying value outstanding
Commercial mortgage loans$— $— $— $198,371 $198,371 1.01 %
Residential mortgage loans(2)
1,090 1,201 29,493 2,292 34,076 0.30 %
Consumer loans4,266 1,395 44,074 9,513 59,248 1.23 %
Total$5,356 $2,596 $73,567 $210,176 $291,695 
(1)Includes modifications involving deferral of amounts due, interest rate relief and/or maturity extension.
(2)Certain loans that were modified in the prior quarter have since been repaid in full.
All of the commercial mortgage loans that had a combination of modifications had both interest rate relief and maturity extensions. For these loans, the interest rate relief involved a change from a floating rate to a weighted average fixed rate of 4.0%. The maturity extensions for these loans added a weighted-average of 2.5 years to the life of the loans. In addition, one of the commercial mortgage loans that had a combination of modifications had forgiveness of a portion of the principal due. Global Atlantic has commitments to lend additional funds of $12.9 million for the modified commercial mortgage loans disclosed above.
The table below presents the performance status of the loans modified during the six months ended June 30, 2023.
Performance status as of June 30, 2023 by loan type
Current30-59 days past due60-89 days past due90 days or more past dueTotal
Commercial mortgage loans$164,824 $— $33,547 $— $198,371 
Residential mortgage loans22,860 757 6,394 4,065 34,076 
Consumer loans46,778 8,428 3,087 955 59,248 
Total$234,462 $9,185 $43,028 $5,020 $291,695 
Other investments
Other investments consist of the following:
June 30, 2023December 31, 2022
Investments in real estate(1)
$4,826,960 $4,641,429 
Investments in renewable energy(2)
2,288,584 3,427,062 
Investments in transportation and other leased assets(3)
2,876,274 2,821,602 
Other investment partnerships181,811 197,378 
Federal Home Loan Bank (FHLB) common stock and other investments280,215 287,185 
Total other investments$10,453,844 $11,374,656 
(1)Investments in real estate are held in consolidated investment companies that use fair value accounting.
(2)Net of accumulated depreciation attributed to consolidated renewable energy assets of $134.7 million and $229.7 million as of June 30, 2023 and December 31, 2022, respectively.
(3)Net of accumulated depreciation of $268.8 million and $230.2 million as of June 30, 2023 and December 31, 2022, respectively.

The total amount of other investments accounted for using the equity method of accounting was $1.1 billion as of both June 30, 2023 and December 31, 2022, respectively. Global Atlantic's maximum exposure to loss related to these equity method investments is limited to the carrying value of these investments plus unfunded commitments of $20.5 million and $21.0 million as of June 30, 2023 and December 31, 2022, respectively.
In addition, Global Atlantic has investments that would otherwise require the equity method of accounting for which the fair value option has been elected. The carrying amount of these investments was $216.0 million and $264.9 million as of June 30, 2023 and December 31, 2022, respectively.
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Repurchase agreement transactions
As of June 30, 2023 and December 31, 2022, Global Atlantic participated in repurchase agreements with a notional value of $814.1 million and $798.9 million, respectively. As collateral for these transactions, Global Atlantic may post AFS fixed maturity securities and residential mortgage loans, which are included in Insurance - Investments in the consolidated statements of financial condition. The gross obligation for repurchase agreements is reported in other liabilities in the consolidated statements of financial condition.
The carrying value of assets pledged for repurchase agreements by type of collateral and remaining contractual maturity of the repurchase agreements as of June 30, 2023 and December 31, 2022 is presented in the following tables:
As of June 30, 2023Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$— $525,024 $— $322,723 $847,747 
Residential mortgage loans— 10,889 — — 10,889 
Total borrowing$— $535,913 $— $322,723 $858,636 
As of December 31, 2022Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$— $— $507,656 $325,912 $833,568 
Total borrowing$— $— $507,656 $325,912 $833,568 
Other pledges and restrictions
Certain of Global Atlantic’s subsidiaries are members of regional banks in the FHLB system and such membership requires the members to own stock in these FHLBs. Global Atlantic owns an aggregate of $131 million and $129 million (accounted for at cost basis) of stock in FHLBs as of June 30, 2023 and December 31, 2022, respectively. In addition, Global Atlantic’s operating insurance subsidiaries have entered into funding agreements with the FHLB, which require that Global Atlantic pledge eligible assets, such as fixed maturity securities and mortgage loans, as collateral. Assets pledged as collateral for these funding agreements had a carrying value of $5.1 billion and $3.6 billion as of June 30, 2023 and December 31, 2022, respectively.
Insurance – statutory deposits
As of June 30, 2023 and December 31, 2022, the carrying value of the assets on deposit with various state and U.S. governmental authorities were $146.2 million and $142.7 million, respectively.

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9. DERIVATIVES
Asset Management
KKR and certain of its consolidated funds have entered into derivative transactions as part of their overall risk management for the asset management business and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include forward, swap and option contracts related to foreign currencies and interest rates to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized in Other Assets or Accrued Expenses and Other Liabilities and are presented on a gross basis in the consolidated statements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. KKR's derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. KKR attempts to reduce this risk by limiting its counterparties to major financial institutions with strong credit ratings.
Insurance
Global Atlantic holds derivative instruments that are primarily used in its hedge program. Global Atlantic has established a hedge program that seeks to mitigate economic impacts primarily from interest rate and equity price movements, while taking into consideration accounting and capital impacts.
Global Atlantic hedges interest rate and equity market risks associated with its insurance liabilities including fixed-indexed annuities, indexed universal life policies, variable annuity policies and variable universal life policies, among others. For fixed-indexed annuities and indexed universal life policies, Global Atlantic generally seeks to use static hedges to offset the exposure primarily created by changes in its embedded derivative balances. Global Atlantic generally purchases options which replicate the crediting rate strategies, often in the form of call spreads. Call spreads are the purchase of a call option matched by the sale of a different call option. For variable annuities and variable universal life policies, Global Atlantic generally seeks to dynamically hedge its exposure to changes in the value of the guarantee it provides to policyholders. Doing so requires the active trading of several financial instruments to respond to changes in market conditions. In addition, Global Atlantic enters into inflation swaps to manage inflation risk associated with inflation-indexed preneed policies.
In the context of specific reinsurance transactions in the institutional channel or acquisitions, Global Atlantic may also enter into hedges which are designed to limit short-term market risks to the economic value of the target assets. From time to time, Global Atlantic also enters into hedges designed to mitigate interest rate and credit risk in investment income, interest expense, and fair value of assets and liabilities. In addition, Global Atlantic enters into currency swaps and forwards to manage any foreign exchange rate risks that may arise from investments denominated in foreign currencies.
Global Atlantic attempts to mitigate the risk of loss due to ineffectiveness under these derivative investments through a regular monitoring process which evaluates the program’s effectiveness. Global Atlantic monitors its derivative activities by reviewing portfolio activities and risk levels. Global Atlantic also oversees all derivative transactions to ensure that the types of transactions entered into and the results obtained from those transactions are consistent with both Global Atlantic's risk management strategy and its policies and procedures.
The restricted cash which was held in connection with open derivative transactions with exchange brokers was $279.6 million and $278.7 million as of June 30, 2023 and December 31, 2022, respectively.
Global Atlantic also has embedded derivatives related to reinsurance contracts that are accounted for on a modified coinsurance and funds withheld basis. An embedded derivative exists because the arrangement exposes the reinsurer to third-party credit risk. These embedded derivatives are included in funds withheld receivable and payable at interest in the consolidated statements of financial condition.
Credit Risk
Global Atlantic may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Global Atlantic’s derivatives is limited to the positive fair value of derivatives less any collateral received from the counterparty.
Global Atlantic manages the credit risk on its derivatives by entering into derivative transactions with highly rated financial institutions and other creditworthy counterparties and, where feasible, by trading through central clearing counterparties. Global Atlantic further manages its credit risk on derivatives via the use of master netting agreements, which require the daily posting of collateral by the party in a liability position. Counterparty credit exposure and collateral values are monitored
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regularly and measured against counterparty exposure limits. The provisions of derivative transactions may allow for the termination and settlement of a transaction if there is a downgrade to Global Atlantic’s financial strength ratings below a specified level.
The fair value and notional value of the derivative assets and liabilities were as follows:
As of June 30, 2023Notional ValueDerivative
Assets		Derivative
Liabilities
Asset Management
Foreign Exchange Contracts and Options$17,599,590 $523,986 $303,777 
Other Derivatives503,362 8,093 2,590 
Total Asset Management$18,102,952 $532,079 $306,367 
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$8,676,000 $15,604 $699,007 
Foreign currency contracts2,216,666 27,434 55,199 
Total derivatives designated as hedge accounting instruments$10,892,666 $43,038 $754,206 
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$19,427,472 $188,044 $275,269 
Equity market contracts37,955,559 1,298,658 260,233 
Foreign currency contracts702,911 79,417 34,403 
Credit risk contracts60,000 — 762 
Total derivatives not designated as hedge accounting instruments$58,145,942 $1,566,119 $570,667 
Impact of netting(2)
$— $(572,346)$(572,346)
Total Insurance(1)
$69,038,608 $1,036,811 $752,527 
Fair value included within total assets and liabilities$87,141,560 $1,568,890 $1,058,894 
(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $(3.8) million and the fair value of these embedded derivatives related to liabilities was $172.4 million as of June 30, 2023.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.
As of December 31, 2022
Notional Value		Derivative
Assets		Derivative
Liabilities
Asset Management
Foreign Exchange Contracts and Options$16,144,795 $668,716 $406,746 
Other Derivatives125,000 7,519 11,018 
Total Asset Management$16,269,795 $676,235 $417,764 
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$6,999,000 $— $695,296 
Foreign currency contracts2,021,061 42,557 44,238 
Total derivatives designated as hedge accounting instruments$9,020,061 $42,557 $739,534 
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$8,700,253 $182,734 $267,033 
Equity market contracts34,889,122 626,391 91,344 
Foreign currency contracts675,390 84,883 47,442 
Credit risk contracts60,000 — 929 
Total derivatives not designated as hedge accounting instruments$44,324,765 $894,008 $406,748 
Impact of netting(2)
$— $(212,175)$(212,175)
Total Insurance(1)
$53,344,826 $724,390 $934,107 
Fair value included within total assets and liabilities$69,614,621 $1,400,625 $1,351,871 
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(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $12.8 million and the fair value of these embedded derivatives related to liabilities was $(1.3) billion as of December 31, 2022.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

Derivatives designated as accounting hedges
Where Global Atlantic has derivative instruments that are designated and qualify as accounting hedges, these derivative instruments receive hedge accounting.
Global Atlantic has designated foreign exchange forward purchase contracts ("FX forwards") to hedge the foreign currency risk associated with foreign currency-denominated bonds in fair value hedges. These foreign currency-denominated bonds are accounted for as AFS fixed maturity securities. Changes in the fair value of the hedged AFS fixed maturity securities due to changes in spot exchange rates are reclassified from AOCI to earnings, which offsets the earnings impact of the spot changes of the FX forwards, both of which are recognized within investment-related (losses) gains. The effectiveness of these hedges is assessed using the spot method. Changes in the fair value of the FX forwards related to changes in the spot-forward difference are excluded from the assessment of hedge effectiveness and are deferred in AOCI and recognized in earnings using a systematic and rational method over the life of the FX forwards.
Global Atlantic has designated interest rate swaps to hedge the interest rate risk associated with certain debt and policy liabilities. These fair value hedges qualify for the shortcut method of assessing hedge effectiveness.
The following table presents the financial statement classification, carrying amount and cumulative fair value hedging adjustments for qualifying hedged assets and liabilities:
As of June 30, 2023As of December 31, 2022
Carrying amount of hedged assets/(liabilities)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)(1)        
Carrying amount of hedged assets/(liabilities)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)(1)        
AFS fixed maturity securities(2)
$2,166,079 $56,037 $2,010,748 $(61,785)
Debt(1,575,234)(197,789)(945,873)(201,603)
Policy liabilities(6,123,575)(370,874)(5,670,884)(435,494)
(1)Includes $39.9 million and $53.1 million of hedging adjustments on discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.
(2)Carrying amount is the amortized cost for AFS debt securities.

Global Atlantic has designated bond forwards to hedge the interest rate risk associated with the planned purchase of AFS debt securities in cash flow hedges. These arrangements are hedging purchases from July 2023 through December 2027 and are expected to affect earnings until 2052. Regression analysis is used to assess the effectiveness of these hedges.
As of June 30, 2023 and December 31, 2022, there was a cumulative (loss) gain of $(132.6) million and $(169.8) million on the currently designated bond forwards recorded in accumulated other comprehensive loss, respectively. Amounts deferred in accumulated other comprehensive loss are reclassified to net investment income following the qualifying purchases of AFS securities, as an adjustment to the yield earned over the life of the purchased securities, using the effective interest method.
Global Atlantic estimates that the amount of gains/losses in accumulated other comprehensive loss to be reclassified into earnings in the next 12 months will not be material.

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Notes to Financial Statements (Continued)
Derivative results
The following table presents the financial statement classification and amount of gains (losses) recognized on derivative instruments and related hedged items, where applicable:
Three Months Ended June 30, 2023
Net investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $(85,895)$(40,492)$— 
Foreign currency contracts(19,512)— — — (6,397)
Total gains (losses) on derivatives designated as hedge instruments$(19,512)$— $(85,895)$(40,492)$(6,397)
Gains (losses) on hedged items:
Interest rate contracts$— $— $85,895 $40,492 $— 
Foreign currency contracts26,413 — — — — 
Total gains (losses) on hedged items$26,413 $— $85,895 $40,492 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$7,229 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness7,229 — — — — 
Total gains (losses) on fair value hedges, net of hedged items$14,130 $— $— $— $(6,397)
Cash flow hedges
Interest rate contracts$(269)$— $— $— $(20,702)
Total gains (losses) on cash flow hedges$(269)$— $— $— $(20,702)
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$(8,966)$— $— $— $— 
Other Derivatives7,651 — — — — 
Total included in Net Gains (Losses) from Investment Activities$(1,315)$— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$14,149 $— $— $— $— 
Embedded derivatives - funds withheld payable32,842 — — — — 
Equity index options230,602 — — — — 
Equity future contracts(48,383)— — — — 
Interest rate contracts and other contracts(164,765)— — — — 
Credit risk contracts(62)— — — — 
Total gains (losses) on derivatives not designated as hedge accounting instruments from Insurance Activities$64,383 $— $— $— $— 
Total$76,929 $— $— $— $(27,099)
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Notes to Financial Statements (Continued)
Six Months Ended June 30, 2023
Net investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $(51,338)$(20,388)$— 
Foreign currency contracts(54,900)— — — 2,883 
Total gains (losses) on derivatives designated as hedge instruments$(54,900)$— $(51,338)$(20,388)$2,883 
Gains (losses) on hedged items:
Interest rate contracts$— $— $51,338 $20,388 $— 
Foreign currency contracts56,037 — — — — 
Total gains (losses) on hedged items$56,037 $— $51,338 $20,388 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$14,055 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness14,055 — — — — 
Total gains (losses) on fair value hedges, net of hedged items$15,192 $— $— $— $2,883 
Cash flow hedges
Interest rate contracts$(537)$— $— $— $37,218 
Total gains (losses) on cash flow hedges$(537)$— $— $— $37,218 
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$(31,332)$— $— $— $— 
Other Derivatives19,859 — — — — 
Total included in Net Gains (Losses) from Investment Activities$(11,473)$— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$(16,618)$— $— $— $— 
Embedded derivatives - funds withheld payable(397,393)— — — — 
Equity index options314,489 — — — — 
Equity future contracts(89,208)— — — — 
Interest rate contracts and other contracts(95,769)— — — — 
Credit risk contracts(137)— — — — 
Total gains (losses) on derivatives not designated as hedge accounting instruments from Insurance Activities$(284,636)$— $— $— $— 
Total$(281,454)$— $— $— $40,101 
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Notes to Financial Statements (Continued)
Three Months Ended June 30, 2022
Net investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $(148,285)$(47,115)$— 
Foreign currency contracts77,686 — — — 331 
Total gains (losses) on derivatives designated as hedge instruments$77,686 $— $(148,285)$(47,115)$331 
Gains (losses) on hedged items:
Interest rate contracts$— $— $148,285 $47,115 $— 
Foreign currency contracts(60,535)— — — — 
Total gains (losses) on hedged items$(60,535)$— $148,285 $47,115 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$1,986 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness$1,986 $— $— $— $— 
Total gains (losses) on fair value hedges, net of hedged items$19,137 $— $— $— $331 
Cash flow hedges
Interest rate contracts$218 $— $— $— $(67,029)
Total gains (losses) on cash flow hedges$218 $— $— $— $(67,029)
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$279,882 $— $— $— $— 
Other Derivatives17,574 — — — — 
Total included in Net Gains (Losses) from Investment Activities$297,456 $— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$(33,361)$— $— $— $— 
Embedded derivatives - funds withheld payable1,363,700 — — — — 
Equity index options(504,859)— — — — 
Equity future contracts82,389 — — — — 
Interest rate contracts and other contracts(73,725)— — — — 
Credit risk contracts1,867 — — — — 
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$836,011 $— $— $— $— 
Total$1,152,822 $— $— $— $(66,698)
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Notes to Financial Statements (Continued)
Six Months Ended June 30, 2022
Net investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $(269,659)$(117,675)$— 
Foreign currency contracts118,428 — — — 18,649 
Total gains (losses) on derivatives designated as hedge instruments$118,428 $— $(269,659)$(117,675)$18,649 
Gains (losses) on hedged items:
Interest rate contracts$— $— $269,659 $117,675 $— 
Foreign currency contracts(96,467)— — — — 
Total gains (losses) on hedged items$(96,467)$— $269,659 $117,675 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$5,530 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness$5,530 $— $— $— $— 
Total gains (losses) on fair value hedges, net of hedged items$27,491 $— $— $— $18,649 
Cash flow hedges
Interest rate contracts$421 $— $— $— $(115,093)
Total gains (losses) on cash flow hedges$421 $— $— $— $(115,093)
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$223,765 $— $— $— $— 
Other Derivatives25,706 — — — — 
Total included in Net Gains (Losses) from Investment Activities$249,471 $— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$(67,341)$— $— $— $— 
Embedded derivatives - funds withheld payable2,544,135 — — — — 
Equity index options(728,225)— — — — 
Equity future contracts162,185 — — — — 
Interest rate contracts and other contracts(223,901)— — — — 
Credit risk contracts335 — — — — 
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$1,687,188 $— $— $— $— 
Total$1,964,571 $— $— $— $(96,444)


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Notes to Financial Statements (Continued)
Collateral
The amount of Global Atlantic's net derivative assets and liabilities after consideration of collateral received or pledged were as follows:
As of June 30, 2023Gross amount recognized
Gross amounts offset in the statements of financial position(1)
Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$1,609,157 $(572,346)$1,036,811 $(938,003)$98,808 
Derivative liabilities (excluding embedded derivatives)$1,324,873 $(572,346)$752,527 $565,957 $186,570 
(1)Represents netting of derivative exposures covered by qualifying master netting agreements.

As of December 31, 2022Gross amount recognized
Gross amounts offset in the statements of financial position(1)
Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$936,565 $(212,175)$724,390 $(466,371)$258,019 
Derivative liabilities (excluding embedded derivatives)$1,146,282 $(212,175)$934,107 $366,508 $567,599 
(1)Represents netting of derivative exposures covered by qualifying master netting agreements.
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Notes to Financial Statements (Continued)
10. FAIR VALUE MEASUREMENTS
The following tables summarize the valuation of assets and liabilities measured and reported at fair value by the fair value hierarchy. Investments classified as Equity Method - Other, for which the fair value option has not been elected, and Equity Method - Capital Allocation-Based Income have been excluded from the tables below.
Assets, at fair value:
 June 30, 2023
 Level ILevel IILevel IIITotal
Asset Management
Private Equity$1,224,878 $53,423 $28,606,221 $29,884,522 
Credit286,269 2,303,087 5,372,882 7,962,238 
Investments of Consolidated CFEs— 24,514,439 — 24,514,439 
Real Assets— 834,744 20,307,579 21,142,323 
Equity Method - Other406,958 172,449 1,695,170 2,274,577 
Other Investments240,539 80,941 3,670,330 3,991,810 
Total Investments$2,158,644 $27,959,083 $59,652,182 $89,769,909 
Foreign Exchange Contracts and Options— 523,986 — 523,986 
Other Derivatives158 7,935 — 8,093 
Total Assets at Fair Value - Asset Management$2,158,802 $28,491,004 $59,652,182 $90,301,988 
Insurance
AFS fixed maturity securities:
U.S. government and agencies$335,919 $86,762 $— $422,681 
U.S. state, municipal and political subdivisions— 4,383,838 — 4,383,838 
Corporate— 30,818,137 8,392,560 39,210,697 
Structured securities— 21,094,411 1,922,744 23,017,155 
Total AFS fixed maturity securities$335,919 $56,383,148 $10,315,304 $67,034,371 
Trading fixed maturity securities:
U.S. government and agencies$232,707 $62,291 $— $294,998 
U.S. state, municipal and political subdivisions— 468,522 — 468,522 
Corporate— 7,372,596 636,764 8,009,360 
Structured securities— 3,154,782 658,183 3,812,965 
Total trading fixed maturity securities$232,707 $11,058,191 $1,294,947 $12,585,845 
Equity securities3,907 — 15,695 19,602 
Mortgage and other loan receivables— — 768,276 768,276 
Other investments(1)
— — 5,016,427 5,016,427 
Funds withheld receivable at interest— — (3,833)(3,833)
Reinsurance recoverable— — 988,639 988,639 
Derivative assets:
Equity market contracts4,954 1,293,704 — 1,298,658 
Interest rate contracts9,211 194,437 — 203,648 
Foreign currency contracts— 106,851 — 106,851 
Impact of netting(2)
(41,186)(531,160)— (572,346)
Total derivative assets$(27,021)$1,063,832 $— $1,036,811 
Separate account assets4,182,437 — — 4,182,437 
Total Assets at Fair Value - Insurance$4,727,949 $68,505,171 $18,395,455 $91,628,575 
Total Assets at Fair Value$6,886,751 $96,996,175 $78,047,637 $181,930,563 
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Notes to Financial Statements (Continued)
 December 31, 2022
 Level ILevel IILevel IIITotal
Asset Management
Private Equity$1,057,025 $213,706 $25,336,957 $26,607,688 
Credit187,504 1,830,862 5,786,026 7,804,392 
Investments of Consolidated CFEs— 22,492,366 — 22,492,366 
Real Assets— 961,254 17,015,112 17,976,366 
Equity Method - Other435,315 883,652 1,624,420 2,943,387 
Other Investments395,972 63,060 3,334,366 3,793,398 
Total Investments$2,075,816 $26,444,900 $53,096,881 $81,617,597 
Foreign Exchange Contracts and Options— 668,716 — 668,716 
Other Derivatives9 7,510 — 7,519 
Total Assets at Fair Value - Asset Management$2,075,825 $27,121,126 $53,096,881 $82,293,832 
Insurance
AFS fixed maturity securities:
U.S. government and agencies$283,402 $83,339 $— $366,741 
U.S. state, municipal and political subdivisions— 4,410,960 — 4,410,960 
Corporate— 28,006,275 8,310,657 36,316,932 
Structured securities— 19,425,455 1,419,441 20,844,896 
Total AFS fixed maturity securities$283,402 $51,926,029 $9,730,098 $61,939,529 
Trading fixed maturity securities:
U.S. government and agencies$93,697 $59,940 $— $153,637 
U.S. state, municipal and political subdivisions— 705,836 — 705,836 
Corporate— 7,218,354 672,023 7,890,377 
Structured securities— 2,645,186 643,811 3,288,997 
Total trading fixed maturity securities$93,697 $10,629,316 $1,315,834 $12,038,847 
Equity securities2,213 — 16,286 18,499 
Mortgage and other loan receivables— — 787,515 787,515 
Other investments(1)
— — 4,883,441 4,883,441 
Funds withheld receivable at interest— — 12,785 12,785 
Reinsurance recoverable— — 981,775 981,775 
Derivative assets:
Equity market contracts31,025 595,366 — 626,391 
Interest rate contracts4,856 177,878 — 182,734 
Foreign currency contracts— 127,440 — 127,440 
Impact of netting(2)
(7,079)(205,096)— (212,175)
Total derivative assets$28,802 $695,588 $— $724,390 
Separate account assets4,130,794 — — 4,130,794 
Total Assets at Fair Value - Insurance$4,538,908 $63,250,933 $17,727,734 $85,517,575 
Total Assets at Fair Value$6,614,733 $90,372,059 $70,824,615 $167,811,407 
(1)Other investments excluded from the fair value hierarchy include certain real estate and private equity funds for which fair value is measured at net asset value per share as a practical expedient. As of June 30, 2023 and December 31, 2022, the fair value of these investments was $138.4 million and $148.9 million, respectively.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.
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Notes to Financial Statements (Continued)
Liabilities, at fair value:
 June 30, 2023
 Level ILevel IILevel IIITotal
Asset Management
Securities Sold Short$138,360 $— $— $138,360 
Foreign Exchange Contracts and Options— 303,780 — 303,780 
Unfunded Revolver Commitments— — 110,106 
(1)
110,106 
Other Derivatives — 2,590 — 2,590 
Debt Obligations of Consolidated CFEs— 24,261,260 — 24,261,260 
Total Liabilities at Fair Value - Asset Management$138,360 $24,567,630 $110,106 $24,816,096 
Insurance
Policy liabilities(3) (including market risk benefits)
$— $— $1,181,368 $1,181,368 
Closed block policy liabilities— — 1,026,339 1,026,339 
Funds withheld payable at interest— — (3,090,373)(3,090,373)
Derivative instruments payable:
Equity market contracts25,653 234,580 — 260,233 
Interest rate contracts15,533 958,743 — 974,276 
Foreign currency contracts— 89,602 — 89,602 
Credit contracts— 762 — 762 
Impact of netting(2)
(41,186)(531,160)— (572,346)
Total derivative instruments payable— 752,527 — 752,527 
Embedded derivative – interest-sensitive life products
— — 447,005 447,005 
Embedded derivative – annuity products— — 2,815,783 2,815,783 
Total Liabilities at Fair Value - Insurance$— $752,527 $2,380,122 $3,132,649 
Total Liabilities at Fair Value$138,360 $25,320,157 $2,490,228 $27,948,745 
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Notes to Financial Statements (Continued)
 December 31, 2022
 Level ILevel IILevel IIITotal
Asset Management
Securities Sold Short$158,751 $— $— $158,751 
Foreign Exchange Contracts and Options— 406,746 — 406,746 
Unfunded Revolver Commitments— — 137,315 
(1)
137,315 
Other Derivatives — 11,018 — 11,018 
Debt Obligations of Consolidated CFEs— 22,273,242 — 22,273,242 
Total Liabilities at Fair Value - Asset Management$158,751 $22,691,006 $137,315 $22,987,072 
Insurance
Policy liabilities(3) (including market risk benefits)
$— $— $1,063,496 $1,063,496 
Closed block policy liabilities— — 1,016,313 1,016,313 
Funds withheld payable at interest— — (3,487,766)(3,487,766)
Derivative instruments payable:
Equity market contracts2,692 88,652 — 91,344 
Interest rate contracts9,693 952,636 — 962,329 
Foreign currency contracts— 91,680 — 91,680 
Credit contracts— 929 — 929 
Impact of netting(2)
(7,079)(205,096)— (212,175)
Total derivative instruments payable5,306 928,801 — 934,107 
Embedded derivative – interest-sensitive life products
— — 337,860 337,860 
Embedded derivative – annuity products— — 1,851,381 1,851,381 
Total Liabilities at Fair Value - Insurance$5,306 $928,801 $781,284 $1,715,391 
Total Liabilities at Fair Value$164,057 $23,619,807 $918,599 $24,702,463 
(1)These unfunded revolver commitments are valued using the same valuation methodologies as KKR's Level III credit investments.
(2)Represents netting of derivative exposures covered by qualifying master netting agreement.
(3)Includes market risk benefit of $828.4 million and $682.0 million as of June 30, 2023 and December 31, 2022, respectively.












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Notes to Financial Statements (Continued)
The following tables summarize changes in assets and liabilities measured and reported at fair value for which Level III inputs have been used to determine fair value for the three and six months ended June 30, 2023 and 2022, respectively.
Three Months Ended June 30, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers
In		Transfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date Changes in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$26,189,501 $— $— $— $1,963,136 $453,584 $— $28,606,221 $520,098 $— 
Credit 5,902,578 — — — (541,887)12,191 — 5,372,882 58,128 — 
Real Assets18,946,851 (126,889)— — 1,554,061 (66,444)— 20,307,579 (58,048)— 
Equity Method - Other1,602,694 — — (2,335)2,856 91,955 — 1,695,170 92,549 — 
Other Investments3,738,446 — 22,777 — (76,145)(14,748)— 3,670,330 (10,374)— 
Other Derivatives— — — — — — — — — — 
  Total Assets - Asset Management$56,380,070 $(126,889)$22,777 $(2,335)$2,902,021 $476,538 $— $59,652,182 $602,353 $— 
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$8,294,423 $— $33,196 $— $48,066 $16,996 $(121)$8,392,560 $— $21,233 
Structured securities1,770,785 — 104,572 — 29,871 7,234 10,282 1,922,744 — 12,158 
Total AFS fixed maturity securities10,065,208 — 137,768 — 77,937 24,230 10,161 10,315,304 — 33,391 
Trading fixed maturity securities:
Corporate fixed maturity securities631,870 — — — 3,109 1,785 — 636,764 1,867 — 
Structured securities661,565 — 6,081 — (1,023)(8,440)— 658,183 (8,247)— 
Total trading fixed maturity securities1,293,435 — 6,081 — 2,086 (6,655)— 1,294,947 (6,380)— 
Equity securities15,311 — — — — 384 — 15,695 384 — 
Mortgage and other loan receivables773,917 — — — (16,306)10,665 — 768,276 11,178 — 
Other investments5,009,113 — — — 54,343 (47,029)— 5,016,427 (58,190)— 
Funds withheld receivable at interest(17,982)— — — — 14,149 — (3,833)— — 
Reinsurance recoverable1,010,602 — — — 64 (22,027)— 988,639 — — 
Total Assets - Insurance$18,149,604 $— $143,849 $— $118,124 $(26,283)$10,161 $18,395,455 $(53,008)$33,391 
Total$74,529,674 $(126,889)$166,626 $(2,335)$3,020,145 $450,255 $10,161 $78,047,637 $549,345 $33,391 
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Notes to Financial Statements (Continued)
Six Months Ended June 30, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers
In		Transfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$25,336,957 $— $— $— $2,896,563 $372,701 $— $28,606,221 $437,195 $— 
Credit5,786,026 — 17,628 (23,758)(465,555)58,541 — 5,372,882 102,197 — 
Real Assets17,015,112 (126,889)— — 3,769,101 (349,745)— 20,307,579 (346,687)— 
Equity Method - Other1,624,420 — — (2,335)8,500 64,585 — 1,695,170 69,192 — 
Other Investments3,334,366 — 22,777 (22,376)435,107 (99,544)— 3,670,330 (102,992)— 
Other Derivatives— — — — 2,153 (2,153)— — — — 
Total Assets - Asset Management$53,096,881 $(126,889)$40,405 $(48,469)$6,645,869 $44,385 $— $59,652,182 $158,905 $— 
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$8,310,657 $— $33,196 $— $(18,018)$38,261 $28,464 $8,392,560 $— $35,900 
Structured securities1,419,441 — 275,347 (3,374)184,854 3,095 43,381 1,922,744 — 45,225 
Total AFS fixed maturity securities9,730,098 — 308,543 (3,374)166,836 41,356 71,845 10,315,304 — 81,125 
Trading fixed maturity securities:
Corporate fixed maturity securities672,023 — — — (24,784)(10,475)— 636,764 (10,009)— 
Structured securities643,811 — 11,971 (6,747)12,994 (3,846)— 658,183 (2,959)— 
Total trading fixed maturity securities1,315,834 — 11,971 (6,747)(11,790)(14,321)— 1,294,947 (12,968)— 
Equity securities16,286 — — — — (591)— 15,695 (591)— 
Mortgage and other loan receivables787,515 — — — (26,866)7,627 — 768,276 5,434 — 
Other investments4,883,441 — — — 165,285 (32,299)— 5,016,427 (33,644)— 
Funds withheld receivable at interest12,785 — — — — (16,618)— (3,833)— — 
Reinsurance recoverable981,775 — — — (10,590)17,454 — 988,639 — — 
Total Assets - Insurance$17,727,734 $— $320,514 $(10,121)$282,875 $2,608 $71,845 $18,395,455 $(41,769)$81,125 
Total$70,824,615 $(126,889)$360,919 $(58,590)$6,928,744 $46,993 $71,845 $78,047,637 $117,136 $81,125 
61
Table of Contents
Notes to Financial Statements (Continued)
Three Months Ended June 30, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$23,999,016 $— $— $— $(2,632)$(1,077,663)$— $22,918,721 $(1,145,266)$— 
Credit5,314,853 — — (88,092)(174,627)(121,123)(3,099)4,927,912 (116,384)(3,099)
Real Assets13,292,123 — — — 2,085,875 573,743 — 15,951,741 313,218 — 
Equity Method - Other984,904 — — — 565,959 (76,506)— 1,474,357 (75,498)— 
Other Investments3,134,926 — — (347)16,343 (216,150)— 2,934,772 (200,055)— 
Other Derivatives705 — — — 44,423 (3,189)— 41,939 1,428 — 
Total Assets - Asset Management$46,726,527 $— $— $(88,439)$2,535,341 $(920,888)$(3,099)$48,249,442 $(1,222,557)$(3,099)
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$7,970,195 $— $— $(65,005)$357,033 $(64,510)$(154,644)$8,043,069 $— $(155,609)
Structured securities1,382,539 — — — (42,805)(5,945)(49,910)1,283,879 — (50,327)
Total AFS fixed maturity securities9,352,734 — — (65,005)314,228 (70,455)(204,554)9,326,948 — (205,936)
Trading fixed maturity securities:
Corporate fixed maturity securities705,685 — — (12,867)11,995 (37,798)— 667,015 (37,036)— 
Structured securities630,579 — 7,675 (3,475)(22,156)(32,923)— 579,700 (33,025)— 
Total trading fixed maturity securities1,336,264 — 7,675 (16,342)(10,161)(70,721)— 1,246,715 (70,061)— 
Equity securities32,937 — — — — (15,620)— 17,317 (15,620)— 
Mortgage and other loan receivables1,007,906 — — — (74,787)(27,456)— 905,663 (25,597)— 
Other investments3,620,186 — — — 367,172 23,748 — 4,011,106 28,655 — 
Funds withheld receivable at interest8,196 — — — — (33,362)— (25,166)— — 
Reinsurance recoverable1,231,957 — — — 1,273 (129,546)— 1,103,684 — — 
Total Assets - Insurance$16,590,180 $— $7,675 $(81,347)$597,725 $(323,412)$(204,554)$16,586,267 $(82,623)$(205,936)
Total$63,316,707 $— $7,675 $(169,786)$3,133,066 $(1,244,300)$(207,653)$64,835,709 $(1,305,180)$(209,035)
62
Table of Contents
Notes to Financial Statements (Continued)
Six Months Ended June 30, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$23,322,634 $— $— $(138,220)$678,160 $(943,853)$— $22,918,721 $(1,126,962)$— 
Credit5,826,661 — — (88,092)(558,468)(247,721)(4,468)4,927,912 (175,067)(4,468)
Real Assets11,389,530 — — — 3,094,516 1,467,695 — 15,951,741 1,177,804 — 
Equity Method - Other1,013,807 — — — 606,141 (145,591)— 1,474,357 (146,808)— 
Other Investments3,240,013 — — (347)(69,915)(234,979)— 2,934,772 (215,050)— 
Other Derivatives479 — — — 55,707 (14,247)— 41,939 (9,630)— 
Total Assets - Asset Management$44,793,124 $— $— $(226,659)$3,806,141 $(118,696)$(4,468)$48,249,442 $(495,713)$(4,468)
Insurance
AFS fixed maturity securities: 
Corporate fixed maturity securities$7,652,134 $— $— $(65,005)$748,638 $(64,710)$(227,988)$8,043,069 $— $(205,729)
Structured securities828,381 — 343,338 — 185,929 (9,354)(64,415)1,283,879 — (74,724)
Total AFS fixed maturity securities8,480,515 — 343,338 (65,005)934,567 (74,064)(292,403)9,326,948 — (280,453)
Trading fixed maturity securities:
Corporate fixed maturity securities565,354 — — (44,274)194,427 (48,492)— 667,015 (46,513)— 
Structured securities418,774 — 105,982 (25,220)122,047 (41,883)— 579,700 (43,126)— 
Total trading fixed maturity securities984,128 — 105,982 (69,494)316,474 (90,375)— 1,246,715 (89,639)— 
Equity securities32,937 — — — — (15,620)— 17,317 (15,620)— 
Mortgage and other loan receivables832,674 — — — 128,410 (55,421)— 905,663 (41,173)— 
Other investments1,603,345 — — — 2,287,652 120,109 — 4,011,106 93,603 — 
Funds withheld receivable at interest31,740 — — — 10,435 (67,341)— (25,166)— — 
Reinsurance recoverable1,293,791 — — — (13,102)(177,005)— 1,103,684 — — 
Total Assets - Insurance$13,259,130 $— $449,320 $(134,499)$3,664,436 $(359,717)$(292,403)$16,586,267 $(52,829)$(280,453)
Total$58,052,254 $— $449,320 $(361,158)$7,470,577 $(478,413)$(296,871)$64,835,709 $(548,542)$(284,921)
63
Table of Contents
Notes to Financial Statements (Continued)
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
PurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ SettlementsPurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management
Private Equity$1,966,888 $— $(3,752)$— $1,963,136 $2,922,825 $— $(26,262)$— $2,896,563 
Credit 296,290 — (824,088)(14,089)(541,887)737,023 — (1,103,069)(99,509)(465,555)
Real Assets1,965,000 — (410,939)— 1,554,061 4,256,691 — (486,551)(1,039)3,769,101 
Equity Method - Other3,651 — (795)— 2,856 10,123 — (1,623)— 8,500 
Other Investments83,402 — (123,520)(36,027)(76,145)675,579 — (139,536)(100,936)435,107 
Other Derivatives— — — — — 2,153 — — — 2,153 
  Total Assets - Asset Management$4,315,231 $— $(1,363,094)$(50,116)$2,902,021 $8,604,394 $— $(1,757,041)$(201,484)$6,645,869 
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$215,605 $— $(5,080)$(162,459)$48,066 $450,987 $— $(5,668)$(463,337)$(18,018)
Structured securities88,308 — — (58,437)29,871 265,127 — — (80,273)184,854 
Total AFS fixed maturity securities303,913 — (5,080)(220,896)77,937 716,114 — (5,668)(543,610)166,836 
Trading fixed maturity securities:
Corporate fixed maturity securities7,146 — — (4,037)3,109 14,863 — (1,000)(38,647)(24,784)
Structured securities12,787 — — (13,810)(1,023)37,437 — (694)(23,749)12,994 
Total trading fixed maturity securities19,933 — — (17,847)2,086 52,300 — (1,694)(62,396)(11,790)
Mortgage and other loan receivables257 — — (16,563)(16,306)634 — (3,078)(24,422)(26,866)
Other investments59,240 — (4,897)— 54,343 177,634 — (12,349)— 165,285 
Reinsurance recoverable— — — 64 64 — — — (10,590)(10,590)
Total Assets - Insurance$383,343 $— $(9,977)$(255,242)$118,124 $946,682 $— $(22,789)$(641,018)$282,875 
Total$4,698,574 $— $(1,373,071)$(305,358)$3,020,145 $9,551,076 $— $(1,779,830)$(842,502)$6,928,744 
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
PurchasesIssuancesSalesSettlementsNet Purchases/Issuances/Sales/SettlementsPurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management
Private Equity$152,355 $— $(154,987)$— $(2,632)$1,056,616 $— $(378,456)$— $678,160 
Credit 254,525 — (162,001)(267,151)(174,627)773,876 — (1,047,331)(285,013)(558,468)
Real Assets2,866,531 — (780,656)— 2,085,875 4,377,318 — (1,282,802)— 3,094,516 
Equity Method - Other570,347 — (4,388)— 565,959 612,166 — (6,025)— 606,141 
Other Investments67,684 — (51,341)— 16,343 229,560 — (299,475)— (69,915)
Other Derivatives44,423 — — — 44,423 55,707 — — — 55,707 
  Total Assets - Asset Management$3,955,865 $— $(1,153,373)$(267,151)$2,535,341 $7,105,243 $— $(3,014,089)$(285,013)$3,806,141 
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$672,049 $— $(70,112)$(244,904)$357,033 $1,596,721 $— $(128,504)$(719,579)$748,638 
Structured securities122,344 — — (165,149)(42,805)354,260 — — (168,331)185,929 
Total AFS fixed maturity securities794,393 — (70,112)(410,053)314,228 1,950,981 — (128,504)(887,910)934,567 
Trading fixed maturity securities:
Corporate fixed maturity securities29,638 — (601)(17,042)11,995 218,655 — (601)(23,627)194,427 
Structured securities40,541 — — (62,697)(22,156)195,794 — — (73,747)122,047 
Total trading fixed maturity securities70,179 — (601)(79,739)(10,161)414,449 — (601)(97,374)316,474 
Mortgage and other loan receivables13,053 — (7,302)(80,538)(74,787)233,278 — (7,302)(97,566)128,410 
Other investments641,557 — (274,385)— 367,172 2,562,037 — (274,385)— 2,287,652 
Funds withheld receivable at interest— — — — — — 10,435 — — 10,435 
Reinsurance recoverable— — — 1,273 1,273 — — — (13,102)(13,102)
Total Assets - Insurance$1,519,182 $— $(352,400)$(569,057)$597,725 $5,160,745 $10,435 $(410,792)$(1,095,952)$3,664,436 
Total$5,475,047 $— $(1,505,773)$(836,208)$3,133,066 $12,265,988 $10,435 $(3,424,881)$(1,380,965)$7,470,577 
64
Table of Contents
Notes to Financial Statements (Continued)
Three Months Ended June 30, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$112,534 $— $— $— $— $(2,428)$— $110,106 $(2,428)
Total Liabilities - Asset Management$112,534 $— $— $— $— $(2,428)$— $110,106 $(2,428)
Insurance
Policy liabilities$1,133,779 $— $— $— $(1,508)$(97,515)$146,612 $1,181,368 $— 
Closed block policy liabilities1,046,458 — — — (3,166)(16,297)(656)1,026,339 — 
Funds withheld payable at interest(3,057,531)— — — — (32,842)— (3,090,373)— 
Embedded derivative – interest-sensitive
life products		373,391 — — — 5,255 68,359 — 447,005 — 
Embedded derivative – annuity products2,402,427 — — — 200,486 212,870 — 2,815,783 — 
Total Liabilities - Insurance$1,898,524 $— $— $— $201,067 $134,575 $145,956 $2,380,122 $— 
Total$2,011,058 $— $— $— $201,067 $132,147 $145,956 $2,490,228 $(2,428)
65
Table of Contents
Notes to Financial Statements (Continued)
Six Months Ended June 30, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$137,315 $— $— $— $— $(27,209)$— $110,106 $(27,209)
Total Liabilities - Asset Management$137,315 $— $— $— $— $(27,209)$— $110,106 $(27,209)
Insurance
Policy liabilities$1,063,496 $— $— $— $(2,373)$25,648 $94,597 $1,181,368 $— 
Closed block policy liabilities1,016,313 — — — (9,028)20,961 (1,907)1,026,339 — 
Funds withheld payable at interest(3,487,766)— — — — 397,393 — (3,090,373)— 
Embedded derivative – interest-sensitive life products
337,860 — — — 2,307 106,838 — 447,005 — 
Embedded derivative – annuity products1,851,381 — — — 549,968 414,434 — 2,815,783 — 
Total Liabilities - Insurance$781,284 $— $— $— $540,874 $965,274 $92,690 $2,380,122 $— 
Total$918,599 $— $— $— $540,874 $938,065 $92,690 $2,490,228 $(27,209)
66
Table of Contents
Notes to Financial Statements (Continued)
Three Months Ended June 30, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$64,556 $— $— $— $(4,728)$35,970 $— $95,798 $35,970 
Total Liabilities - Asset Management$64,556 $— $— $— $(4,728)$35,970 $— $95,798 $35,970 
Insurance
Policy liabilities$1,583,528 $— $— $— $(1,708)$(211,039)$(125,378)$1,245,403 $— 
Closed block policy liabilities1,269,991 — — — 398 (136,356)1,876 1,135,909 — 
Funds withheld payable at interest(1,219,491)— — — — (1,363,700)— (2,583,191)— 
Embedded derivative – interest-sensitive
life products		512,015 — — — (2,199)(167,970)— 341,846 — 
Embedded derivative – annuity products1,713,227 — — — 167,929 (488,261)— 1,392,895 — 
Total Liabilities - Insurance$3,859,270 $— $— $— $164,420 $(2,367,326)$(123,502)$1,532,862 $— 
Total$3,923,826 $— $— $— $159,692 $(2,331,356)$(123,502)$1,628,660 $35,970 
67
Table of Contents
Notes to Financial Statements (Continued)
Six Months Ended June 30, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$64,276 $— $— $— $(4,728)$36,250 $— $95,798 $36,250 
Total Liabilities - Asset Management$64,276 $— $— $— $(4,728)$36,250 $— $95,798 $36,250 
Insurance
Policy liabilities$1,962,855 $— $— $— $39,996 $(459,470)$(297,978)$1,245,403 $— 
Closed block policy liabilities1,350,224 — — — (12,972)(207,079)5,736 1,135,909 — 
Funds withheld payable at interest(49,491)— — — 10,435 (2,544,135)— (2,583,191)— 
Embedded derivative – interest-sensitive life products
557,276 — — — 4,533 (219,963)— 341,846 — 
Embedded derivative – annuity products1,864,409 — — — 263,830 (735,344)— 1,392,895 — 
Total Liabilities - Insurance$5,685,273 $— $— $— $305,822 $(4,165,991)$(292,242)$1,532,862 $— 
Total$5,749,549 $— $— $— $301,094 $(4,129,741)$(292,242)$1,628,660 $36,250 
68
Table of Contents
Notes to Financial Statements (Continued)

