Table of ~~accounting. See Note 16 "Goodwill and Intangible Assets."~~Contents

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited ~~condensed consolidated~~ financial statements of KKR & Co. ~~L.P.~~Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP") for interim financial information and the instructions to this Quarterly Report on Form 10-Q. The condensed consolidated financial statements (referred to hereafter as the ~~“financial statements”~~"financial statements"), including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) such that the financial statements are presented fairly and that estimates made in preparing the financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The ~~December 31, 2016 condensed~~ consolidated balance sheet data ~~was~~as of December 31, 2021 were derived from audited ~~consolidated~~ financial statements included in ~~KKR’s~~KKR & Co. Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, which include all disclosures required by GAAP. These~~2021 filed with the U.S. Securities and Exchange Commission ("SEC") on February 28, 2022 (our "Annual Report"), and the financial statements should be read in conjunction with the audited ~~consolidated~~ financial statements included therein. Additionally, in ~~KKR & Co. L.P.’s Annual Report on Form 10-K filed with~~ the ~~Securities~~accompanying financial statements, the condensed consolidated statements of financial condition are referred to hereafter as the "consolidated statements of financial condition"; the condensed consolidated statements of operations are referred to hereafter as the "consolidated statements of operations"; the condensed consolidated statements of comprehensive income (loss) are referred to hereafter as the "consolidated statements of comprehensive income (loss)"; the condensed consolidated statements of changes in equity and ~~Exchange Commission (“SEC”).~~redeemable non-controlling interests are referred to hereafter as the "consolidated statements of changes in equity"; and the condensed consolidated statements of cash flows are referred to hereafter as the "consolidated statements of cash flows."

KKR ~~& Co. L.P.~~ consolidates the financial results of ~~the~~ KKR Group ~~Partnerships~~Partnership and ~~their~~its consolidated ~~subsidiaries,~~entities, which include the accounts of ~~KKR’s~~KKR's investment management and capital markets companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds, Global Atlantic’s insurance companies and certain other entities including CFEs. ~~References~~

The presentations in the ~~accompanying~~consolidated statement of financial condition and consolidated statement of operations reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, each of which possess distinct characteristics. As a result, KKR developed a two-tiered approach for the financial statements presentation, where Global Atlantic's insurance operations are presented separately from KKR's asset management business. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations and that reporting Global Atlantic’s insurance operations separately is appropriate given, among other factors, the relative significance of Global Atlantic’s policy liabilities, which are not obligations of KKR (other than the insurance companies that issued them). If a traditional aggregate presentation were to ~~“principals”~~be used, KKR would expect to eliminate or combine several identical or similar captions, which would condense the presentations, but would also reduce the level of information presented. KKR also believes that using a traditional aggregate presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report.

In the ordinary course of business, KKR’s Asset Management business and Global Atlantic enter into transactions with each other, which may include transactions pursuant to their investment management agreements and financing arrangements. The borrowings from these financing arrangements are non-recourse to ~~KKR’s senior employees~~KKR beyond the assets pledged to support such borrowings. All the investment management and ~~non‑employee operating consultants who hold~~financing arrangements between KKR's Asset Management business and Global Atlantic are eliminated in consolidation; however, KKR's allocated share of the net income from the consolidation of Global Atlantic is increased by the amount of fees earned from and decreased by the amount of interest expense incurred from noncontrolling interest holders in Global Atlantic. Accordingly, the elimination of these fees and interest impacts the net income (loss) attributable to KKR and KKR stockholders' equity for the pro-rata ownership of the noncontrolling interests in ~~KKR’s business through KKR Holdings.~~Global Atlantic.

All intercompany transactions and balances have been eliminated.

For a detailed discussion about KKR’s significant accounting policies and for further information on accounting updates adopted in the prior year, see Note 2 to the financial statements in the 2021 Form 10-K. During the nine months ended September 30, 2022, there were no significant updates to KKR’s significant accounting policies.

Use of Estimates

Table of Contents

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of ~~fees,~~revenues, expenses, and investment income (loss) during the reporting periods. Such estimates include but are not limited to (i) the valuation of investments and financial ~~instruments.~~instruments, (ii) the determination of the income tax provision, (iii) the impairment of goodwill and intangible assets, (iv) the impairment of available-for-sale investments, (v) the valuation of insurance policy liabilities, (vi) the valuation of embedded derivatives, (vii) the determination of the allowance for loan losses, and (viii) amortization of deferred revenues and expenses associated with the insurance business. Certain events particular to each industry and country in which the portfolio companies conduct their operations, as well as general economic, political, regulatory and public health conditions, may have a significant negative impact on KKR’s investments and profitability. Such events are beyond KKR’s control, and the likelihood that they may occur and the effect on KKR's use of estimates cannot be predicted. Actual results could differ from those estimates, and such differences could be material to the financial statements.

~~Principles~~Goodwill and Intangible Assets

Goodwill represents the excess of ~~Consolidation~~

~~The types~~acquisition cost over the fair value of ~~entities KKR assesses for consolidation include (i) subsidiaries, including management companies, broker-dealers~~net tangible and ~~general partners of investment funds that KKR manages, (ii) entities that have all the attributes of~~intangible assets acquired in connection with an ~~investment company, like investment funds, (iii) CFEs and (iv) other entities, including entities that employ non-employee operating consultants. Each of these entities~~acquisition. Goodwill is assessed for ~~consolidation on a case by case basis depending on the specific facts and circumstances surrounding that entity.~~

Pursuant to its consolidation policy, KKR first considers whether an entity is considered a VIE and therefore whether to apply the consolidation guidance under the VIE model. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities (“VOEs”) under the voting interest model.

KKR’s funds are, for GAAP purposes, investment companies and therefore are not required to consolidate their investments in portfolio companies even if majority-owned and controlled. Rather, the consolidated funds and vehicles reflect their investments at fair value as described below in “Fair Value Measurements.”

An entity in which KKR holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk (as a group) lack either the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity’s activities that have a significant effect on the success of the legal entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both and substantially all of the legal entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Limited partnerships and other similar entities where unaffiliated limited partners have not been granted (i) substantive participatory rights or (ii) substantive rights to either

dissolve the partnership or remove the general partner (“kick-out rights”) are VIEs under condition (b) above. KKR’s investment funds that are not CFEs (i) are generally limited partnerships, (ii) generally provide KKR with operational discretion and control, and (iii) generally have fund investors with no substantive rights to impact ongoing governance and operating activities of the fund, including the ability to remove the general partner, and as such the limited partners do not hold kick-out rights. Accordingly, most of KKR’s investment funds are categorized as VIEs.

KKR consolidates all VIEs in which it is the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (i) whether an entity in which KKR holds a variable interest is a VIE and (ii) whether KKR’s involvement, through holding interests directly or indirectlyimpairment annually in the ~~entity~~third quarter of each fiscal year or contractually through other variable interests (for example, management and performance related fees), would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. Fees earned by KKR that are customary and commensurate with the level of effort required to provide those services, and where KKR does not hold other economic interestsmore frequently if circumstances indicate impairment may have occurred. Goodwill is recorded in Other Assets in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered variable interests. KKR factors in all economic interests including interests held through related parties, to determine if it holds a variable interest. KKR determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion periodically.

For entities that are determined not to be VIEs, these entities are generally considered VOEs and are evaluated under the voting interest model. KKR consolidates VOEs it controls through a majority voting interest or through other means.

The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE depends on the facts and circumstances surrounding each entity and therefore certain of KKR’s investment funds may qualify as VIEs whereas others may qualify as VOEs.

With respect to CLOs (which are generally VIEs), in its role as collateral manager, KKR generally has the power to direct the activities of the CLO that most significantly impact the economic performance of the entity. In some, but not all cases, KKR, through its residual interest in the CLO may have variable interests that represent an obligation to absorb losses of, or a right to receive benefits from, the CLO that could potentially be significant to the CLO. In cases where KKR has both the power to direct the activities of the CLO that most significantly impact the CLO's economic performance and the obligation to absorb losses of the CLO or the right to receive benefits from the CLO that could potentially be significant to the CLO, KKR is deemed to be the primary beneficiary and consolidates the CLO.

With respect to CMBS vehicles (which are generally VIEs), KKR holds unrated and non-investment grade rated securities issued by the CMBS, which are the most subordinate tranche of the CMBS vehicle. The economic performance of the CMBS is most significantly impacted by the performance of the underlying assets. Thus, the activities that most significantly impact the CMBS economic performance are the activities that most significantly impact the performance of the underlying assets. The special servicer has the ability to manage the CMBS assets that are delinquent or in default to improve the economic performance of the CMBS. KKR generally has the right to unilaterally appoint and remove the special servicer for the CMBS and as such is considered the controlling class of the CMBS vehicle. These rights give KKR the ability to direct the activities that most significantly impact the economic performance of the CMBS. Additionally, as the holder of the most subordinate tranche, KKR is in a first loss position and has the right to receive benefits, including the actual residual returns of the CMBS, if any. In these cases, KKR is deemed to be the primary beneficiary and consolidates the CMBS.

~~Redeemable Noncontrolling Interests~~

Redeemable Noncontrolling Interests represent noncontrolling interests of certain investment funds and vehicles that are subject to periodic redemption by fund investors following the expiration of a specified period of time (typically between one and three years), or may be withdrawn subject to a redemption fee during the period when capital may not be otherwise withdrawn. Fund investors interests subject to redemption as described above are presented as Redeemable Noncontrolling Interests in the accompanying ~~condensed~~ consolidated statements of financial ~~condition and presented as Net Income (Loss) Attributable to Redeemable Noncontrolling Interests in the accompanying condensed consolidated statements of operations.~~condition.

When redeemable amounts become legally payable to fund investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the accompanying condensed consolidated statements of financial condition. For all consolidated investment vehicles and funds in which redemption rights have not been granted, noncontrolling

~~interests are presented within Equity in the accompanying condensed consolidated statements of financial condition as noncontrolling interests.~~

~~Noncontrolling Interests~~

~~Noncontrolling interests represent (i) noncontrolling interests in consolidated entities and (ii) noncontrolling interests held by KKR Holdings.~~

~~Noncontrolling Interests in Consolidated Entities~~

~~Noncontrolling interests in consolidated entities represent the non-redeemable ownership interests in KKR that are held primarily by:~~


~~(i)~~	~~third party fund investors in KKR’s funds;~~


~~(ii)~~	~~third parties entitled to up to 1% of the carried interest received by certain general partners of KKR’s funds and 1% of KKR’s other profits (losses) through and including December 31, 2015;~~


~~(iii)~~	certain former principals and their designees representing a portion of the carried interest received by the general partners of KKR’s private equity funds that was allocated to them with respect to private equity investments made during such former principals’ tenure with KKR prior to October 1, 2009;


~~(iv)~~	certain principals and former principals representing all of the capital invested by or on behalf of the general partners of KKR’s private equity funds prior to October 1, 2009 and any returns thereon;


~~(v)~~	~~third parties in KKR’s capital markets business;~~


~~(vi)~~	~~holders of exchangeable equity securities representing ownership interests in a subsidiary of a KKR Group Partnership issued in connection with the acquisition of Avoca Capital ("Avoca"); and~~


~~(vii)~~	~~holders of the 7.375% Series A LLC Preferred Shares of KKR Financial Holdings LLC ("KFN") whose rights are limited to the assets of KFN.~~

~~Noncontrolling Interests held by KKR Holdings~~

Noncontrolling interests held by KKR Holdings include economic interests held by principals in the KKR Group Partnerships. Such principals receive financial benefits from KKR’s business in the form of distributions received from KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings. These financial benefits are not paid by KKR & Co. L.P. and are borne by KKR Holdings.

~~The following table presents the calculation of noncontrolling interests held by KKR Holdings:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Balance at the beginning of the period $ 4,683,673
$ 4,018,305
$ 4,293,337
$ 4,347,153
Net income (loss) attributable to noncontrolling interests held by KKR Holdings ⁽¹⁾
115,434
284,834
637,146
86,659
Other comprehensive income (loss), net of tax ⁽²⁾
4,676
231
18,429
(37 )
Impact of the exchange of KKR Holdings units to
KKR & Co. L.P. common units ⁽³⁾
(43,553 ) (22,930 ) (184,254 ) (53,908 )
Equity based compensation 23,807
7,822
127,864
27,469
Capital contributions 39
69
2,989
207
Capital distributions (58,347 ) (57,420 ) (177,701 ) (176,632 )
Transfer of interests under common control
(See Note 15 "Equity")
—
—
7,919
—
Balance at the end of the period $ 4,725,729
$ 4,230,911
$ 4,725,729
$ 4,230,911


~~(1)~~	~~Refer to the table below for calculation of Net income (loss) attributable to noncontrolling interests held by KKR Holdings.~~


~~(2)~~	~~Calculated on a pro rata basis based on the weighted average KKR Group Partnership Units held by KKR Holdings during the reporting period.~~


~~(3)~~	Calculated based on the proportion of KKR Holdings units exchanged for KKR & Co. L.P. common units pursuant to the exchange agreement during the reporting period. The exchange agreement provides for the exchange of KKR Group Partnership Units held by KKR Holdings for KKR & Co. L.P. common units.

~~Net income (loss) attributable to KKR & Co. L.P. after allocation to noncontrolling interests held by KKR Holdings,~~In accordance with the exception of certain tax assets and liabilities that are directly allocable to KKR Management Holdings Corp., is attributed based on the percentage of the weighted average KKR Group Partnership Units held by KKR and KKR Holdings, each of which holds equity of the KKR Group Partnerships. However, primarily because of the (i) contribution of certain expenses borne entirely by KKR Holdings, (ii) the periodic exchange of KKR Holdings units for KKR & Co. L.P. common units pursuant to the exchange agreement and (iii) the contribution of certain expenses borne entirely by KKR associated with the KKR & Co. L.P. 2010 Equity Incentive Plan (“Equity Incentive Plan”), equity allocations shown in the condensed consolidated statement of changes in equity differ from their respective pro-rata ownership interests in KKR’s net assets.

~~The following table presents net income (loss) attributable to noncontrolling interests held by KKR Holdings:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ 378,938
$ 974,762
$ 2,045,356
$ 487,657
Less: Net income (loss) attributable to Redeemable Noncontrolling Interests 20,876
3,121
64,196
4,616
Less: Net income (loss) attributable to Noncontrolling Interests in consolidated entities 80,724
326,454
500,439
266,385
Less: Net income (loss) attributable to Series A and
Series B Preferred Unitholders
8,341
8,201
25,023
13,894
Plus: Income tax / (benefit) attributable to
KKR Management Holdings Corp.
6,063
3,187
30,571
(8,376 )
Net income (loss) attributable to KKR & Co. L.P. Common Unitholders and KKR Holdings $ 275,060
$ 640,173
$ 1,486,269
$ 194,386

Net income (loss) attributable to noncontrolling interests held by KKR Holdings $ 115,434
$ 284,834
$ 637,146
$ 86,659

~~Investments~~

Investments consist primarily of private equity, real assets, credit, investments of consolidated CFEs, equity method, carried interest and other investments. Investments denominated in currencies other than the entity's functional currency are valued based on the spot rate of the respective currency at the end of the reporting period with changes related to exchange rate movements reflected as a component of Net Gains (Losses) from Investment Activities in the consolidated statements of operations. Security and loan transactions are recorded on a trade date basis. Further disclosure on investments is presented in Note 4 “Investments.”

~~The following describes the types of securities held within each investment class.~~

~~Private Equity~~ ~~- Consists primarily of equity investments in operating businesses, including growth equity investments.~~

~~Real Assets~~ - Consists primarily of investments in (i) energy related assets, principally oil and natural gas producing properties, (ii) infrastructure assets, and (iii) real estate, principally residential and commercial real estate assets and businesses.

~~Credit~~ - Consists primarily of investments in below investment grade corporate debt securities (primarily high yield bonds and syndicated bank loans), distressed and opportunistic debt and interests in unconsolidated CLOs.

~~Investments of Consolidated CFEs~~ - Consists primarily of (i) investments in below investment grade corporate debt securities (primarily high yield bonds and syndicated bank loans) held directly by the consolidated CLOs and (ii) investments in originated, fixed-rate mortgage loans held directly by the consolidated CMBS vehicles.

~~Equity Method~~ - Consists primarily of (i) certain investments in private equity funds, real assets funds and credit funds, which are not consolidated and (ii) certain investments in operating companies in which KKR is deemed to exert significant influence under GAAP.

~~Carried Interest~~ - Consists of carried interest from unconsolidated investment funds that are allocated to KKR as the general partner of the investment fund based on cumulative fund performance to date, and where applicable, subject to a preferred return.

~~Other~~ ~~- Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets, credit or investments of consolidated CFEs.~~

~~Investments held by Consolidated Investment Funds~~

~~The consolidated investment funds are, for~~ GAAP, purposes, investment companies and reflect their investments and other financial instruments, including portfolio companies that are majority-owned and controlled by KKR's investment funds, at fair value. KKR has ~~retained this specialized accounting for~~ the consolidated funds in consolidation. Accordingly, the unrealized gains and losses resulting from changes in fair value of the investments and other financial instruments held by the consolidated investment funds are reflectedoption to either (i) perform a quantitative impairment test or (ii) first perform a qualitative assessment (commonly known as ~~a component of Net Gains (Losses) from Investment Activities in the condensed consolidated statements of operations.~~

Certain energy investments are made through consolidated investment funds, including investments in working and royalty interests in oil and natural gas producing properties as well as investments in operating companies"step zero") to determine whether it is more likely than not that ~~operate in the energy industry. Since these investments are held through consolidated investment funds, such investments are reflected at fair value as of the end of the reporting period.~~

Investments in operating companies that are held through KKR’s consolidated investment funds are generally classified within private equity investments and investments in working and royalty interests in oil and natural gas producing properties are generally classified as real asset investments.

~~Energy Investments held directly by KKR~~

Certain energy investments are made by KKR directly in working and royalty interests in oil and natural gas producing properties and not through investment funds. Oil and natural gas producing activities are accounted for under the successful efforts method of accounting and such working interests are consolidated based on the proportion of the working interests held by KKR. Accordingly, KKR reflects its proportionate share of the underlying statements of financial condition and statements of operations of the consolidated working interests on a gross basis and changes in the value of these working interests are not reflected as unrealized gains and losses in the consolidated statements of operations. Under the successful efforts method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leasehold costs are charged to expense as incurred.

~~Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred.~~

The capitalized costs of producing oil and natural gas properties are depleted on a field-by-field basis using the units-of production method based on the ratio of current production to estimated total net proved oil, natural gas and natural gas liquid reserves. Proved developed reserves are used in computing depletion rates for drilling and development costs and total proved reserves are used for depletion rates of leasehold costs.

Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves.

Whenever events or changes in circumstances indicate that the carrying amounts of oil and natural gas properties may not be recoverable, KKR evaluates oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based upon estimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flow analysis, with

the carrying value of the related asset. Any impairment in value is recognized when incurred and is recorded in General, Administrative, and Other expense in the condensed consolidated statements of operations.

~~Fair Value Option~~

For certain investments and other financial instruments, KKR has elected the fair value option. Such election is irrevocable and is applied on a financial instrument by financial instrument basis at initial recognition. KKR has elected the fair value option for certain private equity, real assets, credit, investments of consolidated CFEs, equity method and other financial instruments not held through a consolidated investment fund with gains and losses recorded in net income. Accounting for these investments at fair value is consistent with how KKR accounts for its investments held through consolidated investment funds. Changes in the fair value of ~~such instruments are recognized~~a reporting unit is less than its carrying amount, in ~~Net Gains (Losses) from Investment Activities in~~which case the ~~consolidated statements of operations. Interest income on interest bearing credit securities on which~~quantitative test would then be performed. When performing a quantitative impairment test, KKR compares the fair value ~~option has been elected is based on stated coupon rates adjusted for the accretion~~ of ~~purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest Income in the condensed consolidated statements of operations.~~

~~Equity Method~~

For certain investments in entities over which KKR exercises significant influence but which do not meet the requirements for consolidation and for which KKR has not elected the fair value option, KKR uses the equity method of accounting. KKR’s share of earnings (losses) from these investments is reflected as a ~~component of Net Gains (Losses) from Investment Activities in the condensed consolidated statements of operations. For equity method investments, KKR records~~reporting unit with its proportionate share of the investee's earnings or losses based on the most recently available financial information of the investee, which in certain cases may lag the date of KKR's financial statements by no more than three calendar months. As of September 30, 2017, equity method investees for which KKR reports financial results on a quarter lag include Marshall Wace LLP ("Marshall Wace") and USI, Inc. KKR evaluates its equity method investments for which KKR has not elected the fair value option for impairment whenever events or changes in circumstances indicate that the carrying ~~amounts of such investments may not be recoverable.~~

The carrying value of equity method investments in private equity funds, real assets funds and credit funds, which are not consolidated, approximate fair value, because the underlying investments of the unconsolidated investment funds are reported at fair value.

The carrying value of equity method investments in certain operating companies, which KKR is determined to exert significant influence under GAAP and for which KKR has not elected the fair value option, is determined based on the amounts invested by KKR, adjusted for the equity in earnings or losses of the investee allocated based on KKR’s respective ownership percentage, less distributions.

~~Financial Instruments held by Consolidated CFEs~~

~~KKR measures both the financial assets and financial liabilities of the consolidated CFEs in its financial statements using the more observable of~~amount, including goodwill. If the fair value of the ~~financial assets and~~reporting unit is less than its carrying amount, the goodwill impairment loss is equal to the excess of the carrying value over the fair value, limited to the carrying amount of goodwill allocated to that reporting unit. The estimated fair values of the ~~financial liabilities~~reporting units are derived based on valuation techniques KKR believes market participants would use for each respective reporting unit. The estimated fair values are generally determined by utilizing a discounted cash flow methodology and methodologies that incorporate market multiples of certain comparable companies.

KKR tests goodwill for impairment at the reporting unit level, which ~~results in KKR’s consolidated net income (loss) reflecting KKR’s own economic interests in~~is generally at the ~~consolidated CFEs including (i) changes in the fair value~~level of or one level below its reportable segments. Goodwill recorded as a result of the ~~beneficial interests retained by~~acquisition of Global Atlantic has been allocated to the insurance segment, and goodwill recorded as a result of the acquisition of KJRM has been allocated to the asset management segment.

During the third quarter of 2022, KKR performed its annual impairment analysis for the goodwill recorded at the asset management and ~~(ii) beneficial interests~~insurance reporting units.

KKR elected to perform step zero for the purposes of its impairment analysis for the goodwill recorded at the asset management reporting unit. Based upon this assessment, KKR determined that ~~represent compensation for services rendered.~~

~~For the consolidated CLO entities, KKR has determined~~it is more likely than not that the fair value of the reporting unit exceeds its carrying value. Factors considered in the qualitative assessment included macroeconomic conditions, industry and market considerations, cost factors, current and projected financial assets of the consolidated CLOs is more observable than the fair value of the financial liabilities of the consolidated CLOs. As a result, the financial assets of the consolidated CLOs are being measured at fair valueperformance, changes in management or strategy and market capitalization and the ~~financial liabilities are being measured as: (1)~~acquisition of KJRM.

Based on the ~~sum~~qualitative assessment and given the insurance reporting unit has a negative carrying value as of September 30, 2022, the ~~fair value~~goodwill recorded at the insurance reporting unit was not subject to impairment because the amount of goodwill impairment is calculated under ASC 350, Intangibles – Goodwill and Other based on the ~~financial assets and~~excess of the carrying value of ~~any nonfinancial assets that are incidental~~a reporting unit to ~~the operations~~its fair value. The negative carrying value was primarily due to unrealized losses on Global Atlantic's available-for-sale fixed maturity investment portfolio. Global Atlantic does not expect these unrealized losses to be realized as it intends to hold these investments until recovery of the ~~CLOs less (2)~~losses, which may be at maturity, as part of its asset liability cash-flow matching strategy. As of September 30, 2022, the ~~sum~~amount of the fair value of any beneficial interests retained by KKR (other than those that represent compensation for services) and KKR’s carrying value of any beneficial interests that represent compensation for services. The resulting amount isgoodwill allocated to the ~~individual financial liabilities (other~~insurance reporting unit was $501.5 million.

