Transcripts
KKR & Co. Inc.'s management answers for the business every quarter. These are the exchanges that explain it best — verbatim, from the call transcripts preserved in Sources. Each link opens the full transcript at that page in a new tab.
Q1 2026 Earnings Call — Q1 2026
The current state of the firm in management's words: capital allocation discipline, a guidance target being walked down in public, and the private-credit scare met with scale figures. · Open the full transcript →
Why the Insurance segment line understates Global Atlantic: the rest of the economics land in asset management.
Craig Larson (Partner and Head of Investor Relations): Insurance segment operating earnings were $260 million. Now as a reminder, we report the insurance investment portfolio largely based on cash outcomes. So to give you a sense of the embedded profitability as we've done in the last couple of quarters, our insurance operating earnings would have been slightly north of $300 million in Q1 if we included the impact of marks on investments where a significant portion of the return relates to appreciation rather than cash yield. And as a reminder, Insurance segment operating earnings alone do not capture the full economics of GA to KKR. Page 22 of our earnings release details the management fees under our investment management agreement, fees from IV-related vehicles, where we have over $60 billion of AUM that wouldn't exist without GA, alongside GA related capital markets fees. When you take all of that together, total insurance economics over the last twelve months were $1.9 billion. That's net of compensation, up 14% versus the prior period.
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Sizes the private-credit exposure the market was worried about: direct lending is 5% of AUM, the private BDC 0.4%.
Craig Larson (Partner and Head of Investor Relations): Now as you can imagine, we've been filling a lot of questions on direct lending, so we've added a couple of pages to our earnings release. First, just to level set, if you turn to Page 20, you see the size of our direct lending platform. In total, direct lending is $39 billion or 5% of our AUM. It's an important business for us, but in the framework of KKR, it's of modest size. And with a lot of focus on redemption activity in the wealth space, we note the size of our private BDC footprint in the second bar from the right. It's even smaller, around $3 billion of AUM or 0.4% of our AUM in total. In terms of our public BDC, FSK is a little less than 2% of our AUM. FSK reports its Q1 earnings next week. We're not going to get ahead of that. It's important, though, not to conflate FSK's portfolio with other pools of capital. So looking at Page 21, you see investment performance across our institutional strategies as well as our private BDC, all vintages since 2017. You see very consistent outperformance versus benchmark. We thought the more granular framing of investment performance here across the direct lending platform would be helpful context for everyone.
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The capital allocation rule: four tools, no fixed budget for any of them, judged on recurring earnings per share.
Robert Lewin (Chief Financial Officer): I'd like to next shift to capital allocation. It is an area of critical importance to our long-term performance and we have been making some important and deliberate decisions. As a reminder, we have focused on four key tools available to us to allocate our cash flow. Strategic M&A, insurance, share buybacks and strategic holdings. Each of these tools takes full advantage of the KKR ecosystem, and as a result, have the potential for high ROEs. Importantly, we do not have a framework that assigns a specific amount of capital spend into any one of these areas. Our approach here is all about how we take our marginal dollar of cash flows and drive the most amount of recurring durable and growing earnings on a per share basis. That is the mindset we have consistently taken to capital allocation, and it is one that is highly aligned with our shareholders given employees here own roughly 30% of our stock. We believe that we have delivered a lot of value to our shareholders through strategic capital allocation, and we are very confident in our ability to continue to do so in the future.
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Management walks its own $7 ANI target down mid-year and explains why delayed monetizations are deferred, not lost.