Three Months Ended June 30, 2023Six Months Ended June 30, 2023
IssuancesSettlementsNet Issuances/SettlementsIssuancesSettlementsNet Issuances/Settlements
Liabilities
Asset Management
Unfunded Revolver Commitments$— $— $— $— $— $— 
Total Liabilities - Asset Management$— $— $— $— $— $— 
Insurance
Policy liabilities(48)(1,460)(1,508)$(93)$(2,280)$(2,373)
Closed block policy liabilities$— $(3,166)$(3,166)— (9,028)(9,028)
Embedded derivative – interest-sensitive life products
— 5,255 5,255 — 2,307 2,307 
Embedded derivative – annuity products223,713 (23,227)200,486 592,611 (42,643)549,968 
Total Liabilities - Insurance$223,665 $(22,598)$201,067 $592,518 $(51,644)$540,874 
Total$223,665 $(22,598)$201,067 $592,518 $(51,644)$540,874 
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
IssuancesSettlementsNet Issuances/SettlementsIssuancesSettlementsNet Issuances/Settlements
Liabilities
Asset Management
Unfunded Revolver Commitments$17,090 $(21,818)$(4,728)$17,090 $(21,818)$(4,728)
Total Liabilities - Asset Management$17,090 $(21,818)$(4,728)$17,090 $(21,818)$(4,728)
Insurance
Policy liabilities$56 $(1,764)$(1,708)$42,426 $(2,430)$39,996 
Closed block policy liabilities— 398 398 — (12,972)(12,972)
Funds withheld payable at interest— — — 10,435 — 10,435 
Embedded derivative – interest-sensitive life products
(2,144)(55)(2,199)4,664 (131)4,533 
Embedded derivative – annuity products170,352 (2,423)167,929 275,333 (11,503)263,830 
Total Liabilities - Insurance$168,264 $(3,844)$164,420 $332,858 $(27,036)$305,822 
Total$185,354 $(25,662)$159,692 $349,948 $(48,854)$301,094 
Total realized and unrealized gains and losses recorded for Asset Management - Level III assets and liabilities are reported in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations while Insurance - Level III assets and liabilities are reported in Net Investment Gains and Policy Benefits and Claims in the accompanying consolidated statements of operations.
The following table presents additional information about valuation methodologies and significant unobservable inputs used for financial assets and liabilities that are measured and reported at fair value and categorized within Level III as of June 30, 2023. Because input information includes only those items for which information is reasonably available, balances shown below may not equal total amounts reported for such Level III assets and liabilities:
Level III AssetsFair Value June 30, 2023Valuation
Methodologies
Unobservable Input(s) (1)
Weighted
Average (2)
Range
Impact to
 Valuation
from an
Increase in
Input (3)
ASSET MANAGEMENT      
Private Equity$28,606,221 
Private Equity$25,952,540 Inputs to market comparables, discounted cash flow and transaction price Illiquidity Discount6.2%
5.0% - 15.0%
 Decrease
 Weight Ascribed to Market Comparables27.9%
0.0% - 100.0%
 (4)
  Weight Ascribed to Discounted Cash Flow65.9%
0.0% - 100.0%
 (5)
  Weight Ascribed to Transaction Price6.2%
0.0% - 100.0%
 (6)
  Market comparablesEnterprise Value/LTM EBITDA Multiple19.0x
7.5x - 55.3x
 Increase
Enterprise Value/Forward EBITDA Multiple16.9x
5.0x - 31.2x
 Increase
  Discounted cash flowWeighted Average Cost of Capital9.9%
6.6% - 13.8%
 Decrease
  Enterprise Value/LTM EBITDA Exit Multiple14.5x
6.0x - 27.6x
 Increase
69
Table of Contents
Notes to Financial Statements (Continued)
Level III AssetsFair Value June 30, 2023Valuation
Methodologies
Unobservable Input(s) (1)
Weighted
Average (2)
Range
Impact to
 Valuation
from an
Increase in
Input (3)
Growth Equity$2,653,681 Inputs to market comparables, discounted cash flow and milestones Illiquidity Discount9.0%
5.0% - 15.0%
Decrease
Weight Ascribed to Market Comparables28.0%
0.0% - 100.0%
(4)
Weight Ascribed to Discounted Cash Flow5.3%
0.0% - 50.0%
(5)
Weight Ascribed to Milestones 66.7%
0.0% - 100.0%
(6)
Scenario WeightingBase76.7%
70.0% - 80.0%
Increase
Downside10.0%
10.0% - 10.0%
Decrease
Upside18.3%
10.0% - 25.0%
Increase
Credit $5,372,882 Yield AnalysisYield11.6%
8.5% - 21.1%
 Decrease
Net Leverage6.2x
0.3x - 13.8x
Decrease
EBITDA Multiple12.5x
0.2x - 31.0x
Increase
Real Assets$20,307,579       
Energy$1,561,688 Inputs to market comparables, discounted cash flow and transaction priceWeight Ascribed to Market Comparables42.5%
0.0% - 50.0%
(4)
Weight Ascribed to Discounted Cash Flow57.5%
50.0% - 100.0%
(5)
Weight Ascribed to Transaction Price—%
0.0% - 0.0%
(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple3.0x
3.0x - 3.0x
Increase
Enterprise Value/Forward EBITDA Multiple6.5x
4.1x- 7.4x
Increase
Discounted cash flowWeighted Average Cost of Capital12.0%
11.8% - 12.5%
 Decrease
Average Price Per BOE (8)$50.01
$44.91 - $55.11
Increase
Infrastructure
$10,406,642 Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount5.5%
5.0% - 10.0%
 Decrease
Weight Ascribed to Market Comparables1.5%
0.0% - 25.0%
(4)
Weight Ascribed to Discounted Cash Flow85.4%
0.0% - 100.0%
 (5)
Weight Ascribed to Transaction Price13.1%
0.0% - 100.0%
 (6)
Market comparablesEnterprise Value/LTM EBITDA Multiple10.7x
10.7x - 10.7x
Increase
Enterprise Value/Forward EBITDA Multiple14.5x
10.3x - 20.5x
Increase
Discounted cash flowWeighted Average Cost of Capital7.7%
5.1% - 10.1%
Decrease
Enterprise Value/LTM EBITDA Exit Multiple16.9x
10.0x - 22.0x
Increase
Real Estate$8,339,249 Inputs to direct income capitalization, discounted cash flow and transaction priceWeight Ascribed to Direct Income Capitalization22.1%
0.0% - 100.0%
 (7)
  Weight Ascribed to Discounted Cash Flow71.2%
0.0% - 100.0%
 (5)
Weight Ascribed to Transaction Price6.7%
0.0% - 100.0%
(6)
  Direct income capitalizationCurrent Capitalization Rate5.3%
2.0% - 8.4%
 Decrease
  Discounted cash flowUnlevered Discount Rate7.0%
2.6% - 18.0%
 Decrease
Equity Method - Other$1,695,170 Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount6.6%
5.0% - 10.0%
 Decrease
Weight Ascribed to Market Comparables47.1%
0.0% - 100.0%
 (4)
  Weight Ascribed to Discounted Cash Flow37.2%
0.0% - 50.0%
 (5)
  Weight Ascribed to Transaction Price15.7%
0.0% - 100.0%
 (6)
  Market comparablesEnterprise Value/LTM EBITDA Multiple14.1x
3.0x - 20.4x
 Increase
Enterprise Value/Forward EBITDA Multiple11.2x
4.1x - 18.8x
 Increase
  Discounted cash flowWeighted Average Cost of Capital10.4%
7.0% - 15.5%
 Decrease
  Enterprise Value/LTM EBITDA Exit Multiple11.0x
9.5x - 15.0x
 Increase
Other Investments$3,670,330 (9)Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount8.4%
5.0% - 15.0%
 Decrease
Weight Ascribed to Market Comparables15.1%
0.0% - 100.0%
 (4)
Weight Ascribed to Discounted Cash Flow48.3%
0.0% - 100.0%
 (5)
Weight Ascribed to Transaction Price36.6%
0.0% - 100.0%
 (6)
Market comparablesEnterprise Value/LTM EBITDA Multiple10.1x
5.8x - 22.0x
 Increase
Enterprise Value/Forward EBITDA Multiple9.8x
0.0x - 19.1x
 Increase
Discounted cash flowWeighted Average Cost of Capital11.0%
9.3% - 25.0%
 Decrease
Enterprise Value/LTM EBITDA Exit Multiple12.2x
8.5x - 15.0x
 Increase
70
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Notes to Financial Statements (Continued)
Level III AssetsFair Value June 30, 2023Valuation
Methodologies
Unobservable Input(s) (1)
Weighted
Average (2)
Range
Impact to
 Valuation
from an
Increase in
Input (3)
INSURANCE
Corporate fixed maturity securities$1,342,594 Discounted cash flowDiscount Spread3.75%
1.35% - 5.93%
Decrease
Structured securities$89,461 Discounted cash flowDiscount Spread3.78%
3.30% - 6.63%
Decrease
Constant Prepayment Rate6.90%
5.00% - 15.00%
Increase/Decrease
Constant Default Rate1.18%
1.00% - 2.50%
Decrease
Loss Severity
100%
Decrease
Other investments$4,825,147 (10)Discounted cash flowVacancy rate2.70%
0.00% - 5.00%
Decrease
Discount rate7.42%
6.00% - 7.67%
Decrease
Terminal capitalization rate5.95%
4.75% - 6.65%
Decrease
Funds withheld receivable at interest$(3,833)Discounted cash flowDuration/Weighted Average Life8.19 years
0.0 years - 19.4 years
Increase
Contractholder Persistency6.75%
3.30% - 16.80%
Increase
Instrument-specific credit risk1.21%
0.75% - 1.30%
Decrease
Reinsurance recoverable$988,639 Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.3
The average expense assumption is between $8.23 and $78.00 per policy, increased by inflation. The annual inflation rate was increased by 2.50%.
Increase
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense risk margin
9.42%
Decrease
Cost of capital9.8%
3.69% - 13.85%
Increase
Discounted cash flowMortality Rate
5.52%
Increase
Surrender Rate
2.00%
Increase
(1)In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. KKR has determined that market participants would take these inputs into account when valuing the investments and debt obligations. "LTM" means last twelve months, and "EBITDA" means earnings before interest, taxes, depreciation and amortization.
(2)Inputs were weighted based on the fair value of the investments included in the range.
(3)Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.
(4)The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach and transaction price. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach and transaction price.
(5)The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach, transaction price and direct income capitalization approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach, transaction price and direct income capitalization approach.
(6)The directional change from an increase in the weight ascribed to the transaction price or milestones would increase the fair value of the Level III investments if the transaction price or milestones results in a higher valuation than the market comparables and discounted cash flow approach. The opposite would be true if the transaction price or milestones results in a lower valuation than the market comparables approach and discounted cash flow approach.
(7)The directional change from an increase in the weight ascribed to the direct income capitalization approach would increase the fair value of the Level III investments if the direct income capitalization approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the direct income capitalization approach results in a lower valuation than the discounted cash flow approach.
71
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Notes to Financial Statements (Continued)
(8)The total energy fair value amount includes multiple investments (in multiple locations throughout North America) that are held in different investment funds and produce varying quantities of oil, condensate, natural gas liquids, and natural gas. Commodity price may be measured using a common volumetric equivalent where one barrel of oil equivalent ("BOE") is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for the various investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 88% liquids and 12% natural gas.
(9)Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets, credit, equity method - other or investments of consolidated CFEs.
(10)For CRE currently in lease, this assumption is applicable to terminal value calculations only once current lease term ends.
Level III LiabilitiesFair Value June 30, 2023Valuation
Methodologies
Unobservable Input(s) (1)
Weighted
Average (2)
Range
Impact to
 Valuation
from an
Increase in
Input (3)
ASSET MANAGEMENT
Unfunded Revolver Commitments$110,106 Yield AnalysisYield12.7%
9.2% - 23.0%
Decrease
INSURANCE
Policy liabilities
$1,181,368 Policy liabilities under fair value option:
Present value of best estimate liability cash flows. Unobservable inputs include a market participant view of the risk margin included in the discount rate which reflects the variability of the cash flows.Risk Margin Rate1.12%
0.75% - 1.60%
Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender and mortality.Surrender Rate6.16%
3.47% - 7.14%
Decrease
Mortality Rate4.46%
3.50% - 9.09%
Increase
Market risk benefit:
Fair value using a non-option and option valuation approach
Interest rates (10 and 30 year Treasury)
3.81% / 3.85%
Decrease
Instrument-specific credit risk (10 and 30 year)
1.18% / 1.30%
Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender, and mortality.Mortality Rate2.10%
0.70% - 22.20%
Increase
Lapse Rate3.20%
0.40% - 44.80%
Increase
Closed block policy liabilities$1,026,339 Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.3
The average expense assumption is between $8.23 and $78.00 per policy, increased by inflation. The annual inflation rate was increased by 2.50%.
Increase
Instrument-specific credit risk1.21%
0.75% - 1.30%
Decrease
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense Risk Margin
9.42%
Decrease
Cost of Capital9.8%
3.69% - 13.85%
Increase
Discounted cash flowMortality Rate
5.52%
Increase
Surrender Rate
2.00%
Increase
72
Table of Contents
Notes to Financial Statements (Continued)
Level III LiabilitiesFair Value June 30, 2023Valuation
Methodologies
Unobservable Input(s) (1)
Weighted
Average (2)
Range
Impact to
 Valuation
from an
Increase in
Input (3)
Funds withheld payable at interest$(3,090,373)Discounted cash flowDuration/Weighted Average Life8.14
0.0 years - 16.74 years
Decrease
Contractholder Persistency 6.75%
3.30% - 16.80%
Decrease
Instrument-specific credit risk1.21%
0.75% - 1.30%
Decrease
Embedded derivative – interest-sensitive life products
$447,005 Policy persistency is a significant unobservable input.Lapse Rate
3.40%
Decrease
Mortality Rate
0.77%
Decrease
Future costs for options used to hedge the contract obligationsOption Budge Assumption
3.67%
Increase
Instrument-specific credit risk1.21%
0.75% - 1.30%
Decrease
Embedded derivative – annuity products$2,815,783 Policyholder behavior is a significant unobservable input, including utilization and lapse.Utilization:
Fixed-indexed annuity3.41%Decrease
Surrender Rate:
Retail FIA11.60%Decrease
Institutional FIA16.42%Decrease
Mortality Rate:
Retail FIA2.14%Decrease
Institutional FIA1.94%Decrease
Future costs for options used to hedge the contract obligationsOption Budge Assumption:
Retail RIA2.26%Increase
Institutional FIA2.86%Increase
Instrument-specific credit risk1.21%
0.75% - 1.30%
Decrease
(1)In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. KKR has determined that market participants would take these inputs into account when valuing the investments and debt obligations. "LTM" means last twelve months, and "EBITDA" means earnings before interest, taxes, depreciation and amortization.
(2)Inputs were weighted based on the fair value of the investments included in the range.
(3)Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.

In the table above, certain private equity investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value. In addition, certain valuations of private equity investments may be entirely or partially derived by reference to observable valuation measures for a pending or consummated transaction.
The various unobservable inputs used to determine the Level III valuations may have similar or diverging impacts on valuation. Significant increases and decreases in these inputs in isolation and interrelationships between those inputs could result in significantly higher or lower fair value measurements as noted in the table above.
Financial Instruments Not Carried At Fair Value
Asset management financial instruments are primarily measured at fair value on a recurring basis, except as disclosed in Note 17 "Debt Obligations."
73
Table of Contents
Notes to Financial Statements (Continued)
The following tables present carrying amounts and fair values of Global Atlantic’s financial instruments which are not carried at fair value as of June 30, 2023 and December 31, 2022:
Fair Value Hierarchy
As of June 30, 2023Carrying ValueLevel ILevel IILevel IIIFair Value
($ in thousands)
Financial assets:
Insurance
Mortgage and other loan receivables$35,139,287 $— $— $32,522,375 $32,522,375 
Policy loans871,422 — — 789,120 789,120 
FHLB common stock and other investments169,212 — — 169,212 169,212 
Funds withheld receivables at interest2,731,150 — 2,731,150 — 2,731,150 
Cash and cash equivalents4,421,172 4,421,172 — — 4,421,172 
Restricted cash and cash equivalents339,618 339,618 — — 339,618 
Total financial assets$43,671,861 $4,760,790 $2,731,150 $33,480,707 $40,972,647 
Financial liabilities:
Insurance
Policy liabilities - policyholder account balances$49,200,459 $— $39,869,529 $7,434,641 $47,304,170 
Funds withheld payables at interest26,342,130 — 26,342,130 — 26,342,130 
Debt obligations2,356,162 — — 1,905,137 1,905,137 
Securities sold under agreements to repurchase820,242 — 820,242 — 820,242 
Total financial liabilities$78,718,993 $— $67,031,901 $9,339,778 $76,371,679 
Fair Value Hierarchy
As of December 31, 2022Carrying ValueLevel ILevel IILevel IIIFair Value
($ in thousands)
Financial assets:
Insurance
Mortgage and other loan receivables$34,303,183 $— $— $31,256,107 $31,256,107 
Policy loans868,911 — — 789,726 789,726 
FHLB common stock and other investments163,289 — — 163,289 163,289 
Funds withheld receivables at interest2,855,251 — 2,855,251 — 2,855,251 
Cash and cash equivalents6,118,231 6,118,231 — — 6,118,231 
Restricted cash and cash equivalents308,383 308,383 — — 308,383 
Total financial assets$44,617,248 $6,426,614 $2,855,251 $32,209,122 $41,490,987 
Financial liabilities:
Insurance
Policy liabilities - policyholder account balances$48,403,949 $— $38,328,025 $7,383,537 $45,711,562 
Funds withheld payables at interest26,227,183 — 26,227,183 — 26,227,183 
Debt obligations2,128,166 — — 1,698,526 1,698,526 
Securities sold under agreements to repurchase805,316 — 805,316 — 805,316 
Total financial liabilities$77,564,614 $— $65,360,524 $9,082,063 $74,442,587 
74
Table of Contents
Notes to Financial Statements (Continued)
11. FAIR VALUE OPTION
The following table summarizes the financial instruments for which the fair value option has been elected:
 June 30, 2023December 31, 2022
Assets
Asset Management
Credit$719,441 $1,121,775 
Investments of Consolidated CFEs24,514,439 22,492,366 
Real Assets57,821 202,153 
Equity Method - Other2,274,577 2,943,387 
Other Investments101,788 88,046 
  Total Asset Management$27,668,066 $26,847,727 
Insurance
Mortgage and other loan receivables$768,276 $787,515 
Other investments278,861 335,168 
Reinsurance recoverable988,639 981,775 
  Total Insurance$2,035,776 $2,104,458 
     Total Assets$29,703,842 $28,952,185 
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$24,261,260 $22,273,242 
  Total Asset Management$24,261,260 $22,273,242 
Insurance
Policy liabilities$1,379,342 $1,410,951 
  Total Insurance$1,379,342 $1,410,951 
     Total Liabilities$25,640,602 $23,684,193 
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Notes to Financial Statements (Continued)
The following table presents the net realized and unrealized gains (losses) on financial instruments for which the fair value option was elected:
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
 Net Realized
Gains (Losses)		Net Unrealized
Gains (Losses)		TotalNet Realized
Gains (Losses)		Net Unrealized Gains (Losses)Total
Assets
Asset Management
Credit$(52,593)$63,266 $10,673 $(24,442)$83 $(24,359)
Investments of Consolidated CFEs(44,865)251,101 206,236 205 (1,474,681)(1,474,476)
Real Assets51,637 (48,294)3,343 — (470)(470)
Equity Method - Other14,061 59,443 73,504 18,514 (125,423)(106,909)
Other Investments(75)(4,239)(4,314)(186)1,136 950 
   Total Asset Management$(31,835)$321,277 $289,442 $(5,909)$(1,599,355)$(1,605,264)
Insurance
Mortgage and other loan receivables$— $12,540 $12,540 $— $(26,780)$(26,780)
Other investments— (8,649)(8,649)— 10,094 10,094 
   Total Insurance$— $3,891 $3,891 $— $(16,686)$(16,686)
Total Assets$(31,835)$325,168 $293,333 $(5,909)$(1,616,041)$(1,621,950)
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$— $(258,665)$(258,665)$— $1,329,624 $1,329,624 
   Total Asset Management$— $(258,665)$(258,665)$— $1,329,624 $1,329,624 
Insurance
Policy liabilities$— $(1,265)$(1,265)$— $6,473 $6,473 
   Total Insurance$— $(1,265)$(1,265)$— $6,473 $6,473 
Total Liabilities$— $(259,930)$(259,930)$— $1,336,097 $1,336,097 
Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Net Realized
Gains (Losses)		Net Unrealized
Gains (Losses)		TotalNet Realized
Gains (Losses)		Net Unrealized
Gains (Losses)		Total
Assets
Asset Management
Credit$(60,346)$56,295 $(4,051)$(61,957)$(15,751)$(77,708)
Investments of Consolidated CFEs(49,882)568,982 519,100 3,154 (1,744,229)(1,741,075)
Real Assets51,637 (56,597)(4,960)85 24,215 24,300 
Equity Method - Other47,367 (16,300)31,067 2,181 (170,891)(168,710)
Other Investments1,561 (1,761)(200)6,122 (6,549)(427)
   Total Asset Management$(9,663)$550,619 $540,956 $(50,415)$(1,913,205)$(1,963,620)
Insurance
Mortgage and other loan receivables$— $6,196 $6,196 $— $(53,795)$(53,795)
Other investments— (55,641)(55,641)— 37,831 37,831 
   Total Insurance$— $(49,445)$(49,445)$— $(15,964)$(15,964)
Total Assets$(9,663)$501,174 $491,511 $(50,415)$(1,929,169)$(1,979,584)
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$— $(635,153)$(635,153)$(785)$1,555,682 $1,554,897 
   Total Asset Management$— $(635,153)$(635,153)$(785)$1,555,682 $1,554,897 
Insurance
Policy liabilities$— $(671)$(671)$— $9,465 $9,465 
   Total Insurance$— $(671)$(671)$— $9,465 $9,465 
Total Liabilities$— $(635,824)$(635,824)$(785)$1,565,147 $1,564,362 
76
Table of Contents
Notes to Financial Statements (Continued)
12. INSURANCE INTANGIBLES, UNEARNED REVENUE RESERVES AND UNEARNED FRONT-END LOADS
The following reflects the reconciliation of the components of insurance intangibles to the total balance reported in the consolidated statements of financial condition as of June 30, 2023 and December 31, 2022:
June 30,December 31,
20232022
Deferred acquisition costs$973,471 $820,970 
Value of business acquired1,270,894 1,316,529 
Cost-of-reinsurance assets192,268 193,995 
Total insurance intangibles$2,436,633 $2,331,494 
Deferred acquisition costs
The following tables reflect the deferred acquisition costs roll-forward by product category for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$221,679 $367,813 $116,021 $115,457 $820,970 
Capitalizations79,572 88,945 16,396 34,544 219,457 
Amortization expense(29,119)(27,531)(3,270)(7,036)(66,956)
Balance, as of the end of the period$272,132 $429,227 $129,147 $142,965 $973,471 

Six Months Ended June 30, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$107,104 $179,449 $54,298 $56,730 $397,581 
Capitalizations66,696 108,465 37,326 38,891 251,378 
Amortization expense(11,260)(12,547)(3,078)(4,700)(31,585)
Balance, as of the end of the period$162,540 $275,367 $88,546 $90,921 $617,374 

Value of business acquired
The following tables reflect the value of business acquired, or “VOBA” asset roll-forward by product category for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$48,762 $663,296 $276,795 $241,778 $85,898 $1,316,529 
Amortization expense(1,937)(20,595)(6,785)(12,649)(3,669)(45,635)
Balance, as of the end of the period$46,825 $642,701 $270,010 $229,129 $82,229 $1,270,894 

Six Months Ended June 30, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$52,723 $709,271 $292,323 $269,172 $94,479 $1,417,968 
Amortization expense(1,994)(24,837)(7,855)(14,583)(4,750)(54,019)
Balance, as of the end of the period$50,729 $684,434 $284,468 $254,589 $89,729 $1,363,949 
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The following tables reflect the negative value of business acquired, or “negative VOBA” liability roll-forward by product category for the six months ended June 30, 2023 and 2022:
Six Months Ended June 30, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$98,342 $145,610 $461,592 $99,776 $198,804 $1,004,124 
Amortization expense(16,799)(19,828)(17,857)(4,801)(8,909)(68,194)
Balance, as of the end of the period$81,543 $125,782 $443,735 $94,975 $189,895 $935,930 

Six Months Ended June 30, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$136,227 $184,664 $500,264 $109,826 $211,296 $1,142,277 
Amortization expense(19,458)(18,979)(22,561)(5,042)(7,411)(73,451)
Balance, as of the end of the period$116,769 $165,685 $477,703 $104,784 $203,885 $1,068,826 

Estimated future amortization of VOBA and Negative VOBA as of June 30, 2023 is as follows:
YearsVOBANegative VOBATotal, net
Remainder of 2023$44,172 $(60,804)$(16,632)
202484,351 (102,610)(18,259)
202579,042 (83,881)(4,839)
202674,671 (69,403)5,268 
202770,129 (59,433)10,696 
202866,302 (51,659)14,643 
2029 and thereafter852,227 (508,140)344,087 
Total$1,270,894 $(935,930)$334,964 
Unearned revenue reserves and unearned front-end loads
Six Months Ended June 30,
20232022
Preneed
Balance, as of the beginning of the period
$118,186 $55,510 
Deferral36,360 34,753 
Amortized to income during the year(5,341)(2,745)
Balance, as of the end of the period$149,205 $87,518 
Significant inputs, judgments, assumptions for DAC and related amortization amounts
Global Atlantic considers surrender rates, mortality rates, and other relevant policy decrements in determining the expected life of the contract. As a part of Global Atlantic's actual experience update for the six months ended June 30, 2023 and 2022, Global Atlantic observed that there was no significant change in relevant inputs, judgments, or assumptions requiring an update of the amortization rate for DAC and related amortization amounts.
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13. REINSURANCE
Global Atlantic maintains a number of reinsurance treaties with third parties whereby Global Atlantic assumes annuity and life policies on a coinsurance, modified coinsurance or funds withheld basis. Global Atlantic also maintains other reinsurance treaties including the cession of certain annuity, life and health policies.
The effects of all reinsurance agreements on the consolidated statements of financial condition were as follows:
June 30, 2023December 31, 2022
Policy liabilities:
Direct$73,377,623 $71,833,991 
Assumed68,051,592 65,946,938 
Total policy liabilities141,429,215 137,780,929 
Ceded(1)
(25,932,785)(25,755,283)
Net policy liabilities$115,496,430 $112,025,646 
(1)Reported within reinsurance recoverable within the consolidated statements of financial condition.

A key credit quality indicator is a counterparty’s A.M. Best financial strength rating. A.M. Best ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. Global Atlantic mitigates counterparty credit risk by requiring collateral and credit enhancements in various forms including engaging in funds withheld at interest and modified coinsurance transactions. The following shows the amortized cost basis of Global Atlantic’s reinsurance recoverable and funds withheld receivable at interest by credit quality indicator and any associated credit enhancements Global Atlantic has obtained to mitigate counterparty credit risk:
As of June 30, 2023 As of December 31, 2022
A.M. Best Rating(1)
Reinsurance recoverable and funds withheld receivable at interest(2)
Credit enhancements(3)
Net reinsurance credit exposure(4)
Reinsurance recoverable and funds withheld receivable at interest(2)
Credit enhancements(3)
Net reinsurance credit exposure(4)
A++$42,611 $— $42,611 $62,674 $— $62,674 
A+1,787,555 — 1,787,555 1,849,918 — 1,849,918 
A2,292,139 — 2,292,139 2,491,461 — 2,491,461 
A-4,570,737 3,960,510 610,227 5,397,767 4,197,739 1,200,028 
B++31,106 — 31,106 37,939 — 37,939 
B+— — — — — — 
B— — — — — — 
B-— — — (221)— — 
C++/C+(227)— — — — — 
Not rated or private rating(5)
20,142,442 19,291,247 851,195 20,994,058 18,541,678 2,452,380 
Total$28,866,363 $23,251,757 $5,614,833 $30,833,596 $22,739,417 $8,094,400 
(1)Ratings are periodically updated (at least annually) as A.M. Best issues new ratings.
(2)At amortized cost, excluding any associated embedded derivative assets and liabilities.
(3)Includes funds withheld payable at interest and deferred intangible reinsurance assets and liabilities.
(4)Includes credit loss allowance of $21.0 million and $41.2 million as of June 30, 2023 and December 31, 2022, respectively, held against reinsurance recoverable.
(5)Includes $20.1 billion and $21.0 billion as of June 30, 2023 and December 31, 2022, respectively, associated with cessions to co-investment vehicles (the "Ivy Vehicles") that participate in qualifying reinsurance transactions sourced by Global Atlantic.

As of June 30, 2023 and December 31, 2022, Global Atlantic had $2.7 billion and $2.9 billion of funds withheld receivable at interest, respectively, with six counterparties related to modified coinsurance and funds withheld contracts. The assets supporting these receivables were held in trusts and not part of the respective counterparty’s general accounts.
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The effects of reinsurance on the consolidated statements of operations were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net premiums:
Direct$33,255 $28,033 $65,908 $64,606 
Assumed1,135,174 302,359 1,753,904 703,874 
Ceded(542,000)(555,894)(719,759)(621,838)
Net premiums$626,429 $(225,502)$1,100,053 $146,642 
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Policy fees:
Direct$229,043 $238,167 $456,900 $474,504 
Assumed105,673 91,737 210,262 169,515 
Ceded(19,334)(10,874)(37,978)(11,207)
Net policy fees$315,382 $319,030 $629,184 $632,812 
.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net policy benefits and claims:
Direct$785,168 $(220,399)$1,733,287 $(215,937)
Assumed1,583,542 434,425 2,600,478 1,034,644 
Ceded(632,696)(470,205)(1,070,697)(561,708)
Net policy benefits and claims$1,736,014 $(256,179)$3,263,068 $256,999 
Global Atlantic holds collateral for and provides collateral to its reinsurance clients. Global Atlantic held $26.2 billion and $26.1 billion of collateral in the form of funds withheld payable on behalf of its reinsurers as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, reinsurers held collateral of $1.2 billion and $1.3 billion on behalf of Global Atlantic, respectively. A significant portion of the collateral that Global Atlantic provides to its reinsurance clients is provided in the form of assets held in a trust for the benefit of the counterparty. As of June 30, 2023 and December 31, 2022, these trusts held in excess of the $68.1 billion and $65.8 billion of assets it is required to hold in order to support reserves of $64.6 billion and $62.4 billion, respectively. Of the cash held in trust, Global Atlantic classified $62.8 million and $31.3 million as restricted as of June 30, 2023 and December 31, 2022, respectively.
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14. NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. INC. PER SHARE OF COMMON STOCK
For the three and six months ended June 30, 2023 and 2022, basic and diluted Net Income (Loss) attributable to KKR & Co. Inc. per share of common stock were calculated as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Net Income (Loss) Available to KKR & Co. Inc.
Common Stockholders - Basic		$844,463$(734,625)$1,167,207$(744,411)
(+) Series C Mandatory Convertible Preferred Dividend (if dilutive) (1)
17,249—34,499— 
Net Income (Loss) Available to KKR & Co. Inc.
Common Stockholders - Diluted		$861,712$(734,625)$1,201,706$(744,411)
Basic Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic861,553,274 680,747,047 861,332,121 636,719,538 
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock - Basic		$0.98 $(1.08)$1.36 $(1.17)
Diluted Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic861,553,274 680,747,047 861,332,121 636,719,538 
Incremental Common Shares:
Assumed vesting of dilutive equity awards (2)
23,699,808 — 24,877,562 — 
Assumed conversion of Series C Mandatory Convertible Preferred Stock (1)
26,894,799 — 26,858,884 — 
Weighted Average Shares of Common Stock Outstanding - Diluted912,147,881 680,747,047 913,068,567 636,719,538 
Net Income (Loss) Attributable to KKR & Co. Inc.
Per Share of Common Stock - Diluted		$0.94 $(1.08)$1.32 $(1.17)
(1)For the three and six months ended June 30, 2022, the impact of Series C Mandatory Convertible Preferred Stock calculated under the if-converted method was anti-dilutive, and as such (i) shares of common stock (assuming a conversion ratio based on the average volume weighted average price per share of common stock over each reporting period) were not included in the Weighted Average Shares of Common Stock Outstanding - Diluted and (ii) Series C Mandatory Convertible Preferred dividends were not added back to Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Diluted.
(2)For the three and six months ended June 30, 2023, Weighted Average Shares of Common Stock Outstanding – Diluted includes unvested equity awards, including certain equity awards that have met their market price-based vesting condition but have not satisfied their service-based vesting condition, which have been granted under the Equity Incentive Plans. Vesting of these equity awards dilute equity holders of KKR Group Partnership, including KKR & Co. Inc. and holders of exchangeable securities pro rata in accordance with their respective ownership interests in KKR Group Partnership. For the three and six months ended June 30, 2022, all unvested equity awards are excluded from the calculation of Diluted Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock because inclusion of such unvested equity awards would be anti-dilutive having the effect of decreasing the loss per share of common stock.
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Exchangeable Securities
For the three and six months ended June 30, 2023 and 2022, KKR Holdings Units and vested restricted holdings units (as defined in Note 20 "Equity Based Compensation") have been excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the exchange of these units would not dilute KKR & Co. Inc.'s ownership interests in KKR Group Partnership. As of May 31, 2022, there are no outstanding KKR Holdings Units. See Note 1 "Organization" in our financial statements.
 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Weighted Average KKR Holdings Units— 173,365,106 — 215,809,830 
Weighted Average Vested Restricted Holdings Units3,869,444 2,453,841 3,285,537 1,918,224 
Total 3,869,444 175,818,947 3,285,537 217,728,054 
Market Condition Awards
For the three months ended June 30, 2023 and 2022, 22.5 million and 17.0 million, respectively, and for the six months ended June 30, 2023 and 2022, 22.5 million and 17.0 million, respectively, of unvested equity awards that are subject to market price based and service-based vesting conditions were excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the market price based vesting condition was not satisfied. See Note 20 "Equity Based Compensation" in our financial statements.
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15. OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES
Other Assets consist of the following:
 June 30, 2023December 31, 2022
Asset Management
Unsettled Investment Sales (1)
$244,916 $90,072 
Receivables46,168 26,119 
Due from Broker (2)
93,077 160,533 
Deferred Tax Assets, net (See Note 19)50,157 54,769 
Interest Receivable265,973 223,660 
Fixed Assets, net (3)
866,757 857,903 
Foreign Exchange Contracts and Options (4)
523,986 668,716 
Goodwill (5)
547,523 594,270 
Intangible Assets (6)
1,588,412 1,747,891 
Derivative Assets8,093 7,519 
Prepaid Taxes133,272 68,107 
Prepaid Expenses41,696 48,233 
Operating Lease Right of Use Assets (7)
376,855 344,022 
Deferred Financing Costs27,518 16,382 
Other213,519 289,430 
Total Asset Management$5,027,922 $5,197,626 
Insurance
Unsettled Investment Sales(1) and Derivative Collateral Receivables
$319,081 $663,280 
Deferred Tax Assets, net2,121,555 2,272,153 
Derivative Assets1,036,811 724,390 
Accrued Investment Income1,146,857 1,130,103 
Goodwill(9)
501,496 501,496 
Intangible Assets and Deferred Sales Inducements(8)
267,353 276,176 
Operating Lease Right of Use Assets(7)
177,321 175,035 
Premiums and Other Account Receivables187,342 141,551 
Other127,567 121,114 
Prepaid Taxes230,850 22,851 
Market risk benefit asset3,170 13,180 
Total Insurance$6,119,403 $6,041,329 
Total Other Assets$11,147,325 $11,238,955 
(1)Represents amounts due from third parties for investments sold for which cash settlement has not occurred.
(2)Represents amounts held at clearing brokers resulting from securities transactions.
(3)Net of accumulated depreciation and amortization of $221.3 million and $188.8 million as of June 30, 2023 and December 31, 2022, respectively. Depreciation and amortization expense of $16.6 million and $12.9 million for the three months ended June 30, 2023 and 2022, respectively, and $32.4 million and $25.6 million for the six months ended June 30, 2023 and 2022, respectively, are included in General, Administrative and Other in the accompanying consolidated statements of operations. Additionally, KKR’s fixed assets are predominantly located in the United States.
(4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.
(5)As of June 30, 2023, the carrying value of goodwill is recorded and assessed for impairment at the reporting unit. As of June 30, 2023, there are approximately $(44.9) million of cumulative foreign currency translation adjustments included in AOCI related to the goodwill recorded as result of the acquisition of KJRM (see Note 3 "Acquisitions" in our financial statements).
(6)As of June 30, 2023, there are approximately $(153.4) million of cumulative foreign currency translation adjustments included in AOCI related to the intangible assets recorded as result of the acquisition of KJRM (see Note 3 "Acquisitions" in our financial statements).
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(7)For Asset Management, non-cancelable operating leases consist of leases for office space in North America, Europe, Asia and Australia. KKR is the lessee under the terms of the operating leases. The operating lease cost was $17.7 million and $13.2 million for the three months ended June 30, 2023 and 2022, respectively, and $33.4 million and $25.4 million for the six months ended June 30, 2023 and 2022, respectively. For Insurance, non-cancelable operating leases consist of leases for office space and land in the U.S. For the three months ended June 30, 2023 and 2022, the operating lease cost was $6.8 million and $5.9 million, respectively, and for the six months ended June 30, 2023 and 2022, the operating lease cost was $13.6 million and $11.9 million, respectively. Insurance lease right-of-use assets are reported net of $22.3 million and $21.8 million in deferred rent and lease incentives as of June 30, 2023 and December 31, 2022, respectively.
(8)The definite life intangible assets are amortized using the straight-line method over the useful life of the assets which is an average of 15 years. The indefinite life intangible assets are not subject to amortization. The amortization expense of definite life intangible assets was $4.4 million for both the three months ended June 30, 2023 and 2022 and $8.8 million for both the six months ended June 30, 2023 and 2022.
(9)The amounts include approximately $4.5 million of goodwill related to an immaterial acquisition of a residential mortgage platform, which Global Atlantic acquired in October 2021 for a purchase price consideration of $4.6 million. The insurance segment reported a negative equity carrying amount as of June 30, 2023 and December 31, 2022 primarily due to unrealized losses on available-for-sale fixed maturity investment portfolio. Global Atlantic expects that substantially all of these unrealized losses will not be realized as it intends to hold these investments until recovery of the losses, which may be at maturity, as part of its asset liability cash-flow matching strategy. KKR evaluated qualitative factors, including market and economic conditions, industry-specific events and company-specific financial results, and determined that it was not more likely than not that goodwill was impaired.

