KKR & Co. Inc.

Previous wording

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

Current wording

Our asset management business offers a broad range of investment management services to fund investors around the world. Throughout our history, we have consistently been a leader in the private equity industry, having completed approximately 750 private equity investments in portfolio companies with a total transaction value in excess of $725 billion as of June 30, 2024. Since the inception of our firm in 1976, we have expanded our investment strategies and product offerings from traditional private equity to areas such as leveraged credit, alternative credit, infrastructure, energy, real estate, growth equity, core private equity, and impact investments. We also provide capital markets services for our firm, our portfolio companies and third parties. Our balance sheet provides a significant source of capital in the growth and expansion of our business, and it has allowed us to further align our interests with those of our fund investors. Building on these efforts and leveraging our industry expertise and intellectual capital have allowed us to capitalize on a broader range of the opportunities we source and has also enabled the firm to establish a new reporting segment called Strategic Holdings, which is currently comprised of the firm’s participation in our core private equity strategy.

Previous wording

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

Current wording

Through our Private Equity business line, we manage and sponsor a group of private equity funds that invest capital for long-term appreciation, either through controlling ownership of a company or strategic non-controlling minority positions. In addition to our traditional private equity funds that invest in large and mid-sized companies, we sponsor funds that invest in core private equity, growth equity, and impact investments. Our Private Equity business line includes separately managed accounts that invest in multiple strategies, which may include our credit and real assets strategies, as well as our private equity strategies. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser. As of June 30, 2024, our Private Equity business line had $185.3 billion of AUM, consisting of $131.0 billion in traditional private equity, $36.1 billion in core private equity and $18.2 billion in growth equity, which includes $4.6 billion of impact investments.

Previous wording

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

Current wording

(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.

Previous wording

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

Current wording

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, 2024, our Real Assets business line had $151.5 billion of AUM, consisting of $75.2 billion in real estate (of which $39.8 billion is real estate credit and $35.4 billion is real estate equity), $72.7 billion in infrastructure, and $3.6 billion in energy.

Previous wording

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

Current wording

Through our Credit and Liquid Strategies business line, we report our credit and hedge funds platforms on a combined basis. As of June 30, 2024, our Credit and Liquid Strategies business line had $264.5 billion of AUM, comprised of $127.4 billion of assets managed in our leveraged credit strategies, $100.3 billion of assets managed in our private credit strategy, $8.9 billion of assets managed in our strategic investments group (“SIG”) strategy, and $27.9 billion of assets managed through our hedge fund platform. We manage $139.3 billion of credit investments for our Global Atlantic insurance companies. Our BDCs have approximately $15.2 billion in assets under management, which is reflected in the AUM of our leveraged credit and private credit strategies above. We report all of the assets under management of our BDCs in our AUM, but we report only a pro rata portion of the assets under management of our hedge fund partnerships based on our percentage ownership in them.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Global Atlantic also sponsors co-investment vehicles (the "sponsored reinsurance vehicles") to participate alongside Global Atlantic in certain block, flow, PRT and other reinsurance transactions that Global Atlantic enters into during the vehicles’ respective investment period. The sponsored reinsurance vehicles provide third-party capital to support reinsurance transactions and generally do not get consolidated into our financial statements. As of June 30, 2024, third parties have committed capital to the sponsored reinsurance vehicles of approximately $3.5 billion, of which $2.7 billion has been deployed.

Previous wording

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

Current wording

The following table represents Global Atlantic’s new business volumes by business and product for the three and six months ended June 30, 2024 and 2023:

Previous wording

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

Current wording

(1)As of June 30, 2024, 80% of the account value in Global Atlantic's general account associated with its fixed-rate and fixed-indexed annuity products, and 43% of account value in its general account associated with universal life products was protected by surrender charges.

Previous wording

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

Current wording

(4)Institutional market reserves are sourced using customized reinsurance solutions such as block, flow and PRT. As of June 30, 2024, reserves sourced through block, flow and PRT transactions were $65.9 billion, $26.3 billion and $5.8 billion, respectively.