Robert Lewin (Chief Financial Officer): Finally, before I'm going to hand it over to Scott, I did want to provide an update on our 2026 guidance. First, based on the underlying momentum that we are seeing across the business, we continue to feel very confident in our ability to exceed our targets for fundraising, strategic holdings operating earnings and FRE on a per share basis. Turning to ANI. As we said last quarter, following our bottoms-up budgeting process, we entered the year expecting 2026 ANI to reach $7-plus per share, assuming a constructive and more normalized monetization environment. At that level, earnings growth would be approximately 45% year-over-year. So it's clearly an ambitious target, but one that we did have line of sight to achieving. That said, the operating environment four months into the year has, of course, been a bit more challenging than what was embedded in our plan. Importantly, we are still seeing healthy monetization activity. Gross monetization revenues in Q1 were up more than 50% year-over-year. And when we look at exit since March 31 as well as signed transactions expected to close in the coming quarters, that represents over $1.2 billion of gross monetization revenue for KKR. Notably, that is the largest forward monetization figure we've discussed on a call in our history. So while we continue to generate very strong outcomes, we do have modestly less visibility today than what our budget would have suggested at this point in the year. As a result, if you were handicapping our ability to reach $7 per share, we do think it is more likely that we land below that level. Importantly, if that were to happen, any delayed monetizations that impact 2026 would not be lost as we would expect them to shift to 2027 and beyond.
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How broad-based employee ownership shows up in returns, with the CoolIT exit as the worked example.
Bart Dziarski (RBC Capital Markets); Robert Lewin (Chief Financial Officer): Congrats on the CoolIT realization. And I noticed you implemented an employee ownership program at acquisition. So could you maybe speak to how that program contributed to the successful outcome of that deal? And then maybe more broadly on KKR's ownership program at the portfolio company level? […] Bart, it's Rob. Thanks for bringing that one up. CoolIT was obviously an awesome outcome for our investors. It is not often that we exit a business at almost a 15x multiple of money. And as you noted, CoolIT is one of 85 KKR portfolio companies globally now that are part of ou broad-based employee ownership programs where every employee, so it's not just senior management, are equity owners. And in the case of CoolIT, most tenured employees there are going to receive roughly eight times their annual base salary at exit. So a really meaningful outcome. And deservingly given the progress and the returns that we were able to generate at CoolIT. So more broadly, if you look at those 85 businesses that I referenced, we now have approximately 200,000 nonmanagement equity owners in those businesses. And we're really proud of this initiative. We know for sure that it drives better outcomes at our portfolio companies. We see it in the numbers. You've got higher engagement scores. You've got higher retention rates, working capital efficiency is up, margins are up, and ultimately, profitability is up. And so we have developed this program in a way where we've got the full employee base at these companies feeling like owners in the business, and they're delivering better results.
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The hardest question on the call — are LPs frustrated by exit delays? — answered with the DPI record.
Brennan Hawken (BMO Capital Markets); Scott Nuttall (Co-Chief Executive Officer): Wanted to follow up on Glenn Schorr's question. So—I couldn't resist, sorry. So look, the struggle with the $7 is, I think, probably not that surprising, like the environment, given where it is, you can look at consensus and saw the basically it was anticipated. But the one part that I'm sort of curious about is on the realizations and the timing. I know you guys have been a lot stronger on DPI. But how is the potential for further delays in monetization and realizations going across with the LP community. This has been an ongoing delay across the industry. And so is that leading to some frustrations and how are you managing that? […] Brennan, it's Scott. Just to add a couple of things, one, thanks for the question. I wouldn't confuse the message around we may delay some strategic exits with kind of what we're hearing from the LPs. We have, I think, in the deck, the IR deck on the website, a slide somewhere that talks about how we've given cash back from our private equity fund in the U.S. or that business, we've given more back than we called nine out of the last ten years. So what we're hearing from the LPs is we're best-in-class in terms of DPI and cash back, and they know that there's more coming. So the LPs are happy with us. That's why you see a record fundraise in private equity, the $23 billion that Rob mentioned, which is just the U.S. component of our private equity business. But overall, fundraising is up, and we're finding investors want to do even more with us. And I mentioned this dispersion we're seeing across our sector. There is extreme bifurcation, and we're getting a lot of very positive feedback on how we're performing and sending so much cash back relative to others. So I wouldn't confuse the two topics. This is helping us grow the firm faster by virtue of the performance.