Additionally, during the third quarter of 2022, KKR performed its first annual impairment analysis on KJRM’s investment management contracts recorded at KKR’s asset management business, which were determined to have indefinite useful lives and are not subject to amortization. KKR elected to perform a qualitative assessment for the purposes of its impairment analysis. Based upon this assessment, KKR determined that it is more likely than ~~the beneficial interests retained by KKR).~~

~~For the consolidated CMBS vehicles, KKR has determined~~not that the fair value of the KJRM investment management contracts exceeded their carrying value. Factors considered in the qualitative assessment included macroeconomic conditions, industry and market considerations, cost factors, current and projected financial ~~liabilities~~performance.

For additional details on the Global Atlantic and KJRM acquisitions see Note 3 "Acquisitions."

Table of Contents

Adoption of new accounting pronouncements

The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and related regulatory actions

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss ("NOL") carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the ~~consolidated CMBS vehicles is more observable than the fair value~~five preceding taxable years to generate a refund of previously paid income taxes.

The provisions of the CARES Act, as amended by the Consolidated Appropriations Act, also permit financial ~~assets~~institutions to suspend requirements under U.S. GAAP for loan modifications that otherwise would be categorized as troubled debt restructurings ("TDRs") if (1) the borrower was not more than 30 days past due as of December 31, 2019, and (2) the modifications are related to arrangements that defer or delay the payment of principal or interest, or change the interest rate on the loan, provided the modifications are made between March 1, 2020 and the earlier of 60 days after the end of the ~~consolidated CMBS vehicles. As~~national emergency related to the COVID-19 pandemic or January 1, 2022. Global Atlantic has applied this guidance before the permitted suspension period expired on January 1, 2022 to loan forbearance requests that meet the requirements. The application of this guidance did not have a ~~result,~~material impact on the financial ~~liabilities of~~statements.

See Note 8 "Investments" for additional information on loan modifications.

Simplifying the ~~consolidated CMBS vehicles are being measured at fair value and~~accounting for income taxes

On December 18, 2019, the ~~financial assets are being measured in consolidation as: (1)~~Financial Accounting Standards Board (the "FASB") issued ASU No. 2019-12, which modifies ASC 740 to simplify the ~~sum of~~accounting for income taxes. This guidance eliminates the fair value of the financial liabilities (other than the beneficial interests retained by KKR), the fair value of the beneficial interests retained by KKR and the carrying value of any nonfinancial liabilities that are incidentalexceptions to the ~~operations~~incremental approach, to accounting for basis differences when there are changes in ownership of the CMBS vehicles less (2) the carrying value of any nonfinancial assets that are incidental to the operations of the CMBS vehicles. The resulting amount is allocated to the individual financial assets.

~~Fair Value Measurements~~

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Except for certain of KKR's equity method investments (see "Equity Method" above in this Note 2 "Summary of Significant Accounting Policies") and debt obligations (as described in Note 10 "Debt Obligations"), KKR'sforeign investments, and ~~other~~to interim period tax accounting for year-to-date losses that exceed anticipated losses. The guidance also simplifies the application of tax guidance related to franchise taxes, transactions with government entities, separate financial instruments are recorded at fair value or at amounts whose carrying values approximate fair value. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levelsstatements of ~~management estimation and judgment, the degree of which is dependent on a variety of factors.~~

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

~~Investments and financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:~~

~~Level I -~~ Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. The types of financial instruments included in this category are publicly-listed equities, credit investments and securities sold short.

~~Level II -~~ Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies. The types of financial instruments included in this category are credit investments, investments and debt obligations of consolidated CLOlegal entities convertible debt securities indexed to publicly-listed securities, less liquid and restricted equity securities and certain over-the-counter derivatives such as foreign currency option and forward contracts.

~~Level III -~~ Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments generally included in this category are private portfolio companies, real assets investments, credit investments, equity method investments for which the fair value option was elected and investments and debt obligations of consolidated CMBS entities.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. KKR’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset.

A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not ~~orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value.~~

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by KKR in determining fair value is greatest for instruments categorized in Level III. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels I, II, and III, which KKR recognizes at the beginning of the reporting period.

Investments and other financial instruments that have readily observable market prices (such as those traded on a securities exchange) are stated at the last quoted sales price as of the reporting date. KKR does not adjust the quoted price for these investments, even in situations where KKR holds a large position and a sale could reasonably affect the quoted price.

Management’s determination of fair value is based upon the methodologies and processes described below and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors.

~~Level II Valuation Methodologies~~

~~Credit Investments:~~ These instruments generally have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that KKR and others are willing to pay for an instrument. Ask prices represent the lowest price that KKR and others are willing to accept for an instrument. For financial assets and liabilities whose inputs are based on bid-ask prices obtained from third party pricing services, fair value may not always be a predetermined point in the bid-ask range. KKR’s policy is generally to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets KKR’s best estimate of fair value.

~~Investments and Debt Obligations of Consolidated CLO Vehicles:~~ Investments of consolidated CLO vehicles are reported within Investments of Consolidated CFEs and are valued using the same valuation methodology as described above for credit investments. Under ASU 2014-13, KKR measures CLO debt obligations on the basis of the fair value of the financial assets of the CLO.

~~Securities indexed to publicly-listed securities:~~ The securities are typically valued using standard convertible security pricing models. The key inputs into these models that require some amount of judgment are the credit spreads utilized and the volatility assumed. To the extent the company being valued has other outstanding debt securities that are publicly-traded, the implied credit spread on the company’s other outstanding debt securities would be utilized in the valuation. To the extent the company being valued does not have other outstanding debt securities that are publicly-traded, the credit spread will be estimated based on the implied credit spreads observed in comparable publicly-traded debt securities. In certain cases, an additional spread will be added to reflect an illiquidity discount due to the fact that the security being valued is not publicly-traded. The volatility assumption is based upon the historically observed volatility of the underlying equity security into which the convertible debt security is convertible and/or the volatility implied by the prices of options on the underlying equity security.

~~Restricted Equity Securities:~~ ~~The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction.~~

~~Derivatives:~~ ~~The valuation incorporates observable inputs comprising yield curves, foreign currency rates and credit spreads.~~

~~Level III Valuation Methodologies~~

~~Investments and financial instruments categorized as Level III consist primarily of the following:~~

~~Private Equity Investments:~~ KKR generally employs two valuation methodologies when determining the fair value of a private equity investment. The first methodology is typically a market comparables analysis that considers key financial inputs and recent public and private transactions and other available measures. The second methodology utilized is typically a discounted cash flow analysis, which incorporates significant assumptions and judgments. Estimates of key inputs used in this methodology include the weighted average cost of capital for the investment and assumed inputs used to calculate terminal values, such as exit EBITDA multiples. Other inputs are also used in both methodologies. In addition, when a definitive agreement has been executed to sell an investment, KKR generally considers a significant determinant of fair value to be the consideration to be received by KKR pursuant to the executed definitive agreement.

Upon completion of the valuations conducted using these methodologies, a weighting is ascribed to each method, and an illiquidity discount is typically applied where appropriate. The ultimate fair value recorded for a particular investment will generally be within a range suggested by the two methodologies, except that the value may be higher or lower than such range in the case of investments being sold pursuant to an executed definitive agreement.

When determining the weighting ascribed to each valuation methodology, KKR considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis, the expected hold period and manner of realization for the investment, and in the case of investments being sold pursuant to an executed definitive

agreement, an estimated probability of such sale being completed. These factors can result in different weightings among investments in the portfolio and in certain instances may result in up to a 100% weighting to a single methodology.

When an illiquidity discount is to be applied, KKR seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments. KKR then evaluates such private equity investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include (i) whether KKR is unable to sell the portfolio company or conduct an initial public offering of the portfolio company due to the consent rights of a third party or similar factors, (ii) whether the portfolio company is undergoing significant restructuring activity or similar factors and (iii) characteristics about the portfolio company regarding its size and/or whether the portfolio company is experiencing, or expected to experience, a significant decline in earnings. These factors generally make it less likely that a portfolio company would be sold or publicly offered in the near term at a price indicated by using just a market multiples and/or discounted cash flow analysis, and these factors tend to reduce the number of opportunities to sell an investment and/or increase the time horizon over which an investment may be monetized. Depending on the applicability of these factors, KKR determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time KKR holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by KKR in its valuations.

In the case of growth equity investments, enterprise values may be determined using the market comparables analysis and discounted cash flow analysis described above. A scenario analysis may also be conducted to subject the estimated enterprise values to a downside, base and upside case, which involves significant assumptions and judgments. A milestone analysis may also be conducted to assess the current level of progress towards value drivers that we have determined to be important, which involves significant assumptions and judgments. The enterprise value in each case may then be allocated across the investment’s capital structure to reflect the terms of the security and subjected to probability weightings. In certain cases, the values of growth equity investments may be based on recent or expected financings.

~~Real Assets Investments:~~ Real asset investments in infrastructure, energy and real estate are valued using one or more of the discounted cash flow analysis, market comparables analysis and direct income capitalization, which in each case incorporates significant assumptions and judgments. Infrastructure investments are generally valued using the discounted cash flow analysis. Key inputs used in this methodology can include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as exit EBITDA multiples. Energy investments are generally valued using a discounted cash flow analysis. Key inputs used in this methodology that require estimates include the weighted average cost of capital. In addition, the valuations of energy investments generally incorporate both commodity prices as quoted on indices and long-term commodity price forecasts, which may be substantially different from commodity prices on certain indices for equivalent future dates. Certain energy investments do not include an illiquidity discount. Long-term commodity price forecasts are utilized to capture the value of the investments across a range of commodity prices within the energy investment portfolio associated with future development and to reflect a range of price expectations. Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Key inputs used in such methodologies that require estimates include an unlevered discount rate and current capitalization rate. The valuations of real assets investments also use other inputs.

~~Credit Investments:~~ Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, credit investments are generally valued by KKR based on ranges of valuations determined by an independent valuation firm. Valuation models are based on discounted cash flow analyses, for which the key inputs are determined based on market comparables, which incorporate similar instruments from similar issuers.

~~Other Investments:~~ With respect to other investments including equity method investments for which the fair value election has been made, KKR generally employs the same valuation methodologies as described above for private equity investments when valuing these other investments.

~~Investments and Debt Obligations of Consolidated CMBS Vehicles:~~ Under ASU 2014-13, KKR measures CMBS investments, which are reported within Investments of Consolidated CFEs on the basis of the fair value of the financial liabilities of the CMBS. Debt obligations of consolidated CMBS vehicles are valued based on discounted cash flow analyses. The key input is the expected yield of each CMBS security using both observable and unobservable factors, which may include recently offered or completed trades and published yields of similar securities, security-specific characteristics (e.g. securities ratings issued by nationally recognized statistical rating organizations, credit support by other subordinate securities issued by the CMBS and coupon type) and other characteristics.

Key unobservable inputs that have a significant impact on KKR’s Level III investment valuations as described above are included in Note 5 “Fair Value Measurements.” KKR utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level III investments. These unobservable pricing inputs and assumptions may differ by investment and in the application of KKR’s valuation methodologies. KKR’s reported fair value estimates could vary materially if KKR had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if KKR only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies.

~~Level III Valuation Process~~

The valuation process involved for Level III measurements is completed on a quarterly basis and is designed to subject the valuation of Level III investments to an appropriate level of consistency, oversight, and review.

For Private Markets investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and other factors. These preliminary valuations are reviewed by an independent valuation firm engaged by KKR to perform certain procedures in order to assess the reasonableness of KKR’s valuations annually for all Level III investments in Private Markets and quarterly for investments other than certain investments, which have values less than pre-set value thresholds and which in the aggregate comprise less than 5% of the total value of KKR’s Level III Private Markets investments. The valuations of certain real asset investments are determined solely by an independent valuation firm without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firm relies principally on valuation information available to it as a broker or valuation firm. For credit investments and debt obligations of consolidated CMBS vehicles, an independent valuation firm is generally engaged by KKR with respect to investments classified as Level III. The valuation firm either provides a value, or provides a valuation range from which KKR’s investment professionals select a point in the range to determine the preliminary valuation or performs certain procedures in order to assess the reasonableness and provide positive assurance of KKR’s valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted to their respective valuation sub-committees.

KKR has a global valuation committee comprised of senior employees including investment professionals and professionals from business operations functions, and includes one of KKR's Co-Presidents and Co-Chief Operating Officers and its Chief Financial Officer, General Counsel and Chief Compliance Officer. The global valuation committee is assisted by valuation sub-committees and investment professionals for each business strategy. All preliminary Level III valuations are reviewed and approved by the valuation sub-committees for private equity, real estate, energy and infrastructure, and credit, as applicable. For periods prior to the completion of the PAAMCO Prisma transaction, when Level III valuations were required to be performed on hedge fund investments, a valuation sub-committee for hedge funds reviewed these valuations. The valuation sub-committees are responsible for the review and approval of valuations in their respective business lines on a quarterly basis. The members of the valuation sub-committees are comprised of investment professionals, including the heads of each respective strategy, and professionals from business operations functions such as legal, compliance and finance, who are not primarily responsible for the management of the investments.

The global valuation committee provides general oversight of the valuation sub-committees. The global valuation committee is responsible for coordinating and implementing the firm’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All valuations are subject to approval by the global valuation committee. When valuations are approved by the global valuation committee after reflecting any input from it, the valuations of Level III investments, as well as the valuations of Level Itax, and ~~Level II investments, are presented to the audit committee of the board of directors of the general partner of KKR & Co. L.P. and are then reported to the board of directors.~~

~~Fees and Other~~

~~Fees and other consist primarily of (i) transaction fees earned~~enacted changes in connection with successful investment transactions and from capital markets activities, (ii) management and incentive fees from providing investment management services to unconsolidated funds, CLOs, other vehicles, and separately managed accounts, (iii) monitoring fees from providing services to portfolio companies, (iv) carried interest allocations to general partners of unconsolidated funds, (v) revenue earned by oil and gas-producingtax laws in interim periods. The guidance is effective for public business entities that ~~are consolidated and (vi) consulting fees earned by consolidated entities that employ non-employee operating consultants.~~

~~For~~meet the ~~three and nine months ended September 30, 2017 and 2016, respectively, fees and other consisted~~definition of ~~the following:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Management Fees $ 178,942
$ 152,491
$ 517,393
$ 468,390
Transaction Fees 181,280
113,056
581,410
277,776
Monitoring Fees 41,848
23,367
145,203
99,388
Fee Credits (70,641 ) (46,975 ) (207,396 ) (106,506 )
Carried Interest 337,459
414,864
1,224,235
602,695
Incentive Fees 2,519
3,800
3,637
6,045
Oil and Gas Revenue 12,441
16,191
47,096
47,977
Consulting Fees 9,029
10,262
29,039
30,853
Total Fees and Other $ 692,877
$ 687,056
$ 2,340,617
$ 1,426,618

~~All revenues presented in the table above, except~~an SEC filer for oil and gas revenue and certain transaction fees earned by KKR's Capital Markets business, are earned from KKR investment funds and portfolio companies. Consulting fees are earned by certain consolidated entities that employ non-employee operating consultants from providing advisory and other services to portfolio companies and other companies. These fees are separately negotiated with each company for which services are provided and are not shared with KKR.

~~Management Fees~~

Management fees are recognized in the period during which the related services are performed in accordance with the contractual terms of the related agreement. Management fees earned from private equity funds and certain investment funds are based upon a percentage of capital committed or capital invested during the investment period, and thereafter generally based on remaining invested capital or net asset value. For certain other investment funds, CLOs, and separately managed accounts, management fees are based upon the net asset value, gross assets or as otherwise defined in the respective agreements.

Management fees received from KKR’s consolidated funds and vehicles are eliminated in consolidation. However, because these amounts are funded by, and earned from, noncontrolling interests, KKR’s allocated share of the net income from KKR’s consolidated funds and vehicles is increased by the amount of fees that are eliminated. Accordingly, the elimination of these fees does not have an effect on the net income (loss) attributable to KKR or KKR partners’ capital.

~~Transaction Fees~~

Transaction fees are earned by KKR primarily in connection with successful investment transactions and capital markets activities. Transaction fees are recognized in the period when the transaction closes. Fees are typically paid on or shortly after the closing of a transaction.

In connection with pursuing successful portfolio company investments, KKR receives reimbursement for certain transaction‑related expenses. Transaction‑related expenses, which are reimbursed by third parties, are typically deferred until the transaction is consummated and are recorded in Other Assets on the consolidated statements of financial condition on the date incurred. The costs of successfully completed transactions are borne by the KKR investment funds and included as a component of the investment’s cost basis. Subsequent to closing, investments are recorded at fair value each reporting period as described in the section above titled “Investments”. Upon reimbursement from a third party, the cash receipt is recorded and the deferred amounts are relieved. No fees or expenses are recorded for these reimbursements.

~~Monitoring Fees~~

Monitoring fees are earned by KKR for services provided to portfolio companies and are recognized as services are rendered. These fees are generally paid based on a fixed periodic schedule by the portfolio companies either in advance or in arrears and are separately negotiated for each portfolio company.

In connection with the monitoring of portfolio companies and certain unconsolidated funds, KKR receives reimbursement for certain expenses incurred on behalf of these entities. Costs incurred in monitoring these entities are classified as general,

administrative and other expenses and reimbursements of such costs are classified as monitoring fees. In addition, certain monitoring fee provisions may provide for a termination payment following an initial public offering or change of control. These termination payments are recognized in the period when the related transaction closes.

~~Fee Credits~~

Agreements with the fund investors of certain of its investment funds require KKR to share with these fund investors an agreed upon percentage of certain fees, including monitoring and transaction fees received from portfolio companies (“Fee Credits”). Fund investors receive Fee Credits only with respect to monitoring and transaction fees that are allocable to the fund’s investment in the portfolio company and not, for example, any fees allocable to capital invested through co-investment vehicles. Fee Credits are calculated after deducting certain fund-related expenses and generally amount to 80% for older funds, or 100% for our newer funds, of allocable monitoring and transaction fees after fund-related expenses are recovered, although the actual percentage may vary from fund to fund as well as among different classes of investors within a fund.

~~Carried Interest~~

For certain investment fund structures, carried interest is allocated to the general partner based on cumulative fund performance to date, and where applicable, subject to a preferred return to limited partners. At the end of each reporting period, KKR calculates the carried interest that would be due to KKR for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (a) positive performance resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount due to KKR to be less than the amount previously recognized as revenue, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it is necessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and make the required positive or negative adjustments. KKR ceases to record negative carried interest allocations once previously recognized carried interest allocations for a fund have been fully reversed. KKR is not obligated to pay guaranteed returns or hurdles, and therefore, cannot have negative carried interest over the life of a fund. Accrued but unpaid carried interest as of the reporting date is reflected in Investments in the condensed consolidated statements of financial condition.

~~Incentive Fees~~

Incentive fees earned on the performance of certain hedge fund structures are recognized based on fund performance, subject to the achievement of minimum return levels, and/or high water marks, in accordance with the respective terms set out in each fund’s governing agreements. Incentive fee rates generally range from 5% to 20%. KKR does not record performance‑based incentive fees until the end of each fund’s measurement period (which is generally one year) when the performance‑based incentive fees become fixed and determinable.

~~Oil and Gas Revenue Recognition~~

Oil and gas revenues are recognized when production is sold to a purchaser at fixed or determinable prices, when delivery has occurred and title has transferred and collectability of the revenue is reasonably assured. The oil and gas producing entities consolidated by KKR follow the sales method of accounting for natural gas revenues. Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which the entity is entitled based on KKR’s working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under-produced owners to recoup their entitled share through future production. Under the sales method, no receivables are recorded when these entities have taken less than their share of production and no payables are recorded when it has taken more than its share of production unless reserves are not sufficient.

~~Consulting Fees~~

Consulting fees are earned by certain consolidated entities that employ non‑employee operating consultants from providing advisory and other services to portfolio companies and other companies and are recognized as the services are rendered. These fees are separately negotiated with each company for which services are provided and are not shared with KKR.

~~Recently Issued Accounting Pronouncements~~

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Topic 606 (“ASU 2014-09”) which has subsequently been amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2017-13. These ASUs outline a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Revenue recorded under ASU 2014-09 will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of ASU 2014-09 to annual reporting periodsfiscal years beginning after December 15, ~~2017. Early adoption will be permitted as of annual reporting periods beginning after December 15, 2016,~~2020, including interim ~~reporting~~ periods within those ~~annual periods. A full retrospective or modified retrospective approach is required.~~

~~Carried interest is a capital allocation to~~fiscal years. KKR adopted the general partner based on fund performance, and where applicable, subject to a preferred return to limited partners. KKR has concluded that capital allocation-based carried interest represents income from equity method investments that is not in the scope of ASU 2014-09. Accordingly, in connection with thestandard effective January 1, 2021. The adoption of ~~ASU 2014-09, KKR will account for such carried interest as~~this new guidance did not have a financial instrument under the equity method of accounting within the scope of ASC 323, Investments - Equity Method and Joint Ventures (“ASC 323”). In accordance with ASC 323, KKR will record equity method income (losses) basedmaterial impact on the ~~change in KKR’s proportionate claim on~~financial statements.

Reference rate reform

In March 2020, the ~~net assets~~FASB issued new guidance to ease the accounting implications of the ~~investment fund, including performance-based capital allocations, assuming~~transition away from the ~~investment fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements. As carried interest~~London Interbank Offering Rate ("LIBOR") and ~~the related general partner investments~~other reference rates which are ~~considered~~scheduled to be discontinued, including LIBOR tenors after June 30, 2023. The new guidance offers a ~~single unit~~variety of ~~account under KKR’s new~~optional expedients and exceptions related to accounting ~~policy, the equity method income associated with the general partner interests will be combined with the associated carried interest~~for contract modifications and ~~reported in a single line within the statement of operations. KKR expects~~hedging relationships. These expedients and exceptions apply only to ~~apply this change in accounting on a full retrospective basis. The pattern~~contracts, hedging relationships and ~~amount of recognition under the new policy is not~~other transactions that reference LIBOR or another reference rate expected to ~~differ materially~~be discontinued because of reference rate reform. The new guidance is effective for contract modifications made and hedging relationships existing or entered into from ~~KKR’s existing recognition. As it pertains to incentive fees,~~January 1, 2020 through December 31, 2022. In the first quarter 2022, KKR expects the recognition of incentive fees, which are a form of variable consideration, to be deferred until such fees are no longer subject to significant reversal, which is consistent with KKR’s existing recognition treatment. Additionally, KKR is currently in the process of implementing the new revenue guidance and is continuing to evaluate the effect this guidance will have on other revenue streams. KKR expectselected to adopt the new ~~revenue recognition~~ guidance ~~effective January 1, 2018.~~and, for the modifications that have occurred to date, the adoption of the guidance has not had a material impact on KKR’s consolidated financial statements.

~~Financial Instruments~~Future application of accounting standards

Targeted improvements to the accounting for long-duration contracts

In ~~January 2016,~~August 2018, the FASB issued ~~ASU No. 2016-01, Financial Instruments (Topic 825): Recognition~~new guidance for insurance and ~~Measurement~~reinsurance companies that issue long-duration contracts such as life insurance and annuities. The objective of ~~Financial Assets~~this guidance is to improve, simplify and ~~Liabilities (“ASU 2016-01”~~enhance the financial reporting of long-duration contracts by providing financial statement users with useful information in a timely and transparent manner. The primary changes include:

(1) more timely recognition of assumption changes in the liability for future policy benefits and use of a current rate for the discounting of future cash flows – The assumptions used to calculate the liability for future policy benefits on traditional and limited-payment contracts are required to be reviewed and updated periodically (versus set at inception and not changed under

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the current guidance). Cash flow assumptions are required to be reviewed at least annually with the impact recognized in net income. The guidance also prescribes that the discount rate assumption should be based on a current upper-medium grade (i.e., low credit risk) fixed income instrument yield (e.g., a single A credit-rating) with the impact recognized in other comprehensive income ("OCI").

