KKR(US:KKR)2025-08-08 20:43PART I — FINANCIAL INFORMATION This section details KKR's financial performance, condition, and management's analysis for the period ended June 30, 2025 Financial Statements KKR's unaudited condensed consolidated financial statements as of June 30, 2025, reflect significant asset growth and increased revenues, presented with a two-tiered approach for clarity - KKR presents its financial statements using a two-tiered approach, separating the Insurance operations (Global Atlantic) from the Asset Management and Strategic Holdings businesses. This is done to provide a more informative view, given the distinct characteristics and significance of each business, particularly the policy liabilities of the insurance segment58 Condensed Consolidated Statements of Financial Condition The statements detail KKR's assets, liabilities, and equity, showing significant growth in total assets driven by both Asset Management and Insurance segments Condensed Consolidated Statements of Financial Condition (Unaudited) | Key Metrics | June 30, 2025 (In Thousands) | December 31, 2024 (In Thousands) | | :--- | :--- | :--- | | Total Assets | $380,867,573 | $360,099,411 | | Asset Management and Strategic Holdings Assets | $134,252,009 | $122,517,378 | | Insurance Assets | $246,615,564 | $237,582,033 | | Total Liabilities | $309,899,128 | $298,114,719 | | Asset Management and Strategic Holdings Liabilities | $61,510,960 | $57,906,939 | | Insurance Liabilities | $248,388,168 | $240,207,780 | | Total KKR & Co. Inc. Stockholders' Equity | $28,219,229 | $23,651,568 | | Total Equity | $68,974,847 | $60,399,515 | - Total assets of consolidated Variable Interest Entities (VIEs) were $131.8 billion as of June 30, 2025, up from $122.4 billion at December 31, 2024. These VIEs primarily consist of collateralized financing entities (CFEs), certain investment funds, and VIEs formed by Global Atlantic. The assets and liabilities of these VIEs are generally non-recourse to other KKR entities293032 Condensed Consolidated Statements of Operations The statements present KKR's revenues, expenses, and net income for the three and six months ended June 30, 2025, highlighting growth in total revenues Condensed Consolidated Statements of Operations (Unaudited) | (In Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $5,088,843 | $4,171,910 | $8,199,026 | $13,828,648 | | Asset Management & Strategic Holdings | $1,835,166 | $1,560,449 | $3,881,081 | $3,516,917 | | Insurance | $3,253,677 | $2,611,461 | $4,317,945 | $10,311,731 | | Total Expenses | $4,746,444 | $3,946,329 | $8,577,399 | $13,259,273 | | Income (Loss) Before Taxes | $1,528,768 | $1,210,205 | $2,299,835 | $2,573,256 | | Net Income (Loss) | $1,354,464 | $993,236 | $2,038,962 | $2,087,086 | | Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders | $472,387 | $667,926 | $286,463 | $1,350,140 | | Diluted EPS | $0.50 | $0.72 | $0.29 | $1.45 | Notes to Financial Statements (Unaudited) This section provides detailed disclosures and explanations supporting the condensed consolidated financial statements Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an in-depth analysis of KKR's financial condition and operating results across its segments, highlighting key performance drivers and the prevailing business environment - KKR operates through three reportable segments: Asset Management, Insurance (Global Atlantic), and Strategic Holdings. The chief operating decision-makers use segment earnings to allocate resources and assess performance287289 Total Segment Earnings Summary | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Asset Management Segment Earnings | $1,126,966 | $996,000 | | Insurance Operating Earnings | $277,932 | $253,213 | | Strategic Holdings Segment Earnings | $29,121 | $40,852 | | Total Segment Earnings | $1,434,019 | $1,290,065 | Business Environment This section describes the macroeconomic conditions and market trends influencing KKR's operations during the second quarter of 2025 - In Q2 2025, the U.S. economy expanded with real GDP growth of 3.0%, while inflation remained persistent. The Federal Reserve held the federal funds rate target at 4.25% to 4.50%. The Eurozone saw moderate GDP growth, and the European Central Bank lowered its deposit rate to 2.0%421422426 - Global equity markets showed positive returns in Q2 2025, with the S&P 500 up 10.9% and the MSCI World Index up 11.6%. Market volatility, as measured by the VIX, decreased from 22.3 to 16.7 during the quarter425 - Elevated market volatility and uncertainty continued, driven by geopolitical and global trade concerns, including the imposition of tariffs by the United States and retaliation from trading partners since April 