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Q4 and Full Year 2025 Earnings Call — Q4 2025
The annual strategy call: the Arctos acquisition and the M&A framework behind it, the operating-leverage math, and the accounting choices that shape reported insurance earnings. · Open the full transcript →
The five tests any KKR acquisition has to pass, applied in real time to the Arctos deal.
Robert Lewin (Chief Financial Officer): Importantly, as you think about this acquisition, it is highly consistent with the strategic M&A framework we have previously laid out for our investors and analysts. That includes five things of note. Number one, access to leadership positions in large addressable markets that would be difficult to build organically. Number two is long-dated capital. The vast majority of Arctos' $15 billion of AUM is long-duration in nature, with no fixed end date. It is really as close to permanent capital as it gets in the asset manager space. Number three, highly complementary capabilities with a differentiated origination and sourcing engine that we believe can be valuable across the full KKR & Co. Inc. ecosystem, in particular, our insurance business. Number four would be the synergy that exists around distribution across both wealth and institutional channels. Number five, most importantly, strong cultural alignment between our two firms.
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Operating leverage quantified: management fees up 46% against 21% expense growth, the inverse of the three closest peers.
Alexander Blostein (Goldman Sachs); Robert Lewin (Chief Financial Officer): Just to follow up on Glenn's question and Scott, your answer. Obviously, lots of anxiety in the market. It obviously continues today. When you think about the more durable part of the business, Rob, I heard you talk about sort of confidence around exceeding the FRE target you set out for 2026. I think it was $4.50 plus. Can you talk maybe through the building blocks, your confidence levels in those building blocks? Specifically, with respect to management fees, what you expect that growth to look like in '26? […] I'm going to give you a stat, and we were looking at this as part of our recent budgeting process, but I think it's a helpful one. If you look from the end of 2022, so really post-COVID, through to, and I'm going to give you LTM nine-thirty numbers from a comparable perspective. We have grown our management fees by 46% relative to our operating expenses by 21%. Now compare that to our three closest peers, and it is pretty much the inverse. They've all grown their operating expense at a pace that exceeds their management fees, and in two of the three by a pretty substantial margin. […] The last point, because I think it's also helpful in the context of thinking about our ability to achieve that $4.50 plus target or meaningfully exceed it, is when we gave that target, that was a little over two years ago. At the time, our LTM FRE per share was $2.55. Because of the momentum we have across all of those line items and our ability to get operating leverage, that's why you've seen the really substantial growth we've had in FRE over a short period of time.
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Why reported insurance earnings lag the economics: KKR cash-accounts assets whose return is appreciation rather than yield.
Benjamin Budish (Barclays); Robert Lewin (Chief Financial Officer): I wonder if you could talk a little bit about the recent trends at Global Atlantic. It looks like you are a little bit above the kind of $250 million per quarter target you've talked about, but sifting through the pieces, it's a little bit hard to tell. I think we're waiting for some data from the queue when it comes out, but it looks like perhaps the net investment spread may have narrowed a little bit. The G&A came in quite a bit lower than the last '26. Is it still sort of plus or minus $250 million? Or should we see more upside? Thank you. […] Yeah. I'll take that one. It's Rob. All good questions. Let me work through them in pieces. We continue to think that the right level to model the business is in that $250 million-plus range per quarter over the next four quarters, but keep in mind, and we talked a lot about this last quarter, is in our transition to move our book to more of an industry average on alternatives exposure, we are taking on assets that have no yield or limited yield. We are choosing to not have that show up in our P&L by cash accounting for those outcomes. That is different than many of our industry peers. In just Q4 alone, that number was in the mid-90s of accrued that's not showing up in our P&L. As I think about our run rate today, of accrued income is closer to $250 million. As you think about 2026, as we're modeling that business, we think that accrued income number can be $300 to $350 million. Over time, if we do our jobs right, that accrued income that builds and compounds will show up in cash earnings. We expect in 2027 and 2028, you're going to start to see that.
