KKR & Co. Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Summary

KKR & Co. Inc. (KKR) reported its first quarter 2022 financial results, highlighting continued growth in its asset management business alongside the insurance operations of Global Atlantic. While asset management fees and other revenues saw a significant increase, the "Capital Allocation-Based Income (Loss)" component, which includes carried interest and general partner capital interest, experienced a substantial decline due to market conditions, resulting in a net loss for the asset management segment's "Total Revenues". The insurance segment, however, demonstrated strong performance with increased net investment income and policy fees, contributing positively to overall "Total Revenues" despite a net investment-related loss. Overall, KKR reported a net loss attributable to KKR & Co. Inc. common stockholders of $(73.77) million, or $(0.12) per diluted share, a notable shift from the profit reported in the prior year period. This was influenced by the volatility in capital allocation-based income and an increase in overall expenses, including equity-based compensation. Despite the net loss, KKR's balance sheet remains robust, with total assets increasing to $266.3 billion. The company continues to execute its strategic initiatives, including the recent acquisition of Mitsubishi Corp-UBS Realty Inc. (now KJR Management), and maintains a strong cash position. The company also declared a common stock dividend of $0.155 per share and a preferred stock dividend, signaling confidence in its ongoing financial strength and commitment to shareholder returns.

Key Highlights

• 1Total Assets increased to $266.3 billion as of March 31, 2022, up from $264.3 billion at December 31, 2021, indicating continued growth and stability.
• 2Asset Management Fees and Other revenue increased by 58% year-over-year to $780.5 million, driven by strong growth in transaction fees and management fees, signaling robust activity in the core asset management business.
• 3Capital Allocation-Based Income (Loss) turned negative, reaching $(945.7) million compared to a positive $2.7 billion in the prior year, primarily due to net depreciation in investment values, impacting overall asset management segment revenue.
• 4Insurance segment revenues increased to $1.2 billion, driven by substantial growth in Net Investment Income and Policy Fees, showcasing the growing contribution of Global Atlantic.
• 5Net Loss Attributable to KKR & Co. Inc. Common Stockholders was $(73.8) million, or $(0.12) per diluted share, a significant decrease from a net income of $1.6 billion, or $2.68 per diluted share in the prior year, reflecting market headwinds impacting capital allocation-based income.
• 6KKR completed the acquisition of Mitsubishi Corp-UBS Realty Inc. (now KJR Management) in April 2022, expanding its real estate asset management capabilities.
• 7The company ended the quarter with $8.3 billion in cash and cash equivalents for its Asset Management segment and $4.6 billion for its Insurance segment, maintaining substantial liquidity.

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