(2) standardization and improvement in the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts– The ~~amended~~new guidance ~~(i) requires equity investments (except those accounted for under~~creates a new category of benefits referred to as market risk benefits, which are contracts or contract features that provide both protection to the ~~equity method of accounting or those that result in consolidation of~~policyholder from capital market risk and expose the ~~investee)~~insurer to other-than-nominal capital market risk. Market risk benefits are required to be measured at fair value with ~~changes~~the change in fair value recognized in net ~~income; (ii) eliminates~~income, except for changes in the ~~requirement to disclose~~entity’s non-performance risk, which is recognized in OCI.

(3) simplification of the ~~method(s)~~amortization of deferred acquisition costs - Deferred policy acquisition costs ("DAC") and ~~significant assumptions used to estimate the fair value that is currently~~other similar actuarial balances (e.g., deferred sales inducements) for life and annuity contracts are required to be ~~disclosed for financial instruments measured at fair value; (iii) requires an entity to present separately in other comprehensive income~~amortized on a constant basis over the ~~portion~~term of the ~~total change~~related contracts.

(4) enhanced disclosures– Additional disclosures are required including disaggregated roll-forwards of significant insurance liabilities as well as disclosures about significant inputs, judgments, assumptions and methods used in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01measurement.

The guidance is effective for fiscal years beginning after December 15, ~~2017,~~2022, including interim periods within those fiscal years. ~~The amended guidance should be applied by means of a cumulative-effect adjustment~~Early adoption is permitted. For changes related to the ~~balance sheet~~liability for future policy benefits and deferred acquisition costs, the new guidance requires adoption using a modified retrospective approach upon transition with an option to elect a retrospective approach. For changes related to market risk benefits, the new guidance requires a retrospective approach.

KKR intends to implement this guidance using the retrospective approach for the liability for future policy benefits, deferred acquisition costs and market risk benefits with an adoption date of January 1, 2023, and a transition date of January 1, 2021. KKR has completed the design, planning, and build phases of its implementation effort and is performing end-to-end testing activities. KKR has established a governance framework to manage the implementation activities and support timely application of the guidance. KKR has made progress in the following areas:

•High level impact assessment;

•Identification of key accounting policy decisions;

•Evaluation and selection of actuarial system solutions;

•Development of detailed business requirements document inclusive of roll-forward disclosures;

•Infrastructure build and data mapping;

•Actuarial model development for the liability for future policy benefits, deferred acquisition costs and roll forwards; and

•Modeling of market risk benefits.

KKR does not expect the adoption of this guidance to have a material effect on retained earnings and accumulated other comprehensive income (loss) as of our transition date (applied retrospectively to the beginning of the fiscal year of adoption. The amended guidance related to equity securities without readily determinable fair values (including the disclosure requirements) should be applied prospectively to equity investments that exist as of theacquisition date of ~~adoption.~~February 1, 2021) due to the purchase accounting associated with KKR's acquisition of Global Atlantic on February 1, 2021. However, KKR ~~is currently evaluating~~continues to evaluate the impact of this guidance on the acquisition date opening balance sheet and periods after the transition date. The new guidance is expected to increase volatility in our financial ~~statements.~~statements primarily due to the requirement to measure market risk benefits at fair value, which is recorded in net income, except for changes in value attributable to changes in an entity’s non-performance risk, which is recognized in OCI. In addition, the new guidance is expected to have a significant impact on KKR’s systems, processes and controls.

Business combinations - Accounting for contract assets and contract liabilities from contracts with customers

~~Leases~~

In ~~February 2016,~~October 2021, the FASB issued ~~ASU No. 2016-02, Leases (Topic 842). The~~new guidance ~~requires the recognition of lease~~(ASU 2021-08) to add contract assets and ~~lease~~contract liabilities ~~for those leases classified as operating leases under previous GAAP. The guidance retains~~from contracts with customers acquired in a ~~distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar~~business combination to the ~~classification criteria~~list of exceptions to the fair value recognition and measurement principles that apply to business combinations, and instead require them to be accounted for ~~distinguishing between capital leases and operating leases under previous GAAP.~~in accordance with revenue recognition guidance. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not changed significantly from previous GAAP. For operating leases, a lessee is required to do the following: (a) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the Statement of Financial Condition, (b) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis, and (c) classify all cash payments within operating activities in the statement of cash flows. Thenew guidance is effective for ~~fiscal periods beginning after December 15, 2018. Early application is~~public entities on January 1, 2023 and applied prospectively,

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with early adoption permitted. KKR is currently evaluating the impact of this ~~guidance~~accounting standard update on ~~the~~its consolidated financial statements.

~~Investments~~Troubled debt restructurings and vintage disclosures

In March ~~2016,~~2022, the FASB issued ~~ASU No. 2016-07, Investments - Equity Method~~new guidance regarding the modification of receivables, which affects their recognition and ~~Joint Ventures (Topic 323): Simplifying~~measurement. The guidance eliminates the ~~Transition~~concept of troubled debt restructurings and instead requires all modifications to be analyzed to determine whether they result in a new receivable or a continuation of an existing receivable. The guidance also makes related updates to the ~~Equity Method~~measurement of ~~Accounting ("ASU 2016-07")~~expected credit losses for receivables. The new guidance requires additional disclosures for receivable modifications involving borrowers experiencing financial difficulty as well as disclosure of loan charge-offs by origination year (vintage). For entities that have already adopted ASC 326 (addressing credit losses on financial instruments), ~~which simplifies~~ the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. ASU 2016-07guidance is effective ~~for all entities~~ for fiscal years beginning after December 15, ~~2016,~~2022, including interim ~~periods~~period within those fiscal years, with early adoption permitted for all entities. Entities are required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the ASU’s effective date. Additional transition disclosures are not required upon adoption. This guidance has been adopted as of January 1, 2017 and did not have a material impact on KKR's results of operations or financial condition.

~~Equity-Based Compensation~~

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Shared-Based Payment Accounting ("ASU 2016-09"), which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. KKR adopted ASU 2016-09 on January 1, 2017 and will apply prospective application. In connection with this adoption, the most significant impacts to KKR relate to the following: (i) with respect to the tax impact of equity based compensation charges, KKR has accounted for the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes as an income tax expense or benefit in the statement of operations, (ii) KKR has classified this difference with other income tax cash flows as an operating activity in the statement of cash flows and (iii) KKR has made an election to continue to estimate the number of equity compensation awards that are expected to vest, net of forfeitures, over the life of an equity award and not account for forfeitures as they occur.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"), which amends the scope of modification accounting for share-based payment arrangements. ASU 2017-09 provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. ASU 2017-09 is effective for fiscal years and interim periods beginning after December 15, 2017.years. Early adoption is permitted. KKR is currently evaluating the impact of this ~~guidance~~accounting standard update on ~~the~~its consolidated financial statements.

~~Cash Flow Classification~~Fair value measurement of equity security subject to contractual sale restriction

In ~~August 2016,~~June 2022, the FASB issued ASU ~~No. 2016-15, Statement~~2022-03, ASC Subtopic 820 “Fair Value Measurement of ~~Cash Flows (Topic 230): Classification~~Equity Securities Subject to Contractual Sale Restrictions”. According to ASU 2022-03, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value and an entity is not allowed to recognize a contractual sale restriction as a separate unit of Certain Cash Receipts and Cash Payments, which amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amended guidance adds or clarifies guidance on eight cash flow matters: (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. Theaccount.

~~guidance in the~~ ASU 2022-03 is effective for fiscal years beginning after December 15, ~~2017, including~~2023, and interim periods within those fiscal years. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable.permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. KKR is currently evaluating the impact of this ~~guidance~~accounting standard update on ~~the~~its consolidated financial statements.

~~In November 2016, the FASB issued ASU No. 2016-18, Statement~~

Table of ~~Cash Flows (Topic 230): Restricted Cash, which amends the guidance~~Contents

3. ACQUISITIONS

Acquisition of Mitsubishi Corp-UBS Realty Inc.

On March 17, 2022, KKR entered into an agreement to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The amended guidance requires the following: (i) restricted cash and restricted cash equivalents should be included in the cash and cash-equivalents balances in the statement of cash flows; (ii) changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows; (iii) a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents; and (iv) the natureacquire all of the ~~restrictions must be disclosed for material restricted cash~~outstanding shares of Mitsubishi Corp.-UBS Realty Inc. (“MC-UBSR”) from Mitsubishi Corporation and ~~restricted cash equivalents amounts. The guidance~~UBS Asset Management in ~~this ASU~~an all-cash transaction valued at ¥227 billion (which was approximately $1.7 billion at such time) (the “KJRM Acquisition”). On April 28, 2022, KKR completed the acquisition of MC-UBSR, which changed its name to KJR Management ("KJRM"). KJRM is effective for fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented. KKR is currently evaluating the impact of this guidance on the financial statements.

~~Income Taxes~~

~~In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740)~~a real estate asset manager in Japan that manages two Tokyo Stock Exchange-listed real estate investment trusts ("REITs"): ~~Intra-entity Transfers of Assets Other Than Inventory ("ASU 2016-16"~~Japan Metropolitan Fund Investment Corporation (“JMF”), which ~~removed~~is primarily focused on retail, offices, hotels and other assets located in urban areas in Japan, and Industrial & Infrastructure Fund Investment Corporation (“IIF”), which is primarily focused on industrial and infrastructure properties in Japan. The KJRM Acquisition was accounted for as a business combination under FASB Accounting Standards Codification Topic 805, Business Combinations ("Topic 805").

KKR plans to continue the ~~prohibition~~existing strategy and business of KJRM. The acquisition is expected to enhance KJRM’s leading real estate asset management business with potential opportunities for organic and inorganic growth and scale in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. KKR is currently evaluating the impact of this guidance on the financial statements.Japan.

~~Clarifying the Definition of a Business~~

In ~~January 2017,~~connection with the ~~FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition~~acquisition, KKR allocated a provisional amount of ~~a Business (“ASU 2017-01”). This guidance amends the definition of a business and provides a threshold which must be considered~~$1,733 million to determine whether a transaction is an asset acquisition or a business combination. ASU 2017-01 is effective for fiscal years and interim periods beginning after December 15, 2017. Early adoption is permitted. KKR is currently evaluating the impact of this guidance on the financial statements.

~~Goodwill~~

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance simplifies the accounting for goodwill impairments by eliminating the second step from the goodwill impairment test. The ASU requires goodwill impairments to be measured on the basis of the fair value of ~~a reporting unit relative~~KJRM’s investment management contracts and recognized approximately $530 million of deferred tax liabilities resulting from the difference in book and tax basis of such intangible assets as of the acquisition date. Intangibles are based upon third-party valuations using the excess earnings method, which derives value based on the present value of the cash flow attributable to the ~~reporting unit’s carrying amount rather than~~investment management contracts, less returns for contributory assets. The significant assumptions used in the valuation of the intangible assets acquired are unobservable and include (i) the asset's estimated useful life, (ii) the projected assets under management, (iii) the projected revenue growth rates, and (iv) the discount rate.

KJRM’s investment management contracts were determined to have indefinite useful lives at the time of the KJRM Acquisition and are not subject to amortization. The assignment of indefinite lives to such investment management contracts is primarily based upon (i) the assumption that there is no foreseeable limit on the contract period to manage KJRM’s listed REITs; (ii) KKR expects to have the ability to continue to operate these products indefinitely; (iii) the products have multiple investors and are not reliant on a single investor or small group of investors for their continued operation; (iv) current competitive factors and economic conditions do not indicate a finite life; and (v) there is a high likelihood of continued renewal based on historical experience.

The carrying value of goodwill associated with the KJRM Acquisition was $509 million as of the acquisition date and is entirely allocated to the asset management segment. The goodwill is attributable primarily to the assembled workforce of KJRM and expected synergies. The goodwill recorded is not expected to be deductible for tax purposes.

The fair value of assets acquired and liabilities assumed represent a provisional allocation as our evaluation of facts and circumstances available as of April 28, 2022 is ongoing. Pursuant to Topic 805, the financial statements will not be retrospectively adjusted for any changes to the provisional values of assets acquired and liabilities assumed that occur in subsequent periods. Rather, KKR will recognize any adjustments as we obtain information not available as of the completion of this preliminary fair value calculation. KKR will also be required to record, in the same period as the financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. KKR expects to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

Revenues and earnings for three and nine months ended September 30, 2022 attributable to KJRM after the completion of the KJRM Acquisition were determined to be immaterial. Pro forma results of operations would not be materially different as a result of the acquisition and therefore are not presented.

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Acquisition of Global Atlantic

On July 7, 2020, indirect subsidiaries of KKR & Co. Inc., namely Magnolia Parent LLC and Magnolia Merger Sub Limited, entered into an Agreement and Plan of Merger (the “GA Merger Agreement”) with Global Atlantic Financial Group Limited ("GAFG"), Global Atlantic Financial Life Limited ("GAFLL"), LAMC LP, and Goldman Sachs & Co. LLC, solely in its capacity as the Equity Representative (as defined in the GA Merger Agreement). Pursuant to the GA Merger Agreement, at the closing of the acquisition of Global Atlantic by KKR (the "GA Acquisition"), among other things, Global Atlantic Financial Group Limited continued as the surviving entity in its merger with Magnolia Merger Sub Limited and became a direct subsidiary of Magnolia Parent LLC, which subsequently changed its name to The Global Atlantic Financial Group LLC (“TGAFG”).

On February 1, 2021 (the “GA Acquisition Date”), the GA Acquisition was completed, and KKR acquired all of the voting interests in Global Atlantic and an economic ownership of 61.1% of Global Atlantic prior to certain post-closing purchase price adjustments discussed below and after taking into account GA Rollover Investors’ and GA Co-Investors’ (each as defined below) equity ownership of Global Atlantic. In addition to entering into the retirement and life insurance business through KKR's indirect ownership of Global Atlantic's insurance companies, KKR's flagship investment management company became the investment adviser for Global Atlantic’s insurance companies, which increases KKR’s presence in the insurance community. Furthermore, the transaction allows Global Atlantic to gain access to KKR’s origination and asset management capabilities.

Under the GA Merger Agreement, KKR agreed to pay former shareholders of Global Atlantic Financial Group Limited an amount in cash equal to 1.0x U.S. GAAP Shareholders’ Equity of Global Atlantic Financial Group Limited, excluding Accumulated Other Comprehensive Income and subject to certain other purchase price adjustments ("GA Book Value," determined as $4.7 billion as of February 1, 2021 for purposes of the purchase price determination). The amount of consideration payable by KKR was reduced by the amount of equity rolled over by certain former shareholders of Global Atlantic Financial Group Limited who elected to continue their equity ownership in Global Atlantic at closing ("GA Rollover Investors"). In addition, KKR syndicated equity interests in Global Atlantic to minority co-investors ("GA Co-Investors"), which also had the effect of reducing the amount of consideration payable by KKR at closing. The purchase price is as follows (in thousands):


Cash consideration paid by KKR	$	2,914,455
GA Co-Investors and GA Rollover Investors	1,824,239
Total Purchase Price	$	4,738,694

The purchase price paid at closing was subject to certain post-closing adjustments, which were finalized in June 2021, and KKR and certain GA Co-Investors paid incremental amounts of $55 million and $3 million, respectively ($58 million in total). As a result of the post-closing adjustments, KKR's economic ownership of Global Atlantic increased from 61.1% at closing to 61.5%.

The GA Acquisition was accounted for as a business combination under Topic 805. Goodwill of $497.1 million has been recorded based on the amount that the purchase price exceeds the fair value of the net assets acquired less the amounts attributable to noncontrolling interests. Goodwill is primarily attributable to the scale, skill sets, operations, and synergies that can be achieved subsequent to the GA Acquisition. The goodwill recorded is not expected to be deductible for tax purposes and it has been allocated to the insurance segment.

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The following table summarizes the fair value amounts recognized for the assets acquired and liabilities assumed and resulting goodwill as of the GA Acquisition Date:


	February 1, 2021
($ in thousands)
Consideration Transferred
Cash Consideration paid by KKR	$	2,914,455
GA Co-Investors	978,296
GA Rollover Investors	845,943
Settlement of pre-existing relationships(1)	(60,200)
Total Consideration Transferred(2)	$	4,678,494

Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
Cash, Cash Equivalents and Restricted Cash	$	3,358,772

Investments	99,544,755
Reinsurance Recoverable	15,753,030
Insurance Intangible Assets	1,024,520
Other Assets(3)	3,325,652
Separate Account Assets	5,371,060
Policy Liabilities	(100,374,765)
Debt Obligations	(1,450,920)
Funds Withheld Payable at Interest	(13,800,969)
Accrued Expenses and Other Liabilities	(2,735,811)
Reinsurance Liabilities	(180,573)
Separate Account Liabilities	(5,371,060)
Total Identifiable Net Assets	4,463,691
Redeemable non-controlling interests(4)	(91,845)
Other Noncontrolling interests(4)	(190,405)
Goodwill	$	497,053

(1) Represents KKR debt obligations held by Global Atlantic at the GA Acquisition Date.

(2) At the GA Acquisition Date, the transaction was funded with a combination of (i) cash on hand by KKR, (ii) cash proceeds from syndication of the equity interests in Global Atlantic to minority co-investors and equity rolled over from certain former Global Atlantic shareholders. The equity held by GA co-investors and rollover investors are presented as noncontrolling interests in the financial statements. Acquisition of Global Atlantic, Net of Cash Acquired in the consolidated statements of cash flows represents the Total Consideration Transferred (excluding GA Rollover Investors) net of acquired Cash and Cash Equivalents and Restricted Cash and Cash Equivalents.

(3) Includes $1.0 billion of deferred tax assets recognized from the step-up in basis under purchase accounting.

(4) Represents the fair value of Noncontrolling Interests in consolidated renewable energy entities held by Global Atlantic on the GA Acquisition Date. Such interests do not represent ownership interests held by GA Rollover Investors or GA Co-Investors in Global Atlantic's equity.

Measurement Period Adjustments

KKR finalized the valuation of the acquired assets and assumed liabilities in December 2021. During the second quarter of 2021, KKR recognized measurement period adjustments to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period adjustments also reflected the increase in the total consideration transferred of $58 million as a result of final purchase price adjustments. Measurement period adjustments consist primarily of a $50 million increase in the value of distribution agreements acquired, a $63 million increase in policy liabilities, a $25 million increase in investments, and a $46 million increase in goodwill. The related impact to net income that would have been recognized in previous periods if the adjustments were recognized as of the GA Acquisition Date was not material to the consolidated financial statements.

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KKR performed a valuation of the acquired investments, policy liabilities, value of business acquired ("VOBA"), other identifiable intangibles, and funds withheld at interest payables and receivables. The following is a summary of significant inputs to the valuation:

Investments

Global Atlantic’s investment portfolio primarily consists of fixed maturity securities, mortgage and other loan receivables, equity securities, and investments in real assets such as renewable energy and transportation assets. All of the assets included within the investment portfolio were measured and reported at their fair values on the GA Acquisition Date consistent with the valuation methodologies discussed in Note 2 "Summary of Significant Accounting Policies" in audited financial statements included in KKR & Co. Inc.'s Annual Report. As a result, the cost basis of each respective investment was reset to equal fair value on the GA Acquisition Date.

Policy liabilities

Policy liabilities were remeasured based on generally accepted actuarial methods and reported at their fair values on the GA Acquisition Date. Assumptions for future mortality, persistency, policyholder behavior, expenses, investment return and other actuarial factors were based on an evaluation of Global Atlantic’s recent experience, industry experience, and anticipated future trends. These assumptions are intended to be representative of market assumptions used by buyers and sellers in similar transactions. The approach employed to develop these projection assumptions is described below:

•Discount rates used to calculate fair value ranged from 11% to 15%, depending on product;

•Mortality and persistency assumptions are based on both Global Atlantic and general industry experience;

•Expenses were projected reflecting Global Atlantic’s unit expenses with an allocation of a portion of overhead expenses to in-force business;

•Future investment income reflects a runoff of the existing asset portfolios and reinvestment strategies based on Global Atlantic’s assumptions for asset yield, quality, and maturity. The projections are based on forward interest rates implied ~~amount~~by the Treasury yield curve. Credit rates reflect Global Atlantic’s target spreads;

•Separate account and index account growth rates are based on long-term return expectations for different fund types and on the underlying mix of ~~goodwill relative~~funds; and

•Statutory reserves underlying the valuation reflect Global Atlantic’s current reserving methodologies.

Value of business acquired ("VOBA")

VOBA represents the estimated fair value of future net cash flows from in-force life and annuity insurance contracts acquired at the GA Acquisition Date.

Other identifiable intangible assets

Other identifiable intangible assets represent distribution relationships, trade names and state insurance licenses. The distribution relationships were valued using the excess earnings method, which derives value based on the present value of the cash flow attributable to the ~~goodwill balance~~distribution relationships, less returns for contributory assets. The trade name intangible asset represents the Global Atlantic trade name, and was valued using the relief-from-royalty method giving consideration to publicly available third-party trade name royalty rates as well as expected premiums generated by the use of the ~~reporting unit.~~trade name over its anticipated life. The ~~ASU also (i) clarifies~~state insurance licenses represent Global Atlantic’s jurisdictional insurance licenses, which include 52 insurance licenses, encompassing all 50 U.S. states, the ~~requirements~~District of Columbia, and the U.S. Virgin Islands. They were protected through registration and were valued using the market approach based on third-party market transactions from which the prices paid for ~~excluding~~state insurance licenses could be derived.

Funds withheld at interest receivables and ~~allocating foreign currency translation~~payables

Funds withheld at interest receivables and payables were remeasured at fair value based on the fair value of assets held in the underlying portfolios supporting those receivables or payables.

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The fair value and weighted average estimated useful lives of Value of Business Acquired and Other Identifiable Intangible Assets acquired in the GA Acquisition consist of the following (dollars in thousands):


	Fair Value		Average Useful Life
	($ in thousands)		(in years)
VOBA (included within Insurance Intangible Assets)	$	1,024,520	28.6
Negative VOBA (included within Policy Liabilities)	(1,273,414)		22.2
Total VOBA	$	(248,894)

Value of Distribution Agreements Acquired	$	250,000	16 to 21
Trade Names	50,000		15 to 18
State Insurance Licenses	10,000		Indefinite
Total Identifiable Other Intangible Assets (included within Other Assets)	$	310,000

As of the GA Acquisition Date, Global Atlantic's financial results are reflected in these financial statements. Global Atlantic's revenues and net income of $2.2 billion and $185.8 million, and $4.5 billion and $239.7 million, are included in the consolidated statement of operations for the three and nine months ended September 30, 2021, respectively.

Pro- Forma Financial Information

Unaudited pro-forma financial information for the three and nine months ended September 30, 2021 is presented below. Pro-forma financial information presented does not include adjustments to ~~reporting units related to an entity’s testing of reporting units for goodwill impairment;~~reflect any potential revenue synergies or cost savings that may be achievable in connection with the GA Acquisition and ~~(ii) clarifies that an entity should consider income tax effects from any tax deductible goodwill on~~assume the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The guidance is effective for fiscal periods beginning after December 15, 2019. Early adoption is allowed for entitiesGA Acquisition occurred as of January 1, ~~2017,~~2020. The unaudited pro forma financial information is presented for ~~annual~~informational purposes only, and ~~any interim impairment tests occurring after~~is not necessarily indicative of future operations or results had the GA Acquisition been completed as of January 1, ~~2017. KKR is currently evaluating the impact of this guidance on the financial statements.~~2020.