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Answering the charge that Strategic Holdings is a black box: ~20 companies deleveraging into dividend payers.
Brennan Hawken (BMO); Robert Lewin (Chief Financial Officer): Appreciate that you reiterated the $350 million expectation for this year in Strategic Holdings. Also recognizing that the earnings doubled here this year, more than doubled. Could you help us understand what will drive that? Talking with investors, there's a little bit of a view that it's a black box. There's not a ton of disclosure. So any enhanced color around what's going to drive that substantial ramp? There's a TMT bucket that's in there. Maybe could you provide a little color around what's in that bucket given some of the anxiety and agita that's out there? Thanks. […] Now what is driving it? What's driving it is we've got approximately 20 businesses now that sit in strategic holdings, all generating different levels of growth and free cash flow. Many of those investments were originated five, six, seven, eight years ago with bigger capital structures at the time. A big part of our thesis is as they delever, which they are deleveraging, they're going to be generating more free cash flow for dividends, and that is what's driving our confidence both in 2026 but especially as we look forward through 2030 and beyond.
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Q3 2025 Earnings Call — Q3 2025
The call where the insurance P&L was taken apart in public — total economics, the cash-versus-mark decision, and a self-disclosed carry clawback. · Open the full transcript →
Management explains why it declined to adopt peers' mark-to-market insurance reporting, and what that choice costs the headline.
Robert Lewin (CFO): Transparently, we debated whether to change our insurance operating reporting to mark-to-market and conform to many of the industry peers, but we have concluded that it would be inconsistent with how we think about the P&L across all of KKR. We have had a focus on cash outcomes in our segment reporting since 2018 when we moved away from reporting economic net income. We think it is the easiest way to understand our business and believe that is the right decision for our insurance portfolio as well. Candidly, we like our conservative approach. We have decided to continue reporting the lower-yielding investments in our insurance segment based on cash outcomes. But to give you a sense of the embedded profitability, our insurance operating earnings would have been approximately $50 million higher in Q3 if we included the impact of marks on our investments, where a significant portion of the return is related to appreciation and not cash yield. As we continue to rotate the book, we expect the difference between our reported earnings and the earnings on a marked basis to go up in 2026, but come down over time as the portfolio matures. However, in a growing and performing business, that number will never be zero.
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Bad news delivered unprompted: a carry repayment on the 2013-vintage Asia II fund, sized and reserved before anyone asked.
Robert Lewin (CFO): The one exception here relates to our second Asia private equity fund, which has underperformed. Asia II was raised 12, 13 years ago and stopped investing roughly eight years ago. As we have disclosed to our Asia II investors, we expect that fund will roughly return its cost. To be clear, our performance in Asia private equity more broadly has been a real bright spot. Our most recent funds Asia III and Asia IV are both top quartile performing funds for their vintage, with gross IRRs over 20% and differentiated DPI statistics. Asia III has already returned over 100% of its capital, and Asia IV has already returned 40%. The reason we are discussing this today is that we collected roughly $350 million of gross carry from Asia II many years ago that we now have to pay back. We will be taking a charge in the fourth quarter to do just that, reversing the compensation that was paid out when that carry was collected. To be clear, while we are recognizing this event in Q4, our accrued unrealized performance income on the balance sheet has been net of this impact for some time. The result is that we expect net realized performance income in Q4 to be lower than it otherwise would have been, and ANI per share to be about $0.18 lower. This is really a one-time charge that we've planned and reserved for that we wanted you to be aware is coming. As we sit here today, we do not see any other material clawback risk that exists across our portfolio. When you cut through it, the monetization pipeline is strong, our performance is strong, and we are taking a one-time charge for something that happened roughly 10 years ago.