Previous wording

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

Current wording

As of June 30, 2024, our Strategic Holdings segment consisted of our ownership stakes in 19 companies. Based on certain information made available to management as of June 30, 2024, approximately 65% of these companies are based in the Americas, 30% in Europe, and 5% in the Asia-Pacific (based on the geographic location of their headquarters). In addition, based on such information, these companies are primarily engaged in the following business sectors: approximately 32% in Business Services, 29% in Consumer, 13% in Infrastructure, 13% in technology-media-telecommunications (TMT), and 13% in Healthcare.

Previous wording

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

Current wording

During the second quarter of 2024, the United States experienced accelerating economic growth amid easing inflation. In Europe, GDP growth in the Eurozone was positive in the second quarter of 2024. Meanwhile, Eurozone inflation remained slightly above the European Central Bank’s 2% inflation target. In Asia, the two largest economies continued to experience divergent economic conditions during the second quarter of 2024. Japan’s economy is expected to have experienced positive growth in the second quarter of 2024 in conjunction with inflation exceeding the Bank of Japan’s inflation targets. Against this backdrop, the Bank of Japan did not raise its short-term base interest rate further, having raised it out of negative territory in the first quarter of 2024. In China, the economy grew in the second quarter of 2024, albeit at a slower pace than in the first quarter of 2024. Chinese growth remains subject to various headwinds, including stresses in the property sector, retail sales, and industrial output.

Previous wording

•GDP. In the United States, real gross domestic product (“GDP”) is estimated to have expanded by 1.6% for the quarter ended March 31, 2024, compared to an expansion of 3.4% for the quarter ended December 31, 2023. Euro Area real GDP is estimated to have increased by 0.1% for the quarter ended March 31, 2024, up from -0.1% for the quarter ended December 31, 2023. In Japan, real GDP is estimated to have decreased by 0.2% for the quarter ended March 31, 2024, down from 0.4% growth for the quarter ended December 31, 2023. Real GDP in China increased by 1.6% for the quarter ended March 31, 2024, compared to growth of 1.2% reported for the quarter ended December 31, 2023.

Current wording

•GDP. In the United States, real gross domestic product (“GDP”) expanded by 2.8% for the quarter ended June 30, 2024, compared to an expansion of 1.4% for the quarter ended March 31, 2024. Euro Area real GDP increased by 0.3% for the quarter ended June 30, 2024, unchanged from 0.3% growth for the quarter ended March 31, 2024. In Japan, real GDP is estimated to have increased by 2.4 % for the quarter ended June 30, 2024, up from 2.9% contraction for the quarter ended March 31, 2024. Real GDP in China increased by 0.7% for the quarter ended June 30, 2024, compared to growth of 1.5% reported for the quarter ended March 31, 2024.

Previous wording

•Interest Rates. The effective federal funds rate set by the U.S. Federal Reserve Board was 5.33% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by the European Central Bank was 4.5% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by the Bank of Japan was -0.1% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by The People's Bank of China was 3.45% as of March 31, 2024, unchanged from December 31, 2023.

Current wording

•Interest Rates. The effective federal funds rate set by the U.S. Federal Reserve Board was 5.33% as of June 30, 2024, unchanged from March 31, 2024. The short-term benchmark interest rate set by the European Central Bank was 4.25% as of June 30, 2024, down from 4.5% as of March 31, 2024. The short-term benchmark interest rate set by the Bank of Japan was 0.1% as of June 30, 2024, unchanged from March 31, 2024. The short-term benchmark interest rate set by The People's Bank of China was 3.45% as of June 30, 2024, unchanged from March 31, 2024.