Accrued Expenses and Other Liabilities consist of the following:
 June 30, 2023December 31, 2022
Asset Management
Amounts Payable to Carry Pool (1)
$2,152,438 $1,872,568 
Unsettled Investment Purchases (2)
410,342 416,822 
Securities Sold Short (3) 
138,360 158,752 
Derivative Liabilities2,590 11,018 
Accrued Compensation and Benefits413,477 265,712 
Interest Payable463,660 363,849 
Foreign Exchange Contracts and Options (4)
303,777 406,746 
Accounts Payable and Accrued Expenses212,945 216,688 
Taxes Payable30,525 136,245 
Uncertain Tax Positions 43,752 56,032 
Unfunded Revolver Commitments110,106 137,315 
Operating Lease Liabilities (5)
380,194 347,901 
Deferred Tax Liabilities, net (See Note 19)1,893,174 1,667,740 
Other Liabilities199,446 414,387 
Total Asset Management$6,754,786 $6,471,775 
Insurance
Unsettled Investment Purchases(2)
$264,664 $208,941 
Collateral on Derivative Instruments921,491 466,371 
Accrued Expenses657,027 600,633 
Insurance Operations Balances in Course of Settlement113,563 949,383 
Securities Sold Under Agreements to Repurchase820,242 805,316 
Derivative Liabilities752,527 934,107 
Accrued Employee Related Expenses363,055 322,698 
Operating Lease Liabilities(5)
198,346 195,001 
Tax Payable to Former Parent Company61,180 67,086 
Interest Payable15,227 13,329 
Accounts and Commissions Payable18,435 25,261 
Other Tax Related Liabilities6,597 12,249 
Total Insurance$4,192,354 $4,600,375 
Total Accrued Expenses and Other Liabilities$10,947,140 $11,072,150 
(1)Represents the amount of carried interest payable to current and former KKR employees arising from KKR's investment funds and co-investment vehicles that provide for carried interest.
(2)Represents amounts owed to third parties for investment purchases for which cash settlement has not occurred.
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(3)Represents the obligations of KKR to deliver a specified security at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.
(4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.
(5)For Asset Management, operating leases for office space have remaining lease terms that range from approximately 1 year to 17 years, some of which include options to extend the leases from 5 years to 10 years. The weighted average remaining lease terms were 11.0 years and 10.4 years as of June 30, 2023 and December 31, 2022, respectively. The weighted average discount rates were 2.9% and 2.5% as of June 30, 2023 and December 31, 2022, respectively. For Insurance, operating leases for office space have remaining lease terms that range from approximately 1 year to 12 years, some of which include options to extend the leases for up to 10 years. The weighted average remaining lease terms were 7.6 years and 7.0 years as of June 30, 2023 and December 31, 2022, respectively. The weighted average discount rate was 4.2% and 3.6% as of June 30, 2023 and December 31, 2022, respectively. The weighted average remaining lease terms for land were 25.9 years and 26.9 years as of June 30, 2023 and December 31, 2022, respectively.
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16. VARIABLE INTEREST ENTITIES
Consolidated VIEs
KKR consolidates certain VIEs in which it is determined that KKR is the primary beneficiary. The consolidated VIEs are predominately CLOs and certain investment funds sponsored by KKR. The primary purpose of these VIEs is to provide strategy specific investment opportunities to earn investment gains, current income or both in exchange for management fees and performance income. KKR's investment strategies differ for these VIEs; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance income. KKR does not provide performance guarantees and has no other financial obligation to provide funding to these consolidated VIEs, beyond amounts previously committed, if any. Furthermore, KKR consolidates certain VIEs, which are formed by Global Atlantic to hold investments, including investments in transportation, renewable energy, consumer and other loans and fixed maturity securities.
Unconsolidated VIEs
KKR holds variable interests in certain VIEs which are not consolidated as it has been determined that KKR is not the primary beneficiary. VIEs that are not consolidated predominantly include certain investment funds sponsored by KKR as well as certain investment partnerships where Global Atlantic retains an economic interest. KKR's investment strategies differ by investment fund; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance income. KKR's maximum exposure to loss as a result of its investments in the unconsolidated investment funds is the carrying value of such investments, including KKR's capital interest and any unrealized carried interest. Accordingly, disaggregation of KKR's involvement by type of unconsolidated investment fund would not provide more useful information. For these unconsolidated investment funds in which KKR is the sponsor, KKR may have an obligation as general partner to provide commitments to such investment funds. As of June 30, 2023, KKR's commitments to these unconsolidated investment funds were $3.4 billion. KKR has not provided any financial support other than its obligated amount as of June 30, 2023. Additionally, Global Atlantic also has unfunded commitments of $23.8 million in relation to other limited partnership interests as of June 30, 2023.
As of June 30, 2023 and December 31, 2022, the maximum exposure to loss, before allocations to the carry pool and noncontrolling interests, if any, for those VIEs in which KKR is determined not to be the primary beneficiary but in which it has a variable interest is as follows:
 June 30, 2023December 31, 2022
Investments - Asset Management$7,810,797 $6,862,712 
Due from (to) Affiliates, net - Asset Management1,274,668 1,356,308 
Maximum Exposure to Loss - Asset Management$9,085,465 $8,219,020 
Other Investment Partnerships - Insurance$171,140 $295,808 
Investment in Renewable Energy - Insurance102,211 30,177 
Maximum Exposure to Loss - Insurance$273,351 $325,985 
Total Maximum Exposure to Loss$9,358,816 $8,545,005 
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17. DEBT OBLIGATIONS
Asset Management Debt Obligations
In Asset Management, KKR enters into credit agreements and issues debt for its general operating and investment purposes. KKR consolidates and reports debt obligations of KKR Financial Holdings LLC, a KKR subsidiary ("KFN"), which are non-recourse to KKR beyond the assets of KFN. From time to time, KKR may provide credit support for the funding obligations of its subsidiaries.
Certain of KKR's consolidated investment funds have entered into financing arrangements with financial institutions, generally to provide liquidity to such investment funds. These financing arrangements are generally not direct obligations of the general partners of KKR's investment funds (beyond KKR's capital interest) or its management companies. Such borrowings have varying maturities and bear interest at floating rates. Borrowings are generally secured by the investment purchased with the proceeds of the borrowing and/or the uncalled capital commitment of each respective fund. When an investment vehicle borrows, the proceeds are available only for use by that investment vehicle and are not available for the benefit of other investment vehicles or KKR. Collateral within each investment vehicle is also available only against borrowings by that investment vehicle and not against the borrowings of other investment vehicles or KKR.
In certain other cases, investments and other assets held directly by majority-owned consolidated investment vehicles and other entities have been funded with borrowings that are collateralized by the investments and assets they own. These borrowings are non-recourse to KKR beyond the investments or assets serving as collateral or the capital that KKR has committed to fund such investment vehicles. Such borrowings have varying maturities and generally bear interest at fixed rates.
In addition, consolidated CFEs issue debt securities to third-party investors which are collateralized by assets held by the CFE. Debt securities issued by CFEs are supported solely by the assets held at the CFEs and are not collateralized by assets of any other KKR entity. CFEs also may have warehouse facilities with banks to provide liquidity to the CFE. The CFE's debt obligations are non-recourse to KKR beyond the assets of the CFE.
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KKR's Asset Management debt obligations consisted of the following:
 June 30, 2023 December 31, 2022
Financing AvailableBorrowing OutstandingFair Value Financing AvailableBorrowing OutstandingFair Value
Revolving Credit Facilities:
Corporate Credit Agreement$1,500,000 $— $—  $1,500,000 $— $— 
KCM Credit Agreement (1)
727,986 — — 723,132 — — 
KCM 364-Day Revolving Credit Agreement750,000 — — 750,000 — — 
Notes Issued: (2)
KKR ¥25 billion (or $173.2 million)
0.509% Notes Due 2023 (8)
(5)
— — — — 189,432 189,447 
KKR ¥5 billion (or $34.6 million)
0.764% Notes Due 2025
(5)
— 34,447 34,585 — 37,646 37,625 
KKR ¥36.4 billion (or $252.2 million)
1.054% Notes Due 2027
(5)
— 251,073 251,137 — 274,628 271,081 
KKR ¥44.7 billion (or $309.7 million)
1.428% Notes Due 2028
(5)
— 308,184 311,777 — — — 
KKR €650 million (or $709.1 million)
1.625% Notes Due 2029
(5)
— 703,587 597,931 — 687,928 565,003 
KKR $750 million 3.750% Notes Due 2029
(5)
— 744,666 666,150 — 744,222 675,413 
KKR ¥4.9 billion (or $34.0 million)
1.244% Notes Due 2029
(5)
— 33,505 33,540 — 36,657 36,020 
KKR ¥1.8 billion (or $12.5 million)
1.614% Notes Due 2030
(5)
— 12,131 12,446 — — — 
KKR $750 million 4.850% Notes Due 2032
(5)
— 742,100 707,970 — 741,655 701,610 
KKR ¥6.2 billion (or $43.0 million)
1.437% Notes Due 2032
(5)
— 42,424 42,081 — 46,431 44,800 
KKR ¥1.5 billion (or $10.4 million)
1.939% Notes Due 2033
(5)
— 10,055 10,359 — — — 
KKR ¥7.5 billion (or $52.0 million)
1.553% Notes Due 2034
(5)
— 51,349 50,648 — 56,204 53,477 
KKR ¥5.5 billion (or $38.1 million)
1.795% Notes Due 2037
(5)
— 37,536 36,818 — 41,097 38,550 
KKR ¥10.3 billion (or $71.4 million)
1.595% Notes Due 2038
(5)
— 70,457 65,945 — 77,134 69,565 
KKR ¥3.0 billion (or $20.8 million)
2.312% Notes Due 2038
(5)
— 20,373 20,654 — — — 
KKR $500 million 5.500% Notes Due 2043 (7)
(5)
— 490,693 453,597 — 490,494 455,287 
KKR ¥4.5 billion (or $31.2 million)
2.574% Notes Due 2043
(5)
— 30,669 31,152 — — — 
KKR $1.0 billion 5.125% Notes Due 2044 (7)
(5)
— 965,088 839,663 — 964,726 845,944 
KKR $500 million 3.625% Notes Due 2050
(5)
— 492,886 343,160 — 492,753 343,490 
KKR $750 million 3.500% Notes Due 2050 (7)
(5)
— 736,694 508,556 — 736,451 503,862 
KKR $750 million 3.250% Notes Due 2051
(5)
— 740,008 482,925 — 739,832 475,920 
KKR ¥6.0 billion (or $41.6 million)
2.747% Notes Due 2053
(5)
— 40,944 41,371 — — — 
KKR $500 million 4.625% Notes Due 2061
(6)
— 486,577 358,600 — 486,399 340,400 
KFN $500 million 5.500% Notes Due 2032
(3)
— 495,752 436,055 — 495,511 417,551 
KFN $120 million 5.200% Notes Due 2033
(3)
— 118,834 101,139 — 118,773 96,502 
KFN $70 million 5.400% Notes Due 2033
(3)
— 69,094 59,767 — 69,048 57,042 
KFN Issued Junior Subordinated Notes (4)
(3)
— 238,130 200,662 — 237,471 189,673 
2,977,986 7,967,256 6,698,688 2,973,132 7,764,492 6,408,262 
Other Debt Obligations(1)(7)
6,615,684 35,726,128 35,516,217 4,837,893 32,834,121 32,649,546 
 $9,593,670 $43,693,384 $42,214,905  $7,811,025 $40,598,613 $39,057,808 
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Notes to Financial Statements (Continued)
(1)Financing available is reduced by the dollar amounts specified in any issued letters of credit.
(2)Borrowing outstanding includes: (i) unamortized note discount (net of premium), as applicable and (ii) unamortized debt issuance costs, as applicable. Financing costs related to the issuance of the notes have been deducted from the note liability and are being amortized over the life of the notes.
(3)These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.
(4)KKR consolidates KFN and reports KFN's outstanding $258.5 million aggregate principal amount of junior subordinated notes. The weighted average interest rate is 7.8% and 6.9% and the weighted average years to maturity is 13.3 years and 13.8 years as of June 30, 2023 and December 31, 2022, respectively.
(5)The notes are classified as Level II within the fair value hierarchy and fair value is determined by third party broker quotes.
(6)The notes are classified as Level I within the fair value hierarchy and fair value is determined by quoted prices in active markets since the debt is publicly listed.
(7)As of June 30, 2023 and December 31, 2022, the borrowing outstanding and fair value reflects the elimination for the portion of these debt obligations that are held by Global Atlantic.
(8)On March 22, 2023, the 2023 Notes matured, and KKR Group Finance Co. IV LLC repaid the principal and accrued interest in full.

Asset Management Revolving Credit Facilities
KCM Short-Term Credit Agreement
On April 7, 2023, KKR Capital Markets Holdings L.P. and certain other capital markets subsidiaries (the "KCM Borrowers") replaced their existing 364-day revolving credit agreement with a new 364-day revolving credit agreement (the "KCM Short-Term Credit Agreement”) with Mizuho Bank, Ltd., as administrative agent, and one or more lenders party thereto. The KCM Short-Term Credit Agreement replaces the prior 364-day revolving credit agreement, dated as of April 8, 2022, between the KCM Borrowers and the administrative agent, and one or more lenders party to the KCM Short-Term Agreement, which was terminated according to its terms on April 7, 2023. The KCM Short-Term Credit Agreement provides for revolving borrowings up to $750 million, expires on April 5, 2024, and ranks pari passu with the existing $750 million revolving credit facility provided by them for KKR's capital markets business (the "KCM Credit Agreement").
If a borrowing is made under the KCM Short-Term Credit Agreement, the interest rate will vary depending on the type of drawdown requested. If the borrowing is (i) denominated in U.S. dollars and a term rate, it will be based on the term Secured Overnight Financing Rate ("SOFR"), (ii) denominated in euros, it will be based on EURIBOR and (iii) denominated in pounds sterling, it will be based on the Sterling Overnight Interbank Average Rate (SONIA), in each case, plus the applicable margin which ranges initially between 1.50% and 2.75%, depending on the duration of the loan. If the borrowing is an ABR Loan, it will be based on the greater of (i) the federal funds rate plus 0.50% and (ii) term SOFR for one-month tenor plus 1.00%, in each case, plus the applicable margin which ranges initially between 0.50% and 1.75% depending on the amount and nature of the loan. Borrowings under the KCM Short-Term Credit Agreement may only be used to facilitate the settlement of debt transactions syndicated by KKR's capital markets business. Obligations under the KCM Short-Term Credit Agreement are limited to the KCM Borrowers, which are solely entities involved in KKR's capital markets business, and liabilities under the KCM Short-Term Credit Agreement are non-recourse to other parts of KKR.
The KCM Short-Term Credit Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including a financial covenant providing for a maximum debt to equity ratio for the KCM Borrowers. The KCM Borrowers' obligations under the KCM Short-Term Credit Agreement are secured by certain assets of the KCM Borrowers, including a pledge of equity interests of certain subsidiaries of the KCM Borrowers.
Repayment of KKR-Issued 2023 Yen Senior Notes
On March 23, 2018, KKR Group Finance Co. IV LLC, an indirect subsidiary of KKR & Co. Inc., issued ¥40.3 billion aggregate principal amount of its (i) ¥25.0 billion 0.509% Senior Notes due 2023 (the "2023 Notes"), (ii) ¥5.0 billion 0.764% Senior Notes due 2025 (the "2025 Notes") and (iii) ¥10.3 billion 1.595% Senior Notes due 2038 (the "2038 Notes" and, together with the 2023 Notes and the 2025 Notes, the "JPY Notes"). On March 22, 2023, the 2023 Notes matured, and KKR Group Finance Co. IV LLC repaid the principal and accrued interest in full.
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Notes to Financial Statements (Continued)
KKR Issued Yen Senior Notes
On May 25, 2023, KKR Group Finance Co. XI LLC, an indirect subsidiary of KKR & Co. Inc., completed the offering of (i) ¥44.7 billion aggregate principal amount of its 1.428% Senior Notes due May 25, 2028 (the “2028 Notes”), (ii) ¥1.8 billion aggregate principal amount of its 1.614% Senior Notes due May 24, 2030 (the “2030 Notes”), (iii) ¥1.5 billion aggregate principal amount of its 1.939% Senior Notes due May 25, 2033 (the “2033 Notes”), (iv) ¥3.0 billion aggregate principal amount of its 2.312% Senior Notes due May 25, 2038 (the “2038 Notes”), (v) ¥4.5 billion aggregate principal amount of its 2.574% Senior Notes due May 22, 2043 (the “2043 Notes”) and (vi) ¥6.0 billion aggregate principal amount of its 2.747% Senior Notes due May 23, 2053 (the “2053 Notes” and, together with the 2028 Notes, the 2030 Notes, the 2033 Notes, the 2038 Notes and the 2043 Notes, the “Yen Notes”). The Yen Notes are guaranteed by KKR & Co. Inc. and KKR Group Partnership.
The Yen Notes bear interest at the rates, and will mature on the dates, set forth above unless earlier redeemed. Interest on the Yen Notes accrues from May 25, 2023 and is payable semi-annually in arrears on May 25 and November 25 of each year, commencing on November 25, 2023 and ending on the applicable maturity date. The Yen Notes are unsecured and unsubordinated obligations of KKR Group Finance Co. XI LLC. The Yen Notes are fully and unconditionally guaranteed, jointly and severally, by each of the guarantors. The guarantees are unsecured and unsubordinated obligations of the guarantors.
The Yen Notes were issued pursuant to an indenture, dated as of April 26, 2022, among KKR Group Finance Co. XI LLC, KKR Group Co. Inc. (formerly known as KKR & Co. Inc.), KKR Group Partnership and The Bank of New York Mellon Trust Company, N.A., as trustee (as supplemented, the “Indenture”). The Indenture includes covenants, including limitations on KKR Group Finance Co. XI LLC’s and the Guarantors’ ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or convey all or substantially all of their assets. The Indenture also provides for events of default and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Yen Notes may declare the Yen Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the Yen Notes and any accrued and unpaid interest on the Yen Notes automatically become due and payable. KKR Group Finance Co. XI LLC may redeem the Yen Notes at its option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the Yen Notes to be redeemed, together with interest accrued and unpaid to, but excluding, the date fixed for redemption, at any time, in the event of certain changes affecting taxation as provided in the indenture governing the Yen Notes. If a change of control repurchase event occurs, the Yen Notes are subject to repurchase by KKR Group Finance Co. XI LLC at a repurchase price in cash equal to 101% of the aggregate principal amount of the Yen Notes repurchased plus any accrued and unpaid interest on the Yen Notes repurchased to, but not including, the date of repurchase.
Other Asset Management Debt Obligations
As of June 30, 2023, other debt obligations consisted of the following:
Financing AvailableBorrowing
Outstanding		Fair ValueWeighted
Average
Interest Rate		Weighted Average Remaining Maturity in Years
Financing Facilities of Consolidated Funds and Other (1)
$6,615,684 $11,464,868 $11,254,957 6.1%4.8
Debt Obligations of Consolidated CLOs — 24,261,260 24,261,260 
(2)
9.5
 $6,615,684 $35,726,128 $35,516,217   
(1)Includes borrowings collateralized by fund investments, fund co-investments and other assets held by levered investment vehicles of $2.4 billion.
(2)The senior notes of the consolidated CLOs had a weighted average interest rate of 6.2%. The subordinated notes of the consolidated CLOs do not have contractual interest rates but instead receive a pro rata amount of the net distributions from the excess cash flows of the respective CLO vehicle. Accordingly, weighted average borrowing rates for the subordinated notes are based on cash distributions during the period, if any.

Debt obligations of consolidated CLOs are collateralized by assets held by each respective CLO vehicle and assets of one CLO vehicle may not be used to satisfy the liabilities of another. As of June 30, 2023, the fair value of the consolidated CLO assets was $25.8 billion. This collateral consisted of Cash and Cash Equivalents, Investments, and Other Assets.
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Insurance Debt Obligations
Global Atlantic's debt obligations consisted of the following:
 June 30, 2023 December 31, 2022
Financing AvailableBorrowing Outstanding
Fair Value(2)
 Financing AvailableBorrowing Outstanding
Fair Value(2)
Revolving Credit Facilities:
Global Atlantic revolving credit facility, due August 2026$1,000,000 $— $—  $600,000 $400,000 $400,000 
Notes Issued and Others:
Global Atlantic senior notes, due October 2029500,000 422,200 500,000 419,550 
Global Atlantic senior notes, due June 2031650,000 489,905 650,000 478,335 
Global Atlantic senior notes, due June 2033650,000 653,770 — — 
Global Atlantic subordinated debentures, due October 2051750,000 533,100 750,000 572,475 
2,550,000 $2,098,975 2,300,000 $1,870,360 
Purchase accounting adjustments(1)
41,729 43,285 
Debt issuance costs, net of accumulated amortization(37,778)(17,623)
Fair value loss (gain) of hedged debt obligations, recognized in earnings(197,789)(197,496)
 $2,356,162  $2,128,166 
(1)The amortization of the purchase accounting adjustments was $0.8 million for both the three months ended June 30, 2023 and 2022, and $1.6 million and $6.2 million for the six months ended June 30, 2023 and 2022, respectively.
(2)These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

Global Atlantic senior notes due 2033
In June 2023, Global Atlantic (Fin) Company, or “GA FinCo,” a Delaware corporation and an indirect subsidiary of Global Atlantic, issued $650 million aggregate principal amount of 7.950% senior unsecured notes due 2033 (the “GA 2033 Senior Notes”). This included $500 million issued on June 15, 2023, and a subsequent reopening of $150 million issued on June 21, 2023. The proceeds of the 2033 Senior Notes were used, in part, to repay outstanding indebtedness under Global Atlantic's revolving credit facility. Remaining proceeds are intended to be used for general corporate purposes. The GA 2033 Senior Notes were issued pursuant to an indenture, dated as of October 7, 2019, among GA FinCo, as issuer, GAFL, as guarantor, and U.S. Bank National Association, as trustee, and supplemented by the Third and Fourth Supplemental Indentures, dated as of June 15, 2023 and June 21, 2023, respectively, among GA FinCo, GAFL and the trustee. The GA 2033 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by GAFL.
The GA 2033 Senior Notes bear interest at a rate of 7.950% per year. Interest on the GA 2033 Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The GA 2033 Senior Notes will mature on June 15, 2033. GA FinCo may, at its option, redeem some or all of the GA 2033 Senior Notes at any time: (i) prior to March 15, 2033 at a redemption price equal to 100% of the principal amount of the GA 2033 Senior Notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption; and (ii) on or after March 15, 2033 at a redemption price equal to 100% of the principal amount of the GA 2033 Senior Notes to be redeemed, plus accrued and unpaid interest to the date of redemption.
Debt Covenants
Borrowings of KKR (including Global Atlantic) contain various debt covenants. These covenants do not, in management's opinion, materially restrict KKR's operating business or investment strategies as of June 30, 2023. KKR (including Global Atlantic) was in compliance with such debt covenants in all material respects as of June 30, 2023.
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Notes to Financial Statements (Continued)
18. POLICY LIABILITIES
The following reflects the reconciliation of the components of policy liabilities to the total balance reported in the consolidated statements of financial condition as of June 30, 2023 and December 31, 2022:
June 30, 2023December 31, 2022
Policyholders’ account balances$113,601,314 $112,281,236 
Liability for future policy benefits15,500,860 14,445,920 
Additional liability for annuitization, death, or other insurance benefits5,062,377 4,970,969 
Market risk benefit liability828,364 682,038 
Other policy-related liabilities(1)
6,436,300 5,400,766 
Total policy liabilities$141,429,215 $137,780,929 
(1)Other policy-related liabilities as of June 30, 2023, and December 31, 2022, primarily consists of negative VOBA ($935.9 million and $1.0 billion, respectively), policy liabilities accounted under a fair value option (both $1.3 billion), embedded derivatives associated with contractholder deposit funds ($3.3 billion and $2.2 billion, respectively) and outstanding claims ($231.1 million and $253.7 million, respectively).
Policyholders’ account balances
The following reflects the policyholders’ account balances roll-forward for the six months ended June 30, 2023 and 2022, and the policyholders’ account balances weighted average crediting rating, net amount at risk, and cash surrender value as of those dates:
Six Months Ended June 30, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreements
Other(1)
Total
Balance as of beginning of period$48,510,703 $29,123,926 $17,397,185 $7,535,489 $9,713,933 $112,281,236 
Issuances and premiums received4,806,261 2,714,727 361,289 200,000 219,980 8,302,257 
Benefit payments, surrenders, and withdrawals(4,662,115)(2,005,875)(454,520)(280,367)(818,454)(8,221,331)
Interest(2)
714,552 242,348 233,704 108,293 149,183 1,448,080 
Other, including changes in assumptions and fair value changes(132,690)(20,889)(226,377)41,456 129,572 (208,928)
Balance as of end of period$49,236,711 $30,054,237 $17,311,281 $7,604,871 $9,394,214 $113,601,314 
Less: reinsurance recoverable(6,849,070)(3,225,203)(3,499,441)— (3,020,941)(16,594,655)
Balance as of end of period, net of reinsurance recoverable$42,387,641 $26,829,034 $13,811,840 $7,604,871 $6,373,273 $97,006,659 
Average interest rate2.90 %1.82 %3.14 %2.88 %2.69 %2.59 %
Net amount at risk, gross of reinsurance(3)
$— $— $83,314,521 $— $1,183,790 $84,498,311 
Cash surrender value(4)
$39,742,358 $27,548,010 $12,894,769 $— $4,679,664 $84,864,801 
_________________
(1)“Other” consists of activity related to payout annuities (without life contingencies), preneed, variable annuities and life products.
(2)Interest includes interest credited to policyholders’ account values, and interest accreted in other components of the policyholder account balance, including investment-type contract values, host amounts for contractholder deposits with embedded derivatives, funding agreements and other associated reserves.
(3)Net amount at risk represents the difference between the face value of the insurance policy and the reserve accumulated under that same policy.
(4)Cash surrender values are reported net of any applicable surrender charges, net of reinsurance.
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Six Months Ended June 30, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreements
Other(1)
Total
Balance as of beginning of period$42,408,740 $25,204,787 $17,391,996 $6,014,553 $6,624,562 $97,644,638 
Issuances and premiums received6,717,836 3,151,058 577,403 1,998,776 618,545 13,063,618 
Benefit payments, surrenders, and withdrawals(3,029,203)(985,071)(294,705)(40,498)(378,664)(4,728,141)
Interest(2)
470,744 134,422 254,325 51,676 97,798 1,008,965 
Other, including changes in assumptions and fair value changes(161,873)(10,731)(458,816)(275,154)(6,370)(912,944)
Balance as of end of period$46,406,244 $27,494,465 $17,470,203 $7,749,353 $6,955,871 $106,076,136 
Less: reinsurance recoverable(6,967,101)(3,800,049)(3,512,293)— (1,260,136)(15,539,579)
Balance as of end of period, net of reinsurance recoverable$39,439,143 $23,694,416 $13,957,910 $7,749,353 $5,695,735 $90,536,557 
Average interest rate2.27 %1.07 %3.09 %1.51 %2.25 %2.05 %
Net amount at risk, gross of reinsurance(3)
$— $— $84,450,972 $— $1,187,423 $85,638,395 
Cash surrender value(4)
$36,548,250 $23,591,798 $13,570,814 $— $3,505,284 $77,216,146 
_________________
(1)“Other” consists of activity related to payout annuities (without life contingencies), preneed, variable annuities and life products.
(2)Interest includes interest credited to policyholders’ account values, and interest accreted in other components of the policyholder account balance, including investment-type contract values, host amounts for contractholder deposits with embedded derivatives, funding agreements and other associated reserves.
(3)Net amount at risk represents the difference between the face value of the life insurance policy and the reserve accumulated under that same policy.
(4)Cash surrender values are reported net of any applicable surrender charges, net of reinsurance.
The following table presents the account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums. Account values, as disclosed below differs from policyholder account balances as it excludes balances associated with index credits, contractholder deposit fund host balances, funding agreements, and other associated reserves. In addition, policyholder account balances include discounts and premiums on assumed business which are not reflected in account values.
As of June 30, 2023
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum
1 - 49 bps above guaranteed minimum
50 - 99 bps above guaranteed minimum
100 - 150 bps above guaranteed minimum
Greater than 150 bps above guaranteed minimum
Total
Less than 1.00%
$2,796,085 $23,208 $849,903 $4,315,030 $22,189,077 $30,173,303 
1.00% - 1.99%
1,670,531 1,221,713 993,189 1,853,681 4,048,609 9,787,723 
2.00% - 2.99%
995,061 42,477 8,922 56,948 709,314 1,812,722 
3.00% - 4.00%
11,974,567 440,560 121,550 532,894 136,852 13,206,423 
Greater than 4.00%
7,465,770 1,835,087 63,693 5,888 54,774 9,425,212 
Total$24,902,014 $3,563,045 $2,037,257 $6,764,441 $27,138,626 $64,405,383 
Percentage of total39 %6 %3 %11 %41 %100 %
As of December 31, 2022
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum
1 - 49 bps above guaranteed minimum
50 - 99 bps above guaranteed minimum
100 - 150 bps above guaranteed minimum
Greater than 150 bps above guaranteed minimum
Total
Less than 1.00%
$3,211,064 $25,500 $847,989 $4,669,081 $20,158,257 $28,911,891 
1.00% - 1.99%
2,350,348 1,171,911 1,077,219 1,910,863 2,820,473 9,330,814 
2.00% - 2.99%
1,096,383 53,360 9,747 1,222 590,032 1,750,744 
3.00% - 4.00%
12,505,278 417,005 147,812 494,726 136,429 13,701,250 
Greater than 4.00%
7,822,274 1,596,918 65,498 6,087 55,589 9,546,366 
Total$26,985,347 $3,264,694 $2,148,265 $7,081,979 $23,760,780 $63,241,065 
Percentage of total43 %5 %3 %11 %38 %100 %

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Liability for future policy benefits
The following tables summarize the balances of, and changes in, the liability for future policy benefits for traditional and limited-payment contracts for the six months ended June 30, 2023 and 2022:
Six months ended
June 30, 2023June 30, 2022
Payout annuities(1)
Other(2)
Total
Payout annuities(1)
Other(2)
Total
Present value of expected net premiums
Balance as of beginning of the period$— $(255,401)$(255,401)$— $(329,716)$(329,716)
Balance at original discount rate$— $(303,610)$(303,610)$— $(334,780)$(334,780)
Effect of changes in cash flow assumptions— — — — — — 
Effect of actual variances from expected experience— 3,380 3,380 — 9,177 9,177 
Adjusted beginning of period balance— (300,230)(300,230)— (325,603)(325,603)
Interest— (2,399)(2,399)— (2,343)(2,343)
Net premiums collected— 16,685 16,685 — 18,660 18,660 
Flooring impact2 — 2 — — — 
Ending balance at original discount rate2 (285,944)(285,942)— (309,286)(309,286)
Effect of changes in discount rate assumptions— 47,419 47,419 — 39,935 39,935 
Balance as of the end of the period$2 $(238,525)$(238,523)$— $(269,351)$(269,351)
Present value of expected future policy benefits
Balance as of beginning of the period$14,021,514 $679,807 $14,701,321 $16,302,904 $883,399 $17,186,303 
Balance at original discount rate$17,180,626 $806,555 $17,987,181 $16,443,480 $895,295 $17,338,775 
Effect of changes in cash flow assumptions— — — — — — 
Effect of actual variances from expected experience(12,863)1,818 (11,045)(14,985)(7,828)(22,813)
Adjusted beginning of period balance17,167,763 808,373 17,976,136 16,428,495 887,467 17,315,962 
Issuances1,610,241 342 1,610,583 595,122 4,840 599,962 
Interest198,070 4,908 202,978 144,262 8,243 152,505 
Benefit payments(793,163)(47,493)(840,656)(744,663)(53,482)(798,145)
De-recognition (lapses and withdrawals)— — — — (3,271)(3,271)
Ending balance at original discount rate18,182,911 766,130 18,949,041 16,423,216 843,797 17,267,013 
Effect of changes in discount rate assumptions(3,083,441)(126,217)(3,209,658)(2,843,185)(108,051)(2,951,236)
Balance as of the end of the period15,099,470 639,913 15,739,383 13,580,031 735,746 14,315,777 
Net liability for future policy benefits15,099,472 401,388 15,500,860 13,580,031 466,395 14,046,426 
Less: reinsurance recoverable(3)
(7,749,635)1,739 (7,747,896)(7,482,271)(3,725)(7,485,996)
Net liability for future policy benefits, net of reinsurance recoverables$7,349,837 $403,127 $7,752,964 $6,097,760 $462,670 $6,560,430 
_________________
(1)Payout annuities generally only have a single premium received at contract inception. As a result, the liability for future policy benefits generally would not reflect a present value for future premiums for payout annuities.
(2)“Other” consists of activity related to variable annuities, traditional life insurance, preneed insurance and fixed-rate annuity products.
(3)Reinsurance recoverables associated with the liability for future policy benefits is net of the effect of changes in discount rate assumptions of $45.7 million and $(1.6) billion for the six months ended June 30, 2023 and 2022, respectively.


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The following table summarizes the amount of gross premiums related to traditional and limited-payment contracts recognized in the consolidated statement of operations for the six months ended June 30, 2023 and 2022:
Gross premiums
Six months ended June 30,
20232022
Payout annuities$1,759,137 $697,136 
Other34,063 39,571 
Total products$1,793,200 $736,707 
The following table reflects the weighted-average duration and weighted-average interest rates of the future policy benefit liability as of June 30, 2023 and December 31, 2022:
As of June 30, 2023
Payout annuitiesOther
Weighted-average interest rates, original discount rate3.09 %2.53 %
Weighted-average interest rates, current discount rate5.32 %5.33 %
Weighted-average liability duration (years, current rates)8.449.19
As of December 31, 2022
Payout annuitiesOther
Weighted-average interest rates, original discount rate2.76 %2.50 %
Weighted-average interest rates, current discount rate5.04 %5.03 %
Weighted-average liability duration (years, current rates)8.399.32
The following reflects the undiscounted ending balance of expected future gross premiums and expected future benefits and payments for traditional and limited-payment contracts, as of June 30, 2023 and December 31, 2022:
As of June 30, 2023
Payout annuitiesOther
Expected future benefit payments, undiscounted$25,944,347 $934,197 
Expected future benefit payments, discounted (original discount rate)18,182,911 766,130 
Expected future benefit payments, discounted (current discount rate)15,099,470 639,913 
Expected future gross premiums, undiscounted— 485,618 
Expected future gross premiums, discounted (original discount rate)— 397,690 
Expected future gross premiums, discounted (current discount rate)— 327,481 
As of December 31, 2022
Payout annuitiesOther
Expected future benefit payments, undiscounted$23,980,780 $986,614 
Expected future benefit payments, discounted (original discount rate)17,321,202 812,773 
Expected future benefit payments, discounted (current discount rate)14,021,514 680,807 
Expected future gross premiums, undiscounted— 524,122 
Expected future gross premiums, discounted (original discount rate)— 431,466 
Expected future gross premiums, discounted (current discount rate)— 356,968 
Significant inputs, judgments and assumptions used in measuring future policyholder benefits
Significant policyholder behavior and other assumption inputs to the calculation of the liability for future policy benefits include discount rates, mortality and, for life insurance, lapse rates. Global Atlantic reviews all assumptions at least annually, and more frequently if necessary.
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For the six months ended June 30, 2023 and 2022, Global Atlantic recognized $(29.5) million and $1.2 billion in other comprehensive income, respectively, due to changes in the future policy benefits estimate from updating discount rates. During six months ended June 30, 2023 and 2022, there were no changes to the methods used to determine the discount rates.
Additional liability for annuitization, death, or other insurance benefits
The following tables reflect the additional liability for annuitization, death, or other insurance benefits roll-forward for the six months ended June 30, 2023 and 2022:
Six months ended
June 30, 2023June 30, 2022
Balance as of beginning of period$5,104,810 $4,832,678 
Effect of changes in experience(28,486)18,972 
Adjusted balance as of beginning of period5,076,324 4,851,650 
Issuances13,006 11,648 
Assessments218,534 242,618 
Benefits paid(193,836)(215,236)
Interest64,982 73,630 
Balance as of end of period5,179,010 4,964,310 
Less: impact of unrealized investment gain and losses116,633 95,076 
Less: reinsurance recoverable, end of period— — 
Balance, end of period, net of reinsurance recoverable and impact of unrealized investment
gains and losses		$5,062,377 $4,869,234 
The additional liability for annuitization, death, or other insurance benefits relates primarily to secondary guarantees on certain interest-sensitive life products, and preneed insurance.
The following reflects the amount of gross assessments recognized for the additional liability for annuitization, death, or other insurance benefits in the consolidated statements of operations for the six months ended June 30, 2023 and 2022:
Gross assessments
Six months ended June 30,
20232022
Total amount recognized within revenue in the consolidated statements of operations$205,414 $290,642 
The following reflects the weighted average duration and weighted average interest rate for the additional liability for annuitization, death, or other insurance benefits as of June 30, 2023 and December 31, 2022:
As of
June 30, 2023December 31, 2022
Weighted-average interest, current discount rate3.00 %3.00 %
Weighted-average liability duration (years)27.3528.21
Significant inputs, judgments and assumptions used in measuring the additional liabilities for annuitization, death, or other insurance benefits
Significant policyholder behavior assumption inputs to the calculation of the additional liability for annuitization, death, or other insurance benefits include mortality and lapse rates. Global Atlantic reviews all assumptions at least annually, and more frequently if necessary.
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Market risk benefits
The following table presents the balances of, and changes in, market risk benefits:
Six months ended
June 30, 2023June 30, 2022
Fixed-indexed annuityVariable- and other annuitiesTotalFixed-indexed annuityVariable- and other annuitiesTotal
Balance as of beginning of period$548,536 $120,322 $668,858 $1,188,355 $255,048 $1,443,403 
Balance as of beginning of period, before impact of changes in instrument-specific credit risk$656,880 $150,633 $807,513 $1,183,116 $254,972 $1,438,088 
Issuances(67)(26)(93)415 42,011 42,426 
Interest19,242 4,515 23,757 4,628 1,306 5,934 
Attributed fees collected51,087 42,067 93,154 47,287 42,608 89,895 
Benefit payments(1,671)(609)(2,280)(1,174)(1,256)(2,430)
Effect of changes in interest rates29,868 8,818 38,686 (440,836)(251,050)(691,886)
Effect of changes in equity markets(17,621)(53,608)(71,229)52,138 147,887 200,025 
Effect of actual experience different from assumptions(1,824)(18,835)(20,659)16,081 (14,098)1,983 
Effect of changes in assumptions— — — — — — 
Balance as of end of period before impact of changes in instrument-specific credit risk735,894 132,955 868,849 861,655 222,380 1,084,035 
Effect of changes in instrument-specific credit risk(35,095)(8,560)(43,655)(227,277)(65,386)(292,663)
Balance as of end of period700,799 124,395 825,194 634,378 156,994 791,372 
Less: reinsurance recoverable as of the end of the period— (14,194)(14,194)— (24,433)(24,433)
Balance as of end of period, net of reinsurance recoverable$700,799 $110,201 $811,000 $634,378 $132,561 $766,939 
Net amount at risk$4,100,714 $1,201,064 $5,301,778 $3,539,283 $1,158,307 $4,697,590 
Weighted-average attained age of contract holders (years)707070706970
The following reflects the reconciliation of the market risk benefits reflected in the preceding table to the amounts reported in an asset and liability position, respectively, in the consolidated statements of financial condition as of June 30, 2023 and December 31, 2022:
As of June 30, 2023As of December 31, 2022
AssetLiabilityNetAssetLiabilityNet
Fixed-indexed annuities$3,143 $703,942 $(700,799)$13,150 $561,686 $(548,536)
Variable- and other annuities27 124,422 (124,395)30 120,352 (120,322)
Total$3,170 $828,364 $(825,194)$13,180 $682,038 $(668,858)
Significant inputs, judgments, and assumptions used in measuring market risk benefits
Significant policyholder behavior and other assumption inputs to the calculation of the market risk benefits include interest rates, instrument-specific credit risk, mortality rates, lapse rates and utilization rates. Global Atlantic reviews all assumptions at least annually, and more frequently if evidence suggests.
Separate account liabilities
Separate account assets and liabilities consist of investment accounts established and maintained by Global Atlantic for certain variable annuity and interest-sensitive life insurance contracts. Some of these contracts include minimum guarantees such as GMDBs and GMWBs that guarantee a minimum payment to the policyholder.
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The assets that support these variable annuity and interest-sensitive life insurance contracts are measured at fair value and are reported as separate account assets on the consolidated statements of financial condition. An equivalent amount is reported as separate account liabilities. Market risk benefit assets and liabilities for minimum guarantees are valued and presented separately from separate account assets and separate account liabilities. For more information on market risk benefits see “–Market risk benefits” in this footnote. Policy charges assessed against the policyholders for mortality, administration and other services are included in “Policy fees” in the consolidated statements of operations.
The following table presents the balances of and changes in separate account liabilities:
June 30, 2023June 30, 2022
Variable annuitiesInterest-sensitive lifeTotalVariable annuitiesInterest-sensitive lifeTotal
Balance as of beginning of period$3,627,769 $503,025 $4,130,794 $4,922,704 $663,724 $5,586,428 
Premiums and deposits16,371 6,977 23,348 15,794 7,415 23,209 
Surrenders, withdrawals and benefit payments(233,703)(10,018)(243,721)(231,508)(9,073)(240,581)
Investment performance301,383 60,124 361,507 (785,691)(130,224)(915,915)
Other(65,086)(24,405)(89,491)(66,592)(23,916)(90,508)
Balance as of end of period$3,646,734 $535,703 $4,182,437 $3,854,707 $507,926 $4,362,633 
Cash surrender value as of end of period(1)
$3,646,734 $535,703 $4,182,437 $3,854,707 $507,926 $4,362,633 
(1)Cash surrender value attributed to the separate accounts does not reflect the impact of surrender charges; surrender charges are attributed to policyholder account balances recorded in the general account.

The following table presents the aggregate fair value of assets, by major investment asset type, supporting separate accounts:
June 30, 2023December 31, 2022
Asset type:
Managed volatility equity/fixed income blended fund$2,207,414 $2,246,803 
Equity1,578,291 1,634,357 
Fixed income152,309 156,594 
Money market243,811 92,284 
Alternative612 756 
Total assets supporting separate account liabilities$4,182,437 $4,130,794 
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19. INCOME TAXES
KKR & Co. Inc. is a domestic corporation for U.S. federal income tax purposes and is subject to U.S. federal, state and local income taxes at the entity level on its share of taxable income. In addition, KKR Group Partnership and certain of its subsidiaries operate as partnerships for U.S. federal tax purposes but as taxable entities for certain state, local or non-U.S. tax purposes. Moreover, certain corporate subsidiaries of KKR, including certain Global Atlantic subsidiaries, are domestic corporations for U.S. federal income tax purposes and are subject to U.S. federal, state, and local income taxes. Income taxes reported in these consolidated financial statements include the taxes described in this paragraph.
For the three months ended June 30, 2023 and 2022, the effective tax rates were 22.4% and 5.3%, respectively, and for the six months ended June 30, 2023 and 2022, the effective tax rates were 25.5% and 10.5%, respectively. The effective tax rate differs from the statutory rate primarily due to the mix of asset management and insurance income (loss) along with a substantial portion of the reported net income (loss) before taxes not being attributable to KKR but rather being attributable to (i) third-party limited partner interests in consolidated investment funds and (ii) exchangeable securities representing ownership interests in KKR Group Partnership,
Based on all available evidence as of December 31, 2022, Global Atlantic concluded that a valuation allowance should be established on a portion of the deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized, which represents the portion of the portfolio Global Atlantic estimates it would not be able to hold to recovery. As of December 31, 2022, Global Atlantic recorded $89.3 million of valuation allowance allocated to other comprehensive income associated with the unrealized tax capital losses in the available for sale securities portfolio. There was no change in the valuation allowance recorded as of June 30, 2023. Based on available evidence and various assumptions as to the timing of income, KKR believes it is likely that all other deferred tax assets will eventually be realized.
During the six months ended June 30, 2023, there was a decrease of $8.7 million to KKR’s uncertain tax positions primarily due to the settlement of local tax audits conducted for the years ended 2010 through 2014.
On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law. In general, the provisions of the IRA were effective as of January 1, 2023. The IRA includes a new 15% corporate minimum tax, which KKR concluded there was no impact on income taxes for the three and six months ended June 30, 2023. The IRA also enacted a 1% excise tax on certain actual and deemed stock repurchases by publicly traded U.S. corporations effective January 1, 2023. The value of repurchases subject to the tax is reduced by the value of any stock issued during the tax year, including stock issued or provided to employees. The excise tax is accounted for in equity as an additional repurchase cost. KKR will continue to evaluate the potential future impacts of the IRA, and will continue to review and monitor the issuance of additional guidance.
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20. EQUITY BASED COMPENSATION
Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
KKR Equity Incentive Plan Awards(1)
$112,616 $112,596 $241,888 $227,740 
(1)For the three months ended June 30, 2023 and 2022, KKR recorded equity based compensation related to our insurance business of $3.7 million and $2.2 million, respectively, and for the six months ended June 30, 2023 and 2022, KKR recorded equity based compensation related to our insurance business of $6.7 million and $4.3 million, respectively.

Asset Management
KKR Equity Incentive Plan Awards
Under KKR's Equity Incentive Plans, KKR is permitted to grant equity awards representing ownership interests in KKR & Co. Inc. common stock. On March 29, 2019, the 2019 Equity Incentive Plan became effective. Following the effectiveness of the 2019 Equity Incentive Plan, KKR no longer makes further grants under the 2010 Equity Incentive Plan, and the 2019 Equity Incentive Plan became KKR's only plan for providing new equity-based awards by KKR & Co. Inc. Outstanding awards under the 2010 Equity Incentive Plan will remain outstanding, unchanged and subject to the terms of the 2010 Equity Incentive Plan and their respective equity award agreements, until the vesting, expiration or lapse of such awards in accordance with their terms. The total number of equity awards representing shares of common stock that may be issued under the 2019 Equity Incentive Plan is equivalent to 15% of the aggregate number of the shares of common stock and KKR Group Partnership Units (excluding KKR Group Partnership Units held by KKR & Co. Inc. or its wholly-owned subsidiaries), subject to annual adjustment. As of June 30, 2023, 69,700,744 shares may be issued under the 2019 Equity Incentive Plan. Equity awards granted pursuant to the Equity Plans generally consist of (i) restricted stock units that convert into shares of common stock of KKR & Co. Inc. (or cash equivalent) upon vesting and (ii) restricted holdings units that are exchangeable into shares of common stock of KKR & Co. Inc. upon vesting and certain other conditions.
Service-Vesting Awards
Under the Equity Incentive Plans, KKR grants restricted stock units and restricted holdings units that are subject to service-based vesting, typically over a three to five-year period from the date of grant (referred to hereafter as "Service-Vesting Awards"). In certain cases, these Service-Vesting Awards may have a percentage of the award that vests immediately upon grant. Additionally, some but not all Service-Vesting Awards are subject to transfer restrictions and/or minimum retained ownership requirements. The transfer restriction period, if applicable, lasts for (i) one year with respect to one-half of the interests vesting on any vesting date and (ii) two years with respect to the other one-half of the interests vesting on such vesting date. While providing services to KKR, some but not all of these awards are also subject to minimum retained ownership rules requiring the award recipient to continuously hold shares of common stock equivalents equal to at least 15% of their cumulatively vested awards that have or had the minimum retained ownership requirement. Holders of the Service-Vesting Awards do not participate in dividends until such awards have met their vesting requirements.
Expense associated with the vesting of these Service-Vesting Awards is based on the closing price of KKR & Co. Inc. common stock on the date of grant, discounted for the lack of participation rights in the expected dividends on unvested equity awards. Expense is recognized on a straight line basis over the life of the award and assumes a forfeiture rate of up to 7% annually based upon expected turnover by class of recipient.
As of June 30, 2023, there was approximately $451.8 million of total estimated unrecognized expense related to unvested Service-Vesting Awards, which is expected to be recognized over the weighted average remaining requisite service period of 1.7 years.
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A summary of the status of unvested Service-Vesting Awards granted under the Equity Incentive Plans from January 1, 2023 through June 30, 2023 is presented below:
 
Shares (1)
Weighted
Average Grant
Date Fair Value
Balance, January 1, 202316,170,064 $45.82 
Granted372,110 50.06 
Vested(3,773,734)44.46 
Forfeitures(419,166)41.03 
Balance, June 30, 202312,349,274 $46.52 
(1)Unvested Service-Vesting Awards include restricted stock units granted to Global Atlantic employees.