~~Other Income~~


	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021
Total Revenues	$	4,483,365	$	12,696,730
Net Income Attributable to KKR & Co. Inc. Common Stockholders	$	1,131,354	$	4,147,132

In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended). The effective date of the new guidance is aligned with the requirements in the new revenue standard, which is effective for annual and interim reporting periods beginning after December 15, 2017. The ASU allows an entity to use a full or modified retrospective adoption approach. KKR is currently evaluating the impact of this guidance on the financial statements.

~~Premium Amortization on Purchased Callable Debt Securities~~

In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). This guidance amends the amortization period forAmounts above reflect certain ~~purchased callable debt securities held at a premium. The guidance requires the premium to be amortized~~pro forma adjustments that were directly attributable to the ~~earliest call date. The guidance does not require an accounting change for securities held at a discount;~~GA Acquisition. These adjustments include the ~~discount continues~~following:

•adjustment to ~~be amortized to maturity. ASU 2017-08 is effective for fiscal years and interim periods beginning after December 15, 2018. Early adoption is permitted~~reflect the elimination of historical amortization of Global Atlantic’s intangibles and the ~~guidance when adopted should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings~~additional amortization of intangibles measured at fair value as of the ~~beginning~~GA Acquisition Date;

•adjustment to reflect the prospective reclassification from accumulated other comprehensive earnings of the ~~period of adoption. KKR is currently evaluating the impact of this guidance~~unrealized gains on available-for-sale securities to a premium which will be amortized into income based on the ~~financial statements.~~expected life of the investment securities;

•adjustments to reflect the KKR pro-rata economic ownership as well as financing consummated by KKR to complete the acquisition; and

•adjustments to reflect the adoption of ASC 326 "Financial Instruments - Credit Losses" in 2020 by Global Atlantic.

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4. REVENUES - ASSET MANAGEMENT

For the three and nine months ended September 30, 2022 and 2021, respectively, Asset Management revenues consisted of the following:


	Three Months Ended September 30,			Nine Months Ended September 30,
		2022		2021		2022		2021
Management Fees		$	419,876	$	349,249	$	1,236,151	$	931,624
Fee Credits		(136,996)		(164,720)		(388,315)		(322,402)
Transaction Fees		328,483		437,619		973,310		978,399
Monitoring Fees		29,683		29,823		99,605		98,164
Incentive Fees		1,402		6,962		15,600		13,092
Expense Reimbursements		10,733		34,857		77,612		122,642

Consulting Fees		20,748		25,178		55,741		66,286
Total Fees and Other		673,929		718,968		2,069,704		1,887,805

Carried Interest		(477,681)		1,216,433		(1,999,678)		4,553,527
General Partner Capital Interest		(95,182)		310,234		(442,402)		1,183,180
Total Capital Allocation-Based Income (Loss)		(572,863)		1,526,667		(2,442,080)		5,736,707

Total Revenues - Asset Management		$	101,066	$	2,245,635	$	(372,376)	$	7,624,512

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5. NET GAINS (LOSSES) FROM INVESTMENT ACTIVITIES - ASSET MANAGEMENT

Net Gains (Losses) from Investment Activities in the ~~condensed~~ consolidated statements of operations consist primarily of the realized and unrealized gains and losses on investments (including foreign exchange gains and losses attributable to foreign denominated investments and related activities) and other financial instruments, including those for which the fair value option has been elected. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments during a period. Upon disposition of an investment or financial instrument, previously recognized unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following ~~tables summarize~~table summarizes total Net Gains (Losses) from Investment ~~Activities~~Activities:


	Three Months Ended September 30, 2022						Three Months Ended September 30, 2021
	Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Total		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Total
Private Equity (1)	$	265,176	$	(263,720)	$	1,456	$	296,410	$	647,448	$	943,858
Credit (1)	(91,950)		(131,594)		(223,544)		74,945		(117,354)		(42,409)
Investments of Consolidated CFEs (1)	(29,402)		30,765		1,363		23,198		(15,013)		8,185
Real Assets (1)	23,210		(266,029)		(242,819)		61,807		575,891		637,698
Equity Method - Other (1)	40,696		(166,024)		(125,328)		311,420		(137,281)		174,139
Other Investments (1)	(18,159)		(332,946)		(351,105)		(118,844)		199,961		81,117
Foreign Exchange Forward Contracts and Options (2)	190,047		403,719		593,766		(2,777)		323,916		321,139
Securities Sold Short (2)	23,523		78		23,601		(21,031)		2,579		(18,452)
Other Derivatives (2)	(13,905)		18,687		4,782		(17,687)		6,577		(11,110)
Debt Obligations and Other (3)	(60,242)		(1,110)		(61,352)		2,190		20,292		22,482
Net Gains (Losses) From Investment Activities	$	328,994	$	(708,174)	$	(379,180)	$	609,631	$	1,507,016	$	2,116,647






	Nine Months Ended September 30, 2022						Nine Months Ended September 30, 2021
	Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Total		Net Realized Gains (Losses)		Net Unrealized Gains (Losses)		Total
Private Equity (1)	$	689,141	$	(2,192,262)	$	(1,503,121)	$	1,322,179	$	3,479,827	$	4,802,006
Credit (1)	(145,416)		(630,558)		(775,974)		130,191		(11,864)		118,327
Investments of Consolidated CFEs (1)	(26,248)		(1,713,464)		(1,739,712)		44,954		173,775		218,729
Real Assets (1)	283,773		958,473		1,242,246		148,581		1,243,725		1,392,306
Equity Method - Other (1)	94,989		(484,292)		(389,303)		410,491		305,085		715,576
Other Investments (1)	18,744		(700,176)		(681,432)		(354,349)		908,906		554,557
Foreign Exchange Forward Contracts and Options (2)	331,889		485,642		817,531		(29,727)		282,030		252,303
Securities Sold Short (2)	83,075		20,422		103,497		36,517		21,313		57,830
Other Derivatives (2)	(30,527)		61,015		30,488		(125,376)		83,805		(41,571)
Debt Obligations and Other (3)	(140,838)		1,686,230		1,545,392		(50,505)		13,342		(37,163)
Net Gains (Losses) From Investment Activities	$	1,158,582	$	(2,508,970)	$	(1,350,388)	$	1,532,956	$	6,499,944	$	8,032,900

(1)See Note 8 "Investments."

(2)See Note 9 "Derivatives" and Note 15 "Other Assets and Accrued Expenses and Other Liabilities."

(3)See Note 17 "Debt Obligations."

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6. NET INVESTMENT INCOME - INSURANCE

Net investment income for ~~the three~~Global Atlantic is comprised primarily of interest income, including amortization of premiums and ~~nine months ended September 30, 2017~~accretion of discounts, based on yields that change due to expectations in projected cash flows, dividend income from common and ~~2016, respectively:~~preferred stock, earnings from investments accounted for under equity method accounting, and lease income on other investments.

The components of net investment income were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Fixed maturity securities – interest and other income	$	820,530	$	632,314	$	2,257,169	$	1,512,377
Mortgage and other loan receivables	411,215		247,917		1,108,919		617,334
Investments in transportation and other leased assets	73,192		56,317		207,585		146,004
Investments in renewable energy	70,300		62,468		139,937		96,400
Investments in real estate	41,261		4,501		75,118		10,028
Short-term and other investment income	33,669		23,285		84,166		41,349
Income assumed from funds withheld receivable at interest	24,104		24,441		67,206		57,554
Policy loans	7,011		3,203		21,977		22,138
Equity securities – dividends and other income	—		764		—		23
Income ceded to funds withheld payable at interest	(238,817)		(160,073)		(657,280)		(273,611)
Gross investment income	1,242,465		895,137		3,304,797		2,229,596
Less investment expenses:
Investment management and administration	87,282		88,789		296,069		190,458
Transportation and renewable energy asset depreciation and maintenance	54,233		47,331		157,042		117,749
Interest expense on derivative collateral and repurchase agreements	6,073		636		12,315		1,730
Net investment income	$	1,094,877	$	758,381	$	2,839,371	$	1,919,659

Table of Contents

Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016

Net Realized
Gains (Losses)

Net Unrealized
Gains (Losses)
Total Net Realized
Gains (Losses) Net Unrealized
Gains (Losses) Total
Private Equity ⁽¹⁾
$ 74,483
$ 77,299
$ 151,782
$ 172,390
$ 37,465
$ 209,855
Credit and Other ⁽¹⁾
(46,946 ) 35,882
(11,064 ) (262,826 ) 256,137
(6,689 )
Investments of Consolidated CFEs ⁽¹⁾
(83,797 ) 43,905
(39,892 ) (18,697 ) 40,049
21,352
Real Assets ⁽¹⁾
24,479
56,217
80,696
28,803
70,700
99,503
Foreign Exchange Forward Contracts
and Options ⁽²⁾
(26,043 ) (69,046 ) (95,089 ) 41,254
(63,997 ) (22,743 )
Securities Sold Short ⁽²⁾
(7,785 ) 14,369
6,584
232,448
29,545
261,993
Other Derivatives ⁽²⁾
(148 ) (5,049 ) (5,197 ) (17,224 ) 14,472
(2,752 )
Debt Obligations and Other ⁽³⁾
18,343
2,616
20,959
112,469
62,156
174,625
Net Gains (Losses) From Investment
Activities $ (47,414 ) $ 156,193
$ 108,779
$ 288,617
$ 446,527
$ 735,144

Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016
Net Realized
Gains (Losses) Net Unrealized
Gains (Losses) Total Net Realized
Gains (Losses) Net Unrealized
Gains (Losses) Total
Private Equity ⁽¹⁾
$ 202,549
$ 372,335
$ 574,884
$ 370,266
$ (412,303 ) $ (42,037 )
Credit and Other ⁽¹⁾
(633,145 ) 740,499
107,354
(284,992 ) (104,028 ) (389,020 )
Investments of Consolidated CFEs ⁽¹⁾
(88,677 ) 71,952
(16,725 ) (239,502 ) 547,099
307,597
Real Assets ⁽¹⁾
(34,208 ) 233,608
199,400
41,158
66,927
108,085
Foreign Exchange Forward Contracts
and Options ⁽²⁾
(7,975 ) (311,427 ) (319,402 ) 41,829
(75,398 ) (33,569 )
Securities Sold Short ⁽²⁾
497,926
66,037
563,963
231,474
(10,343 ) 221,131
Other Derivatives ⁽²⁾
(6,027 ) (10,602 ) (16,629 ) (35,613 ) 40,081
4,468
Debt Obligations and Other ⁽³⁾
66,895
(74,085 ) (7,190 ) 229,485
(397,051 ) (167,566 )
Net Gains (Losses) From Investment
Activities $ (2,662 ) $ 1,088,317
$ 1,085,655
$ 354,105
$ (345,016 ) $ 9,089
7. NET INVESTMENT-RELATED GAINS (LOSSES) - INSURANCE

Net investment-related gains (losses) from insurance operations primarily consists of (i) realized gains and (losses) from the disposal of investments, (ii) unrealized gains and (losses) from investments held for trading, equity securities, real estate investments accounted for under investment company accounting, and investments with fair value remeasurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains and (losses) on funds withheld at interest, (iv) unrealized gains and (losses) from derivatives not designated in an hedging relationship, and (v) allowances for credit losses, and other impairments of investments.

Net investment-related gains (losses) were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Realized gains (losses) on equity investments	$	—	$	51,520	$	—	$	76,645
Realized gains (losses) on available-for-sale fixed maturity debt securities	(8,277)		(15,026)		(539,000)		(88,300)
Credit loss allowances on available-for-sale securities	(15,065)		(3,809)		(32,109)		21,287
Credit loss allowances on mortgage and other loan receivables	(12,112)		(69,386)		(50,495)		(250,690)
Allowances on unfunded commitments	1,292		(3,677)		(2,086)		(15,372)

Unrealized gains (losses) on fixed maturity securities classified as trading	(720,418)		(133,118)		(2,748,542)		(130,228)
Unrealized gains (losses) on investments recognized under the fair-value option	(22,995)		303,021		(63,923)		350,442
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting	(34,479)		9,997		88,609		20,264
Net gains (losses) on derivative instruments	655,304		40,792		2,370,404		70,098
Realized gains (losses) on funds withheld at interest, payable portfolio	3,652		(12,272)		5,992		(31,384)
Realized gains (losses) on funds withheld at interest, receivable portfolio	3,858		2,633		7,296		10,250
Other realized gains (losses)	(24,590)		(8,548)		(4,982)		(29)
Net investment-related gains (losses)	$	(173,830)	$	162,127	$	(968,836)	$	32,983

Table of Contents


~~(1)~~	~~See Note 4 "Investments."~~


~~(2)~~	~~See Note 8 "Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities."~~


~~(3)~~	~~See Note 10 "Debt Obligations."~~

Allowance for credit losses

4.Available-for-sale fixed maturity securities

The table below presents a roll-forward of the allowance for credit losses recognized for fixed maturity securities held by Global Atlantic:


	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
	Corporate		Structured		Total		Corporate		Structured		Total
Balance, as of beginning of period	$	7,842	$	94,451	$	102,293	$	3,238	$	84,895	$	88,133
Initial impairments for credit losses recognized on securities not previously impaired	669		11,903		12,572		791		47,858		48,649
Initial credit loss allowance recognized on purchased credit deteriorated ("PCD") securities	—		—		—		—		707		707
Accretion of initial credit loss allowance on PCD securities	—		581		581		—		1,449		1,449
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities previously identified as credit impaired	—		(3,352)		(3,352)		—		(7,811)		(7,811)

Net additions / reductions for securities previously impaired	121		2,372		2,493		4,603		(21,143)		(16,540)
Write-offs of credit losses previous recognized	(7,841)		—		(7,841)		(7,841)		—		(7,841)

Balance, as of end of period	$	791	$	105,955	$	106,746	$	791	$	105,955	$	106,746


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	Corporate		Structured		Total		Corporate		Structured		Total
Balance, as of beginning of period(1)	$	—	$	91,646	$	91,646	$	—	$	120,895	$	120,895
Initial impairments for credit losses recognized on securities not previously impaired	—		19,921		19,921		—		47,530		47,530
Initial credit loss allowance recognized on purchased credit deteriorated ("PCD") securities	—		1,576		1,576		—		7,204		7,204
Accretion of initial credit loss allowance on PCD securities	—		1,879		1,879		—		2,200		2,200
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities previously identified as credit impaired	—		(2,510)		(2,510)		—		(12,612)		(12,612)

Net additions / reductions for securities previously impaired	—		(16,112)		(16,112)		—		(68,817)		(68,817)


Balance, as of end of period	$	—	$	96,400	$	96,400	$	—	$	96,400	$	96,400

(1)Includes securities designated as purchased credit impaired as of the time of the acquisition of Global Atlantic.

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Mortgage and other loan receivables

Changes in the allowance for credit losses on mortgage and other loan receivables held by Global Atlantic are summarized below:


	Three Months Ended September 30, 2022								Nine Months Ended September 30, 2022
	Commercial Mortgage Loans		Residential Mortgage Loans		Consumer and Other Loan Receivables		Total		Commercial Mortgage Loans		Residential Mortgage Loans		Consumer and Other Loan Receivables		Total
Balance, as of beginning of period	$	103,944	$	96,194	$	211,747	$	411,885	$	65,970	$	72,082	$	236,025	$	374,077
Net provision (release)	26,817		(891)		(13,814)		12,112		64,791		23,221		(37,517)		50,495

Charge-offs	—		—		(671)		(671)		—		—		(1,246)		(1,246)

Balance, as of end of period	$	130,761	$	95,303	$	197,262	$	423,326	$	130,761	$	95,303	$	197,262	$	423,326


	Three Months Ended September 30, 2021								Nine Months Ended September 30, 2021
	Commercial Mortgage Loans		Residential Mortgage Loans		Consumer and Other Loan Receivables		Total		Commercial Mortgage Loans		Residential Mortgage Loans		Consumer and Other Loan Receivables		Total
Balance, as of beginning of period (1)	$	58,255	$	76,536	$	163,135	$	297,926	$	58,203	$	62,056	$	—	$	120,259
Net provision (release)	17,750		(2,793)		54,429		69,386		17,802		10,888		222,000		250,690
Loans purchased with credit deterioration	—		—		—		—		—		799		838		1,637
Charge-offs	—		(3,162)		5,274		2,112		—		(3,162)		—		(3,162)

Balance, as of end of period	$	76,005	$	70,581	$	222,838	$	369,424	$	76,005	$	70,581	$	222,838	$	369,424

(1) Includes loans designated as purchased credit deteriorated as of the time of the acquisition of Global Atlantic.

Proceeds and gross gains and losses from voluntary sales

The proceeds from voluntary sales and the gross gains and losses on those sales of available-for-sale ("AFS") fixed maturity securities were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
AFS fixed maturity securities:
Proceeds from voluntary sales	$	807,228	$	7,440,645	$	10,869,470	$	12,766,887
Gross gains	8,007		16,816		18,203		38,061
Gross losses	(14,676)		(30,086)		(547,123)		(103,190)

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8. INVESTMENTS

Investments consist of the following:


						September 30, 2022		December 31, 2021

	September 30, 2017		December 31, 2016
Asset Management					Asset Management
Private Equity	$	3,896,535	$	2,915,667	Private Equity	$	26,542,743	$	25,685,750
Credit	6,427,635		4,847,936		Credit	7,532,222		7,949,573
Investments of Consolidated CFEs	15,500,898		13,950,897		Investments of Consolidated CFEs	21,500,342		22,076,809
Real Assets	2,278,699		1,807,128		Real Assets	16,659,585		12,500,749
Equity Method	3,524,781		2,728,995
Carried Interest	2,697,294		2,384,177
Other	2,925,995		2,774,965
Equity Method - Other					Equity Method - Other	6,849,902		4,877,592
Equity Method - Capital Allocation-Based Income					Equity Method - Capital Allocation-Based Income	7,032,596		11,539,945
Other Investments					Other Investments	3,603,469		4,145,096
Investments - Asset Management					Investments - Asset Management	$	89,720,859	$	88,775,514

Insurance					Insurance
Fixed maturity securities, available-for-sale, at fair value(1)					Fixed maturity securities, available-for-sale, at fair value(1)	$	58,547,851	$	68,870,886
Mortgage and other loan receivables					Mortgage and other loan receivables	35,420,094		28,876,759
Fixed maturity securities, trading, at fair value(2)					Fixed maturity securities, trading, at fair value(2)	10,247,034		13,753,573
Other investments					Other investments	10,830,743		8,208,566
Funds withheld receivable at interest					Funds withheld receivable at interest	2,893,785		2,999,448
Policy loans					Policy loans	812,844		765,310
Equity securities at fair value					Equity securities at fair value	19,922		289,133
Investments - Insurance					Investments - Insurance	$	118,772,273	$	123,763,675

Total Investments	$	37,251,837	$	31,409,765	Total Investments	$	208,493,132	$	212,539,189

Year Unrecognized Expense
(in millions)
Remainder of 2017 $ 40.1
2018 128.7
2019 75.4
2020 23.9
2021 5.1
2022 1.5
2023 0.9
Total $ 275.6

Table of Contents

A summary of the status of unvested ~~awards~~Service-Vesting Awards granted under the Equity Incentive ~~Plan~~Plans from January 1, ~~2017~~2022 through September 30, ~~2017~~2022 is presented below:


	Shares	Weighted Average Grant Date Fair Value
Balance, January 1, 2022	19,307,041	$	41.21
Granted	847,666	57.10
Vested	(3,846,900)	33.51
Forfeitures	(444,554)	46.63
Balance, September 30, 2022	15,863,253	$	43.77

Units
Weighted
Average Grant
Date Fair Value
Balance, January 1, 2017 37,498,333
$ 13.85
Granted 3,635,101
15.67
Vested (8,326,078 ) 14.79
Forfeited (1,734,984 ) 13.72
Balance, September 30, 2017 31,072,372
$ 13.82
Market Condition Awards

Under the Equity Incentive Plans, KKR also grants RSUs and RHUs that are subject to both a service-based vesting condition and a market price based vesting condition (referred to hereafter as "Market Condition Awards") for certain employees. The following is a discussion of Market Condition Awards excluding the Co-CEO Awards, except where discussed below.

The ~~weighted~~number of Market Condition Awards (other than the Co-CEO awards) that will vest depend upon (i) the market price of KKR common stock reaching certain price targets that range from $45.00 to $140.00 and (ii) the employee being employed by KKR on a certain date, which typically is five and a half years from the date of grant (with exceptions for involuntary termination without cause, death and permanent disability). The market price vesting condition is met when the average ~~remaining~~closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. Holders of the Market Condition Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.

Due to the existence of the service requirement, the vesting period for these Market Condition Awards (other than the Co-CEO awards) is explicit, and as such, compensation expense will be recognized on (i) a straight-line basis over ~~which unvested~~the period from the date of grant through the date the award recipient is required to be employed by KKR and (ii) assumes a forfeiture rate of up to 7% annually based upon expected turnover. The fair value of the awards granted are ~~expected to vest~~based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that holders of the Market Condition Awards will not participate in dividends until such awards have met all of their vesting requirements.

Below is ~~1.2 years.~~

Aa summary of the ~~remaining vesting tranches~~grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of ~~awards granted under the Equity Incentive Plan is presented below:~~these Market Condition Awards:

~~Vesting Date~~

Weighted
Average

~~Units~~

Range

~~October 1, 2017~~Grant Date Fair Value

$25.70

~~3,855,649~~

$19.87 - $66.80

~~April 1, 2018~~Closing KKR share price as of valuation date

$43.04

~~9,848,499~~

$37.93 - $76.31

~~October 1, 2018~~Risk Free Rate

0.55%

~~3,262,341~~

0.41% - 3.46%

~~April 1, 2019~~Volatility

28.16%

~~6,816,127~~

28.00% - 38.00%

~~October 1, 2019~~Dividend Yield

1.41%

~~1,839,242~~

0.76% - 1.53%

~~April 1, 2020~~Expected Cost of Equity

10.59%

~~3,721,944~~

~~October 1, 2020~~9.13% - 11.15%

~~611,015~~

~~April 1, 2021~~

~~638,955~~

~~October 1, 2021~~

~~211,172~~

~~April 1, 2022~~

~~85,084~~

~~October 1, 2022~~

~~91,172~~

~~October 1, 2023~~

~~91,172~~

~~31,072,372~~

~~KKR Holdings Awards~~

~~KKR Holdings units are exchangeable for KKR Group Partnership Units and allow for their exchange into common units of KKR & Co. L.P. on a one-for one basis.~~ As of September 30, ~~2017 and 2016, KKR Holdings owned~~2022, there was approximately ~~41.8% or 339,845,707 and 44.4%, or 356,686,744 units respectively,~~$333.3 million of ~~outstanding KKR Group Partnership Units.~~total estimated unrecognized expense related to these unvested Market Condition Awards, ~~for KKR Holdings units~~which is expected to be recognized over the weighted average remaining requisite service period of 3.7 years.

Table of Contents

A summary of the status of unvested Market Condition Awards granted under the Equity Incentive Plans from January 1, 2022 through September 30, 2022 is presented below:


	Shares	Weighted Average Grant Date Fair Value
Balance, January 1, 2022	21,370,847	$	25.03
Granted	550,000	51.74
Vested	(175,000)	19.87
Forfeitures	(507,887)	21.21
Balance, September 30, 2022	21,237,960	$	25.85

As of September 30, 2022, 19.4 million of these Market Condition awards have met their market price based vesting condition.

