KKR & Co. Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Summary

KKR & Co. Inc. (KKR) reported its financial results for the quarter ended June 30, 2022. The company experienced a net loss attributable to common stockholders of $827.9 million, or $1.22 per diluted share, a significant decline compared to a net income of $1,277.7 million, or $2.05 per diluted share, in the same period last year. This shift was largely driven by substantial unrealized investment losses in the Asset Management segment, particularly impacting private equity and credit strategies, as well as a decline in net investment income and an increase in net investment-related losses within the Insurance segment. Despite the net loss, the company's total revenues for the quarter were $330.1 million, down from $3,136.2 million in the prior year, impacted by a considerable decrease in Capital Allocation-Based Income (loss) due to market depreciation. Asset Management segment operating earnings decreased by 3.6% year-over-year to $953.0 million, impacted by lower transaction fees and a decline in realized performance income. However, management fees saw a notable increase, driven by new capital raised and the inclusion of KJRM assets. The Insurance segment, operated by Global Atlantic, showed resilience with a 7.4% increase in segment operating earnings to $137.1 million, primarily due to higher net investment income driven by increased assets under management and higher yields on floating-rate investments. Total assets grew to $266.1 billion, while total liabilities increased, leading to a decrease in total equity. KKR ended the quarter with $6.7 billion in cash and cash equivalents for its asset management business and $5.1 billion for its insurance business.

Key Highlights

• 1KKR reported a net loss of $827.9 million attributable to common stockholders for Q2 2022, a significant drop from a net income of $1,277.7 million in Q2 2021.
• 2Total revenues decreased substantially to $330.1 million from $3,136.2 million in the prior year, primarily due to a large unrealized investment loss in the Asset Management segment.
• 3Asset Management segment operating earnings declined slightly by 3.6% to $953.0 million, with growth in management fees offset by lower transaction fees and realized performance income.
• 4Insurance segment operating earnings increased by 7.4% to $137.1 million, driven by higher net investment income and growth in assets under management.
• 5Total assets increased to $266.1 billion from $264.3 billion at the end of 2021, while total equity decreased to $52.7 billion from $58.1 billion.
• 6The company continued to repurchase shares, with $108 million remaining under its share repurchase program as of July 29, 2022.
• 7KKR completed the acquisition of Mitsubishi Corp-UBS Realty Inc. (MC-UBSR), renaming it KJR Management (KJRM), to enhance its real estate asset management business in Japan.

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