Market Condition Awards
Under the Equity Incentive Plans, KKR also grants restricted stock units and restricted holdings units that are subject to both a service-based vesting condition and a market price based vesting condition (referred to hereafter as "Market Condition Awards") for certain employees. The following is a discussion of Market Condition Awards excluding the Co-CEO Awards, except where discussed below.
The number of Market Condition Awards (other than the Co-CEO awards) that will vest depend upon (i) the market price of KKR common stock reaching certain price targets that range from $45.00 to $140.00 and (ii) the employee being employed by KKR on a certain date, which typically is five and a half years from the date of grant (with exceptions for involuntary termination without cause, death and permanent disability). The market price vesting condition is met when the average closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. Holders of the Market Condition Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.
Due to the existence of the service requirement, the vesting period for these Market Condition Awards (other than the Co-CEO awards) is explicit, and as such, compensation expense will be recognized on (i) a straight-line basis over the period from the date of grant through the date the award recipient is required to be employed by KKR and (ii) assumes a forfeiture rate of up to 7% annually based upon expected turnover. The fair value of the awards granted are based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that holders of the Market Condition Awards will not participate in dividends until such awards have met all of their vesting requirements.
Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of these Market Condition Awards:

Weighted
Average		Range
Grant Date Fair Value$25.29
$19.87 - $66.80
Closing KKR share price as of valuation date$43.89
$37.93 - $76.31
Risk Free Rate1.14%
0.41% - 3.86%
Volatility30.07%
28.00% - 38.00%
Dividend Yield1.39%
0.76% - 1.53%
Expected Cost of Equity10.83%
9.13% - 11.80%
As of June 30, 2023, there was approximately $356.7 million of total estimated unrecognized expense related to these unvested Market Condition Awards, which is expected to be recognized over the weighted average remaining requisite service period of 3.1 years.
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A summary of the status of unvested Market Condition Awards granted under the Equity Incentive Plans from January 1, 2023 through June 30, 2023 is presented below:
 SharesWeighted
Average Grant
Date Fair Value
Balance, January 1, 202326,198,531 $25.30 
Granted— — 
Vested(130,000)20.49 
Forfeitures(514,950)20.67 
Balance, June 30, 202325,553,581 $25.42 
As of June 30, 2023, 18.7 million of these Market Condition awards have met their market price based vesting condition.
Co-CEO Awards
On December 9, 2021, the Board of Directors approved grants of 7.5 million restricted holdings units to each of KKR’s Co-Chief Executive Officers that are subject to both a service-based vesting condition and a market price based vesting condition (referred to hereafter as "Co-CEOs Awards"). For both Co-Chief Executive Officers, 20% of the Co-CEOs Awards are eligible to vest at each of the following KKR common stock prices targets: $95.80, $105.80, $115.80, $125.80 and $135.80. The market price based vesting condition is met when the average closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. In addition to the market price based vesting conditions, in order for the award to vest, the Co-Chief Executive Officer is required to be employed by KKR on December 31, 2026 (with exceptions for involuntary termination without cause, death and permanent disability).
These awards will be automatically canceled and forfeited upon the earlier of a Co-Chief Executive Officer’s termination of service (except for involuntary termination without cause, death or permanent disability) or the failure to meet the market price based vesting condition by December 31, 2028 (for which continued service is required if the market price vesting condition is met after December 31, 2026). Co-CEO Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.
Due to the existence of the service requirement, the vesting period for these Co-CEO Awards is explicit, and as such, compensation expense will be recognized on a straight-line basis over the period from the date of grant through December 31, 2026 given the derived service period is less than the explicit service period. The fair value of the awards granted are based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that these Co-CEO Awards will not participate in dividends until such awards have met all of their vesting requirements.
Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of these Co-CEO Awards:
Grant Date Fair Value$48.91
Closing KKR share price as of valuation date$75.76
Risk Free Rate1.42 %
Volatility28.0 %
Dividend Yield0.77 %
Expected Cost of Equity9.36 %
As of June 30, 2023, there was approximately $508.2 million of total estimated unrecognized expense related to these unvested Co-CEO Awards, which is expected to be recognized ratably from July 1, 2023 to December 31, 2026. As of June 30, 2023, none of these Co-CEO awards have met their market price based vesting condition.
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Insurance
Global Atlantic recognized $18.8 million and $16.0 million for the three months ended June 30, 2023 and 2022, respectively, and $37.5 million and $36.6 million for the six months ended June 30, 2023 and 2022, respectively, of expense related to equity-based compensation and long-term incentive awards.
No equity-based compensation costs were capitalized during the three and six months ended June 30, 2023 and 2022.
Equity Classified Awards - KKR Equity Incentive Plan Awards
Employees of Global Atlantic are awarded restricted stock units under the 2019 Equity Incentive Plan. These awards are subject to service-based vesting conditions, and expense associated with the vesting of these awards is based on the closing price of KKR & Co. Inc. common stock on the date of grant, consistent with other awards granted under the 2019 Equity Incentive Plan as described above.
Global Atlantic recognized $3.7 million and $2.2 million for the three months ended June 30, 2023 and 2022, respectively, and $6.7 million and $4.3 million for the six months ended June 30, 2023 and 2022, respectively, of total equity-based compensation expense associated with these awards.
Liability Classified Awards - Book Value Awards
On February 1, 2021, Global Atlantic adopted the Global Atlantic Financial Company Book Value Award Plan ("GA Book Value Plan") to enhance the ability of Global Atlantic to attract, motivate and retain its employees and to promote the success of the Global Atlantic business.
The GA Book Value Plan authorizes the grant of cash-settled awards ("book value awards", or "BVAs") representing the right to receive one or more payments upon vesting equal to the product of an initial dollar value set by the award multiplied by a pre-determined formula as of each applicable vesting date. The predetermined formula is equal to the quotient determined by dividing the book value of one share of TGAFG on the applicable vesting date by the book value of a share on the original grant date, subject to adjustments. Book value awards generally vest in three equal, annual installments, subject to continued employment.
On February 1, 2021, under the terms of the GA Merger Agreement and in accordance with applicable plan documentation, former Global Atlantic restricted share awards that were unvested immediately prior to the closing of the GA Acquisition converted into the right to receive a number of book value awards under the GA Book Value Plan having the same value and the same vesting schedule as the former Global Atlantic restricted share awards immediately prior to the closing of the GA Acquisition.
An aggregate of 3,020,017 unvested former Global Atlantic restricted share awards having a fair value of $29.47 per share were converted to book value awards at an aggregate grant-date value of $89.0 million. On February 28, 2021, book value awards having an aggregate value of approximately $28.0 million vested as set forth in the former Global Atlantic grant agreements and resulted in a cash payment of $17.0 million to participants, net of applicable tax withholding.
Also in connection with the GA Acquisition, on February 1, 2021, Global Atlantic employees were issued a one-time grant of book value awards having an aggregate initial value of $23.0 million. These one-time book value awards vest over five (5) years, with the first 25% vesting on April 1, 2023 and the remainder vesting 25% annually on April 1 each subsequent year until fully vested, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.
On March 1, 2021, pursuant to the GA Book Value Plan, book value awards having an aggregate initial value of approximately $32 million were granted. Such book value awards generally vest annually over three years in equal increments, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.
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Global Atlantic began recognizing long-term incentive expense for the book value awards described above at the grant dates, based on their initial value, net of a 4% estimated forfeiture rate. Global Atlantic adjusts expense periodically for changes in book value until the awards are settled or forfeited. Expense recognized on forfeited awards is reversed in the period of forfeiture.
On April 1, 2023, BVAs having an aggregate value of approximately $35 million vested as set forth under the terms of the Book Value Plan agreements and resulted in a cash payment on April 3, 2023 of an aggregate $21 million to unit holders, net of applicable tax withholdings.
On February 28, 2023, BVAs having an aggregate value of approximately $24 million vested as set forth under the pre-acquisition grant agreements and resulted in a cash payment of an aggregate $14 million to participants, net of applicable tax withholdings.
The table below presents the activity related to book value awards for the six months ended June 30, 2023:
Six Months Ended
June 30, 2023
Outstanding amount as of beginning of period$138,595 
Granted31,240 
Forfeited(1,809)
Vested and issued(61,593)
Outstanding amount as of end of period$106,433 
Global Atlantic recognized $15.1 million and $13.9 million for the three months ended June 30, 2023 and 2022, respectively, and $30.8 million and $32.4 million for the six months ended June 30, 2023 and 2022, respectively, of compensation expense associated with these awards. As of June 30, 2023, the remaining unamortized compensation expenses of $95.0 million are expected to be recognized over a remaining average period of 2.31 years.
GA Equity Incentive Plan Awards
On June 24, 2021, Global Atlantic issued 1,000 non-voting incentive shares to a Bermuda exempted partnership owned by certain Global Atlantic employees, who are eligible to receive incentive units under Global Atlantic's Senior Management Equity Incentive Plan ("GA Equity Incentive Plan"). These incentive units represent an interest in the receipt of certain amounts based on Global Atlantic's book value, market value, and AUM, in each case as derived in part from the value of TGAFG’s fully-diluted equity shares.
On June 24, 2021, Global Atlantic granted approximately 808 incentive units under the GA Equity Incentive Plan. The book value component of the incentive units vests 20% per year on the anniversary of the GA Acquisition Date, as long as the grantee remains then employed, and will be settled in cash. The market value and AUM components of the incentive units cliff vest upon the earlier to occur of (i) the fifth anniversary of the GA Acquisition Date, or (ii) a change of control, and will be settled in a variable number of TGAFG’s non-voting common shares. TGAFG shares issued under the AUM component of the Plan are exchangeable for shares of KKR. Except in the event of termination due to death or disability, generally, unvested market value and AUM amounts are forfeited upon a termination of employment.
The GA Equity Incentive Plan is accounted for as a hybrid compensation plan, consisting of one component most closely aligned with a profit-sharing plan under ASC 710, Compensation - General, as well as other components within scope of ASC 718, Compensation - Stock Compensation, in all cases with obligations liability-classified. Accordingly, with regard to awards within scope of ASC 710, Global Atlantic records expense based on payouts deemed to be probable and reasonably estimable based on the book value growth of Global Atlantic at the grant date and at each reporting period. For award components subject to liability-classification under ASC 718, Global Atlantic records expense, net of a 0% estimated forfeiture rate, based on the fair value of awards granted, with periodic adjustments to expense for changes in fair value, over the requisite 5-year service period.
The aggregate value of the GA Equity Incentive Plan awards at the initial date of grant was $197.0 million, based on the intrinsic value of the book value component ($5.0 million), as determined by applying the book value profit share percentage rate to Global Atlantic’s net book value growth at the date of grant, and the fair value of the market value and AUM components at the date of grant ($192.0 million, collectively), based on the projected growth in value of each component over the 5-year vesting schedule and applying a forfeiture rate of 0%. Expense is remeasured accordingly at each reporting period and adjusted as needed until the awards are forfeited or settled.
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During the six months ended June 30, 2023 77 incentive units were granted to employees and 35 incentive units were forfeited. As of June 30, 2023 and December 31, 2022, there were approximately 887 and 845 incentive units outstanding under the Plan, respectively.
Global Atlantic recorded compensation expense of $17.9 million and $9.4 million for the three months ended June 30, 2023 and 2022, respectively, and $56.3 million and $26.8 million for the six months ended June 30, 2023 and 2022, respectively, related to periodic change in expense for the GA Units granted under the GA Equity Incentive Plan, with a corresponding offset to other liabilities. As of June 30, 2023, there was approximately $99.3 million of unrecognized expense related to the GA Units granted under the GA Equity Incentive Plan with a weighted average service period remaining of 2.59 years.

21. RELATED PARTY TRANSACTIONS
Due from Affiliates consists of:
 June 30, 2023December 31, 2022
Amounts due from unconsolidated investment funds$1,291,358 $1,401,766 
Amounts due from portfolio companies282,072 261,537 
Due from Affiliates$1,573,430 $1,663,303 
Due to Affiliates consists of:
 June 30, 2023December 31, 2022
Amounts due to current and former employees under the tax receivable agreement (1)
$404,566 $420,599 
Amounts due to unconsolidated investment funds16,690 45,458 
Due to Affiliates$421,256 $466,057 
(1)See Note 1 "Organization" in our financial statements.

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Notes to Financial Statements (Continued)
22. SEGMENT REPORTING
KKR operates through two reportable segments which are presented below and reflect how its chief operating decision-makers allocate resources and assess performance:
•Asset Management - the asset management business offers a broad range of investment management services to investment funds, vehicles and accounts (including Global Atlantic) and provides capital markets services to portfolio companies and third parties. This reportable segment also reflects how its business lines operate collaboratively with predominantly a single expense pool.
•Insurance - the insurance business is operated by Global Atlantic, which is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits.
KKR’s segment profitability measure used to make operating decisions and assess performance across KKR’s reportable segments is presented prior to giving effect to the allocation of income (loss) among KKR & Co. Inc. and holders of any exchangeable securities, and the consolidation of the investment funds, vehicles and accounts that KKR advises, manages or sponsors (including CFEs). KKR's segment profitability measure excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate related charges and (iv) non-recurring items, if any. Strategic corporate related items arise from corporate actions and consist primarily of (i) impairments, (ii) transaction costs from strategic acquisitions, and (iii) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by KKR as the investment adviser for Global Atlantic insurance companies and (ii) interest income and expense based on lending arrangements where one or more KKR subsidiaries borrow from a Global Atlantic insurance subsidiary. Inter-segment transactions are recorded by each segment based on the definitive documents that contain arms' length terms and comply with applicable regulatory requirements. Segment operating earnings for the asset management and insurance segments is further defined as follows:
•Asset Management Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Asset Management segment and is comprised of: (i) Fee Related Earnings, (ii) Realized Performance Income, (iii) Realized Performance Income Compensation, (iv) Realized Investment Income, and (v) Realized Investment Income Compensation. Asset Management Segment Operating Earnings excludes the impact of: (i) unrealized gains (losses) on investments, (ii) unrealized carried interest, and (iii) related unrealized carried interest compensation (carry pool). Management fees earned by KKR as the adviser, manager or sponsor for its investment funds, vehicles and accounts, including its Global Atlantic insurance companies, are included in Asset Management Segment Operating Earnings.
•Insurance Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Insurance segment. This measure is presented before income taxes and is comprised of: (i) Net Investment Income, (ii) Net Cost of Insurance, (iii) General, Administrative, and Other Expenses, and (iv) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings excludes the impact of: (i) investment gains (losses) which include realized gains (losses) related to asset/liability matching investments strategies and unrealized investment gains (losses) and (ii) non-operating changes in policy liabilities and derivatives which includes (a) changes in the fair value of market risk benefits and other policy liabilities measured at fair value and related benefit payments, (b) fees attributed to guaranteed benefits, (c) derivatives used to manage the risks associated with policy liabilities, and (d) losses at contract issuance on payout annuities. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management costs that are earned by KKR as the investment adviser of the Global Atlantic insurance companies.

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Notes to Financial Statements (Continued)
Modification of Segment Information
In connection with the adoption of LDTI (see Note 2 in our financial statements), KKR reevaluated the manner in which it makes operational and resource deployment decisions and assesses the overall performance of KKR's business. As a result, KKR has modified the presentation of its segment financial information effective as of and for the three and six months ended June 30, 2023 with retrospective application to all prior periods presented. The most significant changes are as follows:
(1)implementation of the accounting changes as a result of LDTI within KKR’s Insurance Segment. KKR excludes (i) changes in the fair value of market risk benefits and other policy liabilities and the associated derivatives, (ii) fees attributed to guaranteed benefits, and (iii) losses at contract issuance on payout annuities from the Insurance Segment Operating Earnings. These items are excluded from Insurance Segment Operating Earnings, because the chief operating decision-makers believe these items do not reflect the underlying performance of this business; and
(2)reporting on a pre-tax basis Insurance Segment Operating Earnings (which was previously reported on an after-tax basis).
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Segment Presentation
The following tables set forth information regarding KKR's segment results:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Asset Management
Management Fees (1)
$748,888 $654,927 $1,487,044 $1,279,855 
Transaction and Monitoring Fees, Net190,228 107,301 332,407 413,339 
Fee Related Performance Revenues28,352 9,999 50,093 22,050 
Fee Related Compensation(217,684)(173,748)(420,778)(385,968)
Other Operating Expenses(147,475)(137,244)(297,879)(263,119)
Fee Related Earnings602,309 461,235 1,150,887 1,066,157 
Realized Performance Income149,334 730,858 324,732 1,340,065 
Realized Performance Income Compensation(97,085)(474,428)(211,094)(858,063)
Realized Investment Income (2)
114,675 276,888 312,769 626,242 
Realized Investment Income Compensation(17,183)(41,533)(46,897)(93,936)
Asset Management Segment Operating Earnings$752,050 $953,020 $1,530,397 $2,080,465 
Insurance
Net Investment Income (1) (2)
$1,283,794 $964,396 $2,555,049 $1,826,810 
Net Cost of Insurance(811,677)(504,712)(1,562,289)(986,582)
General, Administrative and Other(203,285)(165,911)(399,999)(312,323)
  Pre-tax Operating Earnings268,832 293,773 592,761 527,905 
Pre-tax Operating Earnings Attributable to Noncontrolling Interest(98,608)(113,158)(217,425)(203,343)
Insurance Segment Operating Earnings170,224 180,615 $375,336 $324,562 
Total Segment Operating Earnings$922,274 $1,133,635 $1,905,733 $2,405,027 
(1) Includes intersegment management fees of $110.6 million and $69.3 million, for three months ended June 30, 2023 and 2022, respectively, and $218.9 million and $128.3 million for the six months ended June 30, 2023 and 2022, respectively.
(2) Includes intersegment interest expense and income of $43.4 million and $34.5 million, for the three months ended June 30, 2023 and 2022, respectively, and $88.2 million and $60.3 million for the six months ended June 30, 2023 and 2022, respectively.
As of June 30,
20232022
Segment Assets:
  Asset Management$31,532,471 $31,457,937 
  Insurance176,041,236 166,034,315 
Total Segment Assets$207,573,707 $197,492,252 
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Reconciliations of Total Segment Amounts
The following tables reconcile the Segment Revenues, Segment Operating Earnings, and Segment Assets to their equivalent GAAP measure:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Total GAAP Revenues$3,626,518 $323,393 $6,754,000 $1,322,756 
Impact of Consolidation and Other184,775 172,118 394,553 385,518 
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)(696,897)923,474 (1,145,915)1,869,217 
Realized Carried Interest146,232 723,609 318,921 1,303,376 
Realized Investment Income114,675 276,888 312,769 626,242 
Capstone Fees(24,040)(19,510)(43,845)(34,995)
Expense Reimbursements(16,840)(25,576)(32,384)(66,879)
Insurance Adjustments:
Net Premiums(626,429)225,502 (1,100,053)(146,642)
Policy Fees(315,382)(319,030)(629,184)(632,812)
Other Income(39,858)(32,512)(77,016)(67,256)
(Gains) Losses from Investments(1)
193,770 21,041 454,277 188,143 
Non-operating Changes in Policy Liabilities and Derivatives(31,253)474,972 (144,029)761,693 
Total Segment Revenues (2)
$2,515,271 $2,744,369 $5,062,094 $5,508,361 
(1)Includes gains and losses on funds withheld receivables and payables embedded derivatives.
(2)Total Segment Revenues is comprised of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, (v) Realized Investment Income, and (vi) Net Investment Income.
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Income (Loss) Before Tax (GAAP)$1,451,013 $(1,916,593)$1,859,448 $(627,554)
Impact of Consolidation and Other (251,248)790,100 (152,111)(510,226)
Interest Expense92,010 76,619 177,510 146,079 
Equity-based compensation - KKR Holdings(1)
— 80,513 — 100,334 
Asset Management Adjustments:
Unrealized (Gains) Losses(458,311)1,178,759 (358,984)1,501,028 
Unrealized Carried Interest(435,495)1,561,367 (638,154)2,851,400 
Unrealized Carried Interest Compensation
(Carry Pool)		195,361 (646,239)279,191 (1,160,226)
Strategic Corporate Related Charges(2)
7,192 50,306 13,999 70,204 
Equity-based compensation45,261 50,582 104,278 105,693 
Equity-based compensation - Performance based63,654 59,831 130,927 117,784 
Insurance Adjustments:(3)
(Gains) Losses from Investments(3)(4)
125,483 79,905 256,597 208,937 
Non-operating Changes in Policy Liabilities and Derivatives(3)
57,463 (250,582)163,954 (442,783)
Strategic Corporate Related Charges(3)
3,199 2,890 3,199 5,969 
Equity-based and Other Compensation(3)
23,898 13,464 60,291 32,962 
Amortization of Acquired Intangibles(3)
2,794 2,713 5,588 5,426 
Total Segment Operating Earnings$922,274 $1,133,635 $1,905,733 $2,405,027 
(1)Represents equity-based compensation expense in connection with the allocation of units of KKR Holdings, which were not dilutive to common stockholders of KKR & Co. Inc.
(2)For the three and six months ended June 30, 2022, strategic corporate transaction-related charges include a $40.7 million realized loss from foreign exchange derivatives that were entered into in connection with the acquisition of KJRM and that were settled upon closing.
(3)Amounts represent the portion allocable to KKR & Co. Inc.
(4)Includes gains and losses on funds withheld receivables and payables embedded derivatives.
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Notes to Financial Statements (Continued)
As of
June 30, 2023June 30, 2022
Total GAAP Assets$287,694,799 $264,792,220 
Impact of Consolidation and Reclassifications(77,968,654)(64,825,125)
Carry Pool Reclassifications(2,152,438)(2,474,843)
Total Segment Assets$207,573,707 $197,492,252 
23. EQUITY
Stockholders' Equity
Common Stock
The common stock of KKR & Co. Inc. is entitled to vote as provided by its certificate of incorporation, Delaware General Corporation Law and the rules of the New York Stock Exchange ("NYSE"). Subject to preferences that apply to shares of Series C Mandatory Convertible Preferred Stock and any other shares of preferred stock outstanding at the time on which dividends are payable, the holders of common stock are entitled to receive dividends out of funds legally available if the Board of Directors, in its discretion, determines to declare dividends and then only at the times and in the amounts that the Board of Directors may determine. The common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.
Series I Preferred Stock
Except for any distribution required by Delaware law to be made upon a dissolution event, the holders of Series I preferred stock do not have any economic rights to receive dividends. Series I preferred stock is entitled to vote on various matters that may be submitted to vote of the stockholders and the other matters as set forth in the certificate of incorporation. Upon a dissolution event, each holder of Series I preferred stock will be entitled to a payment equal to $0.01 per share of Series I preferred stock. The Series I preferred stock will be eliminated on the Sunset Date (as defined in Note 1 "Organization"), which is scheduled to occur not later than December 31, 2026.
Series C Mandatory Convertible Preferred Stock
On August 14, 2020, KKR & Co. Inc. issued 23,000,000 shares, or $1.15 billion aggregate liquidation preference, of its 6.00% Series C Mandatory Convertible Preferred Stock (the "Series C Mandatory Convertible Preferred Stock").
Unless converted or redeemed earlier in accordance with the terms of the Series C Mandatory Convertible Preferred Stock, each share of Series C Mandatory Convertible Preferred Stock will automatically convert on the mandatory conversion date, which is expected to be September 15, 2023, into between 1.1662 shares and 1.4285 shares of common stock, in each case, subject to customary anti-dilution adjustments described in the certificate of designations related to the Series C Mandatory Convertible Preferred Stock. The number of shares of common stock issuable upon conversion will be determined based on the average volume weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to September 15, 2023.
Dividends on the Series C Mandatory Convertible Preferred Stock will be payable on a cumulative basis when, as and if declared by our Board of Directors, or an authorized committee thereof, at an annual rate of 6.00% on the liquidation preference of $50.00 per share of Series C Mandatory Convertible Preferred Stock, and may be paid in cash or, subject to certain limitations, in shares of common stock or, subject to certain limitations, any combination of cash and shares of common stock. If declared, dividends on the Series C Mandatory Convertible Preferred Stock will be payable quarterly on March 15, June 15, September 15 and December 15 of each year to, and including, September 15, 2023, commencing on December 15, 2020.
Upon KKR & Co. Inc.’s voluntary or involuntary liquidation, winding-up or dissolution, each holder of the Series C Mandatory Convertible Preferred Stock would be entitled to receive a liquidation preference in the amount of $50.00 per share of Series C Mandatory Convertible Preferred Stock, plus an amount equal to accumulated and unpaid dividends on such shares, whether or not declared, to, but excluding, the date fixed for liquidation, winding-up or dissolution, to be paid out of KKR & Co. Inc.’s assets legally available for distribution to its stockholders after satisfaction of debt and other liabilities owed to KKR & Co. Inc.’s creditors and holders of shares of its stock ranking senior to the Series C Mandatory Convertible Preferred Stock and before any payment or distribution is made to holders of any stock ranking junior to the Series C Mandatory Convertible Preferred Stock, including, without limitation, common stock.
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Notes to Financial Statements (Continued)
In connection with the issuance of the Series C Mandatory Convertible Preferred Stock, the limited partnership agreement of KKR Group Partnership was amended to provide for preferred units with economic terms designed to mirror those of the Series C Mandatory Convertible Preferred Stock.
Share Repurchase Program
Under KKR's repurchase program, shares of common stock of KKR & Co. Inc. may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. In addition to the repurchases of common stock, the repurchase program will be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards granted pursuant to our Equity Incentive Plans representing the right to receive common stock. KKR expects that the program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase or retire any specific number of shares of common stock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at any time. As of August 1, 2023, there was approximately $208 million remaining under the program.
The following table presents KKR & Co. Inc. common stock that has been repurchased or equity awards retired under the repurchase program:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Shares of common stock repurchased5,086,354 — 5,086,354 5,191,174 
Equity awards for common stock retired 604,281 596,437 604,281 596,437 

Change in KKR & Co. Inc.'s Ownership Interest
Vesting of restricted holdings units results in a change in ownership in KKR Group Partnership L.P., while KKR retains a controlling interest, and is accounted for as an equity transaction between the controlling and noncontrolling interests. The impact of the vesting of restricted holdings units are included within "Change in KKR & Co. Inc.'s Ownership Interest."
Noncontrolling Interests
Noncontrolling interests in consolidated entities represent the non-redeemable ownership interests in KKR that are held primarily by:
(i)third party fund investors in KKR's consolidated funds and certain other entities;
(ii)third parties in KKR's Capital Markets business line;
(iii)certain current and former employees who hold exchangeable securities; and
(iv)third parties in KKR's insurance business including GA Rollover Investors, GA Co-Investors and third party investors in Global Atlantic's consolidated renewable energy entities and certain other entities.

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Notes to Financial Statements (Continued)
The following tables present the calculation of total noncontrolling interests:
 Three Months Ended
June 30, 2023		Six Months Ended
June 30, 2023
Beginning of Period (as previously reported for the prior period)$37,316,569 $35,778,000 
Adoption of New Accounting Standard (See Note 2)— 632,858 
Balance at the beginning of the period (as revised for the prior period)37,316,569 36,410,858 
Net Income (Loss) Attributable to Noncontrolling Interests 266,086 193,083 
Other Comprehensive Income (Loss), net of tax (77,150)290,038 
Change in KKR & Co. Inc.'s Ownership Interest(113,121)(113,121)
Equity Based Compensation (Non cash Contribution)71,080 147,676 
Capital Contributions4,935,615 7,404,393 
Capital Distributions(1,897,563)(3,737,866)
Changes in Consolidation(72,062)(165,607)
Balance at the end of the period$40,429,454 $40,429,454 
Three Months Ended
June 30, 2022		Six Months Ended
June 30, 2022
Beginning of Period (as previously reported for the prior period)$41,501,791 $40,474,565 
Adoption of New Accounting Standard (See Note 2)491,360 104,961 
Balance at the beginning of the period (as revised for the prior period)41,993,151 40,579,526 
Net Income (Loss) Attributable to Noncontrolling Interests(1,096,715)148,272 
Other Comprehensive Income (Loss), net of tax(1,546,467)(3,166,939)
Exchange of KKR Holdings units to Common Stock(12,865)(12,865)
Equity Based Compensation (Non cash Contribution)145,670 229,062 
Capital Contributions3,852,457 7,432,048 
Capital Distributions(1,742,028)(3,615,901)
Holdings Merger (1)
(7,197,950)(7,197,950)
Change in KKR & Co. Inc.'s Ownership Interest(155,284)(155,284)
Balance at the end of the period$34,239,969 $34,239,969 
(1)Refer to Note 1 "Organization" for further information on the Reorganization Mergers that closed on May 31, 2022, pursuant to which KKR acquired KKR Holdings and all of the KKR Group Partnership Units held by it, and all outstanding KKR Holdings Units were exchanged for KKR & Co. Inc. common stock.

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24. REDEEMABLE NONCONTROLLING INTERESTS
Redeemable noncontrolling interests represent:
(i) Noncontrolling interests of certain KKR investment funds and vehicles that are subject to periodic redemption by fund investors following the expiration of a specified period of time, or may be withdrawn subject to a redemption fee during the period when capital may not be otherwise withdrawn. Consolidated fund investor's interests subject to redemption as described above are presented as Redeemable Noncontrolling Interests in the accompanying consolidated statements of financial condition and presented as Net Income (Loss) Attributable to Redeemable Noncontrolling Interests in the accompanying consolidated statements of operations. When redeemable amounts become legally payable to fund investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the accompanying consolidated statements of financial condition.
(ii) Global Atlantic has redeemable noncontrolling interests related to renewable energy entities of approximately $49.9 million and $82.7 million as of June 30, 2023 and December 31, 2022, respectively, as determined by the hypothetical liquidation at book value ("HLBV") method, respectively. The estimated redemption value of redeemable noncontrolling interests is calculated as the discounted cash flows subsequent to the expected flip date of the respective renewable energy entity. The flip date represents the date at which the allocation of income and cash flows among the investors in the entity is adjusted, pursuant to the redeemable noncontrolling interest investors having achieved an agreed-upon return. The flip date of renewable energy partnerships determines when the redeemable noncontrolling interests are eligible to be redeemed. Eligible redemption dates range from January 1, 2028 to June 30, 2028. For the redeemable noncontrolling interests outstanding as of June 30, 2023 and December 31, 2022, the estimated redemption value that would be due at the respective redemption dates is $3.2 million and $5.3 million, respectively.
The following tables presents the calculation of Redeemable Noncontrolling Interests:
Three Months Ended
June 30, 2023		Six Months Ended
June 30, 2023
Balance at the beginning of the period$144,126 $152,065 
Net income (loss) attributable to Redeemable Noncontrolling Interests(1,740)(9,043)
Capital contributions69,997 69,997 
Capital distributions(1,149)(1,785)
Changes in Consolidation(27,821)(27,821)
Balance at the end of the period$183,413 $183,413 
Three Months Ended
June 30, 2022		Six Months Ended
June 30, 2022
Balance at the beginning of the period$81,793 82,491 
Net income (loss) attributable to Redeemable Noncontrolling Interests8 (55)
Capital contributions— — 
Capital distributions(634)(1,269)
Balance at the end of the period$81,167 $81,167 
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25. COMMITMENTS AND CONTINGENCIES
Funding Commitments and Others
As of June 30, 2023, KKR had unfunded commitments consisting of $9.2 billion to its investment funds and vehicles. KKR has also agreed for certain of its investment vehicles to fund or otherwise be liable for a portion of their investment losses (up to a maximum of approximately $111.7 million) and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).
In addition to these uncalled commitments and funding obligations to KKR's investment funds and vehicles, KKR has entered into contractual commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and syndications in KKR's Capital Markets business line. As of June 30, 2023, these commitments amounted to $615.7 million. Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. KKR's capital markets business has arrangements with third parties, which reduce its risk when underwriting certain debt transactions, and thus our unfunded commitments as of June 30, 2023 have been reduced to reflect the amount to be funded by such third parties. In the case of purchases of investments or assets in our Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be less.
Global Atlantic has commitments to purchase or fund investments of $3.0 billion and $3.3 billion as of June 30, 2023 and December 31, 2022, respectively. These commitments include those related to commercial mortgage loans, other lending facilities and other investments. For those commitments that represent a contractual obligation to extend credit, Global Atlantic has recorded a liability of $24.2 million and $55.8 million for current expected credit losses as of June 30, 2023 and December 31, 2022, respectively.
In addition, Global Atlantic has entered into certain forward flow agreements to purchase loans. Global Atlantic's obligations under these agreements are subject to change, curtailment, and cancellation based on various provisions including repricing mechanics, due diligence reviews, and performance or pool quality, among other factors.
Non-cancelable Operating Leases
KKR's non-cancelable operating leases consist of leases of office space around the world. There are no material rent holidays, contingent rent, rent concessions or leasehold improvement incentives associated with any of these property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions and rent expense is recognized on a straight‑line basis over the term of the lease agreement.
Global Atlantic also enters into land leases for its consolidated investments in renewable energy.
Contingent Repayment Guarantees
The partnership documents governing KKR's carry-paying investment funds and vehicles generally include a "clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. KKR has guaranteed its general partners' clawback obligations.
As of June 30, 2023, approximately $525 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 June 30, 2023 fair values. Although KKR would be required to remit the entire amount to fund investors that are entitled to receive the clawback payment, KKR would be entitled to seek reimbursement of approximately $210 million of that amount from Associates Holdings, which is not a KKR subsidiary. As of June 30, 2023, Associates Holdings had access to cash reserves sufficient to reimburse the full $210 million that would be due to KKR. If the investments in all carry-paying funds were to be liquidated at zero value, the clawback obligation would have been approximately $3.1 billion, and KKR would be entitled to seek reimbursement of approximately $1.2 billion of that amount from Associates Holdings. KKR will acquire control of Associates Holdings when a subsidiary of KKR becomes its general partner upon the closing of the transactions contemplated to occur on the Sunset Date (as defined in Note 1 "Organization"), which will occur not later than December 31, 2026.
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Carried interest is recognized in the consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of KKR's investment balance as this is where carried interest is initially recorded.
Indemnifications and Other Guarantees
Asset Management Segment
KKR may incur contingent liabilities for claims that may be made against it in the future. KKR enters into contracts that contain a variety of representations, warranties and covenants, including indemnifications. KKR (including KFN) and certain of KKR's investment funds have provided and provide certain credit support, such as indemnities and guarantees, relating to a variety of matters, including non-recourse carve-out guarantees for fraud, willful misconduct and other wrongful acts in connection with the financing of (i) certain real estate investments that we have made, including KKR's corporate real estate, and (ii) certain investment vehicles that KKR manages or sponsors.

KKR also has provided, and provides, credit support in connection with the Asset Management business, including:
i.to certain of its subsidiaries' obligations in connection with a limited number of investment vehicles that KKR manages,

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

iii.to one of its hedge fund partnerships,

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

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

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

KKR may also become liable for certain fees payable to sellers of businesses or assets if a transaction does not close, subject to certain conditions, if any, specified in the acquisition agreements for such businesses or assets.
Insurance Segment
The Global Atlantic business was formerly owned by The Goldman Sachs Group, Inc. (together with its subsidiaries, "Goldman Sachs"). In connection with the separation of Global Atlantic from Goldman Sachs in 2013, Global Atlantic entered into a tax benefit payment agreement with Goldman Sachs. Under the tax benefit payment agreement, GA FinCo is obligated to make annual payments out of available cash, guaranteed by GAFG, to Goldman Sachs over an approximately 25-year period totaling $214.0 million. As of June 30, 2023, the present value of the remaining amount to be paid is $61.2 million. Although these payments are subordinated and deferrable, deferral of these payments would result in restrictions on distributions by GA FinCo and GAFG.
In lieu of funding certain investments in loan facilities to third party borrowers in cash, Global Atlantic has arranged or participated in letters of credit issued by third-party banks on behalf of the borrowers in the amount of $29.5 million, as of June 30, 2023, with expiration dates between October 2023 to September 2024. Global Atlantic has available lines of credit that would allow for additional letters of credit to be issued on behalf of certain borrowers, up to $235.5 million, as of June 30,
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2023. For accounting purposes, these letters of credit are considered guarantees of certain obligations of the borrowers. If a letter of credit were to be drawn, Global Atlantic would be obligated to repay the issuing third-party bank, and Global Atlantic would recognize a loan receivable from the borrowers on the consolidated statements of financial condition. Global Atlantic monitors the likelihood of these letters of credit being drawn, and any related contingent obligation. As of both June 30, 2023 and December 31, 2022, the expected credit loss on the contingent liability associated with these letters of credit was not material.
Unless otherwise stated above, KKR's maximum exposure under the arrangements described under this section “Indemnifications and Other Guarantees” are currently unknown as there are no stated or notional amounts included in these arrangements and KKR's liabilities for these matters would require a claim to be made against KKR in the future.
Litigation
From time to time, KKR (including Global Atlantic) is involved in various legal proceedings, lawsuits, arbitration and claims incidental to the conduct of KKR's businesses. KKR's asset management and insurance businesses are also subject to extensive regulation, which may result in regulatory proceedings against them.
In December 2017, KKR & Co. L.P. (which is now KKR Group Co. Inc.) and its then Co-Chief Executive Officers were named as defendants in a lawsuit filed in Kentucky state court alleging, among other things, the violation of fiduciary and other duties in connection with certain separately managed accounts that Prisma Capital Partners LP, a former subsidiary of KKR, manages for the Kentucky Retirement Systems. Also named as defendants in the lawsuit are certain current and former trustees and officers of the Kentucky Retirement Systems, Prisma Capital Partners LP, and various other service providers to the Kentucky Retirement Systems and their related persons. KKR and other defendants’ motions to dismiss were denied by the trial court in November 2018, but in April 2019 the Kentucky Court of Appeals vacated the trial court's opinion and order denying the motions to dismiss the case for lack of standing. The decision of the Court of Appeals was appealed by plaintiffs to the Supreme Court of Kentucky. On July 9, 2020, the Supreme Court of Kentucky reversed the trial court's order and remanded the case to the trial court with direction to dismiss the complaint for lack of constitutional standing. On July 20, 2020, the Office of the Attorney General, on behalf of the Commonwealth of Kentucky, filed a motion to intervene as a plaintiff in the lawsuit and on July 21, 2020 filed a new lawsuit in the same Kentucky trial court making essentially the same allegations against the defendants, including KKR & Co. Inc. and Messrs. Kravis and Roberts. On July 29, 2020, certain private plaintiffs in the original lawsuit filed a motion to further amend their original complaint and to add new plaintiffs. On July 30, 2020, KKR and other defendants filed objections to the Attorney General’s motion to intervene. On December 28, 2020, the trial court dismissed the complaint filed by the original plaintiffs and denied their motion to amend their original complaint and add new plaintiffs, but granted the Office of the Attorney General’s motion to intervene. In January 2021, some of the attorneys for the private plaintiffs in the original lawsuit filed a new lawsuit, and a motion to intervene in the original lawsuit, on behalf of a new set of plaintiffs, who claim to be "Tier 3" members of Kentucky Retirement Systems, alleging substantially the same allegations as in the original lawsuit. The motion to intervene in the original lawsuit was denied. These "Tier 3" plaintiffs appealed the denial of their motion to intervene but then voluntarily dismissed their appeal on January 31, 2022. In addition, the Kentucky Retirement Systems had commissioned an investigation into certain matters alleged in the Attorney General's complaint. The trial court ordered that this investigation be completed by May 17, 2021, and the Attorney General was permitted to amend its complaint after reviewing the investigation's report within ten days of the Attorney General's receipt of it. On May 24, 2021, the Attorney General filed a First Amended Complaint on behalf of the Commonwealth of Kentucky. This complaint continues to name KKR & Co. L.P. and its then Co-Chief Executive Officers, as defendants, and makes similar allegations against them. KKR and the other defendants moved to dismiss the First Amended Complaint on July 30, 2021. The court held oral argument on these motions to dismiss on December 14, 2021. On July 9, 2021, the individual plaintiffs served an amended complaint, which purports to assert, on behalf of a class of beneficiaries of Kentucky Retirement Systems, direct claims for breach of fiduciary duty and civil violations under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). This complaint was removed to the U.S. District Court for the Eastern District of Kentucky, which has entered an order staying this case until the completion of the Attorney General’s lawsuit on behalf of the Commonwealth.
On August 20, 2021, the same and other individual plaintiffs filed a second complaint in Kentucky state court, purportedly on behalf of Kentucky Retirement Systems' funds, alleging the same claims against KKR & Co. Inc. and Messrs. Kravis and Roberts as in the July 9th amended complaint but without the RICO or class action allegations. KKR and the other defendants have moved to dismiss the August 20, 2021 complaint by the Tier 3 plaintiffs, whose motions are awaiting a decision from the Kentucky state court. On March 24, 2022, in a separate declaratory judgment action brought by the Commonwealth of Kentucky regarding the enforceability of certain indemnification provisions available to KKR & Co. Inc. and Prisma Capital Partners LP, the Kentucky state court found that it has personal jurisdiction over KKR & Co. Inc., and this finding is currently being appealed by KKR. On May 27, 2022, following a motion by KKR, the judge then adjudicating the lawsuits recused himself from the original 2017 action and the second Tier 3 action, and a new judge was assigned. On December 9, 2022, the
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new judge issued an order that held in abeyance the motions to dismiss filed by KKR and other defendants pending the outcome of appeals which challenge the trial court’s December 28, 2020 order granting the Attorney General’s motion to intervene. On April 14, 2023, the Kentucky Court of Appeals ruled in favor of KKR and the other defendants in their appeal of the trial court’s December 28, 2020 order granting the Kentucky Attorney General’s motion to intervene in the 2017 action, including that the trial court should have dismissed the entire 2017 action after the Kentucky Supreme Court’s 2020 decision. On May 4, 2023, the Attorney General filed a petition for rehearing with the Court of Appeals. The Court of Appeals denied the petition for rehearing. On July 6, 2023, the Attorney General filed with the Kentucky Supreme Court a motion for discretionary review of the Court of Appeals' decision. The Court of Appeals’ April 14, 2023 decision does not dismiss the Kentucky Attorney General’s standalone lawsuit filed on July 21, 2020.
KKR (including Global Atlantic) currently is and expects to continue to become, from time to time, subject to examinations, inquiries and investigations by various U.S. and non-U.S. governmental and regulatory agencies, including but not limited to the SEC, U.S. Department of Justice, U.S. state attorney generals, Financial Industry Regulatory Authority ("FINRA"), the U.K. Financial Conduct Authority, Central Bank of Ireland, Monetary Authority of Singapore, U.S. state insurance regulatory authorities, and the Bermuda Monetary Authority. Such examinations, inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings or fines against KKR or its personnel. KKR is presently subject to civil investigations and inquiries by the U.S. Department of Justice related to antitrust matters and by the SEC related to business-related electronic communications. KKR is currently cooperating with these civil investigations and inquiries.
Moreover, in the ordinary course of business, KKR (including Global Atlantic) is and can be both the defendant and the plaintiff in numerous lawsuits with respect to acquisitions, bankruptcy, insolvency and other events. Such lawsuits may involve claims that adversely affect the value of certain investments owned by KKR's funds and Global Atlantic's insurance companies. 
KKR establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. No loss contingency is recorded for matters where such losses are either not probable or reasonably estimable (or both) at the time of determination. Such matters may be subject to many uncertainties, including among others: (i) the proceedings may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved or (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties. Consequently, management is unable to estimate a range of potential loss, if any, related to these matters. In addition, loss contingencies may be, in part or in whole, subject to insurance or other payments such as contributions and/or indemnity, which may reduce any ultimate loss. KKR has included in its financial statements the reserve for regulatory, litigation and related matters that Global Atlantic includes in its financial statements, including with respect to matters arising from the conversion of life insurance policies from systems previously managed by Athene Holdings Limited to the platform of one of Global Atlantic's third party service providers, Alliance-One, a subsidiary of DXC Technology Company.
It is not possible to predict the ultimate outcome of all pending legal proceedings, and some of the matters discussed above seek or may seek potentially large and/or indeterminate amounts. Based on information known by management, management has not concluded that the final resolutions of the matters above will have a material effect upon the financial statements. However, given the potentially large and/or indeterminate amounts sought or may be sought in certain of these matters and the inherent unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on KKR's financial results in any particular period.
Other Financing Arrangements
Global Atlantic has financing arrangements with unaffiliated third parties to support the reserves of its affiliated special purpose reinsurers. Total fees associated with these financing arrangements were $5.0 million and $5.6 million for the three months ended June 30, 2023 and 2022, respectively, and $10.1 million for both the six months ended June 30, 2023 and 2022, respectively, and are included in insurance expenses in the consolidated statements of operations. As of both June 30, 2023 and December 31, 2022, the total capacity of the financing arrangements with third parties was $2.3 billion.
Other than the matters disclosed above, there were no outstanding or unpaid balances from the financing arrangements with unaffiliated third parties as of both June 30, 2023 and December 31, 2022.
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26. SUBSEQUENT EVENTS
Common Stock Dividend
A dividend of $0.165 per share of common stock of KKR & Co. Inc. has been declared and was announced on August 7, 2023. This dividend will be paid on August 31, 2023 to common stockholders of record as of the close of business on August 17, 2023.
Preferred Stock Dividends
On September 15, 2023, each outstanding share of the Series C Mandatory Convertible Preferred Stock will automatically convert into a number of shares of our common stock based on the conversion rate set forth in the Series C Mandatory Convertible Preferred Stock prospectus supplement. A dividend of $0.75 per share of Series C Mandatory Convertible Preferred Stock has been declared and was announced on August 7, 2023 and set aside for payment. This dividend will be paid on September 15, 2023 to holders of record of Series C Mandatory Convertible Preferred Stock as of the close of business on September 1, 2023.
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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.
As of June 30, 2023, we manage $519 billion of assets for our clients. Throughout our history, we have consistently been a leader in the private equity industry, having completed approximately 715 private equity investments in portfolio companies with a total transaction value in excess of $705 billion as of June 30, 2023. 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.
Our insurance business is operated by Global Atlantic, in which we acquired a majority controlling interest on February 1, 2021. Global Atlantic is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily offers individuals fixed-rate annuities, fixed-indexed annuities and targeted life products through a network of banks, broker-dealers and independent marketing organizations. Global Atlantic provides its institutional clients customized reinsurance solutions, including block, flow and pension risk transfer reinsurance, as well as funding agreements. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of June 30, 2023, Global Atlantic served approximately 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.
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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 minority positions. In addition to our traditional private equity funds that invest in large and mid-sized companies, we sponsor investment funds that invest in core 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 June 30, 2023, our Private Equity business line had $170.1 billion of AUM, consisting of $119.3 billion in traditional private equity, $34.3 billion in core private equity and $16.5 billion in growth equity, which includes $4.0 billion of impact investments.
The table below presents information as of June 30, 2023, relating to our current private equity and other vehicles reported in our Private Equity business line for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after June 30, 2023.
 Investment PeriodAmount ($ in millions)
 