Co-CEO Awards

On December 9, 2021, the Board of Directors approved grants of 7.5 million RHUs to each of KKR’s Co-Chief Executive Officers that ~~have been granted~~ are ~~generally~~ subject to ~~service~~both a service-based vesting condition and a market price based vesting ~~typically~~condition (referred to hereafter as "Co-CEOs Awards"). For both Co-Chief Executive Officers, 20% of the Co-CEOs Awards are eligible to vest at each of the following KKR common stock prices targets: $95.80, $105.80, $115.80, $125.80 and $135.80. The market price based vesting condition is met when the average closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. In addition to the market price based vesting conditions, in order for the Co-CEOs Awards to vest, the Co-Chief Executive Officer is required to be employed by KKR on December 31, 2026 (with exceptions for involuntary termination without cause, death and permanent disability).

These awards will be automatically canceled and forfeited upon the earlier of the Co-Chief Executive Officer’s termination of service (except for involuntary termination without cause, death or permanent disability) or the failure to meet the market price based vesting condition by December 31, 2028 (for which continued service is required if the market price vesting condition is met after December 31, 2026). Co-CEO Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.

Due to the existence of the service requirement, the vesting period for these Co-CEO Awards is explicit, and as such, compensation expense will be recognized on a straight-line basis over ~~a three to five year~~the period from the date of ~~grant. They are also subject to transfer restrictions which last for (i) one year with respect to one-half~~grant through December 31, 2026 given the derived service period is less than the explicit service period. The fair value of the ~~interests~~awards granted are based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that these Co-CEO Awards will not participate in dividends until such awards have met all of their vesting requirements.

Below is a summary of the grant date fair value based on ~~any~~the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of these Co-CEO Awards:


Grant Date Fair Value	$48.91
Closing KKR share price as of valuation date	$75.76
Risk Free Rate	1.42	%
Volatility	28.0	%
Dividend Yield	0.77	%
Expected Cost of Equity	9.36	%

As of September 30, 2022, there was approximately $616.5 million of total estimated unrecognized expense related to these unvested Co-CEO Awards, which is expected to be recognized ratably from October 1, 2022 to December 31, 2026. As of September 30, 2022, none of these Co-CEO awards have met their market price based vesting ~~date~~condition.

Table of Contents

KKR Holdings Awards

For the three months ended September 30, 2022 and ~~(ii) two years with respect~~2021, KKR recorded equity based compensation expense of $19.5 million and $8.7 million, respectively, and for the nine months ended September 30, 2022 and 2021, KKR recorded equity based compensation expense of $119.8 million and $35.2 million, respectively. The $19.5 million expense for the three months ended September 30, 2022 relates to the ~~other one-half of the interests vesting on such vesting~~

date. While providing services to KKR, the recipients are also subject to minimum retained ownership rules requiring them to continuously hold 25% of their vested interests. Upon separation from KKR, award recipients are subject to the terms of a confidentiality and restrictive covenants agreement that would require the forfeiture of certain vested and unvested units should the terms of the agreement be violated. Holdersremaining 30% of KKR Holdings units ~~are~~that were subject to forfeiture if the Co-CEOs were not ~~entitled to participate in distributions made~~employed by KKR on ~~KKR Group Partnership Units underlying their~~October 1, 2022, as discussed below.

On October 8, 2021, as part of the transactions contemplated by the Reorganization Mergers, of the 3.3 million outstanding KKR Holdings units ~~until such units are vested.~~

~~Because~~that remained unallocated, KKR Holdings ~~is a partnership, all of the 339,845,707~~allocated 1,150,000 KKR Holdings units ~~have been legally allocated, but the allocation of 10,402,858 of these units has not been communicated~~ to each ~~respective principal~~of KKR’s Co-CEOs, of which 70% vested immediately, on October 8, 2021, and the ~~final allocation and terms of vesting for these units are~~remaining 30% were subject to ~~change and~~forfeiture if such Co-CEO is not employed by KKR on October 1, 2022 (except in the ~~exercise~~case of judgment by the general partner of KKR Holdings. It was therefore determined that the grant date and service inception date had not occurred and these units do not yet meet the criteria for recognition of compensation expense.

The fair value of awards granted out of KKR Holdings is generally based on the closing price of KKR & Co L.P. common units on the date of grant. KKR determined this to be the best evidence of fair value as a KKR & Co. L.P. common unit is traded in an active market and has an observable market price. Additionally, a KKR Holdings unit is an instrument with terms and conditions similar to those of a KKR & Co. L.P. common unit. Specifically, units in both KKR Holdings and KKR & Co. L.P. represent ownership interests in KKR Group Partnership Units and, subject to any vesting, minimum retained ownership requirements and transfer restrictions, each KKR Holdings unit is exchangeable into a KKR Group Partnership Unit and then into a KKR & Co. L.P. common unit on a one-for-one basis.

~~In February 2016, approximately 28.9 million~~death or permanent disability). These KKR Holdings units were ~~granted that were originally~~ subject to ~~market condition~~customary one- and ~~service-based vesting~~two-year transfer restrictions that ~~were subsequently modified in November 2016 to eliminate the market condition vesting~~will apply, as applicable, until October 1, 2023 and instead require only service-based vesting in equal annual installments over a five year period. At the date of modification, total future compensation expense amounted to $320.9 million, net of estimated forfeitures, to be recognized over the remaining vesting periodOctober 1, 2024.

In advance of the ~~modified awards.~~

~~The awards described above~~closing of the Reorganization Mergers, the vesting of KKR Holdings units held by Messrs. Kravis, Roberts, Bae and Nuttall was accelerated, and the forfeiture and transfer restrictions applicable to certain KKR Holdings units were ~~granted from outstanding but previously unallocated~~transferred to the common stock received as contemplated by the Reorganization Agreement. In addition, on May 27, 2022, KKR Holdings allocated 535,185 units of KKR Holdings to Mr. Kravis and ~~consequently these grants did not increase the number~~535,184 units of KKR Holdings ~~units outstanding or~~to Mr. Roberts’ trust with no vesting conditions. Please refer to Note 1 "Organization" for further information on the Reorganization Mergers pursuant to which, among other things, KKR acquired KKR Holdings, and all outstanding KKR Holdings units were exchanged for KKR & Co. Inc. common ~~units on a fully-diluted basis. If and when vested, these awards will not dilute KKR's respective ownership interests in~~stock.

Prior to the ~~KKR Group Partnerships.~~

Reorganization Mergers, KKR Holdings ~~Awards give~~awards gave rise to equity-based compensation in the consolidated statements of operations based on the grant-date fair value of the award discounted for the lack of participation rights in the expected distributions on unvested units. ~~Beginning~~This discount is consistent with that noted above for shares issued under the financial results reported for the first quarter of 2017, KKR intends to make quarterly distributions to common unitholders of $0.17 per common unit per quarter or $0.68 per year. Therefore, for awards granted on or after January 1, 2017, the discount for lack of participation rights in the expected distributions on unvested units is based on the $0.68 annual distribution. KKR has made equal quarterly distributions to holders of its common units of $0.16 per common unit per quarter or $0.64 per year in respect of financial results reported for the first quarter of 2016 through the fourth quarter of 2016. Accordingly, for awards granted subsequent to December 31, 2015 but before January 1, 2017, the discount for the lack of participation rights in the expected distributions on unvested unitsEquity Incentive Plans. Expense was ~~based on the $0.64 annual distribution.~~

~~Expense is~~ recognized on a straight line basis over the life of the award and ~~assumes~~assumed a forfeiture rate of up to 8%7% annually based on expected turnover by class of recipient.

Insurance

Global Atlantic recognized $16.4 million and $27.9 million of expense related to equity-based compensation and long-term incentive awards for the three months ended September 30, 2022 and 2021, respectively, and Global Atlantic recognized $53.1 million and $47.1 million of expense related to equity-based compensation and long-term incentive awards for the nine months ended September 30, 2022 and 2021, respectively.

No equity-based compensation costs were capitalized during the three and nine months ended September 30, 2022 and 2021.

Equity Classified Awards - KKR Equity Incentive Plan Awards

On February 1, 2021, in connection with the GA Acquisition, employees of Global Atlantic were awarded a one-time grant of RSUs under the 2019 Equity Incentive Plan. These awards (i) are subject to service-based vesting conditions and (ii) expense associated with the vesting of these awards is based on the closing price of KKR & Co. Inc. common stock on the date of grant, consistent with other awards granted under the 2019 Equity Incentive Plan as described above.

On July 1, 2021, a grant of a Market Condition Award was made under the 2019 Equity Incentive Plan. This award is subject to meeting certain market price based vesting conditions of KKR common stock but has no service vesting condition. Expense associated with the grant date fair value of this award of $10.5 million was fully recognized in the three months ended September 30, 2021.

Global Atlantic recognized $2.2 million and $10.9 million of total equity-based compensation expense for the three months ended September 30, 2022 and 2021 associated with these awards, respectively, and Global Atlantic recognized $6.5 million and $11.4 million of total equity-based compensation expense for the nine months ended September 30, 2022 and 2021 associated with these awards, respectively.

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Liability Classified Awards - Book Value Awards

On February 1, 2021, Global Atlantic adopted the Global Atlantic Financial Company Book Value Award Plan ("GA Book Value Plan") to enhance the ability of Global Atlantic to attract, motivate and retain its employees and to promote the success of the Global Atlantic business.

The GA Book Value Plan authorizes the grant of cash-settled awards ("book value awards") representing the right to receive one or more payments upon vesting equal to the product of an initial dollar value set by the award multiplied by a pre-determined formula as of each applicable vesting date. The predetermined formula is equal to the quotient determined by dividing the book value of one share of TGAFG on the applicable vesting date by the book value of a share on the original grant date, subject to adjustments. Book value awards generally vest in three equal, annual installments, subject to continued employment.

On February 1, 2021, under the terms of the GA Merger Agreement and in accordance with applicable plan documentation, former Global Atlantic restricted share awards that were unvested immediately prior to the closing of the GA Acquisition converted into the right to receive a number of book value awards under the GA Book Value Plan having the same value and the same vesting schedule as the former Global Atlantic restricted share awards immediately prior to the closing of the GA Acquisition.

An aggregate of 3,020,017 unvested former Global Atlantic restricted share awards having a fair value of $29.47 per share were converted to book value awards at an aggregate grant-date value of $89.0 million. On February 28, 2021, book value awards having an aggregate value of approximately $28.0 million vested as set forth in the former Global Atlantic grant agreements and resulted in a cash payment of $17.0 million to participants, net of applicable tax withholding.

Also in connection with the GA Acquisition, on February 1, 2021, Global Atlantic employees were issued a one-time grant of book value awards having an aggregate initial value of $23.0 million. These one-time book value awards vest over five (5) years, with the first 25% vesting on April 1, 2023 and the remainder vesting 25% annually on April 1 each subsequent year until fully vested, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.

On March 1, 2021, pursuant to the GA Book Value Plan, book value awards having an aggregate initial value of approximately $32 million were granted. Such book value awards generally vest annually over three years in equal increments, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.

Global Atlantic began recognizing long-term incentive expense for the book value awards described above at the grant dates, based on their initial value, net of a 4% estimated forfeiture rate. Global Atlantic adjusts expense periodically for changes in book value until the awards are settled or forfeited. Expense recognized on forfeited awards is reversed in the period of forfeiture. The table below presents the activity related to book value awards for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended
	September 30, 2022		September 30, 2021
Outstanding amount as of beginning of period	$	145,000	$	—
Pre-acquisition awards converted to book-value awards on February 1, 2021	—		89,000
Granted	27,191		57,213
Forfeited	(4,647)		(5,508)
Impact of change in book value on outstanding awards	—		6,597
Vested and issued	(49,405)		(31,086)
Outstanding amount as of end of period	$	118,139	$	116,216

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Global Atlantic recognized $14.2 million and $17.0 million of compensation expense for the three months ended September 30, 2022 and 2021 associated with these awards, respectively, and Global Atlantic recognized $46.6 million and $35.7 million of compensation expense for the nine months ended September 30, 2022 and 2021 associated with these awards, respectively. As of September 30, ~~2017,~~2022 and December 31, 2021, the remaining unamortized compensation expenses of $90.0 million and $99.6 million are expected to be recognized over a remaining average period of 2.39 years and 2.67 years, respectively.

GA Equity Incentive Plan Awards

On June 24, 2021, Global Atlantic issued 1,000 non-voting incentive shares to a Bermuda exempted partnership owned by certain Global Atlantic employees, who are eligible to receive incentive units under Global Atlantic's Senior Management Equity Incentive Plan ("GA Equity Incentive Plan"). These incentive units represent an interest in the receipt of certain amounts based on Global Atlantic's book value, market value, and AUM, in each case as derived in part from the value of TGAFG’s fully-diluted equity shares.

On June 24, 2021, Global Atlantic granted approximately 808 incentive units under the GA Equity Incentive Plan. The book value component of the incentive units vests 20% per year on the anniversary of the GA Acquisition Date, as long as the grantee remains then employed, and will be settled in cash. The market value and AUM components of the incentive units cliff vest upon the earlier to occur of (i) the fifth anniversary of the GA Acquisition Date, or (ii) a change of control, and will be settled in a variable number of TGAFG’s non-voting common shares. TGAFG shares issued under the AUM component of the Plan are exchangeable for shares of KKR. Except in the event of termination due to death or disability, generally, unvested market value and AUM amounts are forfeited upon a termination of employment.

The GA Equity Incentive Plan is accounted for as a hybrid compensation plan, consisting of one component most closely aligned with a profit-sharing plan under ASC 710, Compensation - General, as well as other components within scope of ASC 718, Compensation - Stock Compensation, in all cases with obligations liability-classified. Accordingly, with regard to awards within scope of ASC 710, Global Atlantic records expense based on payouts deemed to be probable and reasonably estimable based on the book value growth of Global Atlantic at the grant date and at each reporting period. For award components subject to liability-classification under ASC 718, Global Atlantic records expense, net of a 0% estimated forfeiture rate, based on the fair value of awards granted, with periodic adjustments to expense for changes in fair value, over the requisite 5-year service period.

The aggregate value of the GA Equity Incentive Plan awards at the initial date of grant was $197.0 million, based on the intrinsic value of the book value component at the date of grant ($5.0 million) and the fair value of the market value and AUM components at the date of grant ($192.0 million, collectively), based on the projected growth in value of each component over the 5-year vesting schedule and applying a forfeiture rate of 0%. Expense is remeasured accordingly at each reporting period and adjusted as needed until the awards are forfeited or settled.

During both the three and nine months ended September 30, 2022, 27 incentive units were granted to employees, and 5 and 35 incentive units were forfeited during the three and nine months ended September 30, 2022, respectively. As of September 30, 2022 and December 31, 2021, there were approximately 845 and 831 incentive units outstanding under the Plan, respectively.

Global Atlantic recorded compensation expense of $28.0 million and $54.8 million for the three and nine months ended September 30, 2022 related to the GA Units granted under the GA Equity Incentive Plan, with a corresponding offset to other liabilities, respectively. As of September 30, 2022 and December 31, 2021, there was approximately ~~$207.2~~$98.7 million and $104.1 million of ~~estimated~~ unrecognized expense related to ~~unvested KKR Holdings awards. That cost is expected to be recognized as follows:~~

Year Unrecognized Expense
(in millions)
Remainder of 2017 $ 17.4
2018 63.0
2019 57.3
2020 52.4
2021 17.1
Total $ 207.2

~~A summary of~~ the ~~status of unvested awards~~GA Units granted under the ~~KKR Holdings~~GA Equity Incentive Plan ~~from January 1, 2017 through September 30, 2017 is presented below:~~

Units
Weighted
Average Grant
Date Fair Value
Balance, January 1, 2017 28,245,886
$ 12.10
Granted —
—
Vested (5,968,939 ) 13.97
Forfeited (1,537,807 ) 11.76
Balance, September 30, 2017 20,739,140
$ 11.59

~~The~~with a weighted average service period remaining ~~vesting period over which unvested awards are expected to vest is 2.0 years.~~

~~A summary~~ of ~~the remaining vesting tranches of awards granted under the KKR Holdings Plan is presented below:~~3.34 years and 4.09 years, respectively.



~~Vesting Date~~		~~Units~~
~~October 1, 2017~~		~~93,486~~
~~April 1, 2018~~		~~824,999~~
~~May 1, 2018~~		~~4,820,000~~
~~April 1, 2019~~		~~349,143~~
~~May 1, 2019~~		~~4,820,000~~
~~April 1, 2020~~		~~191,512~~
~~May 1, 2020~~		~~4,820,000~~
~~May 1, 2021~~		~~4,820,000~~
		~~20,739,140~~

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~~Other Exchangeable Securities~~

As of October 1, 2016, all equity securities of a subsidiary of a KKR Group Partnership and of KKR & Co. L.P. both of which are exchangeable into common units of KKR & Co. L.P. on a one-for-one basis issued in connection with the acquisition of Avoca ("Other Exchangeable Securities") have either vested or forfeited, and there is no unrecognized expense associated with Other Exchangeable Securities as of September 30, 2017.

~~Discretionary Compensation~~

KKR employees and certain employees of certain consolidated entities are eligible to receive discretionary cash bonuses. While cash bonuses paid to most employees are borne by KKR and certain consolidated entities and result in customary compensation and benefits expense, cash bonuses that are paid to certain principals are currently borne by KKR Holdings. These compensation charges are currently recorded based on the amount of cash expected to be paid by KKR Holdings.

~~13.~~20. RELATED PARTY TRANSACTIONS

Due from Affiliates consists of:


						September 30, 2022		December 31, 2021
Amounts due from unconsolidated investment funds					Amounts due from unconsolidated investment funds	$	1,204,863	$	1,109,769
Amounts due from portfolio companies					Amounts due from portfolio companies	165,830		114,514
	September 30, 2017		December 31, 2016
Amounts due from portfolio companies	$	105,277	$	66,940
Amounts due from unconsolidated investment funds	371,726		170,219
Amounts due from related entities	7,001		13,293
Due from Affiliates	$	484,004	$	250,452	Due from Affiliates	$	1,370,693	$	1,224,283

Due to Affiliates consists of:


	September 30, 2022		December 31, 2021
Amounts due to current and former employees under the tax receivable agreement (1)	$	400,062	$	399,163
Amounts due to unconsolidated investment funds	44,810		63,559

Due to Affiliates	$	444,872	$	462,722

(1)See Note 1 "Organization."

September 30, 2017 December 31, 2016
Amounts due to KKR Holdings in connection with the tax receivable agreement $ 141,891
$ 128,091
Amounts due to unconsolidated investment funds 237,418
230,823
Amounts due to related entities 500
565
Due to Affiliates $ 379,809
$ 359,479

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~~14.~~21. SEGMENT REPORTING

KKR operates through ~~four~~two reportable ~~business segments. These~~ segments which are ~~differentiated primarily by their~~presented below and reflect how its chief operating decision-makers allocate resources and assess performance:

•Asset Management -the asset management business ~~objectives and~~offers a broad range of investment strategies, are presented below. These financial results represent the combined financial results of the KKR Group Partnerships on a segment basis. KKR earns the majority of its fees from subsidiaries located in the United States.

~~Private Markets~~

Through KKR’s Private Markets segment, KKR manages and sponsors private equity funds and co-investment vehicles, which invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. KKR also manages and sponsorsmanagement services to investment funds, vehicles and ~~co-investment vehicles that invest capital in real assets, such as infrastructure, energy~~accounts (including Global Atlantic) and ~~real estate.~~

~~Public Markets~~

KKR operates and reports its combined credit and hedge funds businesses through the Public Markets segment. KKR’s credit business invests capital in leveraged credit strategies, including leveraged loans, high yield bonds and opportunistic credit, and alternative credit strategies including special situations and private credit opportunities, such as mezzanine or private credit opportunities, direct lending, and revolving credit investment strategies. KKR’s hedge funds business consists of strategic manager partnerships with third party hedge fund managers in which KKR owns minority stakes.

~~Capital Markets~~

~~KKR’s global~~provides capital markets ~~business supports the firm,~~services to portfolio companies and ~~third-party~~third parties. This reportable segment also reflects how its business lines operate collaboratively with predominantly a single expense pool.

•Insurance - the insurance business is operated by Global Atlantic, which is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily generates income by ~~developing~~earning a spread between its investment income and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. These services include arranging debt and equity financing for transactions, placing and underwriting securities offerings and providing other typesthe cost of ~~capital markets services.~~policyholder benefits.

~~Principal Activities~~

~~Through KKR's Principal Activities~~KKR’s segment ~~we manage the firm’s assets and deploy capital to support and grow our businesses.~~

~~KKR's Principal Activities segment uses its balance sheet assets to support KKR's investment management and capital markets businesses, including~~profitability measure used to make ~~capital commitments as general partner to its funds, to seed new businesses or investments for new funds or to bridge capital selectively for its funds’ investments.~~

~~The Principal Activities segment also provides the required capital to fund the various commitments of KKR's Capital Markets business or to meet regulatory capital requirements.~~

~~Key Performance Measure - Economic Net Income (“ENI”)~~

~~ENI is used by management in making~~ operating decisions and ~~resource deployment decisions as well as assessing the overall~~assess performance ~~of each of~~across KKR’s reportable ~~business segments. The reportable~~ segments ~~for KKR’s business are~~is presented prior to giving effect to the allocation of income (loss) ~~between~~among KKR & Co. ~~L.P.~~Inc. and ~~KKR Holdings~~holders of any exchangeable securities, and ~~as such represents the business in total. In addition, KKR’s reportable segments are presented without giving effect to~~ the consolidation of the investment funds, vehicles and accounts that KKR ~~manages.~~advises, manages or sponsors (including CFEs). KKR's segment profitability measure excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic transaction-related charges and (iv) non-recurring items, if any. Strategic transaction-related items arise from corporate actions and consist primarily of (i) impairments, (ii) non-monetary gains or losses on divestitures, (iii) transaction costs from strategic acquisitions, and (iv) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by KKR as the investment adviser for Global Atlantic insurance companies and (ii) interest income and expense based on lending arrangements where one or more KKR subsidiaries borrow from a Global Atlantic insurance subsidiary. Inter-segment transactions are recorded by each segment based on the definitive documents that contain arms' length terms and comply with applicable regulatory requirements. Segment operating earnings for the asset management and insurance segments is further defined as follows:

~~ENI~~•Asset Management Segment Operating Earnings is athe profitability measure used to make operating decisions and to assess the performance of ~~profitability for KKR’s reportable segments~~the asset management segment and is comprised of: (i) Fee Related Earnings, (ii) Realized Performance Income, (iii) Realized Performance Income Compensation, (iv) Realized Investment Income, and (v) Realized Investment Income Compensation. Asset Management Segment Operating Earnings excludes the impact of: (i) unrealized carried interest, (ii) net unrealized gains (losses) on investments, and (iii) related unrealized performance income compensation. Management fees earned by KKR as the adviser, manager, or sponsor for its investment funds, vehicles and accounts, including its Global Atlantic insurance companies and Ivy Vehicles are included in Asset Management Segment Operating Earnings.

•Insurance Segment Operating Earnings is the profitability measure used ~~by management as an alternative measurement~~to make operating decisions and to assess the performance of the ~~operating~~insurance segment and ~~investment earnings of KKR and its business segments. ENI~~ is comprised of: (i) Net Investment Income, (ii) Net Cost of ~~total segment revenues; less total segment~~Insurance, (iii) General, Administrative, and Other Expenses, (iv) Income Taxes, and (v) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings eliminate the impact of: (i) realized (gains) losses related to asset/liability matching investments strategies, (ii) unrealized investment (gains) losses, (iii) changes in the fair value of derivatives, embedded derivatives, and fair value liabilities for fixed-indexed annuities, indexed universal life contracts and variable annuities, and (iv) the associated income tax effects of all exclusions from Insurance Segment Operating Earnings except for equity-based compensation expense. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management fee expenses ~~and certain economic interests in KKR’s segments held~~that are earned by ~~third parties.~~KKR as the investment adviser of the Global Atlantic insurance companies.