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The frame invoked on every call since: FRE guidance is unconditional, ANI guidance depends on the monetization window.
Robert Lewin (CFO): The final topic that I want to discuss this morning relates to our expectations for 2026. Do we still feel good about our guidance of $4.50 plus in FRE per share and $7 to $8 in after-tax ANI per share that we introduced in November 2023 and November 2021, respectively? On FRE, the answer is an unreserved yes. As you could tell from our fundraising this quarter, we have good momentum here and real line of sight to continued management fee growth. Turning to ANI. Given everything that we see and all of the momentum across KKR, we continue to feel confident in our ability to achieve our 2026 ANI guidance. A key component here will, of course, be monetization activity. Today, we have roughly $17 billion of embedded gains across the firm, that is gross unrealized carry and unrealized gains in our asset management investment portfolio and strategic holdings. That is the second highest level in our history, it's up 10% from a year ago and up over 50% from two years ago. Collectively, we've gone back with all of our business heads across all of our geographies and looked at our pipelines on a bottoms-up basis. As a result of that exercise, we feel incredibly well positioned for future monetizations. To be clear, the monetization environment today is constructive, and we would expect that to continue into 2026. However, if the monetization environment deteriorates, we may delay some of that activity. If that were to happen, we would be earning less in 2026, but would be in service of more earnings in 2027 and beyond.
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Q1 2025 Earnings Call — Q1 2025
The call held four weeks into the tariff shock, where the diversification and lockup arguments were tested against a live dislocation. · Open the full transcript →
Tariff exposure quantified within a month of the announcement, by asset class and with the caveats stated.
Robert Lewin (Chief Financial Officer): The first is the impact of tariffs on our existing portfolio. As a starting point, it is important to remember that tariffs and supply chain diversification and resilience have been front-of-mind topic for our investment, public affairs, and macro teams dating back to the global pandemic. As a result, for five-plus years now, this has been a standard topic of conversation. Taking a look at our global private equity portfolio today, this includes traditional, core, and growth. Based on our initial findings, we estimate that 90% of our AUM has limited to no first-order impact from the announced tariffs. Importantly, this figure does not include identified mitigating measures that we are actively implementing. Specifically, our core private equity portfolio and our strategic holding segment are not expected to have any material impact from tariffs. Across our infrastructure platform, the vast majority of our companies have either contractual protections that insulate KKR returns or minimal estimated exposure. Looking at our infrastructure deployment over the last five years, approximately 70% has been in Europe and in Asia. And as we look at our credit portfolio, there will be pockets of exposure. But we believe the opportunities, and we really do think this is a credit picker's market, will outweigh the downsides. While we expect there will be individual instances of direct tariff impact in parts of the portfolio, based on how we understand tariffs today, we feel well-equipped to manage these challenges and on the whole feel very good with how our portfolio is positioned.
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The Global Atlantic model in one passage: longer liabilities, more alternatives, third-party sidecars, all-in ROE near 20%.
Robert Lewin (Chief Financial Officer): Turning next to insurance, we are now a year plus into owning 100% of Global Atlantic and we are progressing well on our path to modestly evolving how we source both liabilities and assets, including raising more third-party capital, elongating our liability profile and sourcing additional alternatives. This addition of longer dated alternatives to the portfolio, where we think that we have a differentiated sourcing advantage, will drive up overall returns, while at the same time naturally reducing leverage over time. Financial performance here begins with Insurance segment operating earnings. In Q1, as you would have heard from Craig, we reported $259 million, which was in line with our expectations. Consistent with our comments last quarter, I would expect insurance operating earnings to stay in that $250 million plus or minus level during the next few quarters. This line item alone does not capture though how our model works and the overall impact of our insurance related economics. A lot of it appropriately shows up in our Asset Management segment. Firstly, management fees from our Ivy sidecar vehicles as well as strategic partnerships. This capital allows us to grow GA in a very capital efficient way, and there is more to come here. For example, Japan Post Insurance announced in Q1 their intention to expand our existing strategic partnership and make a new $1 billion to $2 billion investment here. Number two, capital markets fees, where we've just begun to scratch the surface. We see the potential to generate several hundred million of additional annual revenues over time. In 2024, that number was closer to $50 million. Finally, the management fees charged for our investment management agreement with Global Atlantic, critically even while we are in the process of shifting our strategy to emphasize longer duration and more private market assets. Our all-in pre-tax ROE of our insurance business is approaching 20%, with a clear path to 20- plus percent returns as we get all the elements of the business working well together.
