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 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.

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 765 private equity investments in portfolio companies with a total transaction value in excess of $735 billion as of September 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 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.

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 September 30, 2024, our Private Equity business line had $190.2 billion of AUM, consisting of $134.7 billion in traditional private equity, $37.0 billion in core private equity and $18.5 billion in growth equity, which includes $4.6 billion of impact investments.

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 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.

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 September 30, 2024, our Real Assets business line had $162.8 billion of AUM, consisting of $79.6 billion in real estate (of which $41.9 billion is real estate credit and $37.7 billion is real estate equity), $77.5 billion in infrastructure, $4.1 billion in energy, and $1.6 billion of unallocated commitments from a strategic investment partnership.

Previous 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.

Current wording

Through our Credit and Liquid Strategies business line, we report our credit and hedge funds platforms on a combined basis. As of September 30, 2024, our Credit and Liquid Strategies business line had $271.4 billion of AUM, comprised of $128.6 billion of assets managed in our leveraged credit strategies, $105.8 billion of assets managed in our private credit strategy, $7.9 billion of assets managed in our strategic investments group (“SIG”) strategy, and $29.1 billion of assets managed through our hedge fund platform. We manage $140.4 billion of credit investments for our Global Atlantic insurance companies. Our BDCs have approximately $15.5 billion in assets under management, which is reflected in the AUM of our 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

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.

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 September 30, 2024, third parties have committed capital to the sponsored reinsurance vehicles of approximately $3.5 billion, of which $2.9 billion has been deployed.

Previous 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:

Current wording

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

Previous 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.

Current wording

(1)As of September 30, 2024, 81% 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 June 30, 2024, reserves sourced through block, flow and PRT transactions were $65.9 billion, $26.3 billion and $5.8 billion, respectively.

Current wording

(4)Institutional market reserves are sourced using customized reinsurance solutions such as block, flow and PRT. As of September 30, 2024, reserves sourced through block, flow and PRT transactions were $65.6 billion, $29.6 billion and $6.4 billion, respectively.

Previous 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.

Current wording

As of September 30, 2024, our Strategic Holdings segment consisted of our ownership stakes in 18 companies. Based on certain information made available to management as of September 30, 2024, approximately 67% of these companies are based in the Americas, 27% in Europe, and 6% 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 Business Services, 30% in Consumer, 14% in technology-media-telecommunications (TMT), 14% in Healthcare, and 10% in Infrastructure,

Previous wording

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

Current wording

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

Previous 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.

Current wording

During the third quarter of 2024, the United States continued to experience accelerating economic growth. The U.S. Federal Reserve Board decided in September to lower the target range for the federal funds rate by 50 basis points to 4.75-5.00%. In Europe, the European Central Bank lowered the deposit rate by 25 basis points to 3.50% from 3.75%. GDP growth in the Eurozone was positive in the third quarter of 2024. Meanwhile, Eurozone inflation slowed as compared to the prior quarter albeit remaining slightly above the European Central Bank’s 2% inflation target. In Asia, the two largest economies continued to experience divergent economic conditions during the third quarter of 2024. Japan’s economy is expected to have experienced positive growth in the third quarter of 2024. In China, the economy grew slightly in the third quarter of 2024, but Chinese growth remains subject to various headwinds including stresses in the property sector.

Previous 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.

Current wording

•GDP. In the United States, real gross domestic product (“GDP”) expanded by 2.8% for the quarter ended September 30, 2024, compared to an expansion of 3.0% for the quarter ended June 30, 2024. Euro Area real GDP increased by 0.4% for the quarter ended September 30, 2024, up from 0.2% growth for the quarter ended June 30, 2024. In Japan, real GDP is estimated to have increased by 1.6% for the quarter ended September 30, 2024, down from 2.9% expansion for the quarter ended June 30, 2024. Real GDP in China increased by 0.9% for the quarter ended September 30, 2024, compared to growth of 0.5% reported for the quarter ended June 30, 2024.

Previous 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.