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Segment Presentation

The following tables ~~present the financial data for KKR’s reportable segments:~~set forth information regarding KKR's segment results:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Asset Management
Management Fees (1)	$	670,534	$	559,016	$	1,950,389	$	1,478,878
Transaction and Monitoring Fees, Net	167,455		249,670		580,794		645,108
Fee Related Performance Revenues	49,924		9,897		71,974		34,760
Fee Related Compensation	(199,780)		(184,224)		(585,748)		(485,760)
Other Operating Expenses	(146,370)		(104,772)		(409,489)		(309,483)
Fee Related Earnings	541,763		529,587		1,607,920		1,363,503
Realized Performance Income	497,860		432,784		1,837,925		1,222,403
Realized Performance Income Compensation	(322,927)		(274,955)		(1,180,990)		(797,965)
Realized Investment Income (2)	284,979		447,565		911,221		1,277,701
Realized Investment Income Compensation	(42,747)		(67,142)		(136,683)		(191,663)
Asset Management Segment Operating Earnings	958,928		1,067,839		3,039,393		2,873,979

Insurance
Net Investment Income (1) (2)	1,054,757		771,982		2,881,567		1,977,383
Net Cost of Insurance	(642,443)		(436,415)		(1,664,664)		(1,076,566)
General, Administrative and Other	(161,242)		(139,489)		(472,795)		(338,325)
Pre-tax Insurance Operating Earnings	251,072		196,078		744,108		562,492
Income Taxes	(44,468)		(9,046)		(125,927)		(63,148)
Net Income Attributable to Noncontrolling Interest	(79,582)		(72,043)		(238,118)		(193,570)
Insurance Segment Operating Earnings	127,022		114,989		380,063		305,774

Total Segment Operating Earnings	$	1,085,950	$	1,182,828	$	3,419,456	$	3,179,753

(1) Includes intersegment management fees of $83.0 million and $46.7 million, for the three months ended September 30, 2022 and 2021, respectively, and $211.3 million and $108.5 million for the nine months ended September 30, 2022 and 2021, respectively.
(2) Includes intersegment interest expense and income of $44.0 million and $10.8 million, for the three months ended September 30, 2022 and 2021, respectively, and $104.3 million and $11.9 million for the nine months ended September 30, 2022 and 2021, respectively.

	As of
	September 30, 2022		September 30, 2021
Segment Assets:
Asset Management	$	31,244,274	$	31,853,573
Insurance	165,521,042		164,436,876
Total Segment Assets	$	196,765,316	$	196,290,449

	Three Months Ended September 30,				Nine Months Ended September 30,
Noncash expenses excluded from Segment Operating Earnings	2022		2021		2022		2021
Equity Based Compensation and Other
Asset Management	$	109,509	$	62,510	$	332,986	$	188,269
Insurance	41,102		40,086		94,711		64,061
Total Non-cash expenses	$	150,611	$	102,596	$	427,697	$	252,330

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As of and for the Three Months Ended September 30, 2017

Private
Markets

Public
Markets

Capital
Markets
Principal Activities Total
Reportable
Segments
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 153,841
$ 79,113
$ —
$ —
$ 232,954
Monitoring Fees 14,342
—
—
—
14,342
Transaction Fees 82,258
11,469
85,440
—
179,167
Fee Credits (59,854 ) (10,893 ) —
—
(70,747 )
Total Management, Monitoring and Transaction Fees, Net 190,587
79,689
85,440
—
355,716

Performance Income (Loss)

Realized Incentive Fees —
4,074
—
—
4,074
Realized Carried Interest 419,438
—
—
—
419,438
Unrealized Carried Interest (96,571 ) 36,933
—
—
(59,638 )
Total Performance Income (Loss) 322,867
41,007
—
—
363,874

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
76,053
76,053
Net Unrealized Gains (Losses) —
—
—
(50,902 ) (50,902 )
Total Realized and Unrealized —
—
—
25,151
25,151
Interest Income and Dividends —
—
—
70,557
70,557
Interest Expense —
—
—
(45,613 ) (45,613 )
Net Interest and Dividends —
—
—
24,944
24,944
Total Investment Income (Loss) —
—
—
50,095
50,095

Total Segment Revenues 513,454
120,696
85,440
50,095
769,685

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 63,482
16,257
16,924
33,958
130,621
Realized Performance Income Compensation 176,075
1,630
—
—
177,705
Unrealized Performance Income Compensation (36,379 ) 16,553
—
—
(19,826 )
Total Compensation and Benefits 203,178
34,440
16,924
33,958
288,500
Occupancy and Related Charges 8,537
1,535
760
3,840
14,672
Other Operating Expenses 42,376
7,672
6,293
14,176
70,517
Total Segment Expenses 254,091
43,647
23,977
51,974
373,689

Income (Loss) attributable to noncontrolling interests —
—
1,046
—
1,046

Economic Net Income (Loss) $ 259,363
$ 77,049
$ 60,417
$ (1,879 ) $ 394,950

Total Assets $ 2,123,892
$ 1,313,920
$ 458,269
$ 11,451,918
$ 15,347,999

As of and for the Three Months Ended September 30, 2016

Private
Markets

Public
Markets

Capital
Markets
Principal Activities Total
Reportable
Segments
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 117,795
$ 83,713
$ —
$ —
$ 201,508
Monitoring Fees 11,091
—
—
—
11,091
Transaction Fees 53,223
10,748
47,383
—
111,354
Fee Credits (37,127 ) (10,265 ) —
—
(47,392 )
Total Management, Monitoring and Transaction Fees, Net 144,982
84,196
47,383
—
276,561

Performance Income (Loss)

Realized Incentive Fees —
3,659
—
—
3,659
Realized Carried Interest 350,469
—
—
—
350,469
Unrealized Carried Interest 53,339
17,012
—
—
70,351
Total Performance Income (Loss) 403,808
20,671
—
—
424,479

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
170,078
170,078
Net Unrealized Gains (Losses) —
—
—
136,740
136,740
Total Realized and Unrealized —
—
—
306,818
306,818
Interest Income and Dividends —
—
—
71,185
71,185
Interest Expense —
—
—
(47,506 ) (47,506 )
Net Interest and Dividends —
—
—
23,679
23,679
Total Investment Income (Loss) —
—
—
330,497
330,497

Total Segment Revenues 548,790
104,867
47,383
330,497
1,031,537

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 47,858
22,022
7,803
24,284
101,967
Realized Performance Income Compensation 157,688
1,463
—
—
159,151
Unrealized Performance Income Compensation 22,588
6,805
—
—
29,393
Total Compensation and Benefits 228,134
30,290
7,803
24,284
290,511
Occupancy and Related Charges 9,248
2,570
330
3,729
15,877
Other Operating Expenses 32,031
8,894
3,552
10,646
55,123
Total Segment Expenses 269,413
41,754
11,685
38,659
361,511

Income (Loss) attributable to noncontrolling interests —
—
760
—
760

Economic Net Income (Loss) $ 279,377
$ 63,113
$ 34,938
$ 291,838
$ 669,266

Total Assets $ 1,835,166
$ 1,179,955
$ 403,609
$ 10,119,919
$ 13,538,649

As of and for the Nine Months Ended September 30, 2017

Private
Markets

Public
Markets

Capital
Markets
Principal Activities Total
Reportable
Segments
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 419,606
$ 251,201
$ —
$ —
$ 670,807
Monitoring Fees 58,072
—
—
—
58,072
Transaction Fees 237,392
41,040
300,235
—
578,667
Fee Credits (177,254 ) (33,894 ) —
—
(211,148 )
Total Management, Monitoring and Transaction Fees, Net 537,816
258,347
300,235
—
1,096,398

Performance Income (Loss)

Realized Incentive Fees —
8,384
—
—
8,384
Realized Carried Interest 890,310
—
—
—
890,310
Unrealized Carried Interest 305,945
71,762
—
—
377,707
Total Performance Income (Loss) 1,196,255
80,146
—
—
1,276,401

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
162,684
162,684
Net Unrealized Gains (Losses) —
—
—
461,111
461,111
Total Realized and Unrealized —
—
—
623,795
623,795
Interest Income and Dividends —
—
—
195,275
195,275
Interest Expense —
—
—
(134,348 ) (134,348 )
Net Interest and Dividends —
—
—
60,927
60,927
Total Investment Income (Loss) —
—
—
684,722
684,722

Total Segment Revenues 1,734,071
338,493
300,235
684,722
3,057,521

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 183,943
58,991
57,053
105,591
405,578
Realized Performance Income Compensation 374,335
3,354
—
—
377,689
Unrealized Performance Income Compensation 126,677
30,485
—
—
157,162
Total Compensation and Benefits 684,955
92,830
57,053
105,591
940,429
Occupancy and Related Charges 24,174
5,140
2,052
11,082
42,448
Other Operating Expenses 97,255
24,244
15,320
40,265
177,084
Total Segment Expenses 806,384
122,214
74,425
156,938
1,159,961

Income (Loss) attributable to noncontrolling interests —
—
3,810
—
3,810

Economic Net Income (Loss) $ 927,687
$ 216,279
$ 222,000
$ 527,784
$ 1,893,750

Total Assets $ 2,123,892
$ 1,313,920
$ 458,269
$ 11,451,918
$ 15,347,999

As of and for the Nine Months Ended September 30, 2016

Private
Markets

Public
Markets

Capital
Markets
Principal Activities Total
Reportable
Segments
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 354,376
$ 245,349
$ —
$ —
$ 599,725
Monitoring Fees 52,126
—
—
—
52,126
Transaction Fees 114,021
17,768
144,214
—
276,003
Fee Credits (93,042 ) (16,230 ) —
—
(109,272 )
Total Management, Monitoring and Transaction Fees, Net 427,481
246,887
144,214
—
818,582

Performance Income (Loss)

Realized Incentive Fees —
9,897
—
—
9,897
Realized Carried Interest 749,194
3,838
—
—
753,032
Unrealized Carried Interest (131,386 ) (3,370 ) —
—
(134,756 )
Total Performance Income (Loss) 617,808
10,365
—
—
628,173

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
370,594
370,594
Net Unrealized Gains (Losses) —
—
—
(725,699 ) (725,699 )
Total Realized and Unrealized —
—
—
(355,105 ) (355,105 )
Interest Income and Dividends —
—
—
253,756
253,756
Interest Expense —
—
—
(144,497 ) (144,497 )
Net Interest and Dividends —
—
—
109,259
109,259
Total Investment Income (Loss) —
—
—
(245,846 ) (245,846 )

Total Segment Revenues 1,045,289
257,252
144,214
(245,846 ) 1,200,909

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 142,500
61,193
23,374
72,689
299,756
Realized Performance Income Compensation 317,178
5,493
—
—
322,671
Unrealized Performance Income Compensation (47,377 ) (1,347 ) —
—
(48,724 )
Total Compensation and Benefits 412,301
65,339
23,374
72,689
573,703
Occupancy and Related Charges 27,212
7,252
1,901
11,121
47,486
Other Operating Expenses 95,166
28,102
10,870
32,404
166,542
Total Segment Expenses 534,679
100,693
36,145
116,214
787,731

Income (Loss) attributable to noncontrolling interests —
—
2,002
—
2,002

Economic Net Income (Loss) $ 510,610
$ 156,559
$ 106,067
$ (362,060 ) $ 411,176

Total Assets $ 1,835,166
$ 1,179,955
$ 403,609
$ 10,119,919
$ 13,538,649

Reconciliations of Total Segment Amounts

The following tables reconcile the ~~most directly comparable financial measures calculated~~Segment Revenues, Segment Operating Earnings, and ~~presented~~Segment Assets to their equivalent GAAP measure:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Total GAAP Revenues	$	1,858,413	$	4,483,365	$	3,192,500	$	12,182,552
Impact of Consolidation and Other	207,822		134,524		593,340		392,883
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)	572,863		(1,526,667)		2,442,080		(5,736,707)
Realized Carried Interest	496,494		413,114		1,799,870		1,183,826
Realized Investment Income	284,979		447,565		911,221		1,277,701
Capstone Fees	(20,748)		(25,178)		(55,743)		(66,286)
Expense Reimbursements	(10,733)		(34,857)		(77,612)		(122,642)
Insurance Adjustments:
Net Premiums	(480,462)		(974,903)		(627,104)		(1,698,912)
Policy Fees	(320,206)		(310,381)		(964,349)		(824,326)
Other Income	(35,632)		(31,938)		(102,888)		(82,160)
Investment Gains and Losses	(11,584)		(156,909)		176,559		83,153
Derivative Gains and Losses	184,303		53,179		945,996		47,151
Total Segment Revenues (1)	$	2,725,509	$	2,470,914	$	8,233,870	$	6,636,233

(1)Total Segment Revenues is comprised of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, (v) Realized Investment Income, and (vi) Net Investment Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Income (Loss) Before Tax (GAAP)	$	(52,153)	$	3,660,927	$	(1,110,231)	$	12,621,574
Impact of Consolidation and Other	97,699		(1,472,312)		(168,246)		(4,985,859)
Interest Expense	83,335		63,446		229,414		185,100
Equity-based compensation - KKR Holdings(1)	19,500		8,764		119,834		35,734
Asset Management Adjustments:
Net Unrealized (Gains) Losses	233,265		(598,304)		1,734,293		(2,890,326)
Unrealized Carried Interest	1,094,782		(911,156)		3,946,182		(3,872,150)
Unrealized Carried Interest Compensation (Carry Pool)	(468,785)		397,449		(1,629,011)		1,667,447
Strategic Corporate Transaction-Related Charges(2)	17,925		7,362		88,129		17,497
Equity-based compensation	50,566		44,488		156,259		138,196
Equity-based compensation - Performance based	58,943		18,022		176,727		50,073
Insurance Adjustments:(3)
Net (Gains) Losses from Investments and Derivatives	(54,585)		(75,241)		(120,033)		183,842
Strategic Corporate Transaction-Related Charges	4,413		3,931		14,120		15,947
Equity-based and Other Compensation	41,102		40,086		94,711		64,061
Amortization of Acquired Intangibles	4,411		4,412		13,235		11,765
Income Taxes	(44,468)		(9,046)		(125,927)		(63,148)
Total Segment Operating Earnings	$	1,085,950	$	1,182,828	$	3,419,456	$	3,179,753

(1)Represents equity-based compensation expense in connection with the allocation of units of KKR Holdings, which were not dilutive to common stockholders of KKR & Co. Inc.

(2)For the nine months ended September 30, 2022, strategic corporate transaction-related charges include a $40.7 million realized loss from foreign exchange derivatives that were entered in connection with the acquisition of KJRM and that were settled upon closing in the second quarter of 2022.

(3)Amounts include the portion allocable to noncontrolling interests (~39%).

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	As of
	September 30, 2022		September 30, 2021
Total GAAP Assets	$	266,248,640	$	265,799,650
Impact of Consolidation and Reclassifications	(67,485,113)		(65,946,515)
Carry Pool Reclassifications	(1,998,211)		(3,562,686)

Total Segment Assets	$	196,765,316	$	196,290,449

22. EQUITY

Stockholders' Equity

Common Stock

The common stock of KKR & Co. Inc. is entitled to vote as provided by its certificate of incorporation, Delaware General Corporation Law and the rules of the NYSE. Subject to preferences that apply to shares of Series C Mandatory Convertible Preferred Stock and any other shares of preferred stock outstanding at the time on which dividends are payable, the holders of common stock are entitled to receive dividends out of funds legally available if the board of directors, in its discretion, determines to declare dividends and then only at the times and in the amounts that the board of directors may determine. The common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.

Series I and Series II Preferred Stock

Except for any distribution required by Delaware law to be made upon a dissolution event, the holders of Series I preferred stock do not have any economic rights to receive dividends. Series I preferred stock is entitled to vote on various matters that may be submitted to vote of the stockholders and the other matters as set forth in the certificate of incorporation. Upon a dissolution event, each holder of Series I preferred stock will be entitled to a payment equal to $0.01 per share of Series I preferred stock. The Series I preferred stock will be eliminated on the Sunset Date (as defined in the Reorganization Agreement), which is scheduled to occur not later than December 31, 2026.

The Series II preferred stock was eliminated upon the closing of the Reorganization Mergers. Prior to the Reorganization Mergers, for matters on which common stock was entitled to vote, so long as the ratio at which KKR Group Partnership Units was exchangeable for shares of common stock remains on a one-for-one basis, Series II preferred stock was entitled to vote together with common stock as a single class and on an equivalent basis, except Series II preferred stock was entitled to vote separately as a class on any amendment to the certificate of incorporation that changed certain terms, rights or preferences of Series II preferred stock. Prior to the Reorganization Mergers, each holder of Series II preferred stock was entitled to a payment equal to $0.000000001 per share of Series II preferred stock upon a dissolution event.

Series C Mandatory Convertible Preferred Stock

On August 14, 2020, KKR & Co. Inc. issued 23,000,000 shares, or $1.15 billion aggregate liquidation preference, of its 6.00% Series C Mandatory Convertible Preferred Stock (the "Series C Mandatory Convertible Preferred Stock").

Unless converted or redeemed earlier in accordance with ~~GAAP~~the terms of the Series C Mandatory Convertible Preferred Stock, each share of Series C Mandatory Convertible Preferred Stock will automatically convert on the mandatory conversion date, which is expected to ~~KKR’s total reportable segments:~~ be September 15, 2023, into between 1.1662 shares and 1.4285 shares of common stock, in each case, subject to customary anti-dilution adjustments described in the certificate of designations related to the Series C Mandatory Convertible Preferred Stock. The number of shares of common stock issuable upon conversion will be determined based on the average volume weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to September 15, 2023.

~~Fees and Other~~

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Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Fees and Other $ 692,877
$ 687,056
$ 2,340,617
$ 1,426,618
Plus: Management fees relating to consolidated funds and placement fees 54,012
49,017
153,414
131,335
Less: Fee credits relating to consolidated funds 106
417
3,752
2,766
Plus: Net realized and unrealized carried interest - consolidated funds 22,341
5,956
43,782
15,581
Plus: Total investment income (loss) 50,095
330,497
684,722
(245,846 )
Less: Revenue earned by oil & gas producing entities 12,441
16,191
47,096
47,977
Less: Reimbursable expenses 27,506
12,064
87,131
46,583
Less: Other 9,587
12,317
27,035
29,453
Total Segment Revenues $ 769,685
$ 1,031,537
$ 3,057,521
$ 1,200,909
Dividends on the Series C Mandatory Convertible Preferred Stock will be payable on a cumulative basis when, as and if declared by our board of directors, or an authorized committee thereof, at an annual rate of 6.00% on the liquidation preference of $50.00 per share of Series C Mandatory Convertible Preferred Stock, and may be paid in cash or, subject to certain limitations, in shares of common stock or, subject to certain limitations, any combination of cash and shares of common stock. If declared, dividends on the Series C Mandatory Convertible Preferred Stock will be payable quarterly on March 15, June 15, September 15 and December 15 of each year to, and including, September 15, 2023, commencing on December 15, 2020.

~~Expenses~~

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Total Expenses $ 530,247
$ 511,117
$ 1,699,989
$ 1,242,658
Less: Equity based compensation 72,250
61,552
271,226
186,032
Less: Reimbursable expenses and placement fees 37,508
18,255
132,491
72,887
Less: Operating expenses relating to consolidated funds, CFEs and other entities 21,858
20,141
56,517
85,093
Less: Expenses incurred by oil & gas producing entities 10,725
17,782
34,826
56,000
Less: Intangible amortization 2,473
22,112
13,901
35,640
Less: Other 11,744
9,764
31,067
19,275
Total Segment Expenses $ 373,689
$ 361,511
$ 1,159,961
$ 787,731

~~Net Income (Loss) Attributable~~Upon KKR & Co. Inc.’s voluntary or involuntary liquidation, winding-up or dissolution, each holder of the Series C Mandatory Convertible Preferred Stock would be entitled to receive a liquidation preference in the amount of $50.00 per share of Series C Mandatory Convertible Preferred Stock, plus an amount equal to accumulated and unpaid dividends on such shares, whether or not declared, to, but excluding, the date fixed for liquidation, winding-up or dissolution, to be paid out of KKR & Co. Inc.’s assets legally available for distribution to its stockholders after satisfaction of debt and other liabilities owed to KKR & Co. ~~L.P. Common Unitholders~~Inc.’s creditors and holders of shares of its stock ranking senior to the Series C Mandatory Convertible Preferred Stock and before any payment or distribution is made to holders of any stock ranking junior to the Series C Mandatory Convertible Preferred Stock, including, without limitation, common stock.

Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders $ 153,563
$ 352,152
$ 818,552
$ 116,103
Plus: Preferred Distributions 8,341
8,201
25,023
13,894
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. 115,434
284,834
637,146
86,659
Plus: Non-cash equity-based charges 78,728
61,552
277,704
186,032
Plus: Amortization of intangibles, placement fees and other, net ⁽¹⁾
20,464
(48,299 ) 57,825
(10,273 )
Plus: Income tax (benefit) 18,420
10,826
77,500
18,761
Economic Net Income (Loss) $ 394,950
$ 669,266
$ 1,893,750
$ 411,176

~~(1) Other primarily represents~~In connection with the ~~statement of operations impact~~issuance of the accounting convention differences for (i) direct interests in oil & natural gas properties outside of investment funds and (ii) certain interests in consolidated CLOs and other entities. On a segment basis, direct interests in oil & natural gas properties outside of investment funds are carried at fair value with changes in fair value recorded in Economic Net Income (Loss) and certain interests in consolidated CLOs and other entities are carried at cost. See Note 2 "Summary of Significant Accounting Policies" forSeries C Mandatory Convertible Preferred Stock, the ~~GAAP accounting for these direct interests in oil and natural gas producing properties outside investment funds and interests in consolidated CLOs and other entities.~~

The items that reconcile KKR’s total reportable segments to the corresponding consolidated amounts calculated and presented in accordance with GAAP for net income (loss) attributable to redeemable noncontrolling interests and income (loss) attributable to noncontrolling interests are primarily attributable to the impactlimited partnership agreement of KKR ~~Holdings L.P., KKR's consolidated funds and certain other entities.~~Group Partnership was amended to provide for preferred units with economic terms designed to mirror those of the Series C Mandatory Convertible Preferred Stock.

~~Assets~~

As of September 30,
2017 2016
Total Assets $ 44,305,639
$ 37,984,599
Less: Impact of consolidation of funds and other entities ⁽¹⁾
27,524,641
23,013,503
Less: Carry pool reclassification from liabilities 1,131,071
1,121,510
Less: Impact of KKR Management Holdings Corp. 301,928
310,937
Total Segment Assets $ 15,347,999
$ 13,538,649

(1) Includes accounting basis difference for oil & natural gas properties of $19,358 and $5,966 as of September 30, 2017 and 2016, respectively.

~~15. EQUITY~~

~~Reorganization of India Capital Markets and Corporate NBFC~~

On March 30, 2017, KKR reorganized KKR’s Indian capital markets and credit asset management businesses, to create KKR India Financial Investments Pte. Ltd. or “KIFL”. KKR owns 60% of KIFL. This reorganization transaction was accounted for as a transfer of interests under common control, and the difference between KKR’s carrying value before and after the transaction was treated as a reallocation of equity interests, and no gain or loss was recognized in the consolidated financial statements. This reallocation amounted to an increase to KKR’s equity of $10.3 million and to KKR Holdings of $7.9 million.

~~Unit~~Share Repurchase Program

Since October 27, 2015, KKR has authorized a total of $750.0 million to repurchase its common units, of which $459.0 million has been spent to repurchase 31.7 million common units as of October 23, 2017. Under ~~this common unit~~KKR's repurchase program, shares of common ~~units~~stock of KKR & Co. Inc. may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any ~~unit~~ repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. In addition to the repurchases of common stock, the repurchase program will be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards granted pursuant to our Equity Incentive Plans representing the right to receive common stock. KKR expects that the program, which has no expiration date, will be in effect until the maximum approved dollar amount has been ~~used to repurchase common units.~~used. The program does not require KKR to repurchase or retire any specific number of shares of common ~~units,~~stock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at any time. ~~See condensed~~As of October 28, 2022, the remaining amount available under the repurchase program was approximately $78 million.