Previous wording

•Inflation. The U.S. core consumer price index rose 3.8% on a year-over-year basis as of March 31, 2024, down from 3.9% on a year-over-year basis as of December 31, 2023. Euro Area core inflation was 2.9% as of March 31, 2024, down from 3.4% as of December 31, 2023. In Japan, core inflation fell to 2.2% on a year-over-year basis as of March 31, 2024, down from 2.8% on a year-over-year basis as of December 31, 2023. Core inflation in China was 0.6% on a year-over-year basis as of March 31, 2024, unchanged from 0.6% as of December 31, 2023.

Current wording

•Inflation. The U.S. core consumer price index rose 3.3% on a year-over-year basis as of June 30, 2024, down from 3.8% on a year-over-year basis as of March 31, 2024. Euro Area core inflation was 2.9% as of June 30, 2024, unchanged from 2.9% as of March 31, 2024. In Japan, core inflation fell to 1.9% on a year-over-year basis as of June 30, 2024, down from 2.2% on a year-over-year basis as of March 31, 2024. Core inflation in China was 0.6% on a year-over-year basis as of June 30, 2024, unchanged from 0.6% as of March 31, 2024.

Previous wording

•Unemployment. The U.S. unemployment rate was 3.8%% as of March 31, 2024, up from 3.7% as of December 31, 2023. Euro Area unemployment was 6.5% as of March 31, 2024, unchanged from 6.5% as of December 31, 2023. The unemployment rate in Japan was 2.6% as of March 31, 2024, up from 2.5% as of December 31, 2023. The unemployment rate in China was 5.1% as of March 31, 2024, down from 5.0% as of December 31, 2023.

Current wording

•Unemployment. The U.S. unemployment rate was 4.1% as of June 30, 2024, up from 3.8% as of March 31, 2024. Euro Area unemployment was 6.4% as of June 30, 2024, down from 6.5% as of March 31, 2024. The unemployment rate in Japan was 2.6% as of June 30, 2024, unchanged from 2.6% as of March 31, 2024. The unemployment rate in China was 4.9% as of June 30, 2024, down from 5.1% as of March 31, 2024.

Previous wording

•Equity Markets. For the quarter ended March 31, 2024, the S&P 500 was up 10.6%, the MSCI Europe Index was up 8.6%, the MSCI Asia Index was up 5.1% and the MSCI World Index was up 9.0% on a total return basis including dividends. Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index (VIX), a measure of volatility, ended at 13.0 as of March 31, 2024, increasing from 12.5 as of December 31, 2023.

Current wording

•Equity Markets. For the quarter ended June 30, 2024, the S&P 500 was up 4.3%, the MSCI Europe Index was down 2.3%, the MSCI Asia Index was up 2.7% and the MSCI World Index was up 2.8% 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 12.4 as of June 30, 2024, decreasing from 13.0 as of March 31, 2024.

Previous wording

•Credit Markets. During the quarter ended March 31, 2024, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) tightened by 10 basis points. The non-investment grade credit indices were up during the quarter ended March 31, 2024 with the S&P/LSTA Leveraged Loan Index up 2.5% and the BofAML HY Master II Index up 1.5%. During the quarter ended March 31, 2024, the 10-year government bond yields rose 32 basis points in the United States, rose 27 basis points in Germany, rose 11 basis points in Japan, rose 40 basis points in the UK and fell 27 basis points in China.

Current wording

•Credit Markets. During the quarter ended June 30, 2024, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) tightened by 49 basis points. The non-investment grade credit indices were up during the quarter ended June 30, 2024 with the S&P/LSTA Leveraged Loan Index up 1.9% and the BofAML HY Master II Index up 1.1%. During the quarter ended June 30, 2024, the 10-year government bond yields rose 20 basis points in the United States, rose 20 basis points in Germany, rose 33 basis points in Japan, rose 24 basis points in the UK and fell 9 basis points in China.

Previous wording

•Commodity Markets. During the quarter ended March 31, 2024, the 3-year forward price of WTI crude oil increased approximately 5.7%, and the 3-year forward price of natural gas decreased from approximately $4.44 per MMBtu to $3.82 per MMBtu as of December 31, 2023 and March 31, 2024. The Japan spot LNG import price decreased to approximately $9.45 per MMBtu as of March 31, 2024 from approximately $16.92 per MMBtu as of December 31, 2023.