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Why management fees are insulated from marks: committed capital, eight-year-plus lockups, and $64bn not yet paying fees.
Robert Lewin (Chief Financial Officer): The last theme that I want to go through before handing it off to Scott is around the durability of our model, which provides us with a significant amount of both stability and visibility. Over 90% of our capital is perpetual or committed for an average of eight years or more. Today, we have $116 billion of committed but uncalled capital. If you look at our management fees, they are largely calculated on committed or invested capital, and therefore, not influenced by marks and corresponding NAVs. Finally, we have a record amount of capital on which we're not yet earning fees, with $64 billion committed with a weighted average management fee rate of about 100 basis points. That turns on when the capital is either invested or enters its investment period. Just to put that $64 billion figure into perspective, it is up almost 50% compared to one year ago. So, we benefit from real stability of management fees and increased visibility on how they will grow.
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Pressed on why the buyback isn't bigger, the CFO restates the allocation test and the historical record behind it.
Alexander Blostein (Goldman Sachs); Robert Lewin (Chief Financial Officer): So, zooming out a little bit, the comments over the course of your prepared remarks suggested a much more resilient business, perhaps what's perceived in the market today. You talked about monetization not quite falling off the cliff, deployment, dry powder, really healthy. It sounds like you're not really changing the outlook for fundraising either. So, the question obviously is, with the stock doing what it's done over the last few months, why not step up the buyback here? I know it's a dynamic approach you guys have talked about in the past, and you're looking to generate the best return on investment capital. But if not now, when? […] Great, Alex. It's Rob. Why don't I start? We’ve been very consistent as it relates to capital allocation for some time. The most important thing for any capital allocation process is consistency. We have two goals. One is to ensure every marginal dollar of free cash flow generates the most amount of long-term earnings per share. The second goal, closely related, is increasing the quality of those earnings. Every marginal dollar of free cash flow is looked at through that lens. We've talked about four areas of using our capital base to accomplish those goals. One is share buybacks. The other three are core private equity, strategic M&A, and insurance. Share buybacks, over the past several years, have been a really important part of our capital allocation framework and use of capital. I've got every confidence that as we look forward and think about using our capital, share buybacks will continue to be a core part of how we think about capital allocation. We don't have a framework that puts a specific amount in any one bucket. To us, it’s all about taking that marginal dollar of cash flow and deriving the most amount of earnings per share across our business over a long period, with durability and resilience to that cash flow. We're going to take that same lens. I expect share buybacks, as we look forward, will continue to be a very important part of that allocation framework. It’s also worth noting that KKR senior management own roughly 30% of KKR. Any decision taken around capital structure, around capital allocation, is through that lens, highly aligned with our shareholder base. If you look historically, we’ve used our capital base to retire roughly 10% of our shares outstanding, 15% of our free float. We've done so at an average price of roughly $28 per share. We like our historical body of work and would expect to continue to find accretive ways to put that capital to work for all of our shareholders.
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The industry question of the cycle — will allocations to private equity shrink? — answered: dispersion, not a shakeout.