Current wording

•Interest Rates. The effective federal funds rate set by the U.S. Federal Reserve Board was 4.83% as of September 30, 2024, down from 5.33% as of June 30, 2024. The short-term benchmark interest rate set by the European Central Bank was 3.50% as of September 30, 2024, down from 3.75% as of June 30, 2024. The short-term benchmark interest rate set by the Bank of Japan was 0.2% as of September 30, 2024, up from 0.1% as of June 30, 2024. The short-term benchmark interest rate set by The People's Bank of China was 3.35% as of September 30, 2024, down from 3.45% as of June 30, 2024.

Previous 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.

Current wording

•Inflation. The U.S. core consumer price index rose 3.3% on a year-over-year basis as of September 30, 2024, unchanged from 3.3% on a year-over-year basis as of June 30, 2024. Euro Area core inflation was 2.7% as of September 30, 2024, down from 2.9% as of June 30, 2024. In Japan, core inflation fell to 1.7% on a year-over-year basis as of September 30, 2024, down from 1.9% on a year-over-year basis as of June 30, 2024. Core inflation in China was 0.1% on a year-over-year basis as of September 30, 2024, down from 0.6% as of June 30, 2024.

Previous 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.

Current wording

•Unemployment. The U.S. unemployment rate was 4.1% as of September 30, 2024, unchanged from 4.1% as of June 30, 2024. Euro Area unemployment was 6.4% as of September 30, 2024, down from 6.5% as of June 30, 2024. The unemployment rate in Japan was 2.5% as of September 30, 2024, unchanged from 2.5% as of June 30, 2024. The unemployment rate in China was 5.1% as of September 30, 2024, up from 4.9% as of June 30, 2024.

Previous 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.

Current wording

•Equity Markets. For the quarter ended September 30, 2024, the S&P 500 was up 5.9%, the MSCI Europe Index was up 7.0%, the MSCI Asia Index was up 9.2% and the MSCI World Index was up 6.5% 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 16.7 as of September 30, 2024, increasing from 12.4 as of June 30, 2024.

Previous 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.

Current wording

•Credit Markets. During the quarter ended September 30, 2024, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) tightened by 4 basis points. The non-investment grade credit indices were up during the quarter ended September 30, 2024 with the S&P/LSTA Leveraged Loan Index up 2.0% and the BofAML HY Master II Index up 5.3%. During the quarter ended September 30, 2024, the 10-year government bond yields fell 62 basis points in the United States, fell 38 basis points in Germany, fell 20 basis points in Japan, fell 17 basis points in the UK and fell 4 basis points in China.

Previous 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.

Current wording

•Commodity Markets. During the quarter ended September 30, 2024, the 3-year forward price of WTI crude oil decreased approximately 4.1%, and the 3-year forward price of natural gas increased from approximately $3.48 per MMBtu to $3.49 per MMBtu as of June 30, 2024 and September 30, 2024. The Japan spot LNG import price increased to approximately $12.86 per MMBtu as of September 30, 2024 from approximately $10.35 per MMBtu as of June 30, 2024.

Previous 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.

Current wording

•Foreign Exchange Rates. For the quarter ended September 30, 2024, the euro rose 3.9%, the British pound rose 5.8%, the Japanese yen rose 12.0%, and the Chinese renminbi rose 3.5%, respectively, relative to the U.S. dollar.

Previous wording

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

Current wording

Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include certain securities exchangeable into shares of common stock of KKR & Co. Inc and excludes shares granted in connection with equity incentive awards that have not vested.

Previous wording

The following is a discussion of our consolidated results of operations on a GAAP basis for the three months ended June 30, 2024 and 2023. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "Risk Factors" in our Annual Report and "—Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

Current wording

The following is a discussion of our consolidated results of operations on a GAAP basis for the three months ended September 30, 2024 and 2023. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "Risk Factors" in our Annual Report and "—Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations. Please see "Part II—Item 5—Other Information" for information regarding the difference between the consolidated results presented in this report to the amounts previously reported in our earnings release issued on October 24, 2024.

Previous wording

Fee credits increased compared to the prior period as a result of a higher level of transaction fees in our Credit and Liquid Strategies and Real Assets 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 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 as a result of a higher 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 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.

Previous 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.

Current wording

Capital Allocation-Based Income (Loss) for the three months ended September 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 Americas Fund XII, North America Fund XIII, and Global Infrastructure Fund IV. Capital Allocation-Based Income (Loss) for the three months ended September 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 Asian Fund IV.