Start
Date(1)
End
Date (2)
Commitment (3)
Uncalled
Commitments		Percentage
Committed
by General
Partner		InvestedRealized
Remaining
Cost (4)
Remaining
Fair Value		Gross Accrued Carried Interest
Private Equity Business Line         
North America Fund XIII8/20218/2027$18,400 $12,209 3%$6,191 $— $6,191 $6,880 $7 
Americas Fund XII5/20175/202113,500 1,671 4%12,428 6,801 9,767 18,667 1,534 
North America Fund XI11/20121/20178,718 158 3%10,039 22,833 2,759 3,252 170 
2006 Fund (5)
9/20069/201217,642 — 2%17,309 37,415 19 8 5 
Millennium Fund (5)
12/200212/20086,000 — 3%6,000 14,123 — 6 1 
Ascendant Fund6/20226/20282,721 2,721 11%— — — — — 
European Fund VI6/20226/20287,396 6,201 3%1,195 — 1,195 1,047 — 
European Fund V7/20192/20226,334 1,023 2%5,380 917 5,213 6,270 271 
European Fund IV2/20153/20193,512 5 6%3,637 5,122 1,848 2,952 211 
European Fund III (5)
3/20083/20145,505 145 5%5,360 10,625 586 85 (32)
European Fund II (5)
11/200510/20085,751 — 2%5,751 8,507 — 31 (1)
Asian Fund IV7/20207/202614,735 8,511 4%6,386 161 6,278 7,226 15 
Asian Fund III8/20177/20209,000 1,446 6%8,064 5,294 6,773 11,596 910 
Asian Fund II10/20133/20175,825 — 1%7,323 6,474 2,929 2,145 (346)
Asian Fund (5)
7/20074/20133,983 — 3%3,974 8,728 110 — (1)
China Growth Fund (5)
11/201011/20161,010 — 1%1,010 1,065 322 135 (24)
Next Generation Technology Growth Fund III11/202211/20282,620 2,620 7%— — — — — 
Next Generation Technology Growth Fund II12/20195/20222,088 207 7%2,078 496 1,876 2,637 161 
Next Generation Technology Growth Fund3/201612/2019659 5 22%668 1,036 322 949 70 
Health Care Strategic Growth Fund II5/20215/20273,789 3,122 4%667 — 667 708 — 
Health Care Strategic Growth Fund12/20164/20211,331 189 11%1,272 207 1,141 1,708 78 
Global Impact Fund II6/20226/20282,186 2,186 7%— — — — — 
Global Impact Fund2/20193/20221,242 265 8%1,152 332 1,011 1,538 100 
Co-Investment Vehicles and OtherVariousVarious16,339 3,080 Various13,690 8,126 9,816 12,050 1,057 
Core Investment VehiclesVariousVarious24,773 11,235 30%14,397 927 14,039 22,960 148 
Unallocated Commitments (6)
N/AN/A4,085 4,085 Various— — — — — 
Total Private Equity  $189,144 $61,084  $133,971 $139,189 $72,862 $102,850 $4,334 
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 June 30, 2023.
(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.
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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 June 30, 2023, our Real Assets business line had $121.6 billion of AUM, consisting of $64.2 billion in real estate (of which $35.7 billion is real estate credit and $28.5 billion is real estate equity), $54.3 billion in infrastructure, and $3.1 billion in energy.
The table below presents information as of June 30, 2023, relating to our current real asset and other vehicles reported in our Real Assets business line for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after June 30, 2023.
 Investment PeriodAmount ($ in millions)
 
Start
Date (1)
End
Date (2)
Commitment (3)
Uncalled
Commitments		Percentage
Committed
by General
Partner		InvestedRealized
Remaining
Cost (4)
Remaining
Fair Value		Gross Accrued Carried Interest
Real Assets Business Line
Energy Income and Growth Fund II8/20188/2022$994 $— 20%$1,191 $255 $987 $1,560 $37 
Energy Income and Growth Fund9/20136/20181,974 — 13%1,974 1,076 977 474 — 
Natural Resources Fund (5)
VariousVarious887 — Various887 132 170 34 — 
Global Energy OpportunitiesVariousVarious915 62 Various520 192 319 185 — 
Global Infrastructure Investors IV8/20218/202716,578 7,734 2%9,133 289 8,962 9,448 21 
Global Infrastructure Investors III7/20186/20217,164 1,200 4%6,230 1,769 5,417 6,572 283 
Global Infrastructure Investors II12/20146/20183,039 128 4%3,164 4,753 1,094 1,605 53 
Global Infrastructure Investors9/201010/20141,040 — 5%1,050 2,228 — — — 
Asia Pacific Infrastructure Investors II9/20229/20285,790 5,790 6%— — — — — 
Asia Pacific Infrastructure Investors1/20209/20223,792 1,382 7%2,695 496 2,425 2,769 87 
Diversified Core Infrastructure Fund12/2020(6)8,844 663 6%8,210 329 8,210 8,578 — 
Real Estate Partners Americas III1/20211/20254,253 1,802 5%2,548 213 2,431 2,311 — 
Real Estate Partners Americas II5/201712/20201,921 229 8%1,929 2,492 611 640 46 
Real Estate Partners Americas5/20135/20171,229 135 16%1,024 1,408 94 55 (1)
Real Estate Partners Europe II3/20203/20242,060 691 10%1,512 368 1,335 1,256 — 
Real Estate Partners Europe8/201512/2019707 110 10%675 757 206 208 — 
Asia Real Estate Partners7/20197/20231,682 551 15%1,138 19 1,107 1,246 — 
Real Estate Credit Opportunity Partners II8/20196/2023950 — 5%976 158 976 953 8 
Real Estate Credit Opportunity Partners2/20174/20191,130 122 4%1,008 462 1,008 1,003 4 
Property Partners Americas12/2019
(6)
2,569 46 19%2,523 159 2,523 2,645 — 
Co-Investment Vehicles and OtherVariousVarious7,013 2,337 Various4,743 1,652 4,277 3,923 14 
Total Real Assets$74,531 $22,982 $53,130 $19,207 $43,129 $45,465 $552 
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 June 30, 2023.
(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)Open-ended fund.
Private Equity and Real Asset Performance
The table below presents information as of June 30, 2023, 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 June 30, 2023, 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.
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 AmountFair Value of Investments   
Private Equity and Real Assets Business Lines 
Investment Funds and Other Vehicles
Commitment (2)
Invested
Realized (4)
UnrealizedTotal 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 Fund357 357 1,828 — 1,828 29.0 %25.8 %5.1 
1982 Fund328 328 1,291 — 1,291 48.1 %39.2 %3.9 
1984 Fund1,000 1,000 5,964 — 5,964 34.5 %28.9 %6.0 
1986 Fund672 672 9,081 — 9,081 34.4 %28.9 %13.5 
1987 Fund6,130 6,130 14,949 — 14,949 12.1 %8.9 %2.4 
1993 Fund1,946 1,946 4,143 — 4,143 23.6 %16.8 %2.1 
1996 Fund6,012 6,012 12,477 — 12,477 18.0 %13.3 %2.1 
Subtotal - Legacy Funds16,475 16,475 50,269 — 50,269 26.1 %19.9 %3.1 
Included Funds        
European Fund (1999)3,085 3,085 8,758 — 8,758 26.9 %20.2 %2.8 
Millennium Fund (2002)6,000 6,000 14,123 6 14,129 22.0 %16.1 %2.4 
European Fund II (2005)5,751 5,751 8,507 31 8,538 6.1 %4.5 %1.5 
2006 Fund (2006)17,642 17,309 37,415 8 37,423 11.9 %9.3 %2.2 
Asian Fund (2007)3,983 3,974 8,728 — 8,728 18.9 %13.7 %2.2 
European Fund III (2008)5,505 5,360 10,625 85 10,710 16.4 %11.3 %2.0 
E2 Investors (Annex Fund) (2009)196 196 200 — 200 0.6 %0.5 %1.0 
China Growth Fund (2010)1,010 1,010 1,065 135 1,200 4.3 %0.4 %1.2 
Natural Resources Fund (2010)887 887 132 34 166 (24.5)%(26.1)%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 10,039 22,833 3,252 26,085 23.9 %19.4 %2.6 
Asian Fund II (2013) 5,825 7,323 6,474 2,145 8,619 4.8 %3.2 %1.2 
Real Estate Partners Americas (2013) 1,229 1,024 1,408 55 1,463 16.1 %11.3 %1.4 
Energy Income and Growth Fund (2013) 1,974 1,974 1,076 474 1,550 (6.3)%(9.0)%0.8 
Global Infrastructure Investors II (2014)3,039 3,164 4,753 1,605 6,358 19.8 %17.1 %2.0 
European Fund IV (2015) 3,512 3,637 5,122 2,952 8,074 23.8 %18.5 %2.2 
Real Estate Partners Europe (2015) 707 675 757 208 965 12.8 %9.3 %1.4 
Next Generation Technology Growth Fund (2016)659 668 1,036 949 1,985 31.3 %26.6 %3.0 
Health Care Strategic Growth Fund (2016)1,331 1,272 207 1,708 1,915 19.1 %12.3 %1.5 
Americas Fund XII (2017)13,500 12,428 6,801 18,667 25,468 25.0 %20.2 %2.0 
Real Estate Credit Opportunity Partners (2017)1,130 1,008 462 1,003 1,465 9.2 %7.8 %1.5 
Core Investment Vehicles (2017) 24,773 14,397 927 22,960 23,887 18.9 %18.1 %1.7 
Asian Fund III (2017)9,000 8,064 5,294 11,596 16,890 29.6 %23.1 %2.1 
Real Estate Partners Americas II (2017)1,921 1,929 2,492 640 3,132 26.9 %22.2 %1.6 
Global Infrastructure Investors III (2018)7,164 6,230 1,769 6,572 8,341 13.2 %9.9 %1.3 
Global Impact Fund (2019)1,242 1,152 332 1,538 1,870 26.6 %19.6 %1.6 
European Fund V (2019) 6,334 5,380 917 6,270 7,187 14.5 %10.8 %1.3 
Energy Income and Growth Fund II (2018)994 1,191 255 1,560 1,815 20.6 %18.4 %1.5 
Asia Real Estate Partners (2019)1,682 1,138 19 1,246 1,265 12.5 %4.1 %1.1 
Next Generation Technology Growth Fund II (2019)2,088 2,078 496 2,637 3,133 23.8 %18.4 %1.5 
Real Estate Credit Opportunity Partners II (2019)950 976 158 953 1,111 9.8 %7.5 %1.1 
Asia Pacific Infrastructure Investors (2020) 3,792 2,695 496 2,769 3,265 16.3 %10.9 %1.2 
Asian Fund IV (2020)14,735 6,386 161 7,226 7,387 13.0 %6.9 %1.2 
Real Estate Partners Europe II (2020)2,060 1,512 368 1,256 1,624 5.7 %2.0 %1.1 
Real Estate Partners Americas III (2021)4,253 2,548 213 2,311 2,524 (0.8)%(3.7)%1.0 
Health Care Strategic Growth Fund II (2021)3,789 667 — 708 708 11.3 %(22.3)%1.1 
Global Infrastructure Investors IV (2021) (3)
16,578 9,133 289 9,448 9,737 — — — 
North America Fund XIII (2021) (3)
18,400 6,191 — 6,880 6,880 — — — 
European Fund VI (2022) (3)
7,396 1,195 — 1,047 1,047 — — — 
Global Impact Fund II (2022) (3)
2,186 — — — — — — — 
Asia Pacific Infrastructure Investors II (2022) (3)
5,790 — — — — — — — 
Next Generation Technology Growth Fund III (2022) (3)
2,620 — — — — — — — 
Ascendant Fund (2022) (3)
2,721 — — — — — — — 
Subtotal - Included Funds227,191 160,696 156,896 120,934 277,830 16.1 %12.3 %1.8 
All Funds$243,666 $177,171 $207,165 $120,934 $328,099 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 June 30, 2023.
(3)The gross IRR, net IRR and gross multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to June 30, 2023. We therefore have not calculated gross IRRs, net IRRs and gross multiples of invested capital with respect to these funds.
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(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 the Assets We Manage—Future results of our funds, our insurance subsidiaries or our balance sheet investments may be different than, and may not achieve the levels of, any of their 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 June 30, 2023, our Credit and Liquid Strategies business line had $226.8 billion of AUM, comprised of $111.9 billion of assets managed in our leveraged credit strategies, $78.2 billion of assets managed in our private credit strategy, and $8.0 billion of assets managed in our SIG strategy, $26.8 billion of assets managed through our hedge fund platform, and $1.9 billion of assets managed in other Credit and Liquid Strategies strategies. We manage $110.7 billion of credit investments for our Global Atlantic insurance companies. Our BDC has approximately $15.5 billion in assets under management, which is reflected in the AUM of our leveraged credit and private credit strategies above. We report all of the assets under management of our BDC in our AUM, but we report only a pro rata portion of the assets under management of our hedge fund partnerships based on our percentage ownership in them.
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 FS KKR Capital Corp. (NYSE: FSK), a publicly listed BDC. For further information regarding the legal entities involved in the Credit business and the regulatory and legal requirements that apply to these entities and their activities, see "—Regulation" in our Annual Report.
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.
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Alternative Credit. Our alternative credit strategy consists of our (i) private credit strategies and (ii) investments overseen by our credit platform’s strategic investments group (“SIG”):
•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.
The table below presents information as of June 30, 2023, relating to our current credit and other investment 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 June 30, 2023.
 Investment PeriodAmount ($ in millions)
 
Start
Date (1)
End
Date (2)
Commitment (3)
Uncalled
Commitments		Percentage
Committed
by General
Partner		InvestedRealized
Remaining
Cost (4)
Remaining
Fair Value		Gross Accrued Carried Interest
Credit and Liquid Strategies Business Line
Dislocation Opportunities Fund8/201911/2021$2,967 $556 14%$2,412 $979 $1,824 $1,876 $46 
Special Situations Fund II2/20153/20193,525 284 9%3,241 2,294 1,421 1,323 — 
Special Situations Fund1/20131/20162,274 1 12%2,273 1,782 509 410 — 
Mezzanine Partners7/20103/20151,023 33 4%990 1,165 256 152 (20)
Asset-Based Finance Partners10/20207/20252,059 1,175 7%884 48 884 939 15 
Private Credit Opportunities Partners II12/201512/20202,245 395 2%1,850 821 1,276 1,237 — 
Lending Partners III4/201711/20211,498 607 2%891 640 741 753 37 
Lending Partners II6/20146/20171,336 157 4%1,179 1,192 189 88 — 
Lending Partners12/201112/2014460 40 15%420 458 29 11 — 
Lending Partners Europe II5/20199/2023837 158 7%678 108 678 695 4 
Lending Partners Europe3/20153/2019848 184 5%662 398 310 231 — 
Asia Credit1/20215/20251,084 682 9%402 5 402 453 7 
Other Alternative Credit VehiclesVariousVarious15,347 7,892 Various7,578 5,816 3,824 3,967 10 
Total Credit and Liquid Strategies$35,503 $12,164 $23,460 $15,706 $12,343 $12,135 $99 
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 Note 2 "Summary of Significant Accounting Policies" in our financial statements.
(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 foreign exchange rate that prevailed on June 30, 2023.
(4)The remaining cost represents the initial investment of the general partner and limited partners, reduced for returns of capital.
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The following table presents information regarding larger leveraged credit strategies managed by KKR from inception to June 30, 2023. 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 StrategyInception DateGross
Returns		Net
Returns
Benchmark (1)
Benchmark
Gross
Returns
Bank Loans Plus High Yield Jul 20086.73 %6.13 %
65% S&P/LSTA Loan Index, 35% BoAML HY Master II Index (2)
5.41%
Opportunistic Credit (3)
May 200810.32 %8.71 %
50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (3)
5.55%
Bank Loans Apr 20115.26 %4.69 %
S&P/LSTA Loan Index (4)
4.21%
High-Yield Apr 20115.65 %5.07 %
BoAML HY Master II Index (5)
4.93%
European Leveraged Loans (6)
Sep 20094.42 %3.90 %
CS Inst West European Leveraged Loan Index (7)
3.47%
European Credit Opportunities (6)
Sept 20075.76 %4.72 %
S&P European Leveraged Loans (All Loans) (8)
3.99%
 
(1)The benchmarks referred to herein include the S&P/LSTA Leveraged Loan Index (the "S&P/LSTA Loan Index"), S&P/LSTA U.S. B/BB Ratings Loan Index (the "S&P/LSTA BB-B Loan Index"), the Bank of America Merrill Lynch High Yield Master II Index (the "BoAML HY Master II Index"), the BofA Merrill Lynch BB-B US High Yield Index (the "BoAML HY BB-B Constrained"), the Credit Suisse Institutional Western European Leveraged Loan Index (the "CS Inst West European Leveraged Loan Index"), and S&P European Leveraged Loans (All Loans). The S&P/LSTA Loan Index is a daily tradable index for the U.S. loan market that seeks to mirror the market-weighted performance of the largest institutional loans that meet certain criteria. The BoAML HY Master II Index is an index for high-yield corporate bonds. It is designed to measure the broad high-yield market, including lower-rated securities. The CS Inst West European Leveraged Loan Index contains only institutional loan facilities priced above 90, excluding TL and TLa facilities and loans rated CC, C or are in default. The S&P European Leveraged Loan Index reflects the market-weighted performance of institutional leveraged loan portfolios investing in European credits. While the returns of our leveraged credit strategies reflect the reinvestment of income and dividends, none of the indices presented in the chart above reflect such reinvestment, which has the effect of increasing the reported relative performance of these strategies as compared to the indices. Furthermore, these indices are not subject to management fees, incentive allocations, or expenses.
(2)Performance is based on a blended composite of Bank Loans Plus High Yield strategy accounts. The benchmark used for purposes of comparison for the Bank Loans Plus High Yield strategy is based on 65% S&P/LSTA Loan Index and 35% BoAML HY Master II Index.
(3)The Opportunistic Credit strategy invests in high-yield securities and corporate loans with no preset allocation. The benchmark used for purposes of comparison for the Opportunistic Credit strategy presented herein is based on 50% S&P/LSTA Loan Index and 50% BoAML HY Master II Index. Funds within this strategy may utilize third-party financing facilities to enhance investment returns. In cases where financing facilities are used, the amounts drawn on the facility are deducted from the assets of the fund in the calculation of net asset value, which tends to increase returns when net asset value grows over time and decrease returns when net asset value decreases over time.
(4)Performance is based on a composite of portfolios that primarily invest in leveraged loans. The benchmark used for purposes of comparison for the Bank Loans strategy is based on the S&P/LSTA Loan Index.
(5)Performance is based on a composite of portfolios that primarily invest in high-yield securities. The benchmark used for purposes of comparison for the High Yield strategy is based on the BoAML HY Master II Index.
(6)The returns presented are calculated based on local currency.
(7)Performance is based on a composite of portfolios that primarily invest in higher quality leveraged loans. The benchmark used for purposes of comparison for the European Leveraged Loans strategy is based on the CS Inst West European Leveraged Loan Index.
(8)Performance is based on a composite of portfolios that primarily invest in European institutional leveraged loans. The benchmark used for purposes of comparison for the European Credit Opportunities strategy is based on the S&P European Leveraged Loans (All Loans) Index.
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The following table presents information regarding our alternative credit investment funds where investors have capital commitments from inception to June 30, 2023. 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.
  AmountFair Value 
of Investments		   
Credit and Liquid Strategies 
Investment Funds		Investment Period Start Date Commitment
Invested (1)
Realized (1)
UnrealizedTotal
Value
Gross
IRR (2)
Net
IRR (2)
Multiple of
Invested
Capital (3)
($ in Millions)
Dislocation Opportunities Fund
Aug 2019
$2,967 $2,412 $979 $1,876 $2,855 10.7 %8.3 %1.2 
Special Situations Fund II
Feb 2015
3,525 3,241 2,294 1,323 3,617 2.8 %0.8 %1.1 
Special Situations Fund
Jan 2013
2,274 2,273 1,782 410 2,192 (0.8)%(2.5)%1.0 
Mezzanine Partners
July 2010
1,023 990 1,165 152 1,317 9.2 %6.0 %1.3 
Asset-Based Finance Partners
Oct 2020
2,059 884 48 939 987 16.7 %11.7 %1.1 
Private Credit Opportunities Partners IIDec 20152,245 1,850 821 1,237 2,058 3.4 %1.7 %1.1 
Lending Partners IIIApr 20171,498 891 640 753 1,393 15.2 %12.5 %1.6 
Lending Partners IIJun 20141,336 1,179 1,192 88 1,280 3.0 %1.5 %1.1 
Lending PartnersDec 2011460 420 458 11 469 3.4 %1.8 %1.1 
Lending Partners Europe II
May 2019
837 678 108 695 803 15.2 %11.4 %1.2 
Lending Partners EuropeMar 2015848 662 398 231 629 (1.4)%(3.7)%1.0 
Asia Credit
Jan 2021
1,084 402 5 453 458 19.4 %13.3 %1.1 
Other Alternative Credit VehiclesVarious15,347 7,578 5,816 3,967 9,783 N/AN/AN/A
All Funds $35,503 $23,460 $15,706 $12,135 $27,841   
(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 adversely affect our business in many ways, which could adversely impact our net income, cash flow, financial condition and prospects." and "Risk Factors—Risks Related to the Assets We Manage—Future results of our funds, our insurance subsidiaries or our balance sheet investments may be different than, and may not achieve the levels of, any of their historical returns" in our Annual Report.
The table below presents information as of June 30, 2023, 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.
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($ in millions)AUMFPAUMTypical 
Management
Fee Rate		Incentive Fee /
Carried
Interest		Preferred
Return		Duration
of Capital
Leveraged Credit:      
Leveraged Credit SMAs/Funds (1)
$86,670 $83,527 
0.15% - 1.10%
Various (2)
Various (2)
Subject to redemptions
CLOs25,677 25,677 
0.40% - 0.50%
Various (2)
Various (2)
10-14 Years (3)
Total Leveraged Credit112,347 109,204     
Alternative Credit: (4)
Private Credit (1)
64,098 55,890 
0.30% - 1.50% (5)
10.00 - 20.00%
5.00 - 8.00%
8-15 Years (3)
SIG8,004 2,733 
0.50% - 1.75%
10.00 - 20.00%
7.00 - 12.00%
7-15 Years (3)
Total Alternative Credit72,102 58,623 
Hedge Funds (6)
26,819 26,819 
0.50% - 2.00%
Various (2)
Various (2)
Subject to redemptions
BDC (7)
15,500 15,500 0.60%
7.00% - 8.00%
7.00%Indefinite
Total$226,768 $210,146     
(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 2023 and for separately managed accounts and funds investing in alternative credit strategies from 2009 through 2023.
(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. We report all of the assets under management of this BDC in our AUM and FPAUM.

Hedge Fund Platform
Our hedge fund platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. Our hedge fund partnerships offer a range of alternative investment strategies, including long/short equity, hedge fund-of-funds and energy credit investments. This principally consists of a 39.6% interest in Marshall Wace LLP (together with its affiliates, "Marshall Wace"), a global alternative investment manager specializing in long/short equity products. We also own (i) a 39.9% interest in PAAMCO Prisma Holdings, LLC ("PAAMCO Prisma"), an investment manager focused on liquid alternative investment solutions, including hedge fund-of-fund portfolios, and (ii) a 24.9% interest in BlackGold Capital Management L.P. ("BlackGold"), a credit-oriented investment manager focused on energy and hard asset investments.
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Capital Markets
Our Capital Markets business line is comprised of our global capital markets business, which is integrated with KKR’s other asset management business lines, and serves our firm, our 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 multi-national 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 subsidiary is KKR Capital Markets LLC, an SEC-registered broker-dealer and a member of the Financial Industry Regulatory Authority ("FINRA").
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. A substantial portion of our Principal Activities business line has been dedicated to support our core private equity strategy, where we have committed to fund investors to invest a significant amount of our own capital alongside their core private equity investments. 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 or arranging 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.
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The chart below presents the holdings of our Principal Activities business line by asset class as of June 30, 2023.
Holdings by Asset Class (1)
2760
(1)General partner funded 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.

Core Private Equity
As of June 30, 2023, core private equity investments account for over 30% of the investments on our balance sheet. Core private equity consists of investments anticipated to be held for a longer holding period and which possess a lower anticipated risk profile than our traditional private equity investments. Our core private equity investments are made in companies that, among other things, we believe are more stable, and typically with lower leverage over our holding period than those companies in which our traditional private equity investments are made. We believe our core private equity investments should generate earnings that compound over a long period of time. As of June 30, 2023, the fair value of our core private equity investments on the balance sheet was $6.2 billion, resulting in an inception to date gross IRR of 20%. "Investments" as referenced above is a term used solely for purposes of financial presentation of a portion of our balance sheet and includes majority ownership of subsidiaries that operate our asset management, broker-dealer and other businesses, including the general partner interests of our investment funds.
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Insurance
Our insurance business is operated by Global Atlantic, which we acquired on February 1, 2021. As of June 30, 2023, KKR owns a 63.3% economic interest in Global Atlantic with the balance of Global Atlantic owned by third-party investors and Global Atlantic employees. Following the Global Atlantic acquisition, Global Atlantic continues to operate as a separate business with its existing brands and management team. Since the first quarter of 2021, we have presented Global Atlantic's financial results as a separate reportable segment.
Global Atlantic is a leading 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 primarily offers individual customers fixed-rate annuities, fixed-indexed annuities, and targeted life products through a network of banks, broker-dealers, and insurance agencies. Global Atlantic provides its institutional 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 markets 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 June 30, 2023, Global Atlantic served approximately three million policyholders.
Global Atlantic inflows are derived from new business production in its individual and institutional markets channels. Global Atlantic expects new business production from its individual markets channel and certain institutional markets products to be largely consistent quarter over quarter while exhibiting growth over time, subject to market and business risks. In contrast, Global Atlantic expects block reinsurance transactions generated in the institutional markets channel to be episodic rather than steady quarter over quarter. Similarly, funding agreements issued in the funding agreement backed note ("FABN") program are subject to capital markets conditions and are not expected to be consistent quarter over quarter.
Global Atlantic also sponsors co-investment vehicles (the "Ivy 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. Ivy Vehicles provide third-party capital to support reinsurance transactions and do not get consolidated into our financial statements. As of June 30, 2023, third parties have committed capital to the Ivy Vehicles of approximately $3.3 billion, of which $1.3 billion has been deployed.
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The following table represents Global Atlantic’s new business volumes by business and product for the three and six months ended June 30, 2023 and 2022:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
($ in millions)
Individual market channel:
Fixed-rate annuities$468 $1,481 $2,614 $2,520 
Fixed-indexed annuities727 1,117 1,792 2,021 
Variable annuities7 11 11 22 
Total retirement products(1)
$1,202 $2,609 $4,417 $4,563 
Life insurance products$3 $12 $7 $19 
Preneed life80 73 155 138 
Institutional market channel:
Block— 5 79 2,782 
Flow & pension risk transfer2,438 2,143 4,868 3,842 
Funding agreements(2)
— 900 — 2,000 
Total institutional market channel(3)
$2,438 $3,048 $4,947 $8,624 
_________________
(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.
(2)Funding agreements new business volumes represents funding agreements issued in connection with the FABN program only.
(3)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.
Significant Reinsurance Transaction
On May 25, 2023, Global Atlantic signed a transaction agreement committing to reinsure $19.2 billion of legacy annuity and life policies (including $5.0 billion of separate account liabilities). The transaction is expected to close during the latter half of 2023, subject to the satisfaction or waiver of customary closing conditions, including the receipt of required regulatory approvals.
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The table below represents a breakdown of Global Atlantic’s policy liabilities by business and product type as of June 30, 2023, separated by reserves originated through its individual and institutional markets.
Reserves as of June 30, 2023
Individual market
Institutional market(4)
TotalCededTotal, netPercentage of total
($ in thousands, except percentages, if applicable)
Fixed-rate annuity(1)
$22,868,959 $26,528,736 $49,397,695 $(6,799,573)$42,598,122 33.9 %
Fixed-indexed annuity(1)
23,954,562 9,745,183 33,699,745 (3,132,554)30,567,191 23.1 %
Payout annuities(1)
477,209 17,108,698 17,585,907 (8,532,569)9,053,338 12.1 %
Variable annuities2,518,401 6,206,866 8,725,267 (2,592,822)6,132,445 6.0 %
Interest sensitive life(1)
13,807,157 9,970,551 23,777,708 (3,629,724)20,147,984 16.3 %
Other life insurance(2)
3,486,496 261,690 3,748,186 (208,899)3,539,287 2.7 %
Funding agreements(3)
2,145,853 5,459,017 7,604,870 — 7,604,870 5.2 %
Closed block and other corporate products— 1,072,274 1,072,274 (1,022,451)49,823 0.7 %
Total reserves$69,258,637 $76,353,015 $145,611,652 $(25,918,592)$119,693,060 100.0 %
Total general account$66,988,153 $74,441,062 $141,429,215 $(25,918,592)$115,510,623 97.1 %
Total separate account2,270,484 1,911,953 4,182,437 — 4,182,437 2.9 %
Total reserves$69,258,637 $76,353,015 $145,611,652 $(25,918,592)$119,693,060 100.0 %
(1)As of June 30, 2023, 75% of the account value in Global Atlantic's general account associated with its fixed-rate and fixed-annuity products, and 43% of account value in its general account associated with universal life products was protected by surrender charges.
(2)"Other life insurance” includes universal life, preneed, term and whole life insurance products.
(3)"Funding agreements” includes funding agreements associated with FHLB advances 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 June 30, 2023, reserves sourced through for block, flow and PRT transactions were $46.8 billion, $15.8 billion, and $5.4 billion, respectively.