Glenn Schorr (Evercore); Scott Nuttall (Co-Chief Executive Officer): I want to revisit the discussion on private equity. You clearly illustrated how linear deployment and investment pacing benefit your situation, particularly when considering America's 12 and the capital you've returned. The broader question is whether, during the 2006, 2007, and 2008 vintages, which had subpar industry performance, people believed private equity was finished. We raised a significant amount of money, which doubled and tripled. So, is this time different for the industry? There are more funds and assets raised, yet performance remains subpar. Will we witness a larger shakeout, considering that there wasn't enough of one in previous downturns? […] Hey, Glenn, it's Scott. It's a great question. Our expectation is that it'll probably be more about dispersion. We think you're going to have meaningful dispersion of results across private equity managers, and that will start to come through in a way that it hasn't for a very long time. We've seen a trend for a while of institutional investors in particular globally wanting to do more with fewer. They've been consolidating their relationships with people that they think can perform through a cycle and that, in a lot of cases, are global and multi-asset class. Obviously, we've benefited from that. It will be more about concentration of capital with fewer players. We think we’ll now see the benefit of what I mentioned before, we’ve learned a lot during GFC, during COVID, during Trump 1.0. We've been applying those learnings. Volatility creates opportunity. You need to have the capital to invest and the courage to invest it. We as a firm, and we talk about culture all the time, are incredibly well-connected. If nothing else, we learn, and so, hopefully that will benefit us as it comes through results. It’s going to be dispersion, not a shakeout.
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The wealth thesis in plain terms, including who K-Series is for and who the Capital Group partnership is for.
Scott Nuttall (Co-Chief Executive Officer): We talked about the private wealth opportunity for a while. We do think that it is significant. A lot of institutions globally are 30% to 50% in alternatives; individual investors are low single-digits, depending on when you look at 1% or 2%. The opportunity for expanding our market is meaningful. More importantly, it doesn't make sense that if you are a teacher in Texas and you retired, you have 30-40% of your retirement funds invested in alternatives. If you are a retired dentist, you have zero. You haven't had access to what we do. With K-Series, we've been focused on hitting the accredited investor. That’s about 5% to 7% of U.S. households. We’ve launched there, and we are underway. With Capital Group, we are focused on the other 95%. We've just launched these first two products in the credit space, but what's coming is private equity, real estate, infrastructure, models, and figuring out how to access more efficiently the broader investor universe, as well as target fees.
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Why insurance segment earnings sit flat while the model improves — and the stated willingness to trade near-term P&L.
Patrick Davitt (Autonomous Research); Robert Lewin (Chief Financial Officer): My question is on the insurance discussion. I think you said you expect it to stay in the 250 million range for the next few quarters, but with the ongoing portfolio repositioning, I would think there is potential for wider new investment spreads. Why is there not room for that to tick up through the year? Thanks. […] Yes, thanks a lot for the question, Patrick. There are a few different things going on. So, let me start with how we look at things, and then I'll work towards your specific question. We focus on that all-in ROE concept. Today, we are approaching that 20% level, so pretty attractive in its own right. We have a clear path to sustainably beating that level to generate 20 plus percent all-in ROEs, especially as we get all elements of the business model working together. I’d point out that we're achieving that return while we’re going through this evolution of our business model at GA, which we know will put some near-term pressure on insurance segment operating earnings for a bit of time, but with the benefit of the longer term economic profile we think we can achieve. We believe that's unquestionably the right path to take. We're always going to side for long-term economics, even at the expense of short-term P&L. […] This all starts with elongating our liabilities. In Q1, 90% of the annuities we sold had a duration of five-plus years. This time last year, that number was 65%. We’re talking about taking our exposure to alternatives up. Industry average tends to be 5%-8% alternatives exposure. Global Atlantic was 1%. In the quarter, we added roughly a billion dollars of alternatives exposure, so making progress there too. Third-party capital is a very significant part of our strategy going forward. I referenced the momentum we have there, the Japan post-strategic partnership. We're currently out-raising IB3 deal. We have a lot going on as it relates to third-party capital. Good progress across these initiatives, but to answer your question specifically, it will take a little bit of time to impact the P&L, especially the part around the alternatives book, as much of that doesn't come through in yield. Additionally, as we grow our third-party capital, those fees only turn on when the capital is invested. Again, this takes time.