Previous 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.

Current wording

For the three months ended September 30, 2024, net unrealized gains were driven by (i) mark-to-market gains primarily relating to OneStream, Inc. (NASDAQ: OS), Exact Holding B.V. (technology sector), and April SA (financial services sector) and (ii) the reversal of previously recognized unrealized losses relating to the realized losses described above. These unrealized gains were partially offset by (i) unrealized losses on certain foreign exchange derivative contracts, (ii) mark-to-market losses at certain of our consolidated credit funds, and (iii) the reversal of previously recognized unrealized gains relating to the realization activity described above.

Previous wording

The factors that affect each investment strategy vary depending on the nature of the asset class and the valuation methodology employed. For the three months ended June 30, 2024, net unrealized gains were primarily generated in the following asset classes:

Current wording

The factors that affect each investment strategy vary depending on the nature of the asset class and the valuation methodology employed. For the three months ended September 30, 2024, net gains were primarily generated in the following asset classes:

Previous 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

Current wording

•Private equity (including 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

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.

Current wording

For the three months ended September 30, 2023, net realized losses related primarily to the (i) realized losses from the distribution of certain assets to third-party fund investors in certain of our consolidated energy funds and (ii) realized losses from certain investments held in our consolidated CLOs. Partially offsetting these realized losses were realized gains on the sale of ForgeRock, Inc. (NYSE: FORG) and realized gains on certain foreign exchange forward contracts.

Previous 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.

Current wording

For the three months ended September 30, 2023, net unrealized gains were driven by mark-to-market gains primarily relating to (i) USI, Inc. (financial services sector), BridgeBio Pharma, Inc., and Arnott's Biscuits Limited (consumer product sector), 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 (i) PetVet Care Centers, LLC (health care sector), certain real estate and credit consolidated funds, and debt obligations of our consolidated CLOs.

Previous 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.

Current wording

During the three months ended September 30, 2024, dividend income was primarily from (i) certain of our consolidated opportunistic real estate equity funds and (ii) our investments in Exact Holding B.V., Arnott's Biscuits Limited and Atlantic Aviation FBO Inc. (infrastructure: transportation sector), each held through our consolidated core investment vehicles. During the three months ended September 30, 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 funds, and (iii) from FS KKR Capital Corp. (NYSE: FSK) ("FSK") (our business development company).

Previous wording

The increase in interest income during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to June 30, 2023, (ii) higher interest rates on floating rate investments held in consolidated CLOs and our consolidated private credit funds, and (iii) a higher level of interest income from certain of our consolidated private credit funds, related primarily to an increase in the amount of capital deployed. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Current wording

The decrease in interest income during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to the impact of lower interest rates during the period on floating rate investments held in consolidated CLOs and certain of our consolidated private credit funds. The decrease in interest income was partially offset by the impact of closing CLOs that are consolidated subsequent to September 30, 2023. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Previous 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."

Current wording

The decrease in interest expense during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to the impact of lower interest rates during the period on floating rate debt obligations held in consolidated CLOs and from certain consolidated funds and other vehicles. This decrease was partially offset by (i) the impact of closing CLOs that are consolidated subsequent to September 30, 2023 and (ii) an increase in the amount of borrowings outstanding from certain consolidated funds and other vehicles. 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 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.

Current wording

The increase in general, administrative and other expenses during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to (i) a provision for legal reserves in the current period, (ii) issuance costs from newly formed consolidated CLOs in the current period and (iii) a higher level of expenses reimbursable by our unconsolidated investment funds and broken-deal expenses.

Previous wording

Net premiums increased for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 primarily due to an increase in initial premiums assumed from reinsurance transactions with life contingencies or morbidity risk during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The increase was partially offset by higher retrocessions to third party reinsurers during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The initial premiums on assumed reinsurance were offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below under “Expenses—Net policy benefits and claims”).

Current wording

Net premiums increased for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to (i) an increase in premiums assumed from flow reinsurance transactions with life contingencies or morbidity risk during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, and (ii) new preneed premiums originated from a new distribution partner. The increase was partially offset by higher retrocessions to third party reinsurers during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The initial premiums on assumed reinsurance were offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below under “Expenses—Net policy benefits and claims”).