2025425 Analysis of Segment Operating Results This section details the operating performance of KKR's Asset Management, Insurance, and Strategic Holdings segments for the quarter Asset Management Segment Operating Results (Q2) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Fee Related Earnings | $886,754 | $755,397 | | Realized Performance Income | $418,850 | $482,309 | | Realized Investment Income | $153,998 | $138,546 | | Asset Management Segment Earnings | $1,126,966 | $996,000 | Insurance Segment Operating Results (Q2) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Investment Income | $1,788,525 | $1,538,046 | | Net Cost of Insurance | ($1,277,381) | ($1,070,616) | | Insurance Operating Earnings | $277,932 | $253,213 | Strategic Holdings Segment Operating Results (Q2) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Dividends, Net | $29,121 | $40,852 | | Strategic Holdings Segment Earnings | $29,121 | $40,852 | Analysis of Non-GAAP Performance Measures This section provides an analysis of KKR's non-GAAP financial measures, including Total Segment Earnings and Adjusted Net Income, to assess underlying business performance Non-GAAP Performance Measures (Q2) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Operating Earnings | $1,193,807 | $1,049,462 | | Total Investing Earnings | $240,212 | $240,603 | | Total Segment Earnings | $1,434,019 | $1,290,065 | | Adjusted Net Income (ANI) | $1,063,350 | $971,869 | - Total Operating Earnings increased by $144.3 million YoY for Q2 2025, driven by higher Fee Related Earnings and Insurance Operating Earnings619620 - Adjusted Net Income (ANI) increased to $1.06 billion in Q2 2025 from $972 million in Q2 2024, primarily due to higher total segment earnings619623 Liquidity and Capital Resources This section discusses KKR's sources and uses of liquidity, capital structure, and financial flexibility - KKR's primary sources of liquidity include operating activities, realizations on carried interest and investments, cash inflows from its insurance business, and borrowings under various credit facilities and debt offerings725 - As of June 30, 2025, KKR had unfunded commitments of $10.5 billion to its investment funds and vehicles, and $0.3 billion in capital markets commitments313314 - A dividend of $0.185 per common share was declared for Q2 2025. As of July 25, 2025, approximately $459 million remained available under the company's share repurchase program344305 - As of June 30, 2025, approximately $521 million of carried interest was subject to clawback obligations, assuming all applicable funds were liquidated at their current fair values320 Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risks during the second quarter of 2025, referring to its Annual Report for comprehensive details - There were no material changes to KKR's market risks during the three months ended June 30, 2025825 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level827 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls828 PART II — OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings KKR is involved in various legal proceedings incidental to its business, with detailed information provided in the notes to financial statements - The company refers to Note 24 "Commitments and Contingencies" for a detailed discussion of its legal proceedings830 Risk Factors The company reports no material changes to its risk factors beyond those discussed in the Business Environment section of the MD&A - There were no material changes to the risk factors disclosed in the company's Annual Report, aside from those discussed in the Business Environment section831 Unregistered Sales of Equity Securities and Use of Proceeds This section details KKR's share repurchase activities and the status of its equity award retirements and repurchase program during the quarter Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | April 2025 | 36,411 | $92.32 | | May 2025 | — | $— | | June 2025 | — | $— | | Total Q2 2025 | 36,411 | $92.32 | - The share repurchase program was automatically increased by $500 million during Q2 2025 after the remaining available amount fell below the $50 million threshold. As of July 25, 2025, approximately $459 million remained available for repurchases833835 Defaults Upon Senior Securities Not applicable Mine Safety Disclosures Not applicable Other Information Not applicable Exhibits This section provides a comprehensive list of all exhibits filed as part of the report, including key corporate and financial documents - The report includes exhibits such as the Indenture for the 6.875% Subordinated Notes due 2065, CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and interactive data files (XBRL)839