Current wording

•Commodity Markets. During the quarter ended June 30, 2024, the 3-year forward price of WTI crude oil increased approximately 0.4%, and the 3-year forward price of natural gas decreased from approximately $3.82 per MMBtu to $3.48 per MMBtu as of March 31, 2024 and June 30, 2024. The Japan spot LNG import price increased to approximately $10.35 per MMBtu as of June 30, 2024 from approximately $9.45 per MMBtu as of March 31, 2024.

Previous wording

•Foreign Exchange Rates. For the quarter ended March 31, 2024, the euro fell 2.3%, the British pound fell 0.8%, the Japanese yen fell 6.8%, and the Chinese renminbi fell 1.7%, respectively, relative to the U.S. dollar.

Current wording

•Foreign Exchange Rates. For the quarter ended June 30, 2024, the euro fell 0.7%, the British pound rose 0.2%, the Japanese yen fell 5.9%, and the Chinese renminbi fell 0.6%, respectively, relative to the U.S. dollar.

Previous wording

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

Current wording

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

Previous wording

Total Segment Earnings is a performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Total Segment Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate related charges, and (iv) non-recurring items, if any. Strategic corporate related charges arise from corporate actions and consist primarily of (i) impairments, (ii) transaction costs from strategic acquisitions, and (iii) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by our Asset Management segment as the investment adviser for Global Atlantic insurance companies, (ii) management and performance fees earned by our Asset Management segment for acquiring and managing the companies included in our Strategic Holdings segment, and (iii) interest income and expense based on lending arrangements where our Asset Management segment borrows from our Insurance segment. All these inter-segment transactions are recorded by each segment based on the applicable governing agreements. Total Segment Earnings represents the total segment earnings of KKR’s Asset Management, Insurance and Strategic Holdings segments.

Current wording

Total Segment Earnings is a performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Total Segment Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, and (iii) transaction-related and non-operating items, if any. Transaction-related and non-operating items arise from corporate actions and non-operating items, which consist of: (i) impairments, (ii) transaction costs from acquisitions, (iii) depreciation on real estate that KKR owns and occupies, (iv) contingent liabilities, net of any recoveries, and (v) other gains or charges that affect period-to-period comparability and are not reflective of KKR's ongoing operational performance. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by our Asset Management segment as the investment adviser for Global Atlantic insurance companies, (ii) management and performance fees earned by our Asset Management segment for acquiring and managing the companies included in our Strategic Holdings segment, and (iii) interest income and expense based on lending arrangements where our Asset Management segment borrows from our Insurance segment. All these inter-segment transactions are recorded by each segment based on the applicable governing agreements. Total Segment Earnings represents the total segment earnings of KKR’s Asset Management, Insurance and Strategic Holdings segments.

Previous wording

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

Current wording

Total Fees and Other for the three months ended June 30, 2024 increased compared to the three months ended June 30, 2023 primarily as a result of the increase in transaction fees and management fees, partially offset by an increase in fee credits.

Previous wording

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

Current wording

Capital Allocation-Based Income (Loss) for the three months ended June 30, 2024 was positive primarily due to the net appreciation of the underlying investments at many of our unconsolidated carry earning investment funds, most notably Asian Fund IV, Asian Fund III, and North America Fund XIII. 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.

Previous wording

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

Current wording

For the three months ended June 30, 2024, net unrealized gains were driven by (i) mark-to-market gains primarily relating to USI, Inc. (financial services sector), Barracuda Networks, Inc. (technology sector), and Arnott's Biscuit Company (consumer products sector). These unrealized gains were partially offset by (i) mark-to-market losses primarily relating to BridgeBio Pharma, Inc. (NASDAQ: BBIO) and Accell Group N.V. (consumer products sector), and (ii) the reversal of previously recognized unrealized gains relating to the realization activity described above.