Previous wording

The increase in the fair value of embedded derivatives on funds withheld at interest payable was driven primarily by the change in fair value of the underlying investments in the funds withheld payable at interest portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables and other investments. The underlying investments in the funds withheld at interest payable portfolio decreased in value during the three months ended June 30, 2024, primarily due to a smaller increase in market interest rates and an increase in the overall growth of the funds withheld at interest payable portfolio due recent reinsurance transactions, as compared to a decrease in value in the three months ended June 30, 2023, due to a comparatively larger increase in market interest rates.

Current wording

The decrease in the fair value of embedded derivatives on funds withheld at interest payable was driven primarily by the change in fair value of the underlying investments in the funds withheld payable at interest 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 during the three months ended September 30, 2024, primarily due to a decrease in market interest rates, as compared to a decrease in value in the three months ended September 30, 2023, due to an increase in market interest rates.

Previous wording

The increase in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to a widening of credit spreads during the six months ended June 30, 2024, as compared to a narrowing of credit spreads during the six months ended June 30, 2023.

Current wording

The decrease in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to a decrease in market interest rates during the three months ended September 30, 2024 as compared to an increase in market interest rates during the three months ended September 30, 2023.

Previous 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.

Current wording

The increase in the fair value of interest rate contracts was primarily driven by a decrease in market interest rates during the three months ended September 30, 2024, as compared to an increase in market interest rates during the three months ended September 30, 2023, resulting in a gain and a loss on interest rate contracts, in each of the respective periods.

Previous 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.

Current 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 increased during the three months ended September 30, 2024, as compared to a decrease during the three months ended September 30, 2023.

Previous wording

The increase in net other investment losses for the three months ended June 30, 2024 as compared to net other investment losses for the three months ended June 30, 2023, were primarily due to (i) an increase in unrealized losses on fixed maturity securities classified as trading primarily as a result of the growth in the trading portfolio and an 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, (ii) an increase in unrealized losses on investments accounted under a fair-value option and equity investments, and (iii) an increase in realized losses on available-for-sale fixed maturity securities which was primarily due to an increase in portfolio rotation activity.

Current wording

The increase in net other investment gains for the three months ended September 30, 2024 as compared to net other investment losses for the three months ended September 30, 2023, were primarily due to (i) an increase in unrealized gains on fixed maturity securities classified as trading primarily as a result of the growth in the trading portfolio and a decrease in market interest rates during the three months ended September 30, 2024 as compared to an increase in market interest rates during the three months ended September 30, 2023, and (ii) an increase in unrealized gains on investments accounted under a fair-value option and equity investments.

Previous wording

Offsetting these increases in net other investment losses were (i) an increase in realized gains on funds withheld at interest payable portfolio and (ii) a decrease in credit loss allowances.

Current wording

Partially offsetting these increases in net other investment gains were (i) an increase in realized losses on available-for-sale fixed maturity debt securities due to strategic optimization of yields by selling lower-yielding older vintages of available-for-sale debt securities to be replaced with more recent vintages of similar credit quality with higher expected yields, as well as the ongoing rotation of investments acquired from recent reinsurance transactions into asset classes with higher expected yields (referred to as portfolio optimization and asset rotation in this report) and (ii) an increase in credit loss allowances due to a decrease in credit quality of certain commercial mortgage loan and available-for-sale fixed maturity debt securities, and an increase in initial allowances due to new residential mortgage loan originations in the quarter.

Previous 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.

Current wording

Net policy benefits and claims increased for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 primarily due to (i) an increase in net flows from both individual and institutional market channel sales, (ii) higher initial reserves assumed related to new reinsurance transactions with life contingencies or morbidity risk in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, (iii) 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, (iv) an increase in market risk benefits liabilities due to a decrease in market interest rates for the three months ended September 30, 2024 as compared to an increase during the three months ended September 30, 2023, and (v) an increase in the value of embedded derivatives in Global Atlantic's fixed indexed annuity products, as a result of higher equity market gains for the three months ended September 30, 2024 as compared to the three months ended September 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).