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Q4 and Full Year 2023 Earnings Call — Q4 2023
The landmark call: 100% ownership of Global Atlantic, the new Strategic Holdings segment and total operating earnings metric, and the three-engine model KKR still runs on. · Open the full transcript →
The call that created today's reporting: a Strategic Holdings segment, a lower fee-comp ratio, and total operating earnings.
Rob Lewin (Chief Financial Officer): Concurrent with the closing of GA, we have created a new strategic holdings segment, which you will see in our Q1 2024 earnings release. Here the segment operating earnings will be driven by cash dividends from our Core PE portfolio. […] We also revised our compensation ratios, which similarly will be reflected in our Q1 financials, delivering more FRE to our shareholders, and driving even more alignment between our compensation model and the outcomes of our clients. […] Combining these aspects, we will be introducing a new reporting framework that will better highlight our business model. This will include a new financial metric, total operating earnings, which represents our more recurring forms of income.
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The three-engine framing and the 2026 targets that every subsequent call has been measured against.
Rob Lewin (Chief Financial Officer): As a reminder, we do expect these announcements to be accretive to all of our per share metrics. And together with the confidence and current visibility we have, it is what allowed us to increase our 2026 FRE per share target to $4.50-plus per share. In 2023, we generated $2.68 per share of FRE. So our expectation is for a lot of growth from here. […] Turning first to our asset management business – there remains a lot of upside here, with multiple drivers of growth. We have a lot of younger strategies that are just beginning to scale. We started 25 or so investing businesses through the past decade alone, and many are now starting to inflect. We are in asset classes and geographies with massive end markets – Asia, infrastructure including climate, and credit are all great examples. And as a reminder, we only want to be competing in areas with large addressable markets and where we have conviction that we can be a top-three player. We are in the early days of tapping into the private wealth end market. We've had early success in our K-Series suite of products, with a tremendous amount of opportunity that is still in front of us. With these growth avenues, along with our strong track record, talent, and the trust that we've built with our clients, we feel that we could double our asset management business from here. And that's without starting anything new. […] And finally, number three, strategic holdings, where our opportunity is highly differentiated. This segment leverages all of our people, capabilities, and our collaborative culture. As a result, we are uniquely positioned to capitalize on what we believe is a huge, addressable market. And that's in addition to the current visibility we already have to drive net dividends in this segment of $300- plus million by 2026, and $600-plus million by 2028.
p. 5 · Read in context →
More calls
Q2 2025 Earnings Call — Q2 2025 · 13 pages · Go here for the first quarter with the Americas XIV flagship fee stream switched on, and the resulting step-up in management fee and FRE margin math. · Open →
Q4 and Full Year 2024 Earnings Call — Q4 2024 · 14 pages · The first full year reported under the new three-segment structure, useful as the clean baseline for the 2026 targets. · Open →
Q3 2024 Earnings Call — Q3 2024 · 16 pages · Read this for the fundraising super-cycle framing and the quarter FRE first passed $1bn, alongside the durable-earnings share of pre-tax profit. · Open →
Q2 2024 Earnings Call — Q2 2024 · 14 pages · The first call after S&P 500 inclusion and the April Investor Day; management restates the full 2026 guidance set and the 2030 Strategic Holdings ambition. · Open →
Q1 2024 Earnings Call — Q1 2024 · 8 pages · The first results reported on the new basis, with the Strategic Holdings portfolio described company-by-company and the 2026/2028/2030 dividend ladder laid out. · Open →
Q4 and Full Year 2021 Earnings Call — Q4 2021 · 28 pages · The pre-restructuring firm at its scaling peak — the first full year with Global Atlantic consolidated, AUM up 87%, management fees up 44%, distributable earnings more than doubled. · Open →