Previous wording

•Traditional private equity and core private equity, which were primarily impacted by (i) the positive returns of global equity markets and the related increase of market multiples used in the market comparables methodology for the valuation of Level III investments, and (ii) overall positive operating performance of its portfolio companies;

Current wording

•Core private equity, which were primarily impacted by (i) overall positive operating performance of its portfolio companies, and (ii) the positive returns of global equity markets and the related increase of market multiples used in the market comparables methodology for the valuation of Level III investments; and

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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., (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.

Previous wording

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

Current wording

During the three months ended June 30, 2024, dividend income was primarily from (i) our investment in MásOrange (telecommunications sector), held through our consolidated European Fund V, (ii) our investment in 1-800 Contacts Inc. (health care sector) held through our consolidated core vehicles and (iii) certain of our consolidated real estate funds. During the three months ended June 30, 2023, dividend income was primarily from (i) certain investments held in our consolidated open-ended core infrastructure fund, Diversified Core Infrastructure Fund, (ii) Atlantic Aviation FBO Inc. (infrastructure: transportation sector), and (iii) certain investments held in our consolidated opportunistic real estate equity and credit funds.

Previous wording

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

Current wording

The increase in interest expense during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to June 30, 2023, (ii) an increase in the amount of borrowings outstanding from certain consolidated funds and other vehicles, (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, 2023. For a discussion of other factors that affected KKR's interest expense, see "—Key Segment and Non-GAAP Performance Measures."

Previous wording

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

Current wording

The increase in compensation and benefits expense during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to a higher level of accrued carried interest compensation in the current period. Additionally, the number of equity-based compensation awards granted in 2023 is higher than in 2022, which resulted in higher equity-based compensation in the current period.

Previous wording

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

Current wording

The increase in general, administrative and other expenses during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to (i) expenses from consolidation of newly formed CLOs in the current period, (ii) higher level of expenses reimbursable by our unconsolidated investment funds and (iii) higher levels of broken-deal expenses.

Previous wording

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

Current wording

The increase in the fair value of interest rate contracts was primarily driven by a smaller increase in market interest rates during the three months ended June 30, 2024, as compared to a larger increase in market interest rates during the three months ended June 30, 2023, resulting in losses on interest rate contracts in both periods.

Previous wording

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

Current wording

The increase in the fair value of equity futures contracts was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in 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 had a smaller increase during the three months ended June 30, 2024, as compared to a larger increase during the three months ended June 30, 2023, resulting in a gain on equity futures contracts in both periods.

Previous wording

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

Current wording

The decrease in the fair value of equity index options was primarily driven by the performance of the indexes upon which these options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index options are based on the S&P 500 Index, which had a smaller increase during the three months ended June 30, 2024, as compared to a larger increase during the three months ended June 30, 2023.

Previous wording

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

Current wording

These increases were offset in part by (i) a smaller increase in the value of embedded derivatives in Global Atlantic's fixed indexed annuity products, as a result of lower equity market gains for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 (as discussed above under "Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)—Insurance—Revenues—Net investment-related (losses) gains," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims) and (ii) a decrease in market risk benefits gains due to a smaller increase in interest rates and equity-market returns for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

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

Current wording

Insurance expenses increased for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily due to an increase in commission expenses and reinsurance expense allowances as result of higher volumes of new business in the institutional markets channel.

Previous wording

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

Current wording

General, administrative and other decreased for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023 primarily due to a decrease in employee compensation expenses.

Previous wording

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

Current wording

Fee credits increased compared to the prior period primarily as a result of a (i) higher level of transaction fees in our Real Assets and Credit and Liquid Strategies business lines in the current period and (ii) a higher level of monitoring fees primarily due to a termination payment received in connection with the initial public offering of BrightSpring Health Services, Inc.(NASDAQ: BTSG) in our Americas Fund XII during the current period. These termination payments in connection with our monitoring fee arrangements may occur in the future; however, they are infrequent in nature and typically occur at initial public offering and other realization activity in our private equity portfolio. 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.