KKR(KKR)2025-02-28 21:28Market Risks and Investment Activities - KKR's investment activities are subject to significant market risks, including interest rate volatility and credit spreads, which can impact net gains from investment activities [1031]. - As of December 31, 2024, a hypothetical 10% decrease in the fair value of investments would lead to a corresponding change in net gains (losses) from investment activities, significantly affecting carried interest [1045]. - KKR's insurance segment is exposed to market volatility, particularly in interest rates and equity prices, affecting its liabilities and investment portfolio [1031]. - The company faces risks related to geopolitical developments, natural disasters, and intense competition in the investment management industry [23]. - KKR's reliance on third-party service providers introduces additional operational risks, including cybersecurity and data security breaches [23]. Financial Performance and Metrics - Total revenues for 2024 reached 14.50 billion in 2023 [1121]. - Net income attributable to KKR & Co. Inc. was 3.68 billion in 2023, reflecting a decrease of 16.4% [1122]. - The company reported net premiums of 1.98 billion in 2023, marking a growth of 299.5% [1121]. - Basic earnings per share decreased to 4.24 in 2023, a decline of 18.2% [1122]. - The company experienced unrealized losses on available-for-sale securities of 2.09 billion in 2023 [1124]. Assets and Liabilities - Total assets increased to 317,294,194 in 2023, representing a growth of approximately 13.5% [1109]. - Total liabilities grew to 258,915,282 in 2023, indicating an increase of approximately 15.1% [1110]. - Policy liabilities associated with market risk benefits increased to 160,058,271 in 2023, reflecting a growth of approximately 15.7% [1110]. - The company’s cash and cash equivalents in the insurance segment decreased to 11,954,675 in 2023, a decline of approximately 46.9% [1109]. Risk Management and Governance - The Board of Directors oversees KKR's governance, with five standing committees focused on risk management and compliance [1032]. - Global Atlantic's risk management includes maintaining adequate capital and liquidity resources to honor obligations to policyholders under stress scenarios [1041]. - The company has established various committees to manage enterprise risks, including market, operational, and regulatory risks [1033]. - KKR's organizational structure allows for certain exemptions from corporate governance requirements, which may impact shareholder rights [25]. Investment Valuation and Fair Value Measurements - Fair value measurements are based on observable market prices or derived from such prices, with varying levels of management estimation and judgment applied [1166]. - KKR utilizes a hierarchical disclosure framework for measuring financial instruments at fair value, categorized into Level I, II, and III based on market price observability [1167]. - Level III financial instruments require significant management judgment due to unobservable pricing inputs, including private equity investments and certain structured securities [1170][1180]. - KKR applies a minimum 5% illiquidity discount to private equity investments, which may be adjusted based on specific factors affecting the investment's marketability [1183]. Changes in Equity and Stockholder Information - Total stockholders' equity for KKR & Co. Inc. increased to 22,858,694 in 2023, representing a growth of about 3.5% [1129]. - The number of common shares outstanding at the end of 2024 was 888,232,174, an increase from 885,005,588 shares in 2023, indicating a rise of approximately 0.3% [1129]. - KKR & Co. Inc. declared common stock dividends of 612,068, compared to 563,285 [1129]. Tax and Regulatory Considerations - KKR analyzes its tax filing positions in all U.S. federal, state, local, and foreign tax jurisdictions where it is required to file income tax returns [1222]. - Deferred tax assets are recorded in Other Assets and are reduced by a valuation allowance when it is more likely than not that some portion will not be realized [1220]. - The total tax benefit recognized for equity-based compensation was 51.3 million, and $65.4 million for the years ended December 31, 2024, 2023, and 2022, respectively [1215].