The following table presents KKR & Co. Inc. common stock that has been repurchased or equity awards retired under the repurchase program:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Shares of common stock repurchased	—	—	5,191,174	2,667,995
Equity awards for common stock retired	—	—	596,437	2,366,447

Noncontrolling Interests

Noncontrolling interests represent (i) noncontrolling interests in consolidated ~~statements~~entities and (ii) noncontrolling interests held by KKR Holdings before the closing of the Reorganization Mergers described in Note 1 "Organization".

Noncontrolling Interests in Consolidated Entities and Other

Noncontrolling interests in consolidated entities represent the non-redeemable ownership interests in KKR that are held primarily by:

(i)third party fund investors in KKR's consolidated funds and certain other entities;

(ii)third parties entitled to up to 1% of the carried interest received by certain general partners of KKR's funds that have made investments on or prior to December 31, 2015;

(iii)certain former principals and their designees representing a portion of the carried interest received by the general partners of KKR's private equity funds that was allocated to them with respect to private equity investments made during such former principals' tenure with KKR prior to October 1, 2009;

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(iv)certain former principals representing all of the capital invested by or on behalf of the general partners of KKR's private equity funds prior to October 1, 2009 and any returns thereon;

(v)third parties in KKR's Capital Markets business line;

(vi)certain current and former employees who hold exchangeable securities; and

(vii)third parties in KKR's insurance business including GA Rollover Investors, GA Co-Investors and third party investors in Global Atlantic's consolidated renewable energy entities and certain other entities.

Noncontrolling Interests held by KKR Holdings

Noncontrolling interests held by KKR Holdings prior to the Reorganization Mergers consisted of economic interests held by principals indirectly in KKR Group Partnership Units. Such principals received financial benefits from KKR's business in the form of distributions received from KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Units held by KKR Holdings. These financial benefits were not paid by KKR & Co. Inc. and were borne by KKR Holdings. As described in Note 1 "Organization", KKR completed the Reorganization Mergers on May 31, 2022 and acquired KKR Holdings and all of the KKR Group Partnership Units held by it.

The following tables present the calculation of total noncontrolling interests:



	Three Months Ended September 30, 2022
	Noncontrolling Interests in Consolidated Entities and Other		Noncontrolling Interests Held by KKR Holdings		Total Noncontrolling Interests
Balance at the beginning of the period	$	33,664,541	$	—	$	33,664,541
Net income (loss) attributable to noncontrolling interests (1)	(6,792)		—		(6,792)
Other comprehensive income (loss), net of tax (2)	(815,541)		—		(815,541)

Equity-based and other non-cash compensation	65,179		—		65,179
Capital contributions	3,685,933		—		3,685,933
Capital distributions	(2,143,703)		—		(2,143,703)


Balance at the end of the period	$	34,449,617	$	—	$	34,449,617


	Nine Months Ended September 30, 2022
	Noncontrolling Interests in Consolidated Entities and Other		Noncontrolling Interests Held by KKR Holdings		Total Noncontrolling Interests
Balance at the beginning of the period	$	32,043,699	$	8,430,866	$	40,474,565
Net income (loss) attributable to noncontrolling interests (1)	271,678		(313,019)		(41,341)
Other comprehensive income (loss), net of tax (2)	(3,434,340)		(1,074,414)		(4,508,754)
Exchange of KKR Holdings Units to Common Stock (3)	—		(12,865)		(12,865)
Equity-based and other non-cash compensation	193,907		100,334		294,241
Capital contributions	11,117,981		—		11,117,981
Capital distributions	(5,588,024)		(171,580)		(5,759,604)
Holdings Merger (4)	—		(6,959,322)		(6,959,322)
Change in KKR & Co. Inc.'s Ownership Interest	(155,284)		—		(155,284)
Balance at the end of the period	$	34,449,617	$	—	$	34,449,617

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	Three Months Ended September 30, 2021
	Noncontrolling Interests in Consolidated Entities and Other		Noncontrolling Interests Held by KKR Holdings		Total Noncontrolling Interests
Balance at the beginning of the period	$	28,402,888	$	7,935,515	$	36,338,403
Net income (loss) attributable to noncontrolling interests (1)	1,452,730		670,839		2,123,569
Other comprehensive income (loss), net of tax (2)	(54,640)		(31,904)		(86,544)

Equity-based and other non-cash compensation	32,255		8,764		41,019
Capital contributions	3,658,497		—		3,658,497
Capital distributions	(1,981,504)		(49,844)		(2,031,348)

Changes in consolidation	(12,352)		—		(12,352)
Balance at the end of the period	$	31,497,874	$	8,533,370	$	40,031,244



	Nine Months Ended September 30, 2021
	Noncontrolling Interests in Consolidated Entities and Other		Noncontrolling Interests Held by KKR Holdings		Total Noncontrolling Interests
Balance at the beginning of the period	$	20,570,716	$	6,512,382	$	27,083,098
Net income (loss) attributable to noncontrolling interests (1)	4,889,401		2,425,961		7,315,362
Other comprehensive income (loss), net of tax (2)	(132,351)		(77,377)		(209,728)
Exchange of KKR Holdings Units to Common Stock(3)	—		(122,065)		(122,065)
Equity-based and other non-cash compensation	71,993		35,734		107,727
Capital contributions	9,721,024		25		9,721,049
Capital distributions	(3,734,474)		(241,290)		(3,975,764)
Impact of Acquisition (5)	190,405		—		190,405
Changes in consolidation	(78,840)		—		(78,840)
Balance at the end of the period	$	31,497,874	$	8,533,370	$	40,031,244

(1)Refer to the table below for calculation of net income (loss) attributable to noncontrolling interests formerly held by KKR Holdings.

(2)With respect to noncontrolling interests formerly held by KKR Holdings, calculated on a pro rata basis based on the weighted average KKR Group Partnership Units formerly held by KKR Holdings during the reporting period.

(3)Calculated based on the proportion of KKR Holdings units exchanged for KKR & Co. Inc. common stock. The exchange agreement with KKR Holdings provided for the exchange of KKR Group Partnership Units held by KKR Holdings for KKR & Co. Inc. common stock.

(4)Refer to Note 1 "Organization" for further information on the Reorganization Mergers that closed on May 31, 2022, pursuant to which KKR acquired KKR Holdings and all of the KKR Group Partnership Units held by it, and all outstanding KKR Holdings units were exchanged for KKR & Co. Inc. common stock.

(5)Represents other noncontrolling interests at the GA Acquisition Date.

Net income (loss) attributable to each of KKR & Co. Inc. common stockholders, KKR Holdings prior to the Reorganization Mergers, and holders of exchangeable securities, with the exception of certain tax assets and liabilities that are directly allocable to KKR & Co. Inc., is attributed based on the percentage of the weighted average KKR Group Partnership Units directly or indirectly held by them. However, primarily because of the (i) contribution of certain expenses borne entirely by KKR Holdings prior to the Reorganization Mergers and holders of exchangeable securities, (ii) the periodic exchange of KKR Holdings units for KKR & Co. Inc. common stock pursuant to the exchange agreement prior to the Reorganization Mergers and (iii) the contribution of certain expenses borne entirely by KKR associated with the Equity Incentive Plans, equity allocations shown in the consolidated statement of changes in equity ~~for the amount~~differ from their respective pro rata ownership interests in KKR's net assets.

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Table of ~~common units repurchased during the nine months ended September 30, 2016. There were no common units repurchased pursuant~~Contents

The following table presents net income (loss) attributable to ~~this program during the nine months ended September 30, 2017.~~noncontrolling interests held by KKR Holdings:

~~Distribution Policy~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss)	$	(79,587)	$	3,281,645	$	(981,395)	$	11,459,886
(-) Net income (loss) attributable to Redeemable Noncontrolling Interests	1,601		1,519		1,546		2,856
(-) Net income (loss) attributable to Noncontrolling Interests in consolidated entities and other	(6,792)		1,452,730		271,678		4,889,401
(-) Series A and B Preferred Stock Dividends	—		7,953		—		36,647
(-) Series C Mandatory Convertible Preferred Stock Dividends	17,250		17,250		51,750		51,750
(+) Income tax expense (benefit) attributable to KKR & Co. Inc.	(45,975)		311,745		(313,679)		1,104,628

Net income (loss) attributable to KKR & Co. Inc. Common Stockholders and KKR Holdings	$	(137,621)	$	2,113,938	$	(1,620,048)	$	7,583,860

Net income (loss) attributable to Noncontrolling Interests held by KKR Holdings	$	—	$	670,839	$	(313,019)	$	2,425,961

~~Under KKR's distribution policy for its common units, KKR intends~~

23. REDEEMABLE NONCONTROLLING INTERESTS

Global Atlantic has redeemable non-controlling interests related to ~~make equal quarterly distributions to holders~~renewable energy entities of ~~its common units in an amount of $0.17~~ per common unit per quarter. The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all, that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR or that any particular distribution policy will be maintained.

~~16. GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill~~

~~As of December 31, 2016, the carrying value of goodwill was $89.0 million, which was allocated to Public Markets and Principal Activities in the amounts of $59.0~~approximately $82.1 million and ~~$30.0~~$82.5 million respectively. As part of the PAAMCO Prisma transaction that occurred on June 1, 2017, goodwill of $5.5 million was included in determining the gain on the contribution of Prisma to PAAMCO Prisma. In accordance with ASC 350, the amount of goodwill included in the gain calculation was based on the relative fair values of Prisma, which was integrated in Public Markets, and the remaining portion of Public Markets. Subsequent to this transaction the remaining carrying value of goodwill in Public Markets and Principal Activities is $53.5 million and $30.0 million, respectively, as of September 30, ~~2017.~~

~~Goodwill~~2022 and December 31, 2021, respectively, as determined by the hypothetical liquidation book value ("HLBV") method, respectively. The estimated redemption value of redeemable non-controlling interests is ~~recorded in Other Assets~~calculated as the discounted cash flows subsequent to the expected flip date of the respective renewable energy entity. The flip date represents the date at which the allocation of income and cash flows among the investors in the ~~condensed consolidated statements~~entity is adjusted, pursuant to the redeemable non-controlling interest investors having achieved an agreed-upon return. The flip date of ~~financial condition. All of~~renewable energy partnerships determines when the ~~goodwill is currently expected~~redeemable non-controlling interests are eligible to be ~~deductible for tax purposes. See Note 8 “Other Assets~~redeemed. Eligible redemption dates range from January 1, 2028 to June 30, 2028. For the redeemable non-controlling interests outstanding as of both September 30, 2022 and ~~Accounts Payable, Accrued Expenses and Other Liabilities.”~~December 31, 2021, the estimated redemption value that would be due at the respective redemption dates is $5.3 million.

~~Intangible Assets~~

~~Intangible Assets, Net consists of the following:~~

September 30, 2017 December 31, 2016
Finite-Lived Intangible Assets $ 74,524
$ 251,768
Accumulated Amortization (57,086 ) (116,744 )
Intangible Assets, Net $ 17,438
$ 135,024

~~Changes in Intangible Assets, Net consists of the following:~~

Nine Months Ended
September 30, 2017
Balance, Beginning of Period $ 135,024
Amortization Expense (13,891 )
Foreign Exchange 1,938
Other ⁽¹⁾
(105,633 )
Balance, End of Period $ 17,438

(1) Represents the removal of intangible assets in connection with the PAAMCO Prisma transaction.

~~17.~~24. COMMITMENTS AND CONTINGENCIES

~~Debt Covenants~~

Borrowings of KKR contain various debt covenants. These covenants do not, in management’s opinion, materially restrict KKR’s operating business or investment strategies as of September 30, 2017. KKR is in compliance with its debt covenants in all material respects as of September 30, 2017.

Funding Commitments

and Others

As of September 30, ~~2017,~~2022, KKR had unfunded commitments consisting of ~~$2,937.4 million~~$10.7 billion to its ~~active private equity~~investment funds and ~~other~~vehicles. KKR has also agreed for certain of its investment ~~vehicles.~~ vehicles to fund or otherwise be liable for a portion of their investment losses (up to a maximum of approximately $116 million) and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).

In addition to ~~the~~these uncalled commitments and funding obligations to KKR's investment funds and vehicles, KKR has entered into contractual commitments primarily with respect to ~~(i) the purchase of investments and other assets in its Principal Activities segment, and (ii)~~ underwriting transactions, debt financing, revolving credit facilities, and syndications in KKR's Capital Markets ~~segment.~~business line. As of September 30, ~~2017,~~2022, these commitments amounted to ~~$93.4 million and $255.7 million, respectively.~~$655.4 million. Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. ~~The unfunded commitments shown for~~ KKR's ~~Capital Markets segment are shown without reflecting~~capital markets business has arrangements ~~that may~~with third parties, which reduce ~~the actual amount of contractual commitments shown. Our capital market business entered into an arrangement that reduces our~~its risk when underwriting certain debt ~~transactions.~~transactions, and thus our unfunded commitments as of September 30, 2022 have been reduced to reflect the amount to be funded by such third parties. In the case of purchases of investments or assets in our Principal Activities ~~segment,~~business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be ~~less than shown.~~less.

Global Atlantic has commitments to purchase or fund investments of $2.5 billion and $2.0 billion as of September 30, 2022 and December 31, 2021, respectively. These commitments include those related to commercial mortgage loans, other lending facilities and other investments. For those commitments that represent a contractual obligation to extend credit, Global Atlantic has recorded a liability of $23.8 million for current expected credit losses as of September 30, 2022.

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In addition, Global Atlantic has entered into certain forward flow agreements to purchase loans. Global Atlantic's obligations under these agreements are subject to change, curtailment, and cancellation based on various provisions including repricing mechanics, due diligence reviews, and performance or pool quality, among other factors.

Non-cancelable Operating Leases

KKR's non-cancelable operating leases consist of leases of office space around the world. There are no material rent holidays, contingent rent, rent concessions or leasehold improvement incentives associated with any of these property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions and rent expense is recognized on a straight‑line basis over the term of the lease agreement.

Global Atlantic also enters into land leases for its consolidated investments in renewable energy.

Contingent Repayment Guarantees

The partnership documents governing ~~KKR’s~~KKR's carry-paying investment funds ~~including funds relating to private equity, infrastructure, energy, real estate, mezzanine, direct lending~~ and ~~special situations investments,~~vehicles generally include a ~~“clawback”~~"clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. Excluding carried interest received by the general partners of funds that were not contributed to KKR in the acquisition of the assets and liabilities of KKR & Co. (Guernsey) L.P. (formerly known as KKR Private Equity Investors, L.P.) on October 1, 2009 (the “KPE Transaction”), as

As of September 30, ~~2017, $47.3~~2022, approximately $507 million of carried interest was subject to this clawback obligation, assuming that all applicable ~~carry paying~~carry-paying funds and their alternative investment vehicles were liquidated at their September 30, ~~2017~~2022 fair values. ~~Had~~Although KKR would be required to remit the entire amount to fund investors that are entitled to receive the clawback payment, KKR would be entitled to seek reimbursement of approximately $203 million of that amount from KKR Associates Holdings L.P., which is not a KKR subsidiary. As of September 30, 2022, KKR Associates Holdings L.P. had access to cash reserves sufficient to reimburse the full $203 million that would be due to KKR. If the investments in ~~such~~all carry-paying funds ~~been~~were to be liquidated at zero value, the clawback obligation would have been ~~$1,990.7 million.~~ approximately $2.6 billion, and KKR would be entitled to seek reimbursement of approximately $1.1 billion of that amount from KKR Associates Holdings L.P. KKR will acquire control of KKR Associates Holdings L.P. when a subsidiary of KKR becomes its general partner upon the closing of the transactions contemplated to occur on the Sunset Date (as defined in the Reorganization Agreement), which will occur not later than December 31, 2026.

Carried interest is recognized in the ~~statement~~consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the ~~fund’s~~fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of ~~KKR’s~~KKR's investment balance as this is where carried interest is initially recorded.

Prior to the KPE Transaction in 2009, certain principals who received carried interest distributions with respect to certain private equity funds contributed to KKR had personally guaranteed, on a several basis and subject to a cap, the contingent obligations of the general partners of such private equity funds to repay amounts to fund investors pursuant to the general partners’ clawback obligations. The terms of the KPE Transaction require that principals remain responsible for any clawback obligations relating to carry distributions received prior to the KPE Transaction, up to a maximum of $223.6 million. Through investment realizations, the principals' potential exposure has been reduced to $72.2 million as of September 30, 2017. Using valuations as of September 30, 2017, $19.7 million would be due with respect to the clawback obligation required to be funded by principals. Carry distributions arising subsequent to the KPE Transaction may give rise to clawback obligations that may be allocated generally to KKR and persons who participate in the carry pool. In addition, guarantees of or similar arrangements relating to clawback obligations in favor of third party investors in an individual investment partnership by entities KKR owns may limit distributions of carried interest more generally.

Indemnifications and Other Guarantees

KKR may incur contingent liabilities for claims that may be made against it in the future. KKR enters into contracts that contain a variety of representations, warranties and covenants, including indemnifications. For example, KKR (including KFN) and certain of ~~KKR’s~~KKR's investment funds ~~and KFN~~ have provided and provide certain indemnities relating to environmental and other matters and have provided ~~nonrecourse~~and provide non-recourse carve-out guarantees for fraud, willful misconduct and other ~~customary~~ wrongful acts, each in connection with the financing of (i) certain real estate investments that we have made, including KKR's corporate real estate and (ii) certain investment vehicles that KKR ~~has made. In addition,~~manages or sponsors. KKR's maximum exposure under these arrangements is currently unknown and KKR's liabilities for these matters would require a claim to be made against KKR ~~has also provided~~in the future.

KKR provides credit support to certain of its ~~subsidiaries’~~subsidiaries' obligations in connection with a limited number of investment vehicles that KKR manages. For example, KKR has guaranteed the obligations of a general partner to post collateral on behalf

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of its investment vehicle in connection with such ~~vehicle’s~~vehicle's derivative ~~transactions, and~~transactions. KKR has also ~~agreed~~entered into a contingent guarantee for a subsidiary's loan repayment obligations, which does not become effective unless and until its loan becomes accelerated due to ~~be liable for~~ certain specified events of default involving the investment ~~losses and/or for providing liquidity in the events specified in the governing documents of another investment vehicle.~~vehicles managed by it. KKR ~~has~~ also ~~provided~~(i) provides credit support regarding repayment and funding obligations to ~~third party~~third-party lenders toon behalf of certain ~~of its~~ employees, excluding its executive officers, in connection with their personal investments in KKR investment funds and a levered multi-asset investment vehicle and (ii) provides credit support to a ~~strategic partner regarding the ownership of its business.~~ hedge fund partnership.

KKR may also ~~may~~ become liable for certain fees payable to sellers of businesses or assets if a transaction does not close, subject to certain conditions, if any, specified in the acquisition agreements for such businesses or assets. ~~KKR’s maximum exposure under these arrangements~~

The Global Atlantic business was formerly owned by The Goldman Sachs Group, Inc. (together with its subsidiaries, "Goldman Sachs"). In connection with the separation of Global Atlantic from Goldman Sachs in 2013, Global Atlantic entered into a tax benefit payment agreement with Goldman Sachs. Under the tax benefit payment agreement, GA FinCo is ~~currently unknown and KKR's liabilities for these matters would require a claim~~obligated to make annual payments out of available cash, guaranteed by Global Atlantic Financial Group Limited ("GAFG"), to Goldman Sachs over an approximately 25-year period totaling $214.0 million. As of September 30, 2022, the present value of the remaining amount to be ~~made against KKR~~paid is $66.4 million. Although these payments are subordinated and deferrable, deferral of these payments would result in restrictions on distributions by GA FinCo and GAFG.

In lieu of funding certain investments in loan facilities to third party borrowers in cash, Global Atlantic has arranged or participated in letters of credit issued by third-party banks on behalf of the borrowers in the ~~future.~~amount of $32.9 million, as of September 30, 2022, with expiration dates between October 2022 to December 2024. Global Atlantic has available lines of credit that would allow for additional letters of credit to be issued on behalf of certain borrowers, up to $232.1 million, as of September 30, 2022. For accounting purposes, these letters of credit are considered guarantees of certain obligations of the borrowers. If a letter of credit were to be drawn, Global Atlantic would be obligated to repay the issuing third-party bank, and Global Atlantic would recognize a loan receivable from the borrowers on the consolidated statements of financial condition. Global Atlantic monitors the likelihood of these letters of credit being drawn, and any related contingent obligation. As of both September 30, 2022 and December 31, 2021, the expected credit loss on the contingent liability associated with these letters of credit was not material.

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Litigation

From time to time, KKR (including Global Atlantic) is involved in various legal proceedings, lawsuits, arbitration and claims incidental to the conduct of ~~KKR’s business. KKR’s business is~~KKR's businesses. KKR's asset management and insurance businesses are also subject to extensive regulation, which may result in regulatory proceedings against ~~it.~~them.

In December 2017, KKR & Co. L.P. (which is now KKR & Co. Inc.) and its then Co-Chief Executive Officers were named as defendants in a lawsuit filed in Kentucky state court alleging, among other things, the violation of fiduciary and other duties in connection with certain separately managed accounts that Prisma Capital Partners LP, a former subsidiary of KKR, manages for the Kentucky Retirement Systems. Also named as defendants in the lawsuit are certain current and former trustees and officers of the Kentucky Retirement Systems, Prisma Capital Partners LP, and various other service providers to the Kentucky Retirement Systems and their related persons. KKR and other defendants’ motions to dismiss were denied by the trial court in November 2018, but in April 2019 the Kentucky Court of Appeals vacated the trial court's opinion and order denying the motions to dismiss the case for lack of standing. The decision of the Court of Appeals was appealed by plaintiffs to the Supreme Court of Kentucky. On July 9, 2020, the Supreme Court of Kentucky reversed the trial court's order and remanded the case to the trial court with direction to dismiss the complaint for lack of constitutional standing. On July 20, 2020, the Office of the Attorney General, on behalf of the Commonwealth of Kentucky, filed a motion to intervene as a plaintiff in the lawsuit and on July 21, 2020 filed a new lawsuit in the same Kentucky trial court making essentially the same allegations against the defendants, including KKR & Co. Inc. and Messrs. Kravis and Roberts. On July 29, 2020, certain private plaintiffs in the original lawsuit filed a motion to further amend their original complaint and to add new plaintiffs. On July 30, 2020, KKR and other defendants filed objections to the Attorney General’s motion to intervene. On December 28, 2020, the trial court dismissed the complaint filed by the original plaintiffs and denied their motion to amend their original complaint and add new plaintiffs, but granted the Office of the Attorney General’s motion to intervene. In January 2021, some of the attorneys for the private plaintiffs in the original lawsuit filed a new lawsuit, and a motion to intervene in the original lawsuit, on behalf of a new set of plaintiffs, who claim to be "Tier 3" members of Kentucky Retirement Systems, alleging substantially the same allegations as in the original lawsuit. The motion to intervene in the original lawsuit was denied. These "Tier 3" plaintiffs appealed the denial of their motion to intervene but then voluntarily dismissed their appeal on January 31, 2022. In addition, the Kentucky Retirement Systems had commissioned an investigation into certain matters alleged in the Attorney General's complaint. The trial court ordered that this investigation be completed by May 17, 2021, and the Attorney General was permitted to amend its complaint after reviewing the investigation's report within ten days of the Attorney General's receipt of it. On May 24, 2021, the Attorney General filed a First Amended Complaint on behalf of the Commonwealth of Kentucky. This complaint continues to name KKR & Co. L.P. and its then Co-Chief Executive Officers, as defendants, and makes similar allegations against them. KKR and the other defendants moved to dismiss the First Amended Complaint on July 30, 2021. The court held oral argument on these motions to dismiss on December 14, 2021. On July 9, 2021, the individual plaintiffs served an amended complaint, which purports to assert, on behalf of a class of beneficiaries of Kentucky Retirement Systems, direct claims for breach of fiduciary duty and civil violations under the Racketeer Influenced and Corrupt Organizations Act ("RICO"). This complaint was removed to the U.S. District Court for the Eastern District of Kentucky, which has entered an order staying this case until the completion of the Attorney General’s lawsuit on behalf of the Commonwealth. On August 20, 2021, the same and other individual plaintiffs filed a second complaint in Kentucky state court, purportedly on behalf of Kentucky Retirement Systems' funds, alleging the same claims against KKR & Co. Inc. and Messrs. Kravis and Roberts as in the July 9th amended complaint but without the RICO or class action allegations. KKR and the other defendants have moved to dismiss the August 20th complaint. On March 24, 2022, in a separate declaratory judgment action brought by the Commonwealth of Kentucky regarding the enforceability of certain indemnification provisions available to KKR & Co. Inc. and Prisma Capital Partners LP, the Kentucky state court found that it has personal jurisdiction over KKR & Co. Inc., and this finding is currently being appealed by KKR. On May 27, 2022, following a motion by KKR, the judge then adjudicating the lawsuits recused himself from the original 2017 action and the second Tier 3 action, and a new judge was assigned.