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Business Environment
Economic and Market Conditions
Our asset management and insurance businesses are materially affected by the economic conditions of, and financial markets in, the United States, the European Union, China, Japan, and other countries. Global and regional economic conditions can each have substantial impact on our business, financial condition and results of operations in various ways, including the valuations of our investments, our ability to exit these investments profitably, our ability to raise capital from investors, and our ability to make new investments.
Economic Conditions
During the second quarter of 2023, many countries and regions, including the United States, began to experience a partial global economic recovery. In the second quarter of 2023, strong economic activity continued to be adversely impacted by the effects of monetary and fiscal policy tightening as years of fiscal stimulus from governments and accommodative monetary policy from global central banks began to wane and central banks took measures to combat inflationary pressures in many major economies around the world. Although certain inflation indicators continued to show signs of slowing, inflation (particularly core and services-related inflation) has continued to present headwinds for many countries and regional economies in which we operate. The U.S. Federal Reserve Board remains focused on managing inflation and has continued to raise interest rates in the second quarter of 2023. While the European Central Bank decelerated its pace of interest rate hikes, it has indicated that it will also remain focused on managing inflation. As a result of these and other actions by central banks, the combination of high rates and more muted, but persistently high, inflation continued to put pressure on corporate profits and consumer balance sheets with inflation generally remaining elevated in absolute terms.
Higher interest rates in conjunction with slower growth or weaker currencies in some emerging market economies have caused, and may further cause, the default risk of these countries to increase, and this could impact the operations or value of our investments that operate in these regions. Areas that have central bank quantitative easing or tightening campaigns affecting their interest rates relative to the United States could potentially experience further currency volatility relative to the U.S. dollar. Relatedly, foreign exchange rates are often affected by countries’ monetary and fiscal responses to inflationary trends. Foreign exchange rates have a substantial impact on the valuations of our investments that are denominated in currencies other than the U.S. dollar. Currency volatility can also affect our businesses and investments that deal in cross-border trade.
Labor disputes, shortages of material and skilled labor, work stoppages and increasing labor costs can also adversely impact us and the assets we manage. Despite various economic headwinds, several key economic indicators in the U.S., including GDP growth, have demonstrated resilience in the second quarter of 2023. In the second quarter of 2023, the prospects of artificial intelligence (AI) began to be reflected in market prices and valuations of companies operating in its related industries. At the same time, however, significant labor shortages continued to be a headwind to economic growth. During the second quarter of 2023, growth in economic activity and demand for goods and services contributed to inflationary pressures. In addition, shifting geopolitics in countries such as China, Russia, Belarus and the Ukraine (including less efficient supply chains) remain a concern. The ongoing Russia-Ukraine conflict, including the sanctions imposed in response to Russia's invasion of Ukraine and protectionist policies that persisted throughout 2022, have exacerbated and may further exacerbate these issues and trends globally, including by continuing to increase oil and gas prices and price volatility. Globally, energy and food inflation relating to disruptions to energy and commodity markets that persisted throughout much of 2022 and part of the first quarter of 2023 largely reversed course in the second quarter of 2023 with a faster than expected flow-through of lower oil, gas and commodity prices more generally into consumer energy and commodity prices. In the U.S., housing demand largely continues to outstrip housing supply. Conversely, the property sector in China remained a drag on its economy as a result of several factors, including a housing oversupply. U.S. office real estate continued to experience significant headwinds as a result of more challenging fundamentals. These and related concerns identified above and below continue to contribute to market volatility.
Economic conditions continued to vary, and often diverge, by country in Asia. In Japan, concerns of labor shortages, rising inflation, tightening monetary policy, significant volatility in currency markets and a return of international tourism were points of focus in the second quarter of 2023. In China, inflation growth was more muted, export growth was strong and international travel was more limited. Conversely to the continued monetary tightening that occurred in the U.S., Europe and Japan, monetary easing in China partially offset these other central bank actions in terms of global economic growth. China continued to experience a consumption-led, but bifurcated, recovery. While Chinese consumption continued to recover, the downbeat market tone in housing, together with lower energy prices and the sluggish labor market, continued to weigh on the entire Chinese economy.
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Several relevant key economic indicators in the U.S. and in other countries and areas in which our business operates include:
•Inflation. The U.S. core consumer price index rose 4.8% on a year-over-year basis as of June 30, 2023, down from 5.6% on a year-over-year basis as of March 31, 2023. Euro Area core inflation was 5.5% as of June 30, 2023, down from 5.7% as of March 31, 2023. Core inflation in China was 0.4% on a year-over-year basis as of June 30, 2023, down from 0.7% as of March 31, 2023. In Japan, core inflation rose to 2.6% on a year-over-year basis as of June 30, 2023, up from 2.3% on a year-over-year basis as of March 31, 2023.
•Interest Rates. The effective federal funds rate set by the Federal Reserve Board was 5.08% as of June 30, 2023, up from 4.83% as of March 31, 2023. The Federal Reserve raised interest rates by 25 basis points in May and left interest rates unchanged in June. The short-term benchmark interest rate set by the European Central Bank was 4.0% as of June 30, 2023, up from 3.5% as of March 31, 2023. The short-term benchmark interest rate set by The People's Bank of China (PBOC) was 3.55% as of June 30, 2023, down from 3.65% as of March 31, 2023. The short-term benchmark interest rate set by the Bank of Japan was -0.1% as of June 30, 2023, unchanged from March 31, 2023.
•GDP. In the United States, real GDP is estimated to have expanded by 1.3% for the quarter ended June 30, 2023, compared to an expansion of 2.0% for the quarter ended March 31, 2023. Euro Area real GDP is estimated to have increased by 0.1% for the quarter ended June 30, 2023, up from -0.1% for the quarter ended March 31, 2023. Real GDP in China is estimated to have increased by 0.8% for the quarter ended June 30, 2023, compared to growth of 2.2% reported for the quarter ended March 31, 2023. In Japan, real GDP is estimated to have increased by 0.7% for the quarter ended June 30, 2023, down from 2.7% for the quarter ended March 31, 2023.
•Unemployment. The U.S. unemployment rate was 3.6% as of June 30, 2023, up from 3.5% as of March 31, 2023. Euro Area unemployment was 6.5% as of June 30, 2023, down from 6.6% as of March 31, 2023. The unemployment rate in China was 5.5% as of June 30, 2023, unchanged as of March 31, 2023. In addition, the unemployment rate in Japan was 2.6% as of June 30, 2023, down from 2.8% as of March 31, 2023.
Market Conditions
Equity, credit, commodity and foreign exchange markets in the United States and in other countries and areas in which we have made investments each may have a material effect on our financial condition and results of operations.
In our asset management segment, many of our investments are in equities, so a change in global equity prices or in market volatility directly impacts the value of our investments and our profitability as well as our ability to realize investment gains and the receptiveness of fund investors to our investment products. Volatility across global equity and credit markets, alongside shifting liquidity conditions in new issue activity across equity and non-investment grade credit markets, have adversely impacted (and may continue to adversely impact) our financial results and the volume of capital markets activity, the level of transaction fees that our Capital Markets business line is able to earn, the valuation of our portfolio companies, sale activity and investment proceeds we realize, and our ability or our decision to deploy our and our funds' capital. For our investments that are publicly listed and thus have readily observable market prices, global equity market price declines had (and may continue to have) a direct adverse impact on our investment valuations and the timing of our realization opportunities. For many other of our investments, these markets had an indirect materially adverse impact on many of our investment valuations as we typically utilize market multiples as a critical input to ascertain fair value of our investments that do not have readily observable market prices.
In addition, many of our investments are in both non-investment grade and investment grade credit instruments. Many of our funds invest or have the flexibility to invest a significant portion of their assets in the equity, debt, loans or other securities of issuers that are based outside of the United States. A substantial amount of these investments consist of private equity investments made by our private equity funds. For example, as of June 30, 2023, approximately 50% of the capital invested in those funds was attributable to non-U.S. investments. In our insurance business, a change in equity prices also impacts Global Atlantic’s equity-sensitive annuity and life insurance products, including with respect to hedging costs related to and fee-income earned on those products. Our funds, our portfolio companies and Global Atlantic also rely on credit financing and the ability to refinance existing debt. Consequently, any decrease in the value of credit instruments that we have invested in or any increase in the cost of credit financing reduces our returns and decreases our net income. Tightening liquidity conditions in equity and credit capital markets affect the availability and cost of capital for us and our portfolio companies, and the increased cost of credit or degradation in debt financing terms may adversely impact our ability to identify, execute and exit investments on attractive terms. In addition, during periods of high interest rates, investors may favor certain investments like government debt, which they may view as producing a higher risk-adjusted return over investments in our funds, particularly if the spread
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between these other investments and investments in our funds declines, which may adversely affect our ability to raise capital for new funds.
In our insurance segment, periods of rising or higher interest rates as we are currently experiencing may result in differing impacts on Global Atlantic’s business. Periods of rising or higher interest rates can benefit Global Atlantic’s results of operations and financial condition because we generally expect the yield on new investment purchases and income from any floating rate investments held in Global Atlantic’s investment portfolio to increase as interest rates rise. Higher interest rates also generally tend to increase the demand for certain of Global Atlantic’s products because the benefits and solutions Global Atlantic can offer to clients may become more attractive, potentially resulting in higher new business volumes. Rising rates are also expected to result in decreases to certain policy liability reserves as a result of new accounting guidance which Global Atlantic adopted effective January 1, 2023 (with a transition date of January 1, 2021) for insurance companies that issue or reinsure long-duration contracts such as life insurance and annuities. For a further discussion of this guidance, see Note 2 "Summary of Significant Accounting Policies—Adoption of new accounting pronouncements" in our financial statements.
Higher interest rates can also have a negative impact on Global Atlantic. For example, higher policyholder surrenders may occur in response to rising interest rates as more attractive products become available to policyholders in a higher rate environment. The majority of our investments at Global Atlantic are in investment grade credit instruments. Sales of those investments at a loss, for example to raise cash to meet policyholder obligations upon surrender earlier than expected maturity or as Global Atlantic rotates out of investments acquired with new reinsurance transactions to our desired asset mix during a period of rising or higher rates compared to when the investment was acquired, is expected to decrease our net income in that period and such decrease could be significant. Global Atlantic also expects that in a higher rate environment, Global Atlantic will generally have a higher cost of insurance on new business, including higher hedging costs, as the benefits to policyholders on new business will be generally higher. If Global Atlantic fails to adequately cash flow match liabilities sold with higher benefits and interest rates fall while Global Atlantic holds that liability, Global Atlantic may not generate its expected earnings on those liabilities. In addition, rising interest rates will decrease the fair value of Global Atlantic’s credit investments and the value of embedded derivatives associated with funds withheld reinsurance transactions. Global Atlantic expects that substantially all of its unrealized losses will not be realized as it intends to hold these investments until recovery of the losses, which may be at maturity, as part of its asset liability cash-flow matching strategy. However, if the market or industry- or company-specific factors relating to these investments deteriorate meaningfully, Global Atlantic may be required to recognize an impairment to goodwill and may realize losses as a result of credit defaults or impairments on investments, either of which could have a material adverse effect on our results of operations and financial condition.
In addition, commodity prices are generally expected to rise in inflationary environments. Our Real Assets business line portfolio contains energy real asset investments, and certain of our other Private Equity, Real Assets and Credit and Liquid Strategies business line strategies have investments in or related to the energy sector. The value of these investments is heavily influenced by the price of natural gas and oil. Changes in foreign exchange rates, unless hedged, can materially impact various aspects of our business and financial results, including, but not limited to, the valuations of our non-U.S. investments, the success of fundraising from non-U.S. investors, and the attractiveness of investment opportunities in countries outside of the United States.
Several relevant key market indicators in the U.S. and in other countries and areas which constitute our business environment include:
•Equity Markets. For the quarter ended June 30, 2023, global equity markets were positive, with the S&P 500 up 8.7% and the MSCI World Index up 7.0% 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 13.6 as of June 30, 2023, decreasing from 18.7 as of March 31, 2023.
•Credit Markets. During the quarter ended June 30, 2023, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) narrowed by 15 basis points and U.S. high-yield corporate bond spreads (BofAML HY Master II Index) narrowed by 53 basis points. The non-investment grade credit indices were up during the quarter ended June 30, 2023, with the S&P/LSTA Leveraged Loan Index up 3.1% and the BAML US High Yield Index up 1.6%. During the quarter ended June 30, 2023, 10-year government bond yields rose 37 basis points in the United States, rose 90 basis points in the UK, rose 10 basis points in Germany, fell 22 basis points in China, and rose 5 basis points in Japan.
•Commodity Markets. During the quarter ended June 30, 2023, the 3-year forward price of WTI crude oil decreased approximately 2.7%%, and the 3-year forward price of natural gas decreased from approximately $4.42 per MMBtu as of March 31, 2023 to $3.56 per MMBtu as of June 30, 2023. The Japan spot LNG import price decreased to approximately $9.15 per MMBtu as of June 30, 2023 from approximately $18.59 per MMBtu as of March 31, 2023.
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•Foreign Exchange Rates. For the quarter ended June 30, 2023, the euro rose 0.6%, the British pound rose 3.0%, the Japanese yen fell 7.9%, and the Chinese renminbi fell 5.2%, 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 the known trends or uncertainties and competitive conditions that have had or that are reasonably likely to have a material favorable or unfavorable impact on our businesses, including the impact of economic and market conditions on valuations of investments. These known trends, uncertainties and competitive conditions should be read in conjunction with this Business Environment section and the entire Risk Factor section.
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.
Adoption of New Accounting Standard
Effective January 1, 2023, we adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) as of February 1, 2021, the date of the GA Acquisition, on a full retrospective basis. For a more detailed discussion of the adoption of the LDTI, see Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.
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 "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures."
Modification of Segment Information and Non-GAAP Measures
In connection with the adoption of LDTI (see Note 2 in our financial statements), KKR reevaluated the manner in which it makes operational and resource deployment decisions and assesses the overall performance of KKR's business. Effective with the three months ended March 31, 2023, 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 our previous segment presentation are as follows:
(1)implementation of the accounting changes as a result of LDTI within KKR’s Insurance Segment. KKR excludes (i) changes in the fair value of market risk benefits and other policy liabilities and the associated derivatives, (ii) fees attributed to guaranteed benefits, and (iii) losses at contract issue on payout annuities from the Insurance Segment Operating Earnings. These items are excluded from Insurance Segment Operating Earnings and we believe these items do not reflect the underlying performance of this business;
(2)Global Atlantic book value includes the impact of LDTI except for the impacts recorded in other comprehensive income, which are excluded from book value; and
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(3)reporting on a pre-tax basis Insurance Segment Operating Earnings (which was previously reported on an after-tax basis).
We believe these adjustments and changes reflect how management evaluates the Insurance business. We believe this approach enhances the transparency and visibility of the drivers of Global Atlantic’s underlying operating performance.
Fee Related Earnings, Asset Management Segment Operating Earnings, and Total Asset Management Segment Revenues are not impacted by LDTI or the adjustments and changes noted above. Therefore, these Non-GAAP measures have not been recast for the historical periods.
As discussed in Note 2 "Summary of Significant Accounting Policies" in our financial statements, our historical consolidated GAAP financial results have been recast to reflect the adoption of LDTI on a full retrospective basis. Certain of our historical Non-GAAP measures have been recast to reflect the adoption of LDTI along with the adjustments and changes noted above.
After-tax Distributable Earnings
After-tax distributable earnings is a non-GAAP performance measure of KKR’s earnings, which is derived from KKR’s reported segment results. After-tax distributable earnings is used to assess the performance of KKR’s business operations and measures the earnings potentially available for distribution to its equity holders or reinvestment into its business. After-tax distributable earnings is equal to Distributable Operating Earnings less Interest Expense, Net Income Attributable to Noncontrolling Interests and Income Taxes on Operating Earnings. Series C Mandatory Convertible Preferred Stock dividends have been excluded from After-tax Distributable Earnings, because the definition of Adjusted Shares used to calculate After-tax Distributable Earnings per Adjusted Share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. Income Taxes on Operating Earnings represents the (i) amount of income taxes that would be paid assuming that all pre-tax Asset Management distributable 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) the amount of income taxes on Insurance Segment Operating Earnings. Income taxes on Insurance Segment 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. Income Taxes on Operating Earnings includes the benefit of tax deductions arising from equity-based compensation, which reduces operating income taxes during the period. Equity based compensation expense is excluded from After-tax Distributable Earnings, because (i) KKR believes that the cost of equity awards granted to employees does not contribute to the earnings potentially available for distributions to its equity holders or reinvestment into its business and (ii) excluding this expense makes KKR’s reporting metric more comparable to the corresponding metric presented by other publicly traded companies in KKR’s industry, which KKR believes enhances an investor’s ability to compare KKR’s performance to these other companies. If tax deductions from equity-based compensation were to be excluded from Income Taxes on Operating Earnings, KKR’s After-tax Distributable Earnings would be lower and KKR’s effective tax rate would appear to be higher, even though a lower amount of income taxes would have actually been paid or payable during the period. KKR separately discloses the amount of tax deduction from equity-based compensation for the period reported and the effect of its inclusion in After-tax Distributable Earnings for the period. KKR makes these adjustments when calculating After-tax Distributable Earnings in order to more accurately reflect the net realized earnings that are expected to be or become available for distribution to KKR’s equity holders or reinvestment into KKR’s business. However, After-tax Distributable Earnings does not represent and is not used to calculate actual dividends under KKR’s dividend policy, which is a fixed amount per period, and After-tax Distributable Earnings should not be viewed as a measure of KKR’s liquidity.
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Book Value
Book Value is a non-GAAP performance measure of the net assets of KKR and is used by management primarily in assessing the unrealized value of KKR’s net assets presented on a basis that (i) excludes the net assets that are allocated to investors in KKR’s investment funds and other noncontrolling interest holders, (ii) includes the net assets that are attributable to certain securities exchangeable into shares of common stock of KKR & Co. Inc., and (iii) includes KKR’s ownership of the net assets of Global Atlantic. We believe this measure is useful to stockholders as it provides additional insight into the net assets of KKR excluding those net assets that are allocated to investors in KKR’s investment funds and other noncontrolling interest holders. KKR's book value includes the net impact of KKR's tax assets and liabilities as calculated under GAAP. Series C Mandatory Convertible Preferred Stock has been included in book value, because the definition of adjusted shares used to calculate book value per adjusted share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. To calculate Global Atlantic book value and to make it more comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic’s industry, Global Atlantic book value excludes (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance balances and related assets, net of income tax.
Distributable Operating Earnings
Distributable operating earnings is a non-GAAP performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Distributable Operating Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate 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 KKR as the investment adviser for Global Atlantic insurance companies and (ii) interest income and expense based on lending arrangements where one or more KKR subsidiaries borrow from a Global Atlantic insurance subsidiary. Inter-segment transactions are recorded by each segment based on the definitive documents that contain arms' length terms and comply with applicable regulatory requirements. Distributable Operating Earnings represents operating earnings of KKR’s Asset Management and Insurance segments.
•Asset Management Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Asset Management segment and is comprised of: (i) Fee Related Earnings, (ii) Realized Performance Income, (iii) Realized Performance Income Compensation, (iv) Realized Investment Income, and (v) Realized Investment Income Compensation. Asset Management Segment Operating Earnings excludes the impact of: (i) unrealized gains (losses) on investments, (ii) unrealized carried interest, and (iii) related unrealized carried interest compensation (i.e. the carry pool). Management fees earned by KKR as the adviser, manager or sponsor for its investment funds, vehicles and accounts, including its Global Atlantic insurance companies, are included in Asset Management Segment Operating Earnings.
•Insurance Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Insurance segment. This measure is presented before income taxes and is comprised of: (i) Net Investment Income, (ii) Net Cost of Insurance, (iii) General, Administrative, and Other Expenses, and (iv) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings excludes the impact of: (i) investment gains (losses) which include realized gains (losses) related to asset/liability matching investments strategies and unrealized investment gains (losses) and (ii) non-operating changes in policy liabilities and derivatives which includes (a) changes in the fair value of market risk benefits and other policy liabilities measured at fair value and related benefit payments, (b) fees attributed to guaranteed benefits, (c) derivatives used to manage the risks associated with policy liabilities, and (d) losses at contract issuance on payout annuities. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management costs that are earned by KKR as the investment adviser of the Global Atlantic insurance companies.
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Fee Related Earnings
Fee related earnings is a performance measure used to assess the Asset Management segment’s generation of profits from revenues that are measured and received on a recurring basis and are not dependent on future realization events. KKR believes this measure is useful to stockholders as it provides additional insight into the profitability of KKR’s fee generating asset management and capital markets businesses and other recurring revenue streams. FRE equals (i) Management Fees, including fees paid by the Insurance segment to the Asset Management segment and fees paid by certain insurance co-investment vehicles, (ii) Transaction and Monitoring Fees, Net and (iii) Fee Related Performance Revenues, less (x) Fee Related Compensation, and (y) Other Operating Expenses.
•Fee Related Performance Revenues refers to the realized portion of Incentive Fees from certain AUM that has an indefinite term and for which there is no immediate requirement to return invested capital to investors upon the realization of investments. Fee related performance revenues consists of performance fees (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) that are not dependent on a realization event involving investments held by the investment fund, vehicle or account.
•Fee Related Compensation refers to the compensation expense, excluding equity-based compensation, paid from (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, and (iii) Fee Related Performance Revenues.
•Other Operating Expenses represents the sum of (i) occupancy and related charges and (ii) other operating expenses.
Total Asset Management Segment Revenues
Total Asset Management Segment Revenues is a performance measure that represents the realized revenues of the Asset Management segment (which excludes unrealized carried interest and unrealized net gains (losses) on investments) and is the sum of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, and (v) Realized Investment Income. KKR believes that this performance measure is useful to stockholders as it provides additional insight into the realized revenues generated by KKR's asset management segment.
Other Terms and Capital Metrics
Adjusted Shares
Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include (i) the number of shares of common stock of KKR & Co. Inc. assumed to be issuable upon conversion of the Series C Mandatory Convertible Preferred Stock and (ii) certain securities exchangeable into shares of common stock of KKR & Co. Inc. Weighted average adjusted shares is used in the calculation of After-tax Distributable Earnings per Adjusted Share, and Adjusted Shares is used in the calculation of Book Value per Adjusted Share.
Assets Under Management
Assets under management represent the assets managed, advised or sponsored by KKR from which KKR is entitled to receive management fees or performance income (currently or upon a future event), general partner capital, and assets managed, advised or sponsored by our strategic BDC partnership and the hedge fund and other managers in which KKR holds an ownership interest. We believe this measure is useful to stockholders as it provides additional insight into the capital raising activities of KKR and its hedge fund and other managers and the overall activity in their investment funds and other managed or sponsored capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds and 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.
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Capital Invested
Capital invested is the aggregate amount of capital invested by (i) KKR’s investment funds and Global Atlantic insurance companies, (ii) KKR's Principal Activities business line as a co-investment, if any, alongside KKR’s investment funds, and (iii) KKR's Principal Activities business line in connection with a syndication transaction conducted by KKR's Capital Markets business line, if any. Capital invested is used as a measure of investment activity at KKR during a given period. We believe this measure is useful to stockholders as it provides a measure of capital deployment across KKR’s business lines. Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable. Capital invested excludes (i) investments in certain leveraged credit strategies, (ii) capital invested by KKR’s Principal Activities business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by KKR’s Principal Activities business line that is not invested in connection with a syndication transaction by KKR’s Capital Markets business line. Capital syndicated by KKR's Capital Markets business line to third parties other than KKR’s investment funds or Principal Activities business line is not included in capital invested.
Fee Paying AUM
Fee paying AUM represents only the AUM from which KKR is entitled to receive management fees. We believe this measure is useful to stockholders as it provides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's and its hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments from which KKR is not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which it is entitled to receive only performance income or is otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Uncalled Commitments
Uncalled commitments is the aggregate amount of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments 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.
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Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)
The following is a discussion of our consolidated results of operations on a GAAP basis for the three months ended June 30, 2023 and 2022. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.
Effective January 1, 2023, we adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) as of February 1, 2021, the date of the GA Acquisition, on a full retrospective basis. For a more detailed discussion of the adoption of LDTI, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.
 Three Months Ended
 June 30, 2023June 30, 2022Change
 ($ in thousands)
Revenues  
Asset Management
Fees and Other$754,447 $615,264 $139,183 
Capital Allocation-Based Income (Loss)696,897 (923,474)1,620,371 
1,451,344 (308,210)1,759,554 
Insurance
Net Premiums626,429 (225,502)851,931 
Policy Fees315,382 319,030 (3,648)
Net Investment Income1,311,055 931,889 379,166 
Net Investment-Related Gains (Losses)(117,550)(426,326)308,776 
Other Income39,858 32,512 7,346 
2,175,174 631,603 1,543,571 
Total Revenues3,626,518 323,393 3,303,125 
Expenses
Asset Management
Compensation and Benefits657,114 250,876 406,238 
Occupancy and Related Charges23,593 18,861 4,732 
General, Administrative and Other289,586 253,832 35,754 
970,293 523,569 446,724 
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $(75,286) and $(198,225), respectively)
1,736,014 (256,179)1,992,193 
Amortization of Policy Acquisition Costs170 (23,254)23,424 
Interest Expense39,832 18,970 20,862 
Insurance Expenses172,121 130,338 41,783 
General, Administrative and Other204,052 171,251 32,801 
2,152,189 41,126 2,111,063 
Total Expenses3,122,482 564,695 2,557,787 
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities570,085 (1,885,469)2,455,554 
Dividend Income246,939 147,355 99,584 
Interest Income850,061 391,549 458,512 
Interest Expense(720,108)(328,726)(391,382)
Total Investment Income (Loss)946,977 (1,675,291)2,622,268 
Income (Loss) Before Taxes1,451,013 (1,916,593)3,367,606 
Income Tax Expense (Benefit)324,955 (102,511)427,466 
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Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Net Income (Loss)1,126,058 (1,814,082)2,940,140 
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests(1,740)8 (1,748)
Net Income (Loss) Attributable to Noncontrolling Interests266,086 (1,096,715)1,362,801 
Net Income (Loss) Attributable to KKR & Co. Inc.861,712 (717,375)1,579,087 
Series C Mandatory Convertible Preferred Stock Dividends17,249 17,250 (1)
Net Income (Loss) Attributable to KKR & Co. Inc.
Common Stockholders		$844,463 $(734,625)$1,579,088 
Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Asset Management  
Revenues
For the three months ended June 30, 2023 and 2022, revenues consisted of the following:
 Three Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees$446,809 $418,229 $28,580 
Fee Credits(49,612)(63,574)13,962 
Transaction Fees269,416 177,861 91,555 
Monitoring Fees34,796 30,522 4,274 
Incentive Fees12,158 7,141 5,017 
Expense Reimbursements16,840 25,576 (8,736)
Consulting Fees24,040 19,509 4,531 
Total Fees and Other754,447 615,264 139,183 
Carried Interest540,615 (738,309)1,278,924 
General Partner Capital Interest156,282 (185,165)341,447 
Total Capital Allocation-Based Income (Loss)696,897 (923,474)1,620,371 
Total Revenues - Asset Management$1,451,344 $(308,210)$1,759,554 
Fees and Other
Total Fees and Other for the three months ended June 30, 2023 increased compared to the three months ended June 30, 2022 primarily as a result of the increase in transaction fees and management fees.
For a more detailed discussion of the factors that affected our transaction fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."
The increase in management fees was primarily 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), Next Generation Technology Growth Fund III, and Asia Pacific Infrastructure Investors II, and (ii) management fees earned on assets managed by KJRM. The increase was partially offset by a lower level of management fees from Asian Fund III due to the sale of investments that resulted in a decrease in its fee base, which is capital invested.
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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 Earnings."
Fee credits decreased compared to the prior period as a result of a higher level of fee credits owed to consolidated investments funds and other vehicles, which are eliminated upon consolidation. 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 KKR portfolio companies are not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our capital markets business are not shared with fund investors. Accordingly, certain transaction fees are reflected in our revenues without a corresponding fee credit.
Capital Allocation-Based Income (Loss)
Capital Allocation-Based Income (Loss) for the three months ended June 30, 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, Asian Fund III, and Next Generation Technology Growth Fund II. Capital Allocation-Based Income (Loss) for the three months ended June 30, 2022 was negative primarily due to the net depreciation of the underlying investments at many of our carry earning investment funds, most notably Americas Fund XII and Asian Fund III.
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) - Asset Management
For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.
Net Gains (Losses) from Investment Activities for the three months ended June 30, 2023
The net gains from investment activities for the three months ended June 30, 2023 were comprised of net realized losses of $(389.3) million and net unrealized gains of $959.4 million.
Investment gains and losses relating to our general partner capital interest in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.
Realized Gains and Losses from Investment Activities
For the three months ended June 30, 2023, net realized losses related primarily to the (i) realized losses for Envision Healthcare Corporation (health care sector) and Hilding Anders International AB (consumer products sector) and (ii) losses from the sales of revolving credit facilities. Partially offsetting these realized losses were realized gains on certain foreign exchange forward contracts.
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Unrealized Gains and Losses from Investment Activities
For the three months ended June 30, 2023, net unrealized gains were driven by mark-to-market gains primarily relating to (i) Exact Holding B.V. (technology sector), which is held in one of our consolidated core private equity funds, (ii) USI, Inc. (financial services sector), (iii) certain investments held in our consolidated CLOs, and (iv) 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 (i) PetVet Care Centers, LLC (health care sector) and GenesisCare Pty Ltd. (health care sector), which are held in one of our consolidated core private equity funds, and (ii) debt obligations of our consolidated CLOs.
Net Gains (Losses) from Investment Activities for the three months ended June 30, 2022
The net losses from investment activities for the three months ended June 30, 2022 were comprised of net realized gains of $550.0 million and net unrealized losses of $(2,435.4) million.
Realized Gains and Losses from Investment Activities
For the three months ended June 30, 2022, net realized gains related primarily to the sales of our investments in Fiserv, Inc. (NASDAQ: FISV), Internet Brands, Inc. (technology sector) held in one of our consolidated funds and the sales of certain real estate equity investments that were held in Real Estate Partners Americas II. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds.
Unrealized Gains and Losses from Investment Activities
For the three months ended June 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) Crescent Energy Company (NYSE: CRGY), (ii) Söderberg & Partners (financial services sector), and (iii) investments held in our consolidated credit funds. These unrealized losses were partially offset by mark-to-market gains related to (i) certain investments held in our consolidated energy funds, and (ii) certain investments held in our consolidated core real estate funds.
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 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.
Dividend Income
During the three months ended June 30, 2023, the most significant dividends received included (i) $85.3 million from certain investments held in our consolidated open-ended core infrastructure fund, Diversified Core Infrastructure Fund, (ii) $47.8 million from Atlantic Aviation FBO Inc. (Infrastructure: transportation sector), which is held in our consolidated core private equity funds and (iii) $31.3 million from certain investments held in our consolidated opportunistic real estate equity and credit funds. During the three months ended June 30, 2022, the most significant dividends received included (i) $71.8 million from investments held in our consolidated real estate core plus equity and opportunistic real estate equity funds and (ii) $8.9 million from our investment in Inkling Holdings LLC (media sector).
Significant dividends from portfolio companies and consolidated funds are generally not recurring quarterly dividends, and while they may occur in the future, their size and frequency are variable. For a discussion of other factors that affected KKR's dividend income, see "—Analysis of Asset Management Segment Operating Results."
Interest Income
The increase in interest income during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to June 30, 2022, (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 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."
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Interest Expense
The increase in interest expense during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to (i) the increase in the amount of borrowings outstanding from certain consolidated funds and other vehicles, (ii) impact of closing CLOs that are consolidated subsequent to June 30, 2022, (iii) higher interest rates on floating rate debt obligations held in consolidated CLOs, and (iv) the impact of issuances of our senior notes after June 30, 2022. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."
Expenses - Asset Management
Compensation and Benefits Expense
The increase in compensation and benefits expense during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to accrued carried interest compensation in the current period compared to the reversal of previously recognized carried interest compensation in the prior period. Partially offsetting the increase is a lower level of accrued discretionary cash compensation resulting from a lower level of asset management segment revenues in the current period.
General, Administrative and Other
The increase in general, administrative and other expenses during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to a higher level of information technology and other administrative costs in connection with the overall growth of the firm as well as 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 June 30, 2022. The increase was partially offset by a lower level of expenses reimbursable by our unconsolidated investment funds and a lower level of broken-deal expenses.
The level of broken-deal expenses can vary significantly period to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, the size and complexity of investments being pursued and the number of investment funds currently in their investment period.
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 are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.
Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Insurance
Revenues
For the three months ended June 30, 2023 and 2022, revenues consisted of the following:
 Three Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Net Premiums$626,429 $(225,502)$851,931 
Policy Fees315,382 319,030 (3,648)
Net Investment Income1,311,055 931,889 379,166 
Net Investment-Related Gains (Losses)(117,550)(426,326)308,776 
Other Income39,858 32,512 7,346 
Total Insurance Revenues$2,175,174 $631,603 $1,543,571 
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Net Premiums
Net premiums increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to higher initial premiums related to a larger number of reinsurance transactions with life contingencies assumed during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, and the timing of retrocessions to third party reinsurers during the three months ended June 30, 2022. The initial premiums on assumed reinsurance were offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below).
Net investment income
Net investment income increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) increased average assets under management due to growth in assets in Global Atlantic's institutional market channel as a result of new reinsurance transactions and individual market channel sales, (ii) growth in portfolio yields due to higher market interest rates on floating rate investments, and (iii) rotation into higher yielding assets during 2022.
Net investment-related gains (losses)
The components of net investment-related gains (losses) were as follows:
 Three Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Funds withheld payable at interest embedded derivatives$32,842 $1,363,700 $(1,330,858)
Equity futures contracts(48,383)82,389 (130,772)
Foreign currency forwards13,861 19,355 (5,494)
Credit risk contracts(62)1,867 (1,929)
Equity index options230,602 (504,859)735,461 
Interest rate contracts(164,765)(73,725)(91,040)
Funds withheld receivable embedded derivatives14,149 (33,361)47,510 
Net gains on derivative instruments78,244 855,366 (777,122)
Net other investment losses(195,794)(1,281,692)1,085,898 
Net investment-related gains (losses)$(117,550)$(426,326)$308,776 
Net gains on derivative instruments
The decrease in the fair value of embedded derivatives on funds withheld at interest payable for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 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 in the three months ended June 30, 2023, primarily due to a smaller increase in market interest rates as compared to a decrease in value in the three months ended June 30, 2022, due to a comparatively larger increase in market interest rates.
The increase in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 Index, which increased during the three months ended June 30, 2023, as compared to a decrease during the three months ended June 30, 2022.
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 the three months ended June 30, 2023, as compared to a decrease during the three months ended June 30, 2022, resulting in respectively, a loss, and a gain, on equity futures contracts in the respective periods.
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The decrease in the fair value of interest rate contracts was driven by an increase in market interest rates during both the three months ended June 30, 2023 and the three months ended June 30, 2022, resulting in a loss on interest rate contracts in both periods, respectively.
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 June 30, 2023, as compared to a widening of credit spreads during the three months ended June 30, 2022.
Net other investment losses
The components of net other investment losses were as follows:
 Three Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Realized gains (losses) on investments not supporting asset-liability matching strategies$2,103 $44,600 $(42,497)
Realized gains (losses) on available-for-sale fixed maturity debt securities(55,471)(287,373)231,902 
Credit loss allowances(21,608)(28,908)7,300 
Unrealized gains (losses) on fixed maturity securities classified as trading(66,627)(989,678)923,051 
Unrealized gains (losses) on investments classified as trading or accounted under a fair-value option(3,440)(38,435)34,995 
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting(43,371)45,396 (88,767)
Realized gains (losses) on funds withheld at interest payable portfolio3,632 28,727 (25,095)
Realized gains (losses) on funds withheld at interest receivable portfolio(12,020)(22,162)10,142 
Other1,008 (33,859)34,867 
Net other investment losses$(195,794)$(1,281,692)$1,085,898 
The decrease in net other investment losses for the three months ended June 30, 2023 as compared to net other investment losses for the three months ended June 30, 2022, was primarily due to (i) a decrease in unrealized losses on fixed maturity securities classified as trading which was primarily due to a smaller relative increase in interest rates during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, and (ii) a decrease in realized losses on available-for-sale fixed maturity debt securities which was primarily due to a decrease in portfolio rotation activity.
Offsetting these gains were (i) unrealized losses on real estate investments accounted at fair value under investment company accounting during the three months ended June 30, 2023 as a result of higher interest and capitalization rates, (ii) a decrease in realized gains on investments not supporting asset-liability matching strategies, and (iii) a decrease in realized gains on funds withheld at interest receivable portfolio.
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Expenses
Net policy benefits and claims
Net policy benefits and claims increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) a smaller relative gain on market risk benefits due to a smaller relative increase in interest rates in the three months ended June 30, 2023, as compared to the three months ended June 30, 2022 (ii) an increase in net flows from both individual and institutional market channel sales, (iii) higher funding costs on new business, and (iv) higher initial reserves assumed related to an increase in new reinsurance transactions with life contingencies in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022, and the timing of retrocessions to third party reinsurers, and (v) an increase in the value of embedded derivatives in Global Atlantic's indexed universal life and fixed indexed annuity products, as a result of higher equity market returns. (As discussed above under "Revenues–Net investment-related gains (losses)–Net gains on derivatives instruments," 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).
Offsetting these increases was a decrease in variable annuity market risk benefit liabilities primarily due to higher equity market returns as compared to the three months ended June 30, 2022.
Amortization of policy acquisition costs
Amortization of policy acquisition costs increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to growth in Global Atlantic's individual market and institutional market channels, offset by the impact of amortizing negative VOBA and cost of reinsurance assets.
Interest expense
Interest expense increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 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 revolving facility and fixed-to-floating swaps on its fixed rate debt) due to higher market rates.
Insurance expenses
Insurance expenses increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to increased commission expenses and reinsurance transaction expense allowance.
General, administrative and other
General, administrative and other expenses increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) increased employee compensation and benefits related expenses, and (ii) increased technology-related costs.
Other Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)
Income Tax Expense (Benefit)
For the three months ended June 30, 2023, income tax was an expense of $325.0 million compared to an income tax benefit of $102.5 million in the prior period. The income tax expense was primarily due to asset management net operating income in the current period as compared to a net operating loss in the prior period driven by capital allocation-based losses. For a discussion of factors that impacted KKR's tax provision, see Note 19 "Income Taxes" in our financial statements included elsewhere in this report.
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Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests for the three months ended June 30, 2023 relates primarily to net income (loss) attributable to: (i) exchangeable securities representing ownership interests in KKR Group Partnership, (ii) third-party limited partner interests in consolidated investment funds, and (iii) interests that third party investors hold in Global Atlantic. The net income attributable to noncontrolling interests for the three months ended June 30, 2023 was primarily due to net gains from investment activities primarily at certain of our consolidated investment funds, partially offset by a net loss in the current period allocable to interests that third-party investors hold in Global Atlantic.
Net Income (Loss) Attributable to KKR & Co. Inc.
Net income (loss) attributable to KKR & Co. Inc. for the three months ended June 30, 2023 was positive in the current period as compared to a net loss in the prior period primarily due to capital allocation-based income and net gains from investment activities in the current period as compared to capital allocation-based losses and net losses from investment activities in the prior period, as described above.
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Consolidated Results of Operations (GAAP Basis - Unaudited)
The following is a discussion of our consolidated results of operations on a GAAP basis for the six months ended June 30, 2023 and 2022. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "—Business Environment" for more information about factors that may affect our business, financial performance, operating results and valuations.
 Six Months Ended
 June 30, 2023June 30, 2022Change
 ($ in thousands)
Revenues  
Asset Management
Fees and Other$1,431,463 $1,395,775 $35,688 
Capital Allocation-Based Income (Loss)1,145,915 (1,869,217)3,015,132 
2,577,378 (473,442)3,050,820 
Insurance
Net Premiums1,100,053 146,642 953,411 
Policy Fees629,184 632,812 (3,628)
Net Investment Income2,611,752 1,744,494 867,258 
Net Investment-Related Gains (Losses)(241,383)(795,006)553,623 
Other Income77,016 67,256 9,760 
4,176,622 1,796,198 2,380,424 
Total Revenues6,754,000 1,322,756 5,431,244 
Expenses
Asset Management
Compensation and Benefits1,232,784 534,548 698,236 
Occupancy and Related Charges45,742 37,010 8,732 
General, Administrative and Other503,275 488,497 14,778 
1,781,801 1,060,055 721,746 
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $71,024 and $(393,908), respectively)
3,263,068 256,999 3,006,069 
Amortization of Policy Acquisition Costs44,381 (11,832)56,213 
Interest Expense80,093 32,189 47,904 
Insurance Expenses397,439 246,141 151,298 
General, Administrative and Other415,783 338,875 76,908 
4,200,764 862,372 3,338,392 
Total Expenses5,982,565 1,922,427 4,060,138 
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities410,676 (971,208)1,381,884 
Dividend Income395,106 809,705 (414,599)
Interest Income1,578,677 744,105 834,572 
Interest Expense(1,296,446)(610,485)(685,961)
Total Investment Income (Loss)1,088,013 (27,883)1,115,896 
Income (Loss) Before Taxes1,859,448 (627,554)2,487,002 
Income Tax Expense (Benefit)473,702 (65,860)539,562 
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Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Net Income (Loss)1,385,746 (561,694)1,947,440 
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests(9,043)(55)(8,988)
Net Income (Loss) Attributable to Noncontrolling Interests193,083 148,272 44,811 
Net Income (Loss) Attributable to KKR & Co. Inc.1,201,706 (709,911)1,911,617 
Series C Mandatory Convertible Preferred Stock Dividends34,499 34,500 (1)
Net Income (Loss) Attributable to KKR & Co. Inc.
Common Stockholders		$1,167,207 $(744,411)$1,911,618 
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Consolidated Results of Operations (GAAP Basis - Unaudited) - Asset Management
Revenues
For the six months ended June 30, 2023 and 2022, revenues consisted of the following:
 Six Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees$899,902 $816,275 $83,627 
Fee Credits(107,143)(251,319)144,176 
Transaction Fees479,255 644,827 (165,572)
Monitoring Fees64,649 69,922 (5,273)
Incentive Fees18,571 14,198 4,373 
Expense Reimbursements32,384 66,879 (34,495)
Consulting Fees43,845 34,993 8,852 
Total Fees and Other1,431,463 1,395,775 35,688 
Carried Interest883,685 (1,521,997)2,405,682 
General Partner Capital Interest262,230 (347,220)609,450 
Total Capital Allocation-Based Income (Loss)1,145,915 (1,869,217)3,015,132 
Total Revenues - Asset Management$2,577,378 $(473,442)$3,050,820 
Fees and Other
Total Fees and Other for the six months ended June 30, 2023 increased compared to the six months ended June 30, 2022 primarily as a result of an increase in management fees and a decrease in fee credits, which were partially offset by a lower level of transaction fees.
For a more detailed discussion of the factors that affected our transaction fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."
The increase in management fees was primarily attributable to (i) management fees earned on new capital raised over the past twelve months at Asia Pacific Infrastructure Investors II, Next Generation Technology Growth Fund III and Ascendant Fund, and (ii) management fees earned on assets managed by KJRM. The increase was partially offset by (i) management fees earned on new capital raised for North America Fund XIII in the first quarter of 2022 that was retroactive to the start of the fund's investment period, and (ii) a lower level of management fees from Asian Fund III due to the sale of investments that resulted in a decrease in its fee base, which is capital invested. There were no management fees that were retroactive to the start of the fund's investment period for the six months ended June 30, 2023 for North America Fund XIII.
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 Earnings."
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Fee credits decreased compared to the prior period as a result of a lower level of transaction fees in our Private Equity, Real Assets and Credit and Liquid Strategies business lines in the current period. Fee credits owed to consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, upon consolidation under GAAP, KKR's allocated share of the net income from the consolidated investment funds is decreased by the amount of fee credits that are eliminated. Accordingly, 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 KKR portfolio companies are not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our capital markets business are not shared with fund investors. Accordingly, certain transaction fees are reflected in our revenues without a corresponding fee credit.
Capital Allocation-Based Income (Loss)
Capital Allocation-Based Income (Loss) for the six months ended June 30, 2023 was positive primarily due to the net appreciation of the underlying investments in many of our carry-earning investment funds, most notably Americas Fund XII, Asian Fund III, and Global Infrastructure Investors III. Capital Allocation-Based Income (Loss) for the six months ended June 30, 2022 was negative primarily due to the net depreciation of the underlying investments at many of our carry earning investment funds, most notably Americas Fund XII, Asian Fund II and Asian Fund III.
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) - Asset Management
Net Gains (Losses) from Investment Activities for the six months ended June 30, 2023
The net gains from investment activities for the six months ended June 30, 2023 were comprised of net realized losses of $(289.9) million and net unrealized gains of $700.6 million.
Investment gains and losses relating to our general partner capital interest in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.
Realized Gains and Losses from Investment Activities
For the six months ended June 30, 2023, net realized losses related primarily to (i) the realized losses of Envision Healthcare Corporation, (ii) realized losses on our alternative credit investments, Hilding Anders International AB and Chembulk Group (transportation sector), and (iii) realized losses from the sales of various revolving credit facilities. Partially offsetting these realized losses were realized gains primarily relating to the sale of our investment in KnowBe4, Inc. (NASDAQ: KNBE) and Flutter Entertainment PLC (LON: FLTR).
Unrealized Gains and Losses from Investment Activities
For the six months ended June 30, 2023, net unrealized gains were driven primarily by mark-to-market gains primarily relating to (i) BridgeBio Pharma, Inc. (NASDAQ: BBIO), (ii) Exact Holding B.V. held in one of our consolidated core private equity funds, (iii) the reversal of previously recognized unrealized losses relating to the realization activity described above, and (iv) certain investments held in our consolidated CLOs. These unrealized gains were partially offset by mark-to-market losses primarily relating to (i) GenesisCare Pty Ltd. and PetVet Care Centers, LLC, which are held in one of our consolidated core private equity funds and (ii) debt obligations of our consolidated CLOs.
For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results."
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Net Gains (Losses) from Investment Activities for the six months ended June 30, 2022
The net losses from investment activities for the six months ended June 30, 2022 were comprised of net realized gains of $829.6 million and net unrealized losses of $(1,800.8) million.
Realized Gains and Losses from Investment Activities
For the six months ended June 30, 2022, net realized gains related primarily to the sales of our investments in Fiserv Inc., Internet Brands, Inc. held in one of our consolidated funds and the sale of certain real estate equity investments that were held in Real Estate Partners Americas II. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds and a real estate equity investment in one of our consolidated US real estate funds.
Unrealized Gains and Losses from Investment Activities
For the six months ended June 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) investments held in our consolidated credit funds, (ii) OutSystems Holdings S.A. (technology sector) and (iii) the reversal of previously recognized unrealized gains relating to the realization activity described above. These unrealized losses were partially offset by mark-to-market gains related to (i) certain investments held in our consolidated energy funds, (ii) Viridor Limited (Infrastructure: energy and energy transition sector), and (iii) Clarify Health Solutions Inc. (healthcare sector).
For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results". For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.
Dividend Income
During the six months ended June 30, 2023, the most significant dividends received included (i) $114.9 million from certain investments held in our consolidated open-ended core infrastructure fund, Diversified Core Infrastructure Fund, (ii) $60.6 million from our consolidated opportunistic real estate equity funds, and (iii) $47.8 million from Atlantic Aviation FBO Inc., which is held in one of our consolidated core private equity funds. During the six months ended June 30, 2022, the most significant dividends received included (i) $370.8 million from investments held in our consolidated real estate core plus and real estate opportunistic equity funds and (ii) $86.6 million from our investment in Exact Holding B.V. held in our consolidated core private equity funds.
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 six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to June 30, 2022, (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 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 six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to (i) the increase in the amount of borrowings outstanding from certain consolidated funds and other vehicles, (ii) impact of closing CLOs that are consolidated subsequent to June 30, 2022, (iii) higher interest rates on floating rate debt obligations held in consolidated CLOs, and (iv) the impact of issuances of KKR senior notes after June 30, 2022. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."
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Expenses - Asset Management
Compensation and Benefits Expenses
The increase in compensation and benefits expense during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to accrued carried interest compensation in the current period compared to the reversal of previously recognized carried interest compensation in the prior period. Partially offsetting the increase is a lower level of accrued discretionary cash compensation resulting from a lower level of asset management segment revenues in the current period.
General, Administrative and Other
The increase in general, administrative and other expenses during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to a higher level of information technology and other administrative costs in connection with the overall growth of the firm as well as 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 June 30, 2022. The increase was partially offset by a lower level of expenses reimbursable by our unconsolidated investment funds and a lower level of broken-deal expenses.
The level of broken-deal expenses can vary significantly period to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, the size and complexity of investments being pursued and the number of investment funds currently in their investment period.
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 are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.
Consolidated Results of Operations (GAAP Basis- Unaudited) - Insurance
Revenues
For the six months ended June 30, 2023 and 2022, revenues consisted of the following:
 Six Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Net Premiums$1,100,053 $146,642 $953,411 
Policy Fees629,184 632,812 (3,628)
Net Investment Income2,611,752 1,744,494 867,258 
Net Investment-Related Gains (Losses)(241,383)(795,006)553,623 
Other Income77,016 67,256 9,760 
Total Insurance Revenues$4,176,622 $1,796,198 $2,380,424 
Net Premiums
Net premiums increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to higher initial premiums related to a larger number of reinsurance transactions with life contingencies assumed during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The increase was partially offset by higher retrocessions to third party reinsurers during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. The initial premiums on assumed reinsurance were offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below).
Net investment income
Net investment income increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to (i) increased average assets under management due to growth in assets in Global Atlantic's institutional market channel as a result of new reinsurance transactions and individual market channel sales, (ii) growth in portfolio yields due to higher market interest rates on floating rate investments, and (iii) rotation into higher yielding assets during 2022.
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Net investment-related gains (losses)
The components of net investment-related gains (losses) were as follows:
 Six Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Funds withheld payable embedded derivatives$(397,393)$2,544,135 $(2,941,528)
Equity futures contracts(89,208)162,185 (251,393)
Foreign currency forwards14,655 27,912 (13,257)
Credit risk contracts(137)335 (472)
Equity index options314,489 (728,225)1,042,714 
Interest rate contracts(95,769)(223,901)128,132 
Funds withheld receivable embedded derivatives(16,618)(67,341)50,723 
Other— — — 
Net gains on derivative instruments(269,981)1,715,100 (1,985,081)
Net other investment gains (losses)28,598 (2,510,106)2,538,704 
Net investment-related gains (losses)$(241,383)$(795,006)$553,623 
Net gains on derivative instruments
The decrease in the fair value of embedded derivatives on funds withheld at interest payable for the six months ended June 30, 2023 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 increased in value in the six months ended June 30, 2023, primarily due to a small relative decrease in market interest rates as compared to a decrease in value in the six months ended June 30, 2022, due to a comparatively larger increase in market interest rates.
The decrease in the fair value of equity futures was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which increased during the six months ended June 30, 2023, as compared to a decrease during the six months ended June 30, 2022, resulting in respectively, a loss, and a gain, on equity futures contracts in the respective periods.
The increase in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 Index, which increased during the six months ended June 30, 2023, as compared to a decrease during the six months ended June 30, 2022.
The increase in the fair value of interest rate contracts was driven by a small net decrease in otherwise volatile market interest rates over the course of the six months ended June 30, 2023 as compared to an increase in market interest rates during the six months ended June 30, 2022, resulting in a loss on interest rate contracts in both periods, respectively.
The increase in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to a small narrowing of credit spreads during the six months ended June 30, 2023 as compared to a widening of credit spreads during the six months ended June 30, 2022.
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Net other investment gains (losses)
The components of net other investment losses were as follows:
 Six Months Ended
 June 30, 2023June 30, 2022Change
($ in thousands)
Realized gains on investments not supporting asset-liability matching strategies$2,103 $59,564 $(57,461)
Realized losses on available-for-sale fixed maturity debt securities(52,039)(530,723)478,684 
Credit loss allowances(170,037)(58,805)(111,232)
Impairment of available-for-sale fixed maturity debt
securities due to intent to sell		(26,741)— (26,741)
Unrealized losses on fixed maturity securities classified as trading309,663 (2,028,124)2,337,787 
Unrealized gains on investments accounted under a fair-value option(59,213)(40,928)(18,285)
Unrealized (losses) gains on real estate investments recognized at fair value under investment company accounting19,821 123,088 (103,267)
Realized gains (losses) on funds withheld at interest, payable portfolio7,612 2,340 5,272 
Realized gains (losses) on funds withheld at interest, receivable portfolio5,713 3,438 2,275 
Other(8,284)(39,956)31,672 
Net investment-related gains (losses)$28,598 $(2,510,106)$2,538,704 
The increase in net other investment gains for the six months ended June 30, 2023 as compared to net other investment losses for the six months ended June 30, 2022, were primarily due to (i) an increase in unrealized gains on fixed maturity securities classified as trading which was primarily due to a decrease in interest rates during the six months ended June 30, 2023 as compared to an increase in interest rates during the six months ended June 30, 2022, and (ii) a decrease in realized losses on available-for-sale fixed maturity debt securities which was primarily due to a decrease in portfolio rotation activity.
Offsetting these gains were (i) a decrease in unrealized gains on real estate investments at fair-value under investment company accounting due to higher interest and capitalization rates during the six months ended June 30, 2023, (ii) an increase in credit loss allowances on fixed maturity securities and mortgage and other loan receivables in the six months ended June 30, 2023, which was primarily due to an increase in the overall credit risk of Global Atlantic's loan portfolio, and (iii) a decrease in realized gains on investments not supporting asset-liability matching strategies.
Expenses
Net policy benefits and claims
Net policy benefits and claims increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to (i) a loss on market risk benefits due to a decrease in interest rates in the six months ended June 30, 2023, as compared to a gain on market risk benefits during the six months ended June 30, 2022 due to an increase in rates, (ii) an increase in net flows from both individual and institutional market channel sales, (iii) higher funding costs on new business, (iv) higher initial reserves assumed related to an increase in new reinsurance transactions with life contingencies in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, and (v) an increase in the value of embedded derivatives in Global Atlantic's indexed universal life and fixed indexed annuity products, as a result of higher equity market returns. (As discussed above under "Revenues–Net investment-related gains (losses)–Net gains on derivatives instruments," 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).
Offsetting these increases was an decrease in variable annuity market risk benefit liabilities primarily due to higher equity market returns.
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Amortization of policy acquisition costs
Amortization of policy acquisition costs increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to growth in Global Atlantic's individual market and institutional market channels.
Interest expense
Interest expense increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 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 revolving facility and fixed-to-floating swaps on its fixed rate debt) due to higher market rates.
Insurance expenses
Insurance expenses increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to increased commission expenses and reinsurance transaction expense allowances.
General, administrative and other
General, administrative and other expenses increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to increased employee compensation and benefits related expenses.
Other Consolidated Results of Operations (GAAP Basis - Unaudited)
Income Tax Expense (Benefit)
For the six months ended June 30, 2023, income tax was an expense of $473.7 million compared to an income tax benefit of $65.9 million in the prior period. The income tax expense was primarily due to asset management net operating income in the current period as compared to a net operating loss in the prior period driven by capital allocation-based losses. For a discussion of factors that impacted KKR's tax provision, see Note 19 "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 six months ended June 30, 2023 relates primarily to net income (loss) attributable to: (i) exchangeable securities representing ownership interests in KKR Group Partnership, (ii) third-party limited partner interests in consolidated investment funds, and (iii) interests that third-party investors hold in Global Atlantic. The net income attributable to noncontrolling interests for the six months ended June 30, 2023 was primarily due to net gains from investment activities primarily at certain of our consolidated investment funds, partially offset by a net loss in the current period allocable to interests that third-party investors hold in Global Atlantic.
Net Income (Loss) Attributable to KKR & Co. Inc. 
Net income (loss) attributable to KKR & Co. Inc. for the six months ended June 30, 2023 was positive in the current period as compared to a net loss in the prior period primarily due to capital allocation-based income and net gains from investment activities in the current period as compared to capital allocation-based losses and net losses from investment activities in the prior period, as described above.
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Condensed Consolidated Statements of Financial Condition (GAAP Basis - Unaudited)
The following table provides our condensed consolidated statements of financial condition on a GAAP basis as of June 30, 2023 and December 31, 2022.
(Amounts in thousands, except per share amounts)
As ofAs of
June 30, 2023December 31, 2022
Assets
Asset Management
Cash and Cash Equivalents$5,885,308 $6,705,325 
Investments101,878,868 92,375,463 
Other Assets6,703,972 7,114,360 
114,468,148 106,195,148 
Insurance
Cash and Cash Equivalents4,421,172 6,118,231 
Investments129,599,964 124,199,176 
Other Assets39,205,515 38,834,081 
173,226,651 169,151,488 
Total Assets$287,694,799$275,346,636
Liabilities and Equity
Asset Management
Debt Obligations$43,693,384 $40,598,613 
Other Liabilities7,176,042 6,937,832 
50,869,426 47,536,445 
Insurance
Debt Obligations2,356,162 2,128,166 
Other Liabilities173,874,777 170,311,335 
176,230,939 172,439,501 
Total Liabilities$227,100,365 $219,975,946 
Redeemable Noncontrolling Interests183,413 152,065 
Stockholders' Equity
Stockholders' Equity - Series C Mandatory Convertible Preferred Stock1,115,792 1,115,792 
Stockholders' Equity - Common Stock18,865,775 17,691,975 
Noncontrolling Interests40,429,454 36,410,858 
Total Equity60,411,021 55,218,625 
Total Liabilities and Equity$287,694,799 $275,346,636 
KKR & Co. Inc. Stockholders' Equity - Common Stock
Per Outstanding Share of Common Stock		$21.99 $20.55 
KKR & Co. Inc. Stockholders’ Equity - Common Stock per Outstanding Share of Common Stock was $21.99 as of June 30, 2023, up from $20.55 as of December 31, 2022. The increase was primarily due to (i) unrealized gains on available-for-sale-securities from Global Atlantic that are recorded in other comprehensive income and (ii) net income attributable to KKR & Co. Inc. common stockholders, partially offset by repurchases of our common stock and dividends to common stockholders during the first six months of 2023.
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Consolidated Statements of Cash Flows (GAAP Basis - Unaudited)
The following is a discussion of our consolidated cash flows for the six months ended June 30, 2023 and 2022. 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 $(4.6) billion and $(3.1) billion during the six months ended June 30, 2023 and 2022, respectively. These amounts primarily included: (i) investments purchased (asset management), net of proceeds from investments (asset management) of $(7.7) billion and $(5.2) billion during the six months ended June 30, 2023 and 2022, respectively, (ii) net realized gains (losses) on asset management investments of $(0.3) billion and $0.8 billion during the six months ended June 30, 2023 and 2022, respectively, (iii) change in unrealized gains (losses) on investments (asset management) of $0.7 billion and $(1.8) billion during the six months ended June 30, 2023 and 2022, respectively, (iv) capital allocation-based income (loss) of $1.1 billion and $(1.9) billion during the six months ended June 30, 2023 and 2022, respectively, (v) net realized gains (losses) on insurance operations of $(1.5) billion and $0.4 billion during the six months ended June 30, 2023 and 2022, respectively, and (vi) interest credited to policyholder account balances (net of policy fees) (insurance) of $1.3 billion and $0.8 billion during the six months ended June 30, 2023 and 2022, 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 $(3.6) billion and $(7.1) billion during the six months ended June 30, 2023 and 2022, respectively. Our investing activities included: (i) investments purchased (insurance), net of proceeds from investments (insurance), of $(3.6) billion and $(5.3) billion during the six months ended June 30, 2023 and 2022, respectively, (ii) the purchase of fixed assets of $(61.8) million and $(34.2) million during the six months ended June 30, 2023 and 2022, respectively, and (iii) the acquisition of KJRM, net of cash acquired of $(1.7) billion during the six months ended June 30, 2022.
Net Cash Provided (Used) by Financing Activities
Our net cash provided (used) by financing activities was $5.5 billion and $12.3 billion during the six months ended June 30, 2023 and 2022, respectively. Our financing activities primarily included: (i) contributions by, net of distributions to, our noncontrolling and redeemable noncontrolling interests of $3.7 billion and $3.7 billion during the six months ended June 30, 2023 and 2022, respectively, (ii) proceeds received, net of repayment of debt obligations, of $2.9 billion and $3.2 billion during the six months ended June 30, 2023 and 2022, respectively, (iii) additions to, net of withdrawals from, contractholder deposit funds of $(0.6) billion and $5.5 billion during the six months ended June 30, 2023 and 2022, respectively, (iv) common stock dividends of $(275.7) million and $(177.6) million during the six months ended June 30, 2023 and 2022, respectively, (v) repurchases of common stock of $(272.3) million and $(346.7) million during the six months ended June 30, 2023 and 2022, respectively, and (vi) Series C Mandatory Convertible Preferred Stock dividends of $(34.5) million during each of the six months ended June 30, 2023 and 2022.
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Analysis of Segment Operating Results
The following is a discussion of the results of our business on a segment basis for the three and six months ended June 30, 2023 and 2022. You should read this discussion in conjunction with the information included under "—Key Segment and Non- GAAP Performance Measures" and the financial statements and related notes included elsewhere in this report. See "— Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.
Analysis of Asset Management Segment Operating Results
The following tables set forth information regarding KKR's asset management segment operating results and certain key capital metrics for the three months ended June 30, 2023 and 2022:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees$748,888 $654,927 $93,961 
Transaction and Monitoring Fees, Net190,228 107,301 82,927 
Fee Related Performance Revenues28,352 9,999 18,353 
Fee Related Compensation(217,684)(173,748)(43,936)
Other Operating Expenses(147,475)(137,244)(10,231)
Fee Related Earnings602,309 461,235 141,074 
Realized Performance Income149,334 730,858 (581,524)
Realized Performance Income Compensation(97,085)(474,428)377,343 
Realized Investment Income114,675 276,888 (162,213)
Realized Investment Income Compensation(17,183)(41,533)24,350 
Asset Management Segment Operating Earnings$752,050 $953,020 $(200,970)
Management Fees
The following table presents management fees by business line:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees
Private Equity$320,081 $299,099 $20,982 
Real Assets201,590 161,707 39,883 
Credit and Liquid Strategies227,217 194,121 33,096 
Total Management Fees$748,888 $654,927 $93,961 
The increase in Private Equity management fees was primarily attributable to management fees earned on new capital raised over the past twelve months at Ascendant Fund, Next Generation Technology Growth Fund III, and Global Impact Fund II. The increase was partially offset by a lower level of management fees from Asian Fund III due to the sale of investments that resulted in a decrease in its fee base, which is capital invested. During the second quarter of 2023, approximately $11.7 million of management fees were earned on new capital raised that is retroactive to the start of the relevant fund's investment period.
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The increase in Real Asset management fees was primarily attributable to (i) management fees earned from Asia Pacific Infrastructure Investors II, which entered its investment period in the third quarter of 2022 resulting in management fees now being earned on this capital, (ii) a higher level of management fees earned from Global Atlantic due to an increase in assets being managed by KKR's Asset Management segment, and (iii) a higher level of management fees earned from Diversified Core Infrastructure Fund resulting from new capital raised. The increase was partially offset by a decrease in management fees earned from Asia Pacific Infrastructure Investors as a result of entering its post-investment period in the third quarter of 2022, and now earns fees based on capital invested rather than capital committed. During the second quarter of 2023, approximately $0.5 million of management fees were earned on new capital raised that is retroactive to the start of the relevant fund's investment period.
The increase in Credit and Liquid Strategies management fees was primarily attributable to (i) a higher level of management fees earned from Global Atlantic due to an increase in Global Atlantic's assets being managed by KKR's Asset Management segment and (ii) a higher level of management fees earned from our hedge fund partnership, Marshall Wace. The increase was partially offset by a lower level of management fees from certain SIG funds primarily due to (i) the sale of investments that resulted in a decrease in its fee base, which is capital invested and (ii) certain SIG funds, which no longer pay management fees as a result of us agreeing to waive the management fee.
Transaction and Monitoring Fees, Net
The following table presents transaction and monitoring fees, net by business line:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity$33,142 $16,809 $16,333 
Real Assets5,179 1,569 3,610 
Credit and Liquid Strategies1,493 4,322 (2,829)
Capital Markets150,414 84,601 65,813 
Total Transaction and Monitoring Fees, Net$190,228 $107,301 $82,927 
Our Private Equity, Real Assets, and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are generally required to share all or a portion of such fees with our fund investors. In most 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 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 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. The increase in capital markets transaction fees was primarily due to an increase in the number of equity capital markets transactions for the three months ended June 30, 2023, compared to the three months ended June 30, 2022. Overall, we completed 60 capital markets transactions for the three months ended June 30, 2023, of which 14 represented equity offerings and 46 represented debt offerings, as compared to 60 transactions for the three months ended June 30, 2022, of which 5 represented equity offerings and 55 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 June 30, 2023, approximately 16% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 25% for the three months ended June 30, 2022. Our transaction fees are comprised of fees earned in North America, Europe, and the Asia-Pacific region. For the three months ended June 30, 2023 and 2022, approximately 47% of our transaction fees were generated outside of North America. 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.
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Fee Related Performance Revenues
The following table presents fee related performance revenues by business line:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Fee Related Performance Revenues
Private Equity$— $— $— 
Real Assets9,055 1,108 7,947 
Credit and Liquid Strategies19,297 8,891 10,406 
Total Fee Related Performance Revenues$28,352 $9,999 $18,353 
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 FS KKR Capital Corp. (NYSE: FSK) (our business development company), KKR Property Partners Americas ("KPPA") (our open-ended core plus real estate fund), KKR Real Estate Select Trust ("KREST") (our registered closed-end real estate equity fund), KKR Real Estate Finance Trust Inc. ("KREF") (our real estate credit investment trust), and KJRM. Fee related performance revenues were higher for the three months ended June 30, 2023 compared to the prior period primarily due to (i) a higher level of performance revenues earned from FS KKR Capital Corp. compared to the prior period and (ii) performance revenues earned from KJRM in the current period.
Fee Related Compensation
The increase in fee related compensation for the three months ended June 30, 2023 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of revenues included within fee related earnings.
Other Operating Expenses
The increase in other operating expenses for the three months ended June 30, 2023 compared to the prior period was primarily due to a higher level of information technology, occupancy and other administrative costs in connection with the overall growth of the firm.
Fee Related Earnings
The increase in fee related earnings for the three months ended June 30, 2023 compared to the prior period was primarily due to a higher level of management fees across our Private Equity, Real Assets, and Credit and Liquid Strategies business lines and a higher level of transaction fees earned in our Capital Markets business line, partially offset by a higher level of fee related compensation and other operating expenses, as described above.
Realized Performance Income
The following table presents realized performance income by business line:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Realized Performance Income
Private Equity$146,232 $634,146 $(487,914)
Real Assets— 85,310 (85,310)
Credit and Liquid Strategies3,102 11,402 (8,300)
Total Realized Performance Income$149,334 $730,858 $(581,524)
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Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Private Equity
Americas Fund XII$92,906 $39,261 $53,645 
North America Fund XI23,486 443,170 (419,684)
Asian Fund III23,002 51,397 (28,395)
Co-Investment Vehicles and Other6,838 35,656 (28,818)
2006 Fund— 47,117 (47,117)
European Fund IV— 17,545 (17,545)
Total Realized Carried Interest (1)
146,232 634,146 (487,914)
Incentive Fees— — — 
Total Realized Performance Income$146,232 $634,146 $(487,914)
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Real Assets
Real Estate Partners Americas II$— $85,310 $(85,310)
Total Realized Carried Interest (1)
— 85,310 (85,310)
Incentive Fees— — — 
Total Realized Performance Income$— $85,310 $(85,310)
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Credit and Liquid Strategies
Alternative Credit Vehicles$— $4,153 $(4,153)
Total Realized Carried Interest (1)
— 4,153 (4,153)
Incentive Fees3,102 7,249 (4,147)
Total Realized Performance Income$3,102 $11,402 $(8,300)
(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.
Realized performance income includes (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.
Realized carried interest in our Private Equity business line for the three months ended June 30, 2023 consisted primarily of realized proceeds from the sale of our investments in AppLovin Corporation (NASDAQ: APP) held by Americas Fund XII, Endeavor Group Holdings, Inc. (NASDAQ: EDR) held by North America Fund XI, and Kokusai Electric Corporation (manufacturing sector) held by Asian Fund III. Realized carried interest in our Private Equity business line for the three months ended June 30, 2022 consisted primarily of realized proceeds from the sale of our investment in Internet Brands, Inc. held by our North America Fund XI.
During the three months ended June 30, 2023, there was no realized carried interest earned in our Real Assets business line. Realized carried interest in our Real Assets business line for the three months ended June 30, 2022, consisted primarily of realized proceeds from dividends received and sales of various investments in our real estate funds.
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During the three months ended June 30, 2023, there was no realized carried interest earned in our Credit and Liquid Strategies business line. Realized carried interest in our Credit and Liquid Strategies for the three months ended June 30, 2022, consisted primarily of realized proceeds from the sale of various investments at certain alternative credit funds that are eligible to pay realized carried interest.
Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR sponsored investment vehicles, and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a UK investment fund manager. During the three months ended June 30, 2023 and 2022, there were no incentive fees earned in our Private Equity and Real Asset business lines. Incentive fees in our Credit and Liquid Strategies business line decreased for the three months ended June 30, 2023 compared to the prior period primarily as a result of a lower level of performance fees earned from a UK investment fund manager.
Realized Performance Income Compensation
The decrease in realized performance income compensation for the three months ended June 30, 2023 compared to the prior period was primarily due to a lower level of compensation recorded in connection with the lower level of realized performance income.
Realized Investment Income
The following table presents realized investment income in our Principal Activities business line:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)$15,342 $196,408 $(181,066)
Interest Income and Dividends, Net99,333 80,480 18,853 
Total Realized Investment Income$114,675 $276,888 $(162,213)
The decrease in realized investment income is primarily due to a lower level of net realized gains, partially offset by a higher level of interest income and dividends, net. The amount of realized investment income depends on the transaction activity of our funds and balance sheet, which can vary from period to period.
For the three months ended June 30, 2023, net realized gains were comprised of realized gains primarily from the sale of our investments in AppLovin Corporation, Pembina Gas Infrastructure Inc. (Infrastructure: midstream sector), and Kokusai Electric Corporation. Partially offsetting these realized gains were realized losses on our private equity investment, Envision Healthcare Corporation, alternative credit investment Hilding Anders International AB, and from sales of various revolving credit facilities.
For the three months ended June 30, 2022, net realized gains were comprised of realized gains primarily from the sale of our investments in Fiserv, Inc., Internet Brands, Inc. and Max Healthcare Institute Limited (NSE: MAXHEALTH). Partially offsetting these realized gains were realized losses, the most significant of which were realized losses from the sale of revolving credit facilities and various alternative credit strategy investments.
For the three months ended June 30, 2023, interest income and dividends, net were comprised of (i) $88.0 million of interest income, primarily from our investments in CLOs and, to a lesser extent, our credit investments and cash balances, and (ii) $11.3 million of dividend distributions primarily from our Americas real estate credit and equity investments, as well as dividend distributions from our investments in Atlantic Aviation FBO Inc. and Seiyu Group (consumer products sector).
For the three months ended June 30, 2022, interest income and dividends, net were comprised of (i) $46.5 million of interest income, primarily from our investments in CLOs, and (ii) $34.0 million of dividend income primarily from our Americas real estate credit and equity investments, as well as a dividend distribution from our investment in Inkling Holdings LLC. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."
Realized investment income (loss) includes the net income (loss) from KKR Capstone. For the three months ended June 30, 2023, total fees attributable to KKR Capstone were $24.0 million and total expenses attributable to KKR Capstone were $19.8 million. For KKR Capstone-related adjustments in reconciling asset management segment revenues to GAAP revenues see "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures."
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Realized Investment Income Compensation
The decrease in realized investment income compensation for the three months ended June 30, 2023 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.
Other Operating and Capital Metrics
The following table presents certain key operating and capital metrics as of June 30, 2023 and March 31, 2023:
As of
June 30, 2023March 31, 2023Change
($ in millions)
Assets Under Management$518,523 $510,069 $8,454 
Fee Paying Assets Under Management$419,994 $415,871 $4,123 
Uncalled Commitments$100,154 $106,266 $(6,112)
The following table presents one of our key capital metrics for the three months ended June 30, 2023 and 2022:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in millions)
Capital Invested$9,590 $18,651 $(9,061)
Assets Under Management
Private Equity
The following table reflects the changes in the AUM of our Private Equity business line from March 31, 2023 to June 30, 2023:
 ($ in millions)
March 31, 2023$165,762 
New Capital Raised1,992 
Distributions and Other(1,793)
Change in Value4,178 
June 30, 2023$170,139 
AUM of our Private Equity business line was $170.1 billion at June 30, 2023, an increase of $4.3 billion, compared to $165.8 billion at March 31, 2023.
The increase was primarily attributable to (i) an appreciation in investment value from Americas Fund XII, Asian Fund III, and our core private equity strategy and (ii) new capital raised from Ascendant Fund and private equity vehicles customized for private wealth investors. Partially offsetting the increase was distributions to its investors primarily as a result of realized proceeds, most notably from Americas Fund XII, Asian Fund III, and North America Fund XI.
For the three months ended June 30, 2023, the value of our traditional private equity investment portfolio increased 5%. This was comprised of a 17% 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 June 30, 2023, the value of our growth equity investment portfolio increased 5% and our core private equity investment portfolio increased 2%.
The most significant increases in the value of our publicly held investments were increases in AppLovin Corporation, J.B. Chemicals and Pharmaceuticals Limited (NYSE: JBCP), and BrightView Holdings, Inc. (NYSE: BV). These increases were partially offset by decreases in the value of certain publicly held investments, the most significant of which was ZJLD Group Inc. (HKG: 6979) and PropertyGuru Group Limited (NYSE: PGRU). The prices of publicly held companies may experience volatile changes following the reporting period. See "—Business Environment" for more information about the factors, such as volatility, that may impact our business, financial performance, operating results and valuations.
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The most significant increases in the value of our privately held investments were increases in Kokusai Electric Corporation, Cloudera, Inc. (technology sector), and Exact Holding B.V. These increases in value on our privately held investments were partially offset by decreases in the value of certain other privately held investments, the most significant of which were PetVet Care Centers, LLC, Global Medical Response, Inc. (health care sector), and Accell Group N.V. (consumer products sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, and (iii) with respect to Kokusai Electric Corporation, an increase in valuation related to a partial sale transaction. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to an unfavorable business outlook. See "—Business Environment" for more information about the factors, that may impact our business, financial performance, operating results and valuations.
Real Assets
The following table reflects the changes in the AUM of our Real Assets business line from March 31, 2023 to June 30, 2023:
 ($ in millions)
March 31, 2023$120,806 
New Capital Raised2,812 
Distributions and Other(1,539)
Redemptions(79)
Change in Value(384)
June 30, 2023$121,616 
AUM of our Real Assets business line was $121.6 billion at June 30, 2023, an increase of $0.8 billion, compared to $120.8 billion at March 31, 2023.
The increase was primarily attributable to new capital raised from Global Atlantic under our investment management agreements with Global Atlantic's insurance companies, Diversified Core Infrastructure Fund, and infrastructure vehicles customized for private wealth investors. Partially offsetting the increase was (i) payments to Global Atlantic policyholders and (ii) distributions to its investors as a result of realized proceeds, most notably distributions from Global Infrastructure Investors III.
For the three months ended June 30, 2023, the value of our infrastructure investment portfolio increased 2%, the value of our opportunistic real estate equity investment portfolio remained flat, and the value of our energy investment portfolio decreased by 2%.
The most significant increases in value across our Real Assets portfolio were in CyrusOne Inc. (Infrastructure: asset leasing sector), Colonial Enterprises, Inc. (Infrastructure: midstream sector), and Refresco Group B.V. (manufacturing sector). These increases in value were partially offset by decreases in value relating primarily to various assets held in our real estate equity portfolio, ONNET Fibra Colombia S.A.S. (Infrastructure: telecommunications sector), and Crescent Energy Company. 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 capitalization rates and/or discount rates, which impacted our real estate equity portfolio. The prices of publicly held companies may experience volatile changes following the reporting period. See "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.
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Credit and Liquid Strategies
The following table reflects the changes in the AUM of our Credit and Liquid Strategies business line from March 31, 2023 to June 30, 2023: 
 ($ in millions)
March 31, 2023$223,501 
New Capital Raised7,979 
Distributions and Other(4,682)
Redemptions(1,200)
Change in Value1,170 
June 30, 2023$226,768 
AUM of our Credit and Liquid Strategies business line was $226.8 billion at June 30, 2023, an increase of $3.3 billion compared to $223.5 billion at March 31, 2023.
The increase was primarily attributable to (i) new capital raised from Global Atlantic, an open-ended asset based financing fund, the issuance of a European CLO, and our hedge fund partnership, Marshall Wace, and to a lesser extent (ii) appreciation in investment value across our leveraged credit and alternative credit investment funds and on assets managed by our hedge fund partnership, Marshall Wace. Partially offsetting the increase was (i) payments to Global Atlantic policyholders, (ii) redemptions at Marshall Wace, and (iii) distributions and redemptions to its investors at certain leveraged credit funds.
See also "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations and "—Credit and Liquid Strategies" for investment performance information for our leveraged and alternative credit strategies.
Fee Paying Assets Under Management
Private Equity
The following table reflects the changes in the FPAUM of our Private Equity business line from March 31, 2023 to June 30, 2023:
 ($ in millions)
March 31, 2023$102,323 
New Capital Raised3,145 
Distributions and Other(1,882)
Change in Value144 
June 30, 2023$103,730 
FPAUM of our Private Equity business line was $103.7 billion at June 30, 2023, an increase of $1.4 billion compared to $102.3 billion at March 31, 2023.
The increase was primarily attributable to new capital raised from our core private equity strategy portfolio, Ascendant Fund, and private equity vehicles customized for private wealth investors. Partially offsetting the increase was (i) a reduction in FPAUM for the write-off of Envision Healthcare Corporation and (ii) distributions to its investors primarily as a result of realized proceeds, most notably from Americas Fund XII.
Uncalled commitments from private equity and multi-strategy investment funds from which KKR is currently not earning management fees amounted to approximately $17.4 billion at June 30, 2023, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.0%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.
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Real Assets
The following table reflects the changes in the FPAUM of our Real Assets business line from March 31, 2023 to June 30, 2023:
 ($ in millions)
March 31, 2023$105,727 
New Capital Raised3,139 
Distributions and Other(1,723)
Redemptions(79)
Net Changes in Fee Base of Certain Funds (375)
Change in Value(571)
June 30, 2023$106,118 
FPAUM of our Real Assets business line was $106.1 billion at June 30, 2023, an increase of $0.4 billion, compared to $105.7 billion at March 31, 2023.
The increase was primarily attributable to (i) new capital raised from Global Atlantic and infrastructure vehicles customized for private wealth investors and (ii) Asia Real Estate Partners II entering its investment period, resulting in management fees now being earned on this capital. Partially offsetting this increase were (i) payments to Global Atlantic policyholders, and (ii) a change in fee base for Asia Real Estate Partners as a result of entering its post-investment period, during which we earn fees on invested capital rather than committed capital.
Uncalled commitments from real assets investment funds from which KKR is currently not earning management fees amounted to approximately $8.7 billion at June 30, 2023, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.2%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.
Credit and Liquid Strategies
The following table reflects the changes in the FPAUM of our Credit and Liquid Strategies business line from March 31, 2023 to June 30, 2023: 
 ($ in millions)
March 31, 2023$207,821 
New Capital Raised7,160 
Distributions and Other(4,621)
Redemptions(1,200)
Change in Value986 
June 30, 2023$210,146 
FPAUM of our Credit and Liquid Strategies business line was $210.1 billion at June 30, 2023, an increase of $2.3 billion, compared to $207.8 billion at March 31, 2023.
The increase was primarily attributable to (i) new capital raised from Global Atlantic, an open-ended asset based financing fund, the issuance of a European CLO, and our hedge fund partnership, Marshall Wace, and to a lesser extent (ii) appreciation in investment value across our leveraged credit and alternative credit investment funds and on assets managed by Marshall Wace. Partially offsetting this increase was (i) payments to Global Atlantic policyholders, (ii) redemptions at our hedge fund partnership, Marshall Wace, and (iii) distributions and redemptions to its investors at certain leveraged credit funds.
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Uncalled capital commitments from investment funds in our Credit and Liquid Strategies business line from which KKR is currently not earning management fees amounted to approximately $11.5 billion at June 30, 2023. 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 0.6%. 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, which will occur over an extended period of time, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.
See "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.
Uncalled Commitments
Private Equity
As of June 30, 2023, our Private Equity business line had $61.2 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $64.1 billion as of March 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 June 30, 2023, our Real Assets business line had $23.8 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $27.7 billion as of March 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 June 30, 2023, our Credit and Liquid Strategies business line had $15.1 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $14.5 billion as of March 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 June 30, 2023, our Private Equity business line had $3.2 billion of capital invested as compared to $5.7 billion for the three months ended June 30, 2022. The decrease was driven primarily by a $4.1 billion decrease in capital invested in our traditional private equity strategy, partially offset by a $1.8 billion increase in capital invested in our core private equity strategy. During the three months ended June 30, 2023, 62% of capital deployed in private equity (including core and growth equity investments which includes impact investments) was in transactions in Europe, 35% was in North America, and 3% was in the Asia-Pacific region. The number of large private equity investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.
Real Assets
For the three months ended June 30, 2023, our Real Assets business line had $3.3 billion of capital invested as compared to $8.1 billion for the three months ended June 30, 2022. The decrease was driven primarily by a $3.5 billion decrease in capital invested in our real estate strategy and a $1.3 billion decrease in our infrastructure strategy. During the three months ended June 30, 2023, 52% of capital deployed in real assets was in transactions in North America, 25% was in Europe, and 23% was in the Asia-Pacific region. 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.
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Credit and Liquid Strategies
For the three months ended June 30, 2023, our Credit and Liquid Strategies business line had $3.1 billion of capital invested as compared to $4.9 billion for the three months ended June 30, 2022. The decrease was primarily due to a lower level of capital deployed across our various private credit and direct lending strategies. During the three months ended June 30, 2023, 81% of capital deployed was in transactions in North America, 12% was in Europe, and 7% was in the Asia-Pacific region.
Analysis of Insurance Segment Operating Results
Effective January 1 , 2023, we adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) as of February 1, 2021, the date of the GA Acquisition, on a full retrospective basis. For a more detailed discussion of the adoption of the LDTI, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.
The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the three months ended June 30, 2023 and 2022:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Net Investment Income$1,283,794 $964,396 $319,398 
Net Cost of Insurance(811,677)(504,712)(306,965)
General, Administrative and Other(203,285)(165,911)(37,374)
Pre-tax Operating Earnings268,832 293,773 (24,941)
Pre-tax Operating Earnings Attributable to Noncontrolling Interests(98,608)(113,158)14,550 
Insurance Segment Operating Earnings$170,224 $180,615 $(10,391)
Insurance segment operating earnings
Insurance segment operating earnings decreased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to lower variable investment income for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.
Net investment income
Net investment income increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) increased average assets under management due to growth in assets in the institutional market channel as a result of new reinsurance transactions and individual market channel sales from new business growth, (ii) increases in portfolio yields due to higher market interest rates on floating rate investments, and (iii) rotation into higher yielding assets. Offsetting these increases to net investment income was a decrease in variable investment income, primarily due to a decrease in net realized gains from the sale of investments not related to asset/liability matching strategies.
Net cost of insurance
Net cost of insurance increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (ii) higher funding costs on new business originated.
General, administrative and other expenses
General and administrative expenses increased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 primarily due to (i) an increase in interest expense on floating rate debt (i.e., Global Atlantic's revolving facility and fixed-to-floating swaps on its fixed rate debt) due to higher market rates and higher total debt notional outstanding, (ii) increased employee compensation and benefits-related expenses, and (iii) increased technology-related costs.
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Net income attributable to non-controlling interests
Net income attributable to non-controlling interests decreased for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 in proportion to the decrease in insurance segment operating earnings for the comparable period. Net income attributable to non-controlling interests represents the proportionate interest in the insurance segment operating earnings attributable to other investors in Global Atlantic.
Analysis of Non-GAAP Performance Measures
The following is a discussion of our Non-GAAP performance measures for the three months ended June 30, 2023 and 2022:
Three Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Asset Management Segment Operating Earnings$752,050 $953,020 $(200,970)
Insurance Segment Operating Earnings170,224 180,615 (10,391)
Distributable Operating Earnings922,274 1,133,635 (211,361)
Interest Expense(92,010)(76,619)(15,391)
Net Income Attributable to Noncontrolling Interests(6,118)(4,535)(1,583)
Income Taxes on Operating Earnings(171,542)(201,265)29,723 
After-tax Distributable Earnings$652,604 $851,216 $(198,612)
Distributable Operating Earnings
The decrease in distributable operating earnings for the three months ended June 30, 2023 compared to the prior period is primarily due to a lower level of asset management segment operating earnings and insurance segment operating earnings. For a discussion of the asset management and insurance segment operating earnings, see "—Analysis of Asset Management Segment Operating Results" and "—Analysis of Insurance Segment Operating Results."
After-tax Distributable Earnings
The decrease in after-tax distributable earnings for the three months ended June 30, 2023 compared to the prior period was primarily due to a lower level of distributable operating earnings and an increase in interest expense, partially offset by a decrease in income taxes on operating earnings.
Interest Expense
The increase in interest expense for the three months ended June 30, 2023 compared to the prior period was primarily due to issuances of debt securities by KKR's financing subsidiaries.
Income Taxes on Operating Earnings
The decrease in income taxes on operating earnings for the three months ended June 30, 2023 compared to the prior period was primarily due to a lower level of asset management segment operating earnings.
For the three months ended June 30, 2023 and 2022, the amount of the tax benefit from equity-based compensation included in income taxes on operating earnings was $10.5 million and $15.9 million, respectively. The inclusion of the tax benefit from equity-based compensation in After-tax Distributable Earnings had the effect of increasing this measure by 2%, for both the three months ended June 30, 2023 and 2022.
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Analysis of Asset Management Segment Operating Results
The following tables set forth information regarding KKR's asset management segment operating results and certain key capital metrics as of and for the six months ended June 30, 2023 and 2022.
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees$1,487,044 $1,279,855 $207,189 
Transaction and Monitoring Fees, Net332,407 413,339 (80,932)
Fee Related Performance Revenues50,093 22,050 28,043 
Fee Related Compensation(420,778)(385,968)(34,810)
Other Operating Expenses(297,879)(263,119)(34,760)
Fee Related Earnings1,150,887 1,066,157 84,730 
Realized Performance Income324,732 1,340,065 (1,015,333)
Realized Performance Income Compensation(211,094)(858,063)646,969 
Realized Investment Income312,769 626,242 (313,473)
Realized Investment Income Compensation(46,897)(93,936)47,039 
Asset Management Segment Operating Earnings$1,530,397 $2,080,465 $(550,068)
Management Fees
The following table presents management fees by business line:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Management Fees
Private Equity$636,422 $581,283 $55,139 
Real Assets394,955 315,520 79,435 
Credit and Liquid Strategies455,667 383,052 72,615 
Total Management Fees$1,487,044 $1,279,855 $207,189 
The increase in Private Equity management fees was primarily attributable to management fees earned on new capital raised over the past twelve months at European Fund VI, Next Generation Technology Growth Fund III, and Ascendant Fund. The increase was partially offset by (i) management fees earned on new capital raised for North America Fund XIII in the first quarter of 2022 that was retroactive to the start of the fund's investment period, and (ii) a lower level of management fees from Asian Fund III due to the sale of investments that resulted in a decrease in its fee base, which is capital invested. There were no management fees that were retroactive to the start of the fund's investment period for the six months ended June 30, 2023 for North America Fund XIII. During the six months ended June 30, 2023, approximately $20.7 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 Asset management fees was primarily attributable to (i) management fees earned from Asia Pacific Infrastructure Investors II, which entered its investment period in the third quarter of 2022 resulting in management fees now being earned on this capital, (ii) a higher level of management fees earned from Global Atlantic due to an increase in assets being managed by KKR's Asset Management segment and (iii) management fees earned on assets managed by KJRM, which we acquired in the second quarter of 2022. The increase was partially offset by (i) a lower level of management fees from Asia Pacific Infrastructure as a result of entering its post-investment period in the third quarter of 2022 and, consequently, we now earn fees based on capital invested rather than capital committed. During the six months ended June 30, 2023, approximately $0.5 million of management fees were earned on new capital raised that is retroactive to the start of the relevant fund's investment period.
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The increase in Credit and Liquid Strategies management fees was primarily attributable to (i) a higher level of management fees earned from Global Atlantic due to an increase in Global Atlantic's assets being managed by KKR's Asset Management segment and (ii) a higher level of management fees earned from our hedge fund partnership, Marshall Wace. The increase was partially offset by a lower level of management fees from certain SIG funds primarily due to (i) the sale of investments that resulted in a decrease in its fee base, which is capital invested and (ii) certain SIG funds, which no longer pay management fees as a result of us agreeing to waive the management fee.
Transaction and Monitoring Fees, Net
The following table presents transaction and monitoring fees, net by business line:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity$67,416 $49,865 $17,551 
Real Assets10,913 9,199 1,714 
Credit and Liquid Strategies1,777 14,418 (12,641)
Capital Markets252,301 339,857 (87,556)
Total Transaction and Monitoring Fees, Net$332,407 $413,339 $(80,932)
Our Private Equity, Real Assets and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are generally required to share all or a portion of such fees with our fund investors. In most 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 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 not shared with fund investors.
The decrease in transaction and monitoring fees, net is primarily due to a lower level of transaction fees earned in our Capital Markets business line. The decrease in capital markets transaction fees was primarily due to a decrease in the number of capital markets transactions for the six months ended June 30, 2023, compared to the six months ended June 30, 2022 reflecting reduced levels of issuance activity across the global equity and leveraged loan markets. Overall, we completed 102 capital markets transactions for the six months ended June 30, 2023, of which 23 represented equity offerings and 79 represented debt offerings, as compared to 147 transactions for the six months ended June 30, 2022, of which 16 represented equity offerings and 131 represented debt offerings, where we earned fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we earn for similar transactions generally correlates with overall transaction sizes.
Our capital markets fees are generated in connection with activity involving our private equity, real assets and credit funds as well as from third-party companies. For the six months ended June 30, 2023, approximately 15% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 21% for the six months ended June 30, 2022. Our transaction fees are comprised of fees earned from North America, Europe, and the Asia-Pacific region. For the six months ended June 30, 2023, approximately 52% of our transaction fees were generated outside of North America as compared to approximately 40% for the six months ended June 30, 2022. 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.
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Fee Related Performance Revenues
The following table presents fee related performance revenues by business line:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Fee Related Performance Revenues
Private Equity$— $— $— 
Real Assets12,759 3,425 9,334 
Credit and Liquid Strategies37,334 18,625 18,709 
Total Fee Related Performance Revenues$50,093 $22,050 $28,043 
Fee related performance revenues were higher for the six months ended June 30, 2023 compared to the prior period primarily due to (i) a higher level of performance revenues earned from FS KKR Capital Corp. compared to the prior period and (ii) performance revenues earned from KJRM in the current period.
Fee Related Compensation
The increase in fee related compensation for the six months ended June 30, 2023 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of revenues included within fee related earnings.
Other Operating Expenses
The increase in other operating expenses for the six months ended June 30, 2023 compared to the prior period was primarily due to a higher level of information technology, occupancy and other administrative costs in connection with the overall growth of the firm.
Fee Related Earnings
The increase in fee related earnings for the six months ended June 30, 2023 compared to the prior period is primarily due to a higher level of management fees from our Private Equity, Real Assets, and Credit and Liquid Strategies business lines and a higher level of fee related performance revenues, partially offset by a lower level of transaction and monitoring fees, net, and a higher level of fee related compensation and other operating expenses, as described above.
Realized Performance Income
The following table presents realized performance income by business line:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Realized Performance Income
Private Equity$309,284 $1,237,969 $(928,685)
Real Assets9,686 85,310 (75,624)
Credit and Liquid Strategies5,762 16,786 (11,024)
Total Realized Performance Income$324,732 $1,340,065 $(1,015,333)
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Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Private Equity
Americas Fund XII$107,620 $122,277 $(14,657)
Core Investment Vehicles103,659 262,219 (158,560)
North America Fund XI23,486 563,112 (539,626)
Asian Fund III23,002 51,397 (28,395)
Global Impact Fund20,257 — 20,257 
Next Generation Technology Growth Fund17,810 — 17,810 
Co-Investment Vehicles and Other9,130 48,100 (38,970)
2006 Fund4,271 80,575 (76,304)
European Fund IV— 86,233 (86,233)
Total Realized Carried Interest (1)
309,235 1,213,913 (904,678)
Incentive Fees49 24,056 (24,007)
Total Realized Performance Income$309,284 $1,237,969 $(928,685)
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Real Assets
Global Infrastructure Investors II$9,686 $— $9,686 
Real Estate Partners Americas II— 85,310 (85,310)
Total Realized Carried Interest (1)
9,686 85,310 (75,624)
Incentive Fees— — — 
Total Realized Performance Income$9,686 $85,310 $(75,624)
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Credit and Liquid Strategies
Alternative Credit and Other Funds$— $4,153 $(4,153)
Total Realized Carried Interest (1)
— 4,153 (4,153)
Incentive Fees5,762 12,633 (6,871)
Total Realized Performance Income$5,762 $16,786 $(11,024)
(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.
Realized performance income includes (i) realized carried interest from our carry-earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.
Realized carried interest in our Private Equity business line for the six months ended June 30, 2023 consisted primarily of (i) realized proceeds from the sale of our investments in AppLovin Corporation held by Americas Fund XII, KnowBe4, Inc. held by Global Impact Fund and Next Generation Technology Fund, and Endeavor Group Holdings, Inc. held by North America Fund XI, and (ii) performance income from our core investment vehicles. Realized carried interest in our Private Equity business line for the six months ended June 30, 2022 consisted primarily of (i) realized proceeds from the sale of our investments in Internet Brands, Inc. held by our North America Fund XI, Hensoldt AG (FRA: HAG) held by our European Fund IV and (ii) realized performance income from our core investment vehicles.
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Realized carried interest in our Real Assets business line for the six months ended June 30, 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 carried interest in our Real Assets business line for the six months ended June 30, 2022 consisted primarily of realized proceeds from dividends received from and sales of various investments in our real estate strategy.
During the six months ended June 30, 2023, there was no realized carried interest earned in our Credit and Liquid Strategies business line. Realized carried interest in our Credit and Liquid Strategies for the six months ended June 30, 2022, consisted primarily of realized proceeds from the sale of various investments at certain alternative credit funds that are eligible to pay realized carried interest.
Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR sponsored investment vehicles, and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a UK investment fund manager. Incentive fees in our Private Equity business line decreased for the six months ended June 30, 2023 compared to the prior period as a result of incentive fees not being earned from certain levered multi-asset investment vehicles in the current period. Incentive fees in our Credit and Liquid Strategies business line decreased for the six months ended June 30, 2023 compared to the prior period primarily as a result of a lower level of performance fees earned from a UK investment fund manager. During the six months ended June 30, 2023 and 2022, there were no incentive fees earned in our Real Asset business line.
Realized Performance Income Compensation
The decrease in realized performance income compensation for the six months ended June 30, 2023 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized performance income.
Realized Investment Income
The following table presents realized investment income from our Principal Activities business line:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)$107,249 $272,544 $(165,295)
Interest Income and Dividends, Net205,520 353,698 (148,178)
Total Realized Investment Income$312,769 $626,242 $(313,473)
The decrease in realized investment income is primarily due to a lower level of net realized gains and a lower level of interest income and dividends, net. The amount of realized investment income depends on the transaction activity of our funds and our subsidiaries, which can vary from period to period.
For the six months ended June 30, 2023, net realized gains were comprised primarily of the sale of our investments in AppLovin Corporation, Pembina Gas Infrastructure Inc., KnowBe4, Inc., and Flutter Entertainment PLC. Partially offsetting these realized gains were realized losses, the most significant of which were (i) a realized loss on our private equity investment, Envision Healthcare Corporation, (ii) realized losses on our alternative credit investments, Hilding Anders International AB and Chembulk Group, and (iii) realized losses from the sales of various revolving credit facilities.
For the six months ended June 30, 2022, net realized gains were comprised primarily of the sale of our investments in Fiserv, Inc., Internet Brands, Inc. and Hensoldt AG. Partially offsetting these realized gains were realized losses, the most significant of which were (i) realized losses on our alternative credit investment, Hilding Anders International AB, and real estate equity investment, River Plaza (real estate equity) and (ii) realized losses from the sales of various revolving credit facilities.
For the six months ended June 30, 2023, interest income and dividends, net were comprised of (i) $158.7 million of interest income primarily from our investments in CLOs, and to a lesser extent, our credit investments and cash balances, and (ii) $46.8 million of dividend income primarily from (i) our Americas real estate credit and equity investments and (ii) dividend distributions received from our investment in Resolution Life Holdings L.P. (financial services sector), and our investment in Diversified Core Infrastructure Fund.
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For the six months ended June 30, 2022, interest income and dividends, net were comprised of (i) $252.9 million of dividend income primarily from levered multi-asset investment vehicles and our private equity investments, Exact Holding B.V. and Internet Brands, Inc., and (ii) $100.8 million of interest income primarily from our investments in CLOs. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."
For the six months ended June 30, 2023, total fees attributable to KKR Capstone were $43.8 million and total expenses attributable to KKR Capstone were $39.4 million. For KKR Capstone-related adjustments in reconciling asset management segment revenues to GAAP revenues see "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures".
We currently expect to realize at least $350.0 million of realized performance income from carried interest and realized investment income in the second half of 2023 from transactions entered into prior to the date of filing this report. 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 through December 31, 2023, which could impact, positively or negatively, the total amount of our realized performance income from carried interest and realized investment income. Therefore, our actual realized performance income and realized investment income for the second half of 2023 may be materially higher or lower than $350.0 million.
Realized Investment Income Compensation
The decrease in realized investment income compensation for the six months ended June 30, 2023 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.
Other Operating and Capital Metrics
The following table presents certain key operating and capital metrics as of June 30, 2023 and December 31, 2022:
As of
June 30, 2023December 31, 2022Change
($ in millions)
Assets Under Management$518,523 $503,897 $14,626 
Fee Paying Assets Under Management$419,994 $411,923 $8,071 
Uncalled Commitments$100,154 $107,679 $(7,525)
The following table presents one of our key capital metrics for the six months ended June 30, 2023 and 2022:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in millions)
Capital Invested$19,357 $40,027 $(20,670)
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Assets Under Management
Private Equity
The following table reflects the changes in the AUM of our Private Equity business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$165,147 
New Capital Raised2,341 
Distributions and Other(3,020)
Change in Value5,671 
June 30, 2023$170,139 
AUM of our Private Equity business line was $170.1 billion at June 30, 2023, an increase of $5.0 billion, compared to $165.1 billion at December 31, 2022.
The increase was primarily attributable to (i) an appreciation in investment value from Americas Fund XII, Asian Fund III, and our core private equity strategy, and (ii) new capital raised from Ascendant Fund, private equity vehicles customized for private wealth investors, and Next Generation Technology Growth Fund III. Partially offsetting the increase was distributions to its investors primarily as a result of realized proceeds, most notably from Americas Fund XII, Asian Fund III, and North America Fund XI.
For the six months ended June 30, 2023, the value of our traditional private equity investment portfolio increased by 7%. This was comprised of a 31% increase in share prices of various publicly held investments and a 5% increase in value of our privately held investments. For the six months ended June 30, 2023, the value of our growth equity investment portfolio increased 7% and our core private equity investment portfolio increased 2%.
The most significant increases in share prices of our publicly held investments were increases in AppLovin Corporation, J.B. Chemicals and Pharmaceuticals Limited, and US Foods Holding Corp. (NYSE: USFD). These increases were partially offset by decreases in share prices of other publicly held investments, the most significant of which was ZJLD Group Inc. The prices of publicly held companies may experience volatile changes following the reporting period. See "—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 Cloudera, Inc., Kokusai Electric Corporation, and Exact Holding B.V. These increases in value on our privately held investments were partially offset by decreases in the value of certain other privately held investments, the most significant of which were GenesisCare Pty Ltd, PetVet Care Centers, LLC, and Global Medical Response, Inc. The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, and (iii) with respect to Kokusai Electric Corporation, an increase in valuation related to a partial sale transaction. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to an unfavorable business outlook. See "—Business Environment" for more information about the factors, that may impact our business, financial performance, operating results and valuation.
Real Assets
The following table reflects the changes in the AUM of our Real Assets business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$118,592 
New Capital Raised5,425 
Distributions and Other(3,007)
Redemptions(158)
Change in Value764 
June 30, 2023$121,616 
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AUM of our Real Assets business line was $121.6 billion at June 30, 2023, an increase of $3.0 billion, compared to $118.6 billion at December 31, 2022.
The increase was primarily attributable to new capital raised from Global Atlantic under our investment management agreements with Global Atlantic's insurance companies, Diversified Core Infrastructure Fund, and Asia Real Estate Partners II. Partially offsetting the increase was (i) payments to Global Atlantic policyholders, and (ii) distributions to its investors as a result of realized proceeds, most notably from Global Infrastructure Investors III and Global Infrastructure Investors II.
For the six months ended June 30, 2023, the value of our infrastructure investment portfolio increased 8%, the value of our opportunistic real estate equity investment portfolio decreased by 2%, and the value of our energy investment portfolio decreased by 11%.
The most significant increases in value across our Real Assets portfolio were in Atlantic Aviation FBO Inc., ONNET Fibra Chile S.A.S. (Infrastructure: telecommunications infrastructure sector), and First Gen Corporation (Infrastructure: power and utilities sector). These increases in value were partially offset by decreases in value relating primarily to Crescent Energy Company and various assets held in our opportunistic real estate equity investment portfolio. 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 capitalization rates and/or discount rates which impacted our real estate equity portfolio. The prices of publicly held companies may experience volatile changes following the reporting period. See "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.
Credit and Liquid Strategies
The following table reflects the changes in the AUM of our Credit and Liquid Strategies business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$220,158 
New Capital Raised16,694 
Distributions and Other(8,707)
Redemptions(3,733)
Change in Value2,356 
June 30, 2023$226,768 
AUM of our Credit and Liquid Strategies business line totaled $226.8 billion at June 30, 2023, an increase of $6.6 billion compared to AUM of $220.2 billion at December 31, 2022.
The increase was primarily attributable to (i) new capital raised from Global Atlantic, various leveraged credit and alternative credit funds, the issuance of CLOs, and our hedge fund partnership, Marshall Wace, and to a lesser extent (ii) appreciation in investment value across our leveraged credit and alternative credit investment funds and on assets managed by Marshall Wace. Partially offsetting the increase was (i) payments to Global Atlantic policyholders, (ii) redemptions at our hedge fund partnership, Marshall Wace, and (iii) distributions and redemptions to its investors at certain leveraged credit funds.
See also "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.
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Fee Paying Assets Under Management
Private Equity
The following table reflects the changes in the FPAUM of our Private Equity business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$102,261 
New Capital Raised4,552 
Distributions and Other(3,283)
Change in Value200 
June 30, 2023$103,730 
FPAUM of our Private Equity business line was $103.7 billion at June 30, 2023, an increase of $1.4 billion, compared to $102.3 billion at December 31, 2022.
The increase was primarily attributable to new capital raised from our core private equity strategy portfolio, Ascendant Fund, and private equity vehicles customized for private wealth investors. Partially offsetting the increase was (i) a reduction in FPAUM for the write-off of Envision Healthcare Corporation, (ii) distributions to its investors primarily as a result of realized proceeds, most notably from Americas Fund XII, and (iii) a reduction in fee base for European Fund III and China Growth Fund, which no longer pay management fees.
Real Assets
The following table reflects the changes in the FPAUM of our Real Assets business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$103,532 
New Capital Raised6,573 
Distributions and Other(2,994)
Redemptions(158)
Net Changes in Fee Base of Certain Funds (375)
Change in Value(460)
June 30, 2023$106,118 
FPAUM of our Real Assets business line was $106.1 billion at June 30, 2023, an increase of $2.6 billion, compared to $103.5 billion at December 31, 2022.
The increase was primarily attributable to new capital raised from Diversified Core Infrastructure Fund, Global Atlantic, and Global Infrastructure Investors IV. Partially offsetting the increase was (i) payments to Global Atlantic policyholders, (ii) a change in fee base for Asia Real Estate Partners as a result of entering its post-investment period, during which we earn fees on invested capital rather than committed capital, and (iii) distributions to its investors as a result of realized proceeds, most notably from Global Infrastructure Investors II.
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Credit and Liquid Strategies
The following table reflects the changes in the FPAUM of our Credit and Liquid Strategies business line from December 31, 2022 to June 30, 2023:
 ($ in millions)
December 31, 2022$206,130 
New Capital Raised15,656 
Distributions and Other(9,849)
Redemptions(3,733)
Change in Value1,942 
June 30, 2023$210,146 
FPAUM of our Credit and Liquid Strategies business line was $210.1 billion at June 30, 2023, an increase of $4.0 billion compared to $206.1 billion at December 31, 2022.
The increase was primarily attributable to (i) new capital raised from Global Atlantic, various leveraged credit and alternative credit funds, the issuance of CLOs, and our hedge fund partnership, Marshall Wace, and to a lesser extent (ii) appreciation in investment value across our leveraged credit and alternative credit investment funds and on assets managed by our hedge fund partnership, Marshall Wace. Partially offsetting the increase was (i) payments to Global Atlantic policyholders, (ii) redemptions at Marshall Wace, and (iii) distributions and redemptions to its investors at certain leveraged credit funds.
See "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.
Uncalled Commitments
Private Equity
As of June 30, 2023, our Private Equity business line had $61.2 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $65.9 billion as of December 31, 2022. 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 June 30, 2023, our Real Assets business line had $23.8 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $27.5 billion as of December 31, 2022. 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 June 30, 2023, our Credit and Liquid Strategies business line had $15.1 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $14.3 billion as of December 31, 2022. 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 six months ended June 30, 2023, $6.1 billion of capital was invested by our Private Equity business line, as compared to $10.1 billion for the six months ended June 30, 2022. The decrease was driven primarily by a $6.5 billion decrease in capital invested in our traditional private equity strategy, partially offset by a $2.8 billion increase in capital invested in our core private equity strategy. During the six months ended June 30, 2023, 59% of capital deployed in private equity was in transactions in Europe, 37% was in North America, and 4% was in the Asia-Pacific region. The number of large private equity investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.
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Real Assets
For the six months ended June 30, 2023, $7.9 billion of capital was invested by our Real Assets business line, as compared to $17.1 billion for the six months ended June 30, 2022. The decrease was driven primarily by a $7.3 billion decrease in capital invested in our real estate strategy and a $1.2 billion decrease in capital invested in our energy strategy. During the six months ended June 30, 2023, 45% of capital deployed in real assets was in transactions in Europe, 28% was in the Asia-Pacific region, and 27% 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 six months ended June 30, 2023, $5.4 billion of capital was invested by our Credit and Liquid Strategies business line, as compared to $12.8 billion for the six months ended June 30, 2022. The decrease was primarily due to a lower level of capital deployed across our various private credit and direct lending strategies. During the six months ended June 30, 2023, 80% of capital deployed was in transactions in North America, 15% was in Europe, and 5% was in the Asia-Pacific region.
Analysis of Insurance Segment Operating Results
Effective January 1 , 2023, we adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) as of February 1, 2021, the date of the GA Acquisition, on a full retrospective basis. For a more detailed discussion of the adoption of the LDTI, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.
The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the six months ended June 30, 2023 and 2022:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Net Investment Income$2,555,049 $1,826,810 $728,239 
Net Cost of Insurance(1,562,289)(986,582)(575,707)
General, Administrative and Other(399,999)(312,323)(87,676)
Pre-tax Operating Earnings592,761 527,905 64,856 
Pre-tax Operating Earnings Attributable to Noncontrolling Interests(217,425)(203,343)(14,082)
Insurance Segment Operating Earnings$375,336 $324,562 $50,774 
Insurance segment operating earnings
Insurance segment operating earnings increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to higher net investment income resulting from an increase in assets under management due to growth of the business and higher average yields. The increase was offset in part by (i) higher net cost of insurance, primarily due to the growth in both the individual market and institutional market channels and higher funding cost on new business and (ii) a corresponding increase in general and administrative expenses.
Net investment income
Net investment income increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to (i) increased average assets under management due to growth in assets in the institutional market channel as a result of new reinsurance transactions and individual market channel sales from new business growth, (ii) increases in portfolio yields due to higher market interest rates on floating rate investments, and (iii) rotation into higher yielding assets. Offsetting these increases to net investment income was a decrease in variable investment income, primarily due to a decrease in net realized gains from the sale of investments not related to asset/liability matching strategies.
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Net cost of insurance
Net cost of insurance increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to (i) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (ii) higher funding costs on new business originated.
General, administrative and other expenses
General and administrative expenses increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 primarily due to (i) an increase in interest expense on floating rate debt (i.e., Global Atlantic's revolving facility and fixed-to-floating swaps on its fixed rate debt) due to higher market rates and higher total debt notional outstanding and (ii) increased employee compensation and benefits-related expenses.
Net Income attributable to non-controlling interests
Net income attributable to noncontrolling interests increased for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 in proportion to the increase in insurance segment operating earnings for the comparable period. Net income attributable to non-controlling interests represents the proportionate interest in the insurance segment operating earnings attributable to other co-investors in Global Atlantic.
Analysis of Non-GAAP Performance Measures
The following is a discussion of our Non-GAAP performance measures for the six months ended June 30, 2023 and 2022:
Six Months Ended
June 30, 2023June 30, 2022Change
($ in thousands)
Asset Management Segment Operating Earnings$1,530,397 $2,080,465 $(550,068)
Insurance Segment Operating Earnings375,336 324,562 50,774 
Distributable Operating Earnings1,905,733 2,405,027 (499,294)
Interest Expense(177,510)(146,079)(31,431)
Net Income Attributable to Noncontrolling Interests(11,744)(12,151)407 
Income Taxes on Operating Earnings (344,599)(421,544)76,945 
After-tax Distributable Earnings$1,371,880 $1,825,253 $(453,373)
Distributable Operating Earnings
The decrease in distributable operating earnings for the six months ended June 30, 2023 compared to the prior period is primarily due to a lower level of asset management segment operating earnings partially offset by a higher level of insurance segment operating earnings. For a discussion of the asset management and insurance segment operating earnings, see "—Analysis of Asset Management Segment Operating Results" and "—Analysis of Insurance Segment Operating Results."
After-tax Distributable Earnings
The decrease in after-tax distributable earnings for the six months ended June 30, 2023 compared to the prior period was primarily due to a lower level of distributable operating earnings and an increase in interest expense partially offset by a decrease in income taxes on operating earnings.
Interest Expense
The increase in interest expense for the six months ended June 30, 2023 compared to the prior period is due primarily to debt issuances by KKR's financing subsidiaries.
Income Taxes on Operating Earnings
The decrease in income taxes on operating earnings for the six months ended June 30, 2023 compared to the prior period was primarily due to a lower level of asset management segment operating earnings.
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For the six months ended June 30, 2023 and 2022, the amount of the tax benefit from equity-based compensation included in income taxes on operating earnings was $24.2 million and $27.7 million, respectively. The inclusion of the tax benefit from equity-based compensation in After-tax Distributable Earnings had the effect of increasing this measure by 2% both for the six months ended June 30, 2023 and 2022.
Non-GAAP Balance Sheet Measures
Book Value
The following table presents our calculation of book value as of June 30, 2023 and December 31, 2022:
As of
 June 30, 2023December 31, 2022
 ($ in thousands)
(+)Cash and Short-term Investments$3,800,734 $3,256,515 
(+)Investments18,022,787 17,628,327 
(+)
Net Unrealized Performance Income (1)
2,870,684 2,509,589 
(+)
Other Assets, Net (2)
6,838,266 6,979,235 
(+)Global Atlantic Book Value 4,353,892 4,409,873 
(-)Debt Obligations - KKR (excluding KFN and Global Atlantic)7,160,429 6,957,932 
(-)Debt Obligations - KFN948,517 948,517 
(-)Tax Liabilities, Net1,716,000 1,648,600 
(-)Other Liabilities994,069 911,612 
(-)Noncontrolling Interests26,424 32,843 
Book Value$25,040,924 $24,284,035 
Book Value Per Adjusted Share$28.17 $27.27 
Adjusted Shares888,791,917 890,628,190 
(1)The following table provides net unrealized performance income by business line:
As of
June 30, 2023December 31, 2022
($ in thousands)
Private Equity Business Line$2,458,058 $2,199,869 
Real Assets Business Line306,818 212,974 
Credit and Liquid Strategies Business Line105,808 96,746 
Total$2,870,684 $2,509,589 
(2)Other Assets, Net include our (i) ownership interest in FS/KKR Advisor, (ii) minority ownership interests in hedge fund partnerships, and (iii) the net assets of KJRM.
Book value increased 3% from December 31, 2022. The increase was primarily attributable to (i) the net appreciation in the value of our investment portfolio, (ii) an increase in net unrealized carried interest, most notably from Americas Fund XII, Asian Fund III, and Global Infrastructure Investors III, and (iii) the positive impact of our after-tax distributable earnings recognized in the period. Partially offsetting these increases were the payment of dividends and repurchases of our common stock during the period. The value of our asset management segment investments increased 3% in the period. For a further discussion, see "—Consolidated Results of Operations (GAAP Basis) - Asset Management—Investment Income (Loss) - Asset Management—Unrealized Gains and Losses from Investment Activities." For a discussion of the changes in our investment portfolio, see "—Analysis of Asset Management Segment Operating Results—Assets Under Management." For a discussion of factors that impacted KKR's after-tax distributable earnings, see "—Analysis of Non-GAAP Performance Measures—After-tax Distributable Earnings" and for more information about the factors that may impact our business, financial performance, operating results and valuations, see "—Business Environment."
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The following table presents the holdings of our investments in the asset management segment by asset class as of June 30, 2023. To the extent investments are realized at values below their cost in future periods, after-tax distributable earnings would be adversely affected by the amount of such loss, if any, during the period in which the realization event occurs.
As of June 30, 2023
($ in thousands)
Investments (1)
CostFair ValueFair Value as a Percentage of
Total Investments
Core Private Equity$3,018,292 $6,187,476 34.3 %
Traditional Private Equity2,126,441 3,659,859 20.3 %
Growth Equity372,540 927,200 5.1 %
Private Equity Total5,517,273 10,774,535 59.7 %
Real Estate1,867,794 1,889,598 10.5 %
Infrastructure1,397,831 1,592,400 8.8 %
Energy836,511 810,032 4.5 %
Real Assets Total4,102,136 4,292,030 23.8 %
Leveraged Credit1,385,877 1,169,345 6.5 %
Alternative Credit835,175 933,344 5.2 %
Credit Total2,221,052 2,102,689 11.7 %
Other1,134,352 853,533 4.8 %
Total Investments$12,974,813 $18,022,787 100.0 %
(1)Investments is a term used solely for purposes of financial presentation of a portion of KKR's balance sheet and includes majority ownership of subsidiaries that operate KKR's asset management and insurance businesses, including the general partner interests of KKR's investment funds. Investments presented are principally the assets measured at fair value that are held by KKR's asset management segment, which, among other things, does not include the underlying investments held by Global Atlantic and Marshall Wace.
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As of June 30, 2023
($ in thousands)
Top 20 Investments: (1)
CostFair Value
USI, Inc.$531,425 $1,403,499 
PetVet Care Centers, LLC243,211 1,070,128 
Heartland Dental, LLC375,365 824,283 
Exact Holding B.V.213,362 651,887 
Arnott's Biscuits Limited250,841 478,320 
Barracuda Networks, Inc.432,831 432,831 
Roompot B.V.349,036 416,465 
1-800 Contacts Inc.300,178 405,243 
Internet Brands, Inc.340,312 372,628 
ERM Worldwide Group Limited228,710 365,928 
IVIRMA Global SL335,993 341,574 
Teaching Strategies, LLC307,162 307,162 
APRIL Group280,229 301,070 
Resolution Life Group Holdings, L.P.262,191 278,977 
Crescent Energy Company (NYSE: CRGY)523,785 264,291 
Shriram General Insurance Co.245,470 249,158 
BridgeBio Pharma, Inc. (NASDAQ: BBIO)59,799 206,114 
Atlantic Aviation FBO Inc.170,274 198,130 
PortAventura155,803 194,219 
Viridor Limited132,023 193,269 
Total Top 20 Investments$5,738,000 $8,955,176 
(1)This list of investments identifies the twenty largest companies or assets based on their fair values as of June 30, 2023. It does not deduct fund or vehicle level debt, if any, incurred in connection with funding the investment. This list excludes (i) investments expected to be syndicated, (ii) investments expected to be transferred in connection with a new fundraising, (iii) investments in funds and other entities that are owned by one or more third parties and established for the purpose of making investments and (iv) the portion of any investment that may be held through collateralized loan obligations or levered multi-asset investment vehicles, if any. For additional information about the asset classes of the investments held on KKR's balance sheet see "—Our Business—Principal Activities" for the "Holdings by Asset Class" pie chart. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

With respect to KKR's book value relating to its insurance business, KKR includes Global Atlantic's book value, which consists of KKR's pro rata equity interest in Global Atlantic on a GAAP basis, excluding (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance embedded derivative balances and related assets, net of income tax. KKR believes this presentation of Global Atlantic's book value is comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic's industry. As of June 30, 2023, KKR's pro rata interest in Global Atlantic's book value was $4.4 billion. For more information about the composition and credit quality of Global Atlantic's investments on a consolidated basis, please see "—Global Atlantic's Investment Portfolio" below.
Global Atlantic's Investment Portfolio
As of June 30, 2023, 96% and 87% 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, 2022, 95% and 85% 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 June 30, 2023 were Corporate, RMBS and CMBS securities, comprising 30%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 94%, 97% and 95% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 94%, 54% and 54% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of June 30, 2023. The three largest asset categories in Global Atlantic's AFS fixed-maturity security portfolio as of December 31, 2022 were Corporate, RMBS and CMBS securities, comprising 29%, 5% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 94%, 95% and 95% of Global Atlantic's Corporate, RMBS and CMBS securities,
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respectively, were investment grade according to NAIC ratings and 94%, 45% and 53% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of December 31, 2022. 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 30% and 29% as of June 30, 2023 and December 31, 2022, respectively.
Within the funds withheld receivable at interest portfolio, 97% of the fixed maturity securities were investment grade by NAIC designation as of both June 30, 2023 and December 31, 2022.
Trading fixed maturity securities back funds withheld payable at interest where the investment performance is ceded to reinsurers under the terms of the respective reinsurance agreements.
Credit quality of AFS fixed maturity securities
The Securities Valuation Office of the NAIC evaluates the AFS fixed maturity security investments of insurers for regulatory reporting and capital assessment purposes and assigns securities to one of six credit quality categories called “NAIC designations.” Using an internally developed rating is permitted by the NAIC if no rating is available. These designations are generally similar to the credit quality designations of NRSROs for marketable fixed maturity securities, except for certain structured securities as described below. NAIC designations of “1,” highest quality, and “2,” high quality, include fixed maturity securities generally considered investment grade by NRSROs. NAIC designations “3” through “6” include fixed maturity securities generally considered below investment grade by NRSROs.
Consistent with the NAIC Process and Procedures Manual, an NRSRO rating was assigned based on the following criteria: (i) the equivalent S&P rating where the security is rated by one NRSRO; (ii) the equivalent S&P rating of the lowest NRSRO when the security is rated by two NRSROs; and (iii) the equivalent S&P rating of the second lowest NRSRO if the security is rated by three or more NRSROs. If the lowest two NRSROs’ ratings are equal, then such rating will be the assigned rating. NRSROs’ ratings available for the periods presented were S&P, Fitch, Moody’s, DBRS, Inc. and Kroll Bond Rating Agency, Inc. If no rating is available from a rating agency, then an internally developed rating is used.
Substantially all of the AFS fixed maturity securities portfolio, 96% and 95% as of June 30, 2023 and December 31, 2022, 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% and 5% as of June 30, 2023 and December 31, 2022, respectively. Pursuant to Global Atlantic's investment guidelines, Global Atlantic actively monitors the percentage of its portfolio that is held in investments rated NAIC 3 or lower and must obtain an additional approval from Global Atlantic's management investment committee before making a significant investment in an asset rated NAIC 3 or lower.
Corporate fixed maturity securities
Global Atlantic maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. As of both June 30, 2023 and December 31, 2022, 59% of the AFS fixed maturity securities portfolio was invested in corporate fixed maturity securities. As of both June 30, 2023 and December 31, 2022, approximately, 5% of the portfolio is denominated in foreign currency.
As of both June 30, 2023 and December 31, 2022, 94% of the total fair value of corporate fixed maturity securities is rated NAIC investment grade and 94% is rated NRSROs investment grade, respectively.
Residential mortgage-backed securities
As of June 30, 2023 and December 31, 2022, 11% and 10% 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.
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The NAIC designations for RMBS, including prime, sub-prime, alt-A, and adjustable rate mortgages with variable payment options ("Option ARM"), are based upon a comparison of the bond’s amortized cost to the NAIC’s loss expectation for each security. Accordingly, an investment in the same security at a lower cost may result in a higher quality NAIC designation in recognition of the lower likelihood the investment would result in a realized loss. Prime residential mortgage lending includes loans to the most creditworthy borrowers with high quality credit profiles. Alt-A is a classification of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.
As of June 30, 2023 and December 31, 2022, 93% and 90%, respectively, of RMBS securities that are below investment grade as rated by the NRSRO, carry an NAIC 1 ("highest quality") designation.
As of June 30, 2023, Alt-A, Option ARM, Re-Performing and Sub-prime represent 43%, 24%, 10% and 12% of the total RMBS portfolio ($7.4 billion), respectively. As of December 31, 2022, Alt-A, Option ARM, Re-Performing and Sub-prime represent 31%, 28%, 14% and 12% of the total RMBS portfolio ($6.4 billion), respectively.
Unrealized gains and losses for AFS fixed maturity securities
Global Atlantic's investments in AFS fixed maturity securities are reported at fair value with changes in fair value recorded in other comprehensive income as unrealized gains or losses, net of taxes and offsets. Unrealized gains and losses can be created by changes in interest rates or by changes in credit spreads.
As of June 30, 2023 and December 31, 2022, Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $772.0 million and $917.6 million based on NRSRO rating and $212.0 million and $224.9 million based on NAIC ratings, respectively. As of June 30, 2023, 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 both June 30, 2023 and December 31, 2022, 28% of Global Atlantic's total investments consisted of mortgage and other loan receivables.
Global Atlantic invests in U.S. mortgage loans, comprised of first lien and mezzanine 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 June 30, 2023 and December 31, 2022. Office and retail properties represent approximately 26% and 28% of the portfolio as of June 30, 2023 and December 31, 2022, respectively.
Global Atlantic's commercial mortgage loans are assigned NAIC designations, with designations “CM1” and “CM2” considered to be investment grade. As of June 30, 2023 and December 31, 2022, 91% and 88% of the commercial mortgage loan portfolio were rated investment grade based on NAIC designation, respectively. The payment status of over 99% of the commercial mortgage loan portfolio is current as of both June 30, 2023 and December 31, 2022.
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 June 30, 2023 and December 31, 2022, approximately 86% and 84%, respectively, of the commercial mortgage loans have a loan-to-value ratio of 70% or less and for both June 30, 2023 and December 31, 2022, 3% have loan-to-value ratio over 90%.
Changing economic conditions and updated assumptions affect Global Atlantic’s assessment of the collectability 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 June 30, 2023, the payment status of 96% of the residential mortgage loan portfolio is current, and approximately $204.8 million is 90 days or more past due (representing 2% of the total residential mortgage portfolio). As of December 31, 2022, the payment status of 96% of the residential mortgage loan portfolio was current and approximately $192.3 million were 90 days or more past due (representing 2% of the total residential mortgage portfolio).
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The weighted average loan-to-value ratio for residential mortgage loans was 63% and 64% as of June 30, 2023 and December 31, 2022, 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 June 30, 2023, 97% of the consumer loan portfolio is in current status and approximately $37.6 million is 90 days or more past due (representing 1% of the total consumer loan portfolio).
Reconciliations to GAAP Measures
The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with GAAP to KKR's non-GAAP financial measures for the three and six months ended June 30, 2023 and 2022:
Revenues
 Three Months EndedSix Months Ended
 June 30, 2023June 30, 2022June 30, 2023June 30, 2022
 ($ in thousands)
Total GAAP Revenues$3,626,518 $323,393 $6,754,000 $1,322,756 
Impact of Consolidation and Other184,775 172,118 394,553 385,518 
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)(696,897)923,474 (1,145,915)1,869,217 
Realized Carried Interest146,232 723,609 318,921 1,303,376 
Realized Investment Income114,675 276,888 312,769 626,242 
Capstone Fees(24,040)(19,510)(43,845)(34,995)
Expense Reimbursements(16,840)(25,576)(32,384)(66,879)
Insurance Adjustments:
Net Premiums(626,429)225,502 (1,100,053)(146,642)
Policy Fees(315,382)(319,030)(629,184)(632,812)
Other Income(39,858)(32,512)(77,016)(67,256)
(Gains) Losses from Investments (1)
193,770 21,041 454,277 188,143 
Non-operating Changes in Policy Liabilities and Derivatives(31,253)474,972 (144,029)761,693 
Total Segment Revenues (2)
$2,515,271 $2,744,369 $5,062,094 $5,508,361 
(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, and (vi) Net Investment Income.


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Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders
Three Months EndedSix Months Ended
 June 30, 2023June 30, 2022June 30, 2023June 30, 2022
 ($ in thousands)
Net Income (Loss) Attributable to KKR & Co. Inc.
Common Stockholders (GAAP)		$844,463 $(734,625)$1,167,207 $(744,411)
Preferred Stock Dividends 17,249 17,250 34,499 34,500 
Net Income (Loss) Attributable to Noncontrolling Interests264,346 (1,096,707)184,040 148,217 
Income Tax Expense (Benefit)324,955 (102,511)473,702 (65,860)
Income (Loss) Before Tax (GAAP)$1,451,013 $(1,916,593)$1,859,448 $(627,554)
Impact of Consolidation and Other (257,366)785,565 (163,855)(522,377)
Equity-based Compensation - KKR Holdings(1)
— 80,513 — 100,334 
Income Taxes on Operating Earnings(171,542)(201,265)(344,599)(421,544)
Asset Management Adjustments:
Unrealized (Gains) Losses (458,311)1,178,759 (358,984)1,501,028 
Unrealized Carried Interest(435,495)1,561,367 (638,154)2,851,400 
Unrealized Carried Interest Compensation (Carry Pool)195,361 (646,239)279,191 (1,160,226)
Strategic Corporate Related Charges7,192 50,306 13,999 70,204 
Equity-based Compensation45,261 50,582 104,278 105,693 
Equity-based Compensation - Performance based63,654 59,831 130,927 117,784 
Insurance Adjustments:(2)
(Gains) Losses from Investments(2)(3)
125,483 79,905 256,597 208,937 
Non-operating Changes in Policy Liabilities and Derivatives(2)
57,463 (250,582)163,954 (442,783)
Strategic Corporate Related Charges(2)
3,199 2,890 3,199 5,969 
Equity-based and Other Compensation(2)
23,898 13,464 60,291 32,962 
Amortization of Acquired Intangibles(2)
2,794 2,713 5,588 5,426 
After-tax Distributable Earnings$652,604 $851,216 $1,371,880 $1,825,253 
Interest Expense92,010 76,619 177,510 146,079 
Net Income Attributable to Noncontrolling Interests6,118 4,535 11,744 12,151 
Income Taxes on Operating Earnings171,542 201,265 344,599 421,544 
Distributable Operating Earnings$922,274 $1,133,635 $1,905,733 $2,405,027 
Insurance Segment Operating Earnings (170,224)(180,615)(375,336)(324,562)
Realized Performance Income(149,334)(730,858)(324,732)(1,340,065)
Realized Performance Income Compensation97,085 474,428 211,094 858,063 
Realized Investment Income(114,675)(276,888)(312,769)(626,242)
Realized Investment Income Compensation17,183 41,533 46,897 93,936 
Fee Related Earnings$602,309 $461,235 $1,150,887 $1,066,157 
Insurance Segment Operating Earnings170,224 180,615 375,336 324,562 
Realized Performance Income149,334 730,858 324,732 1,340,065 
Realized Performance Income Compensation(97,085)(474,428)(211,094)(858,063)
Realized Investment Income114,675 276,888 312,769 626,242 
Realized Investment Income Compensation(17,183)(41,533)(46,897)(93,936)
Depreciation and Amortization11,051 7,801 21,485 15,366 
Adjusted EBITDA$933,325 $1,141,436 $1,927,218 $2,420,393 
(1)Represents equity-based compensation expense in connection with the allocation of KKR Holdings Units, which were not dilutive to common stockholders of KKR & Co. Inc.
(2)Amounts represent the portion allocable to KKR & Co. Inc.
(3)Includes (gains) losses on funds withheld receivables and payables embedded derivatives.
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KKR & Co. Inc. Stockholders' Equity - Common Stock
As of
June 30, 2023December 31, 2022
($ in thousands)
KKR & Co. Inc. Stockholders' Equity - Common Stock$18,865,775 $17,691,975 
Series C Mandatory Convertible Preferred Stock1,115,792 1,115,792 
Impact of Consolidation and Other400,447 399,318 
Exchangeable Securities165,818 128,850 
Accumulated Other Comprehensive Income (AOCI) and Other (Insurance)4,493,092 4,948,100 
Book Value$25,040,924 $24,284,035 
The following table provides a reconciliation of KKR's GAAP Shares of Common Stock Outstanding to Adjusted Shares:
 As of
 June 30, 2023December 31, 2022
GAAP Shares of Common Stock Outstanding 857,987,641 861,110,478 
Adjustments:
Exchangeable Securities (1)
3,909,477 2,695,142 
Common Stock - Series C Mandatory Convertible Preferred Stock (2)
26,894,799 26,822,570 
Adjusted Shares (3)
888,791,917 890,628,190 
Unvested Equity Awards and Exchangeable Securities (4)
31,110,978 35,457,274 
(1)Consists of vested restricted holdings units granted under our 2019 Equity Incentive Plan, which are exchangeable for shares of KKR & Co. Inc. common stock on a one-for-one basis.
(2)Assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted into shares of KKR & Co. Inc. common stock on June 30, 2023 and December 31, 2022.
(3)Amounts exclude unvested equity awards granted under our Equity Incentive Plans.
(4)Represents equity awards granted under our Equity Incentive Plans. Excludes market condition awards that did not meet their market-price based vesting conditions as of June 30, 2023 and December 31, 2022.

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 holders of our preferred stock; and (vii) paying borrowings, interest payments, and repayments under credit agreements, our senior and subordinated notes, and other borrowing arrangements. See "—Liquidity—Liquidity Needs—Dividends."
See "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.
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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 June 30, 2023, 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 June 30, 2023, netting holes in excess of $50 million only existed at European Fund V and Health Care Growth Fund in the amounts of $131 million and $71 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 June 30, 2023, approximately $525 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 June 30, 2023 fair values. As of June 30, 2023, Asian Fund II is the only investment fund with a clawback obligation in excess of $50 million. See Note 25 "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.
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For a discussion of our debt obligations, including our debt securities, revolving credit agreements and loans, see Note 17 "Debt Obligations" in our financial statements.
Liquidity Needs
We expect that our (including Global Atlantic's) 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 lines, 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 for our Principal Activities business line, including other businesses, investments and assets, 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 23 "Equity" in our financial statements.
Capital Commitments
The agreements governing our active investment funds generally require the general partners of the funds to make minimum capital commitments to such funds, which generally range from 2% to 8% of a fund's total capital commitments at final closing, but may be greater for certain funds (i) where we are pursuing newer strategies, (ii) where third party investor demand is limited, and (iii) where a larger commitment is consistent with the asset allocation strategy for our Principal Activities business line, including core investments and exposure to the Asia-Pacific region.
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The following table presents our uncalled commitments to our active investment funds and other vehicles as of June 30, 2023:
 Uncalled
Commitments
Private Equity($ in millions)
Core Investment Vehicles$3,463 
North America Fund XIII331 
Asian Fund IV319 
Ascendant Fund312 
Next Generation Technology Growth Fund III196 
European Fund VI167 
Global Impact Fund II145 
Health Care Strategic Growth Fund II117 
Other Private Equity Vehicles937 
Total Private Equity Commitments5,987 
 
Real Assets
Asia Pacific Infrastructure Investors II357 
Global Infrastructure Investors IV215 
Real Estate Partners Americas III91 
Asia Real Estate Partners78 
Real Estate Partners Europe II70 
Other Real Assets Vehicles1,211 
Total Real Assets Commitments2,022 
Credit and Liquid Strategies
Asia Credit96 
Dislocation Opportunities Fund80 
Asset-Based Finance Partners79 
Lending Partners Europe II11 
Lending Partners III10 
Private Credit Opportunities Partners II8 
Other Credit and Liquid Strategies Vehicles910 
Total Credit and Liquid Strategies Commitments1,194 
 
Total Uncalled Commitments$9,203 
Other Capital Commitments
In addition to the uncalled commitments to our investment funds as shown above, KKR has entered into contractual capital commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and equity syndications in our Capital Markets business line. As of June 30, 2023, these capital commitments amounted to $0.6 billion.
Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such capital commitments, including the satisfaction or waiver of any conditions to closing or funding. Our capital markets business has arrangements with third parties, which reduce our risk under certain circumstances when underwriting certain debt transactions, and thus our unfunded capital commitments as of June 30, 2023 have been reduced to reflect the amount to be funded by such third parties. In the case of purchases of investments or assets in our Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be less. For more information about our Capital Markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to material risks" in our Annual Report.
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From time to time, we fund various underwriting, syndication and fronting commitments in our capital markets business in connection with the arranging or underwriting of loans, securities or other financial instruments, for which we may draw all or substantially all of our availability for borrowings under our available credit facilities. We generally expect these borrowings by our Capital Markets business line to be repaid promptly as these commitments are syndicated to third parties or otherwise fulfilled or terminated, although we may in some instances elect to retain a portion of the commitments for our own investment. For more information about our Capital Markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to material risks" in this 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 June 30, 2023, an undiscounted payable of $404.6 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 June 30, 2023, approximately $76.7 million of cumulative cash payments have been made under the tax receivable agreement since inception.
Dividends and Stock Repurchases
A dividend of $0.165 per share of our common stock has been declared and will be paid on August 31, 2023 to holders of record of our common stock as of the close of business on August 17, 2023.
On September 15, 2023, each outstanding share of the Series C Mandatory Convertible Preferred Stock will automatically convert into a number of shares of our common stock based on the conversion rate set forth in the Series C Mandatory Convertible Preferred Stock prospectus supplement. In addition, a dividend of $0.75 per share of Series C Mandatory Convertible Preferred Stock has been declared and set aside for payment on September 15, 2023 to holders of record of Series C Mandatory Convertible Preferred Stock as of the close of business on September 1, 2023.
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 7, 2023 that our current dividend policy will be to pay dividends to holders of our common stock in an annual aggregate amount of $0.66 per share (or a quarterly dividend of $0.165 per share) beginning with the dividend that was announced with the results for the first quarter of 2023.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 and the terms of the preferred units of KKR Group Partnership.
Since 2015, KKR has repurchased, or retired equity awards representing, a total of 91.7 million shares of common stock for $2.5 billion, which equates to an average price of $27.23 per share. For further information, see "Part II—Item 2—Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Securities."
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Contractual Obligations, Commitments and Contingencies
In the ordinary course of business, we (including Global Atlantic) and our consolidated funds and CFEs enter into contractual arrangements that may require future cash payments. Contractual arrangements include (1) commitments to fund the purchase of investments or other assets (including obligations to fund capital commitments as the general partner of our investment funds) or to fund collateral for derivative transactions or otherwise, (2) obligations arising under our senior notes, subordinated notes, and other indebtedness, (3) commitments by our capital markets business to underwrite transactions or to lend capital, (4) obligations arising under insurance policies written, (5) other contractual obligations, including servicing agreements with third-party administrators for insurance policy administration, and (6) commitments to fund the business, operations or investments of our subsidiaries. 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 25 "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.
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The presentation in the financial statements reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, each of which possess distinct characteristics. As a result, KKR developed a two-tiered presentation approach for the financial statements in this Management's Discussion and Analysis. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations. KKR believes that reporting Global Atlantic’s insurance operations separately is appropriate given, among other factors, the relative significance of Global Atlantic’s policy liabilities, which are not obligations of KKR (other than the insurance companies that issued them). If a traditional aggregated presentation were to be used, KKR would expect to eliminate or combine several identical or similar captions, which would condense the presentations but would reduce transparency. KKR also believes that using a traditional aggregated presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report.
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:
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Level I
Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
Level II
Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies.
Level III
Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. The valuation of our Level III investments at June 30, 2023 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 55% of the fair value is derived from investments that are valued based exactly 50% on market comparables and 50% on a discounted cash flow analysis. Less than 1% of the fair value of this Level III private equity investment portfolio is derived from investments that are valued either based 100% on market comparables or 100% on a discounted cash flow analysis. As of June 30, 2023, 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%, 54%, and 8%, respectively.
There is inherent uncertainty involved in the valuation of Level III investments, and there is no assurance that, upon liquidation, KKR will realize the values reflected in our valuations. Our valuations may differ significantly from the values that would have been used had an active market for the investments existed, and it is reasonably possible that the difference could be material. See "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.
Key unobservable inputs that have a significant impact on our Level III valuations as described above are included in Note 10 "Fair Value Measurements" in our financial statements.
Level III Valuation Process
The valuation process involved for Level III measurements is completed on a quarterly basis and is designed to subject the valuation of Level III investments to an appropriate level of consistency, oversight, and review.
For private equity and real asset investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and other factors. KKR begins its procedures to determine the fair values of its Level III assets approximately one month prior to the end of a reporting period, and KKR follows additional procedures to ensure that its determinations of fair value for its Level III assets are appropriate as of the relevant reporting date. These preliminary valuations are reviewed by an independent valuation firm engaged by KKR to perform certain procedures in order to assess the reasonableness of KKR's valuations annually for all Level III private equity and real asset investments and quarterly for investments other than certain investments, which have values less than preset value thresholds and which in the aggregate comprise less than 1% of the total value of KKR's Level III private equity and real asset investments. The valuations of certain real asset investments are determined solely by independent valuation firms without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firms rely on valuation information available to it as a
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broker or valuation firm. For credit investments, an independent valuation firm is generally engaged by KKR to assist with the valuations of most investments classified as Level III. The valuation firm either provides a value, provides a valuation range from which KKR's investment professionals select a point in the range to determine the valuation, or performs certain procedures in order to assess the reasonableness of KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted for review and approval by KKR's valuation committees. As of June 30, 2023, less than 2% 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 Co-Chief Executive Officers and its Chief Financial Officer, Chief Legal Officer, General Counsel, and Chief Compliance Officer. When valuations are approved by the global valuation committee after reflecting any input from it, the valuations of Level III investments, as well as the valuations of Level I and Level II investments, are presented to the Audit Committee of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.
Level III investments held by Global Atlantic are valued on the basis of pricing services, 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 June 30, 2023, approximately 89% of these investments were priced via external sources, while approximately 11% 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 June 30, 2023, 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
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sheet investments. With respect to Insurance, a decrease in investment income for certain assets where investment gains and losses are recognized through the statement of operations would impact KKR only to the extent of our economic ownership interest in Global Atlantic.
As of June 30, 2023, there were no investments which represented greater than 5% of total investments on a GAAP basis. On a segment basis, as of June 30, 2023, investments which represented greater than 5% of total Asset Management segment investments consisted of USI, Inc. and PetVet Care Centers, LLC and valued at $1,403 million and $1,070 million, respectively. Our investment income on a GAAP basis and our book value can be impacted by volatility in the public markets related to our holdings of publicly traded securities, including our sizable holdings of Crescent Energy Company and BridgeBio Pharma, Inc. See "—Business Environment" for a discussion of factors that may impact the valuations of our investments, financial results, operating results and valuations, and "—Non-GAAP Balance Sheet Measures" for additional information regarding our largest holdings on a 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 and/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 19 "Income Taxes" in our financial statements in this report for further details.
Critical Accounting Policies and Estimates - Asset Management
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.
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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. Based on the current components and blend of our asset management segment revenues on an annual basis, we expect to use approximately: (i) 20‐25% of fee related revenues, (ii) 60‐70% of realized carried interest and incentive fees not included in fee related performance revenues or earned from our hedge fund partnerships, and (iii) 10‐20% of realized investment income and hedge fund partnership incentive fees, to pay our asset management employees. Because these ranges are applied to applicable 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.
Assuming that we had accrued compensation of (i) 65% of the unrealized carried interest earned by the funds that allocate 40% and 43% to the carry pool and (ii) 15% of the unrealized net gains in our Principal Activities business line (in each case at the mid-point of the ranges above), KKR & Co. Inc. Stockholders’ Equity – Common Stock as of June 30, 2023 would have been reduced by approximately $1.64 per share, compared to our reported $21.99 per share on such date, and our book value as of June 30, 2023 would have been reduced by approximately $1.59 per adjusted share, compared to our reported book value of $28.17 per adjusted share on such date.
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Carry Pool Allocation
With respect to our funds that provide for carried interest, we allocate a portion of the realized and unrealized carried interest that we earn to a carry pool established at Associates Holdings, which is not a KKR subsidiary, from which our asset management employees and certain other carry pool participants are eligible to receive a carried interest allocation. The allocation is determined based upon a fixed arrangement between Associates Holdings and us, and we do not exercise discretion on whether to make an allocation to the carry pool upon a realization event. These amounts are accounted for as compensatory profit sharing arrangements in Accrued Expenses and Other Liabilities within the accompanying consolidated statements of financial condition in conjunction with the related carried interest income and are recorded as compensation expense. Upon a reversal of carried interest income, the related carry pool allocation, if any, is also reversed. Accordingly, such compensation expense is subject to both positive and negative adjustments.
In February 2021, with the approval of a majority of our independent directors, KKR amended the percentage of carried interest that is allocable to the carry pool to 65% for (i) current investment funds for which no or de minimis amounts of carried interest was accrued as of December 31, 2020 and (ii) all future funds. For all other funds, the percentage of carried interest remains 40% or 43%, as applicable. The percentage of carried interest allocable to the carry pool may be increased above 65% only with the approval of a majority of our independent directors. To account for the difference in the carry pool allocation percentages, we expect to use a portion of realized carried interest from the older funds equal to the difference between 65% and 40% or 43%, as applicable, to supplement the carry pool and to pay amounts as discretionary cash bonus compensation as described above to our asset management employees. The amounts paid as discretionary cash bonuses, if any, are at our discretion and vary from individual to individual and from period to period, including having no cash bonus at all for certain employees. See "—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 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 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 20 "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 the above "—Critical Accounting Policies and Estimates—Fair Value Measurements."
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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 us 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.
The critical accounting estimates and related sensitivities, reported below have been updated from those reported in the Annual Report to reflect the impact from the adoption of LDTI (see Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.)
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 (i.e., 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.
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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 18 — “Policy liabilities” for additional information.
As of June 30, 2023, the net market risk liability balance totaled $811.0 million. As of June 30, 2023, the liability balances for market risk benefits were $700.8 million for fixed-indexed annuities and $110.2 million for variable and other annuities. The increase (decrease) to the net market risk benefit liability balance as a result of hypothetical changes in interest rates, instrument-specific credit risk, equity market prices, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.
As of June 30, 2023
Fixed-indexed annuityOther
($ in thousands)
Balance$700,799 $110,201 
Hypothetical change:
+50 bps interest rates(115,774)(46,456)
-50 bps interest rates128,723 55,619 
+50 bps instrument-specific credit risk(123,676)(20,752)
-50 bps instrument-specific credit risk139,036 22,906 
+10% equity market prices(38,415)(48,663)
-10% equity market prices27,647 57,348 
95% of expected mortality41,432 6,588 
105% of expected mortality(38,984)(6,014)
90% of expected surrenders15,584 7,032 
110% of expected surrenders(14,912)(6,562)
________________
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 provides 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 $353.0 million as of June 30, 2023. 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 June 30, 2023, variable annuities accounted for using the fair value option totaled $353.0 million. The increase (decrease) in the reserves for variable annuities accounted for using the fair value option as a result of hypothetical changes in interest rates, instrument-specific credit risk, equity market prices, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.
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As of June 30, 2023
Variable annuities
($ in thousands)
Balance$353,003 
Hypothetical change:
+50 bps interest rates(20,119)
-50 bps interest rates21,744 
+50 bps instrument-specific credit risk(13,574)
-50 bps instrument-specific credit risk14,052 
+10% equity market prices(17,110)
-10% equity market prices19,720 
95% of expected mortality(6,028)
105% of expected mortality5,780 
90% of expected surrenders601 
110% of expected surrenders(603)
________________
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, 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 June 30, 2023, the liability for future policy benefits totaled $7.8 billion, net of reinsurance, split between $7.3 billion associated with payout annuity products, and $403.1 million of life and other insurance products. The increase (decrease) as a result of hypothetical changes in interest rates, credit spreads, expected mortality, and expected surrenders and lapses are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.
As of June 30, 2023
Payout annuitiesLife and other
($ in thousands)
Balance$7,349,837 $403,127 
Hypothetical change:
+50 bps interest rates(154,602)(123,344)
-50 bps interest rates167,012 133,057 
+50 bps credit spreads(127,452)(125,651)
-50 bps credit spreads132,611 130,504 
95% of expected mortality(1)
55,815 31,138 
105% of expected mortality(1)
(52,926)(28,266)
90% of expected surrenders/lapses— (2,358)
110% of expected surrenders/lapses— 1,871 
________________
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 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.
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The additional reserves related to interest-sensitive life products with secondary guarantees are calculated using methods similar to those described above under “Policyholder 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 June 30, 2023, the interest-sensitive life additional liability balance totaled $5.0 billion. The increase (decrease) to the interest-sensitive life additional liability balance, as a result of hypothetical changes in interest rates, equity market prices, annual equity growth, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of the interest-sensitive life no-lapse guarantee liability balance.
As of June 30, 2023
Interest-sensitive life
($ in thousands)
Balance$4,974,197 
Hypothetical change:
+50 bps interest rates409 
-50 bps interest rates(414)
+10% equity market prices397 
-10% equity market prices(308)
1% lower annual equity growth(3,606)
95% of expected mortality(25,163)
105% of expected mortality24,908 
90% of expected surrenders22,186 
110% of expected surrenders(21,216)
________________
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     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.
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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 result 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/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 June 30, 2023, the embedded derivative liability balance totaled $2.8 billion for fixed-indexed annuities, and $447.0 million for interest-sensitive life. The increase (decrease) to the embedded derivatives on fixed-indexed annuity and indexed universal life as a result of hypothetical changes in interest rates, credit spreads, and equity market prices are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.
As of June 30, 2023
Fixed-indexed annuitiesInterest sensitive life
($ in thousands)
Balance$2,815,783 $447,005 
Hypothetical change:
+50 bps interest rates(59,701)(3,836)
-50 bps interest rates63,656 4,019 
+50 bps credit spreads(72,178)(3,836)
-50 bps credit spreads75,598 4,019 
+10% equity market prices406,705 63,138 
-10% equity market prices(348,604)(93,611)
________________
Note: Hypothetical changes to the market risk benefits liability balance do not reflect the impact of related hedges.
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As of June 30, 2023, the embedded derivative balance for modified coinsurance or funds withheld arrangements was a $3.1 billion net asset ($(3.8) million in funds withheld receivables at interest, and $(3.1) billion in funds withheld payable at interest). The increase (decrease) to the embedded derivatives on fixed-indexed annuity and interest-sensitive life products as a result of hypothetical changes in interest rates and investment credit spreads are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.
As of June 30, 2023
Embedded derivative on funds withheld receivable at interestEmbedded derivative on funds withheld payable at interest
($ in thousands)
Balance$(3,833)$(3,090,373)
Hypothetical change:
+50 bps interest rates(12,033)(698,376)
-50 bps interest rates19,706 755,773 
+50 bps investment credit spreads(40,855)(736,671)
-50 bps investment credit spreads40,855 794,069 
________________
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.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There was no material change to our market risks during the three months ended June 30, 2023. For a discussion of our market risks in general, please refer to our Annual Report. For discussion of market risks relating to our Insurance segment as updated to reflect the impact from the adoption of LDTI, please refer to our Interim Report for the three months ended March 31, 2023. In addition, for a discussion of current market conditions and uncertainties, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Environment."
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and such information is accumulated and communicated to management, including the Co-Chief Executive Officers and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives.
We carried out an evaluation, under the supervision and with the participation of our management, including the Co-Chief Executive Officers and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based upon that evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of June 30, 2023, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
We adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”) as of January 1, 2023 on a full retrospective basis to February 1, 2021 (the date of the GA Acquisition.) As a result, we implemented changes to our relevant business processes and internal controls over financial reporting.
Except as reported above, no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the quarter ended June 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1.  LEGAL PROCEEDINGS.
For a discussion of KKR's legal proceedings, see the section entitled "Litigation" appearing in Note 25 "Commitments and Contingencies" in our financial statements included elsewhere in this report, which is incorporated herein by reference.
ITEM 1A.  RISK FACTORS.
Other than as set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Environment" in this report, there were no material changes to the risk factors disclosed in our Annual Report.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF SECURITIES
Share Repurchases in the Second Quarter of 2023
As of August 1, 2023, there is approximately $208 million remaining under KKR's share repurchase program.
Under our current repurchase program, KKR is authorized to repurchase its common stock from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any common stock repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. KKR expects that the program, which has no expiration date, will continue to be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time. In addition to the repurchases of common stock described above, the repurchase program is used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards issued pursuant to our Equity Incentive Plans representing the right to receive shares of common stock.
The table below sets forth the information with respect to repurchases made by or on behalf of KKR & Co. Inc. or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock for the periods presented. During the second quarter of 2023, 5,086,354 shares of common stock were repurchased, and 604,281 equity awards were retired.
Issuer Purchases of Common Stock
(amounts in thousands, except share and per share amounts)
Total Number of Shares Purchased Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Month #1
(April 1, 2023 to
April 30, 2023)		— $— — $468,263 
Month #2
(May 1, 2023 to
May 31, 2023)		974,911 $49.05 974,911 $420,446 
Month #3
(June 1, 2023 to
June 30, 2023)		4,111,443 $48.40 4,111,443 $221,468 
Total through June 30, 20235,086,354 5,086,354 $221,468 
(1)On February 7, 2023, KKR announced the increase to the total available amount under the repurchase program to $500 million. The repurchase program does not have an expiration date.

Other Equity Securities
On April 3, 2023, we issued 1,304 shares of our common stock to one of our fund investors in connection with an arrangement related to the fees paid by such fund investor with respect to its investment.  The shares were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, exempting issuances by an issuer not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4.  MINE SAFETY DISCLOSURES.
Not applicable.
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ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS.
The following is a list of all exhibits filed or furnished as part of this report:
Exhibit No. Description of Exhibit
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
10.1†
31.1 
31.2 
31.3 
32.1 
32.2 
32.3 
101 Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Financial Condition as of June 30, 2023 and December 31, 2022, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and June 30, 2022, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and June 30, 2022; (iv) the Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2023 and June 30, 2022, (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and June 30, 2022, and (vi) the Notes to the Condensed Consolidated Financial Statements.
104Cover page interactive data file, formatted in Inline XBRL and contained in Exhibit 101.
†    Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant treats as private or confidential.
The registrant hereby agrees to furnish to the SEC at its request copies of long-term debt instruments defining the rights of holders of outstanding long-term debt that are not required to be filed herewith.
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The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
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SIGNATURES 
Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 KKR & CO. INC.
  
  
 By:/s/ ROBERT H. LEWIN
  Robert H. Lewin
  Chief Financial Officer
  (principal financial and accounting officer)
   
DATE:August 8, 2023  

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