KKR (including Global Atlantic) currently is and expects to continue to become, from time to time, subject to examinations, inquiries and investigations by various U.S. and ~~non U.S.~~non-U.S. governmental and regulatory agencies, including but not limited to the SEC, U.S. Department of Justice, U.S. state attorney generals, Financial Industry Regulatory Authority ~~or FINRA, and~~("FINRA"), the U.K. Financial Conduct Authority, Central Bank of Ireland, Monetary Authority of Singapore, U.S. state insurance regulatory authorities, and the Bermuda Monetary Authority. Such examinations, inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings or fines against KKR or its personnel. KKR is presently subject to civil investigations and inquiries by the U.S. Department of Justice related to antitrust matters and by the SEC related to business-related electronic communications. KKR is cooperating with these civil investigations and inquiries, and while their outcomes and any related financial impact cannot yet be predicted or reasonably estimated, KKR does not presently believe that they will have a material adverse effect on KKR's financial condition or results of operations.

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Moreover, in the ordinary course of business, KKR (including Global Atlantic) is and can be both the defendant and the plaintiff in numerous lawsuits with respect to acquisitions, bankruptcy, insolvency and other ~~types of proceedings.~~events. Such lawsuits may involve claims that adversely affect the value of certain investments owned by ~~KKR’s funds.~~

KKR's funds and Global Atlantic's insurance companies.

KKR establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. No loss contingency is recorded for matters where such losses are either not probable or reasonably estimable (or both) at the time of determination. Such matters may be subject to many uncertainties, including among ~~others~~others: (i) the proceedings may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be ~~resolved;~~resolved or (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties. Consequently, management is unable to estimate a range of potential loss, if any, related to these matters. In addition, loss contingencies may be, in part or in whole, subject to insurance or other payments such as contributions and/or indemnity, which may reduce any ultimate loss.

KKR has included in its financial statements the reserve for regulatory, litigation and related matters that Global Atlantic includes in its financial statements, including with respect to matters arising from the conversion of life insurance policies from systems previously managed by Athene Holdings Limited to the platform of one of Global Atlantic's third party service providers, Alliance-One, a subsidiary of DXC Technology Company.

It is not possible to predict the ultimate outcome of all pending legal proceedings, and some of the matters discussed above seek or may seek potentially large and/or indeterminate amounts. ~~As of such date, based~~Based on information known by management, management has not concluded that the final resolutions of the matters above will have a material effect upon the financial statements. However, given the potentially large and/or indeterminate amounts sought or may be sought in certain of these matters and the inherent unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on ~~KKR’s~~KKR's financial results in any particular period.

Other Financing Arrangements

~~18. REGULATORY CAPITAL REQUIREMENTS~~

~~KKR~~Global Atlantic has ~~registered broker-dealer subsidiaries which~~financing arrangements with unaffiliated third parties to support the reserves of its affiliated special purpose reinsurers. Total fees expensed associated with these financing arrangements were $5.2 million and $3.5 million for the three months ended September 30, 2022 and 2021, respectively, and total fees expensed associated with these financing arrangements were $15.2 million and $11.9 million for the nine months ended September 30, 2022 and 2021, respectively, and are ~~subject to~~included in insurance expenses in the ~~minimum net capital requirements~~consolidated statements of operations. As of September 30, 2022 and December 31, 2021, the total capacity of the ~~SEC~~financing arrangements with third parties was $2.1 billion and $2.0 billion, respectively.

Other than the ~~FINRA. Additionally, KKR entities based in London and Dublin are subject to~~matters disclosed above, there were no outstanding or unpaid balances from the ~~regulatory capital requirements~~financing arrangements with unaffiliated third parties as of the U.K. Financial Conduct Authority and the Central Bank of Ireland, respectively. In addition, KKR has an entity based in Hong Kong which is subject to the capital requirements of the Hong Kong Securities and Futures Ordinance, an entity based in Tokyo subject to the capital requirements of Financial Services Authority of Japan, and two entities based in Mumbai which are subject to capital requirements of the Reserve Bank of India and the Securities and Exchange Board of India. All of these entities have continuously operated in excess of their respective minimum regulatory capital requirements.

~~The regulatory capital requirements referred to above may restrict KKR’s ability to withdraw capital from its registered broker-dealer entities. At~~both September 30, ~~2017, approximately $141.6 million of cash at KKR’s registered broker-dealer entities may be restricted as to the payment of cash dividends~~2022 and ~~advances to KKR.~~December 31, 2021.

~~19.~~25. SUBSEQUENT EVENTS

Common ~~Unit Distribution~~

Stock Dividend

A ~~distribution~~dividend of ~~$0.17~~$0.155 per share of common stock of KKR & Co. ~~L.P. common unit~~Inc. has been declared and was announced on ~~October 26, 2017, and~~November 1, 2022. This dividend will be paid on November ~~21, 2017~~29, 2022 to common ~~unitholders~~stockholders of record as of the close of business on November ~~6, 2017. KKR Holdings~~14, 2022. Holders of exchangeable securities will receive ~~its~~their pro rata share of the distribution from ~~the~~ KKR Group ~~Partnerships.~~

Partnership.

Preferred ~~Unit Distributions~~

Stock Dividends

A ~~distribution~~dividend of ~~$0.421875~~$0.75 per share of Series AC Mandatory Convertible Preferred ~~Unit~~Stock has been declared asand was announced on ~~October 26, 2017~~November 1, 2022 and set aside for ~~payment~~payment. This dividend will be paid on December 15, ~~2017~~2022 to holders of record of Series AC Mandatory Convertible Preferred ~~Units~~Stock as of the close of business on December 1, ~~2017.~~2022.

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~~A distribution~~

Table of $0.406250 per Series B Preferred Unit has been declared as announced on October 26, 2017 and set aside for payment on December 15, 2017 to holders of record of Series B Preferred Units as of the close of business on December 1, 2017.Contents

~~Investment in Marshall Wace~~

Due to the exercise of one of the options agreed to between Marshall Wace and KKR, KKR expects to acquire an additional 5.0% interest in Marshall Wace in the fourth quarter of 2017. The acquisition is expected to be completed with a combination of cash and common units.

ITEM 2. ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of KKR & Co. ~~L.P.~~Inc., together with its consolidated subsidiaries, and the related notes included elsewhere in this report and our Annual Report, ~~on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on February 24, 2017 (our "Annual Report"),~~ including the audited consolidated financial statements and the related notes and ~~“Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of ~~Operations”~~Operations" contained therein. ~~The historical condensed consolidated financial data discussed below reflects the historical results and financial position of KKR.~~ In addition, this discussion and analysis contains ~~forward looking~~forward-looking statements and involves numerous risks and uncertainties, including those described under ~~“Cautionary~~"Cautionary Note Regarding Forward-looking ~~Statements”~~Statements" and ~~“Risk Factors"~~"Business Environment" in this report and our Annual Report and "Risk Factors" in our Annual Report, and our other ~~quarterly reports.~~filings with the SEC. Actual results may differ materially from those contained in any ~~forward looking~~forward-looking statements.

The unaudited condensed consolidated financial statements and the related notes included elsewhere in this report are hereafter referred to as the "financial statements." Additionally, the condensed consolidated statements of financial condition are referred to herein as the "consolidated statements of financial condition"; the condensed consolidated statements of operations are referred to herein as the "consolidated statements of operations"; the condensed consolidated statements of comprehensive income (loss) are referred to herein as the "consolidated statements of comprehensive income (loss)"; the condensed consolidated statements of changes in equity are referred to herein as the "consolidated statements of changes in equity"; and the condensed consolidated statements of cash flows are referred to herein as the "consolidated statements of cash flows."

Overview

We are a leading global investment firm that ~~manages multiple~~offers alternative asset ~~classes including private equity, energy, infrastructure, real estate, growth equity, credit~~management as well as capital markets and ~~through our strategic manager partnerships, hedge funds.~~insurance solutions. We aim to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and ~~driving~~supporting growth ~~and value creation~~ in our portfolio ~~companies.~~companies and communities. We sponsor investment funds that invest ~~our own capital alongside~~in private equity, credit and real assets and have strategic partners that manage hedge funds. Our insurance subsidiaries offer retirement, life and reinsurance products under the ~~capital we manage for fund investors and provide financing solutions and investment opportunities through our capital markets business.~~management of Global Atlantic.

Our asset management business offers a broad range of investment management services to ~~our~~ fund investors ~~and provides capital markets services to~~around the world. As of September 30, 2022, we manage $496 billion of assets for our ~~firm, our portfolio companies and third parties.~~clients. Throughout our history, we have consistently been a leader in the private equity industry, having completed ~~more than 310~~approximately 685 private equity investments in portfolio companies with a total transaction value in excess of ~~$555~~$690 billion as of September 30, ~~2017. We have grown~~2022. Since the inception of our firm ~~by expanding~~in 1976, we have expanded our ~~geographical presence~~investment strategies and ~~building businesses in~~product offerings from traditional private equity to areas such as leveraged credit, alternative credit, ~~hedge funds, capital markets,~~ infrastructure, energy, real estate, growth equity, core and ~~growth equity.~~impact investments. We also provide capital markets services for our firm, our portfolio companies and third parties. Our balance sheet ~~has provided~~provides a significant source of capital in the growth and expansion of our business, and it has allowed us to further align our interests with those of our fund investors. ~~These~~Building on these efforts ~~build on~~and leveraging our ~~core principles and~~ industry expertise ~~allowing us to leverage the~~and intellectual capital ~~and synergies in our businesses, and~~have allowed us to capitalize on a broader range of the opportunities we source. ~~Additionally,~~

Our insurance business is operated by Global Atlantic, in which we acquired a majority controlling interest on February 1, 2021. Global Atlantic is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily offers individuals fixed-rate annuities, fixed-indexed annuities and targeted life products through a network of banks, broker-dealers and independent marketing organizations. Global Atlantic provides its institutional clients customized reinsurance solutions, including block, flow and pension risk transfer reinsurance, as well as funding agreements. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of September 30, 2022, Global Atlantic served approximately three million policyholders.

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Asset Management

In our asset management business, we have ~~increased our focus on meeting the needs of our existing fund investors~~five business lines: (1) Private Equity, (2) Real Assets, (3) Credit and ~~in developing relationships with new investors in our funds.~~

~~We conduct our business with offices throughout the world, providing us with a pre-eminent global platform for sourcing transactions, raising capital~~Liquid Strategies, (4) Capital Markets, and carrying out capital markets activities. Our growth has been driven by value that we have created through our operationally focused investment approach, the expansion of our existing businesses, our entry into new lines of business, innovation in the products that we offer investors in our funds, an increased focus on providing tailored solutions to our clients and the integration of capital markets distribution activities.(5) Principal Activities.

As ~~a global investment~~an asset management firm, we earn ~~management, monitoring, transaction,~~fees, including incentive fees, and carried interest for providing investment management ~~monitoring~~ and other services to our funds, vehicles, CLOs, managed accounts and portfolio companies, and we generate transaction-specific income from capital markets transactions. We earn additional investment income ~~from~~by investing our own capital alongside that of our fund investors and from other assets on our balance ~~sheet and from the carried~~sheet. Carried interest we receive from our funds and certain ~~of our~~ other investment ~~vehicles. A carried interest~~vehicles entitles ~~the sponsor of a fund~~us to a specified percentage of investment gains that are generated on third-party capital that is invested.

Our investment teams have deep industry knowledge and are supported by a substantial and diversified capital ~~base,~~base; an integrated global investment ~~platform,~~platform; the expertise of operating ~~consultants,~~professionals, senior advisors and other ~~advisors~~advisors; and a worldwide network of business relationships that provide a significant source of investment opportunities, specialized knowledge during due diligence and substantial resources for creating and realizing value for stakeholders. These teams invest capital, a substantial portion of which is of a long duration ~~and~~or not subject to ~~redemption.~~predetermined redemption requirements, which provides us with significant flexibility to grow investments and select exit opportunities. As of September 30, ~~2017,~~2022, approximately ~~78%~~91% of our ~~fee paying assets under management are~~AUM consists of capital that is not subject to redemption for at least 8 years from inception ~~providing us with significant flexibility~~and what we refer to ~~grow investments~~as perpetual capital. For more information about the limitations of perpetual capital, please see "Risks Related to Our Business—AUM referred to as perpetual capital is subject to material reduction, including through withdrawal, redemption, or dividends, and ~~select exit opportunities.~~termination" in our Annual Report. We believe that these aspects of our business ~~will~~ help us continue to ~~expand and~~ grow our asset management business and deliver strong investment performance in a variety of economic and financial conditions.

~~Business Segments~~

Asset Management - Private ~~Markets~~

Equity

Through our Private ~~Markets segment,~~Equity business line, we manage and sponsor a group of what we call traditional private equity funds ~~and co-investment vehicles~~ that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. ~~Our private equity investment strategies include~~In addition to our traditional private equity ~~growth equity~~funds that invest in large and ~~core private equity. We also manage and~~mid-sized companies, we sponsor investment funds ~~and co-investment vehicles~~ that invest ~~capital~~ in ~~real assets, such as infrastructure, energy~~core equity and growth equity, which includes our impact investments. Our Private Equity business line includes separately managed accounts that invest in multiple strategies, which may include our credit and real ~~estate.~~asset strategies in addition to our private equity strategies. These funds ~~vehicles~~ and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an ~~SEC registered~~SEC-registered investment ~~adviser.~~adviser, or one of its subsidiaries. As of September 30, ~~2017, the segment~~2022, our Private Equity business line had ~~$87.6~~$165.5 billion of ~~AUM~~AUM.

Asset Management - Real Assets

Through our Real Assets business line, we manage and ~~FPAUM~~sponsor a group of ~~$61.7 billion, consisting of $47.5 billion in private equity and $14.2 billion in~~ real assets ~~(including~~funds that invest capital in infrastructure, ~~energy~~real estate, or energy. These funds and ~~real estate) and related strategies.~~accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser, or one of its subsidiaries. As of September 30, 2022, our Real Assets business line had $117.8 billion of AUM.

The table below presents information as of September 30, ~~2017~~2022, relating to our current private equity ~~growth equity~~ and real asset funds ~~and other investment vehicles~~ for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after September 30, ~~2017.~~2022.

Investment Period ⁽¹⁾
Amount ($ in millions)
Start Date End Date
Commitment ⁽²⁾
Uncalled
Commitments
Percentage
Committed by
General
Partner
Invested Realized
Remaining
Cost ⁽³⁾
Remaining
Fair Value
Private Markets

Private Equity and Growth Equity

Asian Fund III ⁽⁴⁾
4/2017 4/2023 $ 9,000.0
$ 9,000.0
5.6% $ —
$ —
$ —
$ —
Americas Fund XII ⁽⁴⁾
1/2017 1/2023 13,500.0
13,500.0
7.2% —
—
—
5.6
Health Care Strategic Growth Fund ⁽⁴⁾
12/2016 12/2021 1,214.9
1,214.9
12.3% —
—
—
—
Next Generation Technology Growth Fund ⁽⁴⁾
3/2016 3/2021 658.9
431.3
22.5% 227.6
—
227.6
325.1
European Fund IV ⁽⁴⁾
12/2014 12/2020 3,537.4
1,507.5
5.6% 2,059.6
29.2
2,038.7
2,629.8
Asian Fund II ⁽⁴⁾
4/2013 4/2017 5,825.0
1,012.7
1.3% 5,782.0
1,469.1
4,749.0
7,070.8
North America Fund XI ⁽⁴⁾
9/2012 1/2017 8,718.4
874.2
2.9% 9,268.2
4,344.4
6,743.5
11,525.2
China Growth Fund 11/2010 11/2016 1,010.0
—
1.0% 1,010.0
565.0
665.3
801.4
E2 Investors (Annex Fund) 8/2009 11/2013 195.8
—
4.9% 195.8
195.7
18.1
1.7
European Fund III 3/2008 3/2014 6,165.5
838.2
4.6% 5,327.3
6,989.1
2,029.3
3,427.6
Asian Fund 7/2007 4/2013 3,983.3
—
2.5% 3,945.9
7,681.6
813.8
917.2
2006 Fund 9/2006 9/2012 17,642.2
337.7
2.1% 17,304.5
26,586.4
4,957.8
6,960.9
European Fund II 11/2005 10/2008 5,750.8
—
2.1% 5,750.8
8,467.3
—
58.4
Millennium Fund 12/2002 12/2008 6,000.0
—
2.5% 6,000.0
13,305.4
444.9
610.6
Total Private Equity and Growth Equity 83,202.2
28,716.5
56,871.7
69,633.2
22,688.0
34,334.3

Co-Investment Vehicles and Other ⁽⁴⁾
Various Various 6,674.1
1,830.0
Various 5,042.9
2,712.0
3,686.4
4,848.5

Total Private Equity and Growth Equity 89,876.3
30,546.5
61,914.6
72,345.2
26,374.4
39,182.8

Real Assets
Energy Income and Growth Fund ⁽⁴⁾
9/2013 9/2018 1,974.2
667.7
12.9% 1,336.5
284.1
1,072.6
1,132.7
Natural Resources Fund Various Various 887.4
2.8
Various 884.6
113.4
794.9
151.9
Global Energy Opportunities ⁽⁴⁾
Various Various 979.2
613.2
Various 405.5
59.0
291.0
315.0
Global Infrastructure Investors ⁽⁴⁾
9/2011 10/2014 1,040.2
59.9
4.8% 1,011.3
844.8
604.2
775.9
Global Infrastructure Investors II ⁽⁴⁾
10/2014 10/2020 3,045.4
1,820.2
4.1% 1,412.3
192.9
1,221.0
1,532.5
Real Estate Partners Americas ⁽⁴⁾
5/2013 5/2017 1,229.1
363.3
16.3% 993.7
776.0
562.2
631.9
Real Estate Partners Americas II ⁽⁴⁾
5/2017 (5) 782.7
782.7
19.2% —
—
—
—
Real Estate Partners Europe ⁽⁴⁾
9/2015 6/2020 721.2
594.7
9.2% 132.6
12.0
125.4
158.1
Real Estate Credit Opportunity Partners ⁽⁴⁾
2/2017 2/2019 1,090.0
918.0
4.6% 172.0
—
172.0
184.4
Co-Investment Vehicles and Other Various Various 1,401.9
11.8
Various 1,390.1
511.9
1,387.7
1,799.8

Real Assets $ 13,151.3
$ 5,834.3
$ 7,738.6
$ 2,794.1
$ 6,231.0
$ 6,682.2

Unallocated Commitments 3,041.1
3,041.1
Various —
—
—
—

Private Markets Total $ 106,068.7
$ 39,421.9
$ 69,653.2
$ 75,139.3
$ 32,605.4
$ 45,865.0

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	Investment Period (1)		Amount ($ in millions)
	Start Date	End Date	Commitment (2)		Uncalled Commitments		Percentage Committed by General Partner	Invested		Realized		Remaining Cost (3)		Remaining Fair Value		Gross Accrued Carried Interest

Private Equity Business Line
North America Fund XIII	6/2021	8/2027	$	18,400	$	14,337	3%	$	4,063	$	—	$	4,063	$	4,049	$	—
Americas Fund XII	1/2017	6/2021	13,500		1,632		4%	12,366		4,948		11,293		18,804		1,454
North America Fund XI	9/2012	1/2017	8,718		410		3%	9,769		22,579		2,556		3,450		236
2006 Fund (4)	9/2006	9/2012	17,642		247		2%	17,309		36,207		973		1,189		97
Millennium Fund (4)	12/2002	12/2008	6,000		—		3%	6,000		14,123		—		6		1
European Fund VI	3/2022	6/2028	6,904		6,904		11%	—		—		—		—		—
European Fund V	3/2019	2/2022	6,307		1,004		2%	5,372		912		5,213		5,711		211
European Fund IV	12/2014	3/2019	3,510		62		6%	3,577		5,122		1,798		2,322		117
European Fund III (4)	3/2008	3/2014	5,500		140		5%	5,360		10,604		669		91		(28)
European Fund II (4)	11/2005	10/2008	5,751		—		2%	5,751		8,507		—		34		—
Asian Fund IV	7/2020	7/2026	14,735		10,424		4%	4,351		41		4,295		4,889		4
Asian Fund III	4/2017	7/2020	9,000		1,616		6%	7,813		5,031		6,548		10,880		810
Asian Fund II	4/2013	4/2017	5,825		5		1%	7,120		6,246		4,074		2,386		(346)
Asian Fund (4)	7/2007	4/2013	3,983		—		3%	3,974		8,728		110		16		3
China Growth Fund (4)	11/2010	11/2016	1,010		—		1%	1,010		1,056		330		180		(17)
Next Generation Technology Growth Fund II	12/2019	5/2022	2,088		360		7%	1,925		306		1,779		2,414		121
Next Generation Technology Growth Fund	3/2016	12/2019	659		4		22%	666		863		359		1,108		88
Health Care Strategic Growth Fund II	5/2021	5/2027	3,789		3,657		4%	132		—		132		150		—
Health Care Strategic Growth Fund	12/2016	5/2021	1,331		339		11%	1,122		196		1,012		1,552		77
Global Impact Fund II	6/2022	6/2028	1,854		1,854		8%	—		—		—		—		—
Global Impact Fund	2/2019	3/2022	1,242		350		8%	1,042		174		935		1,462		99
Co-Investment Vehicles and Other	Various	Various	18,843		6,791		Various	12,280		7,734		8,614		10,706		1,095
Core Investment Vehicles	Various	Various	24,621		12,148		31%	13,289		828		12,931		20,274		138
Unallocated Commitments (5)	N/A	N/A	4,383		4,383		Various	—		—		—		—		—

Total Private Equity			$	185,595	$	66,667		$	124,291	$	134,205	$	67,684	$	91,673	$	4,160

Real Assets Business Line
Energy Income and Growth Fund II	6/2018	3/2022	$	994	$	—	20%	$	1,187	$	193	$	1,024	$	1,702	$	43
Energy Income and Growth Fund	9/2013	6/2018	1,974		—		13%	1,974		1,024		1,030		696		—
Natural Resources Fund (4)	Various	Various	887		—		Various	887		131		173		44		—
Global Energy Opportunities	Various	Various	915		62		Various	520		185		320		216		—
Global Infrastructure Investors IV	8/2021	8/2027	16,487		12,163		2%	4,385		61		4,369		4,295		9
Global Infrastructure Investors III	6/2018	6/2021	7,151		1,379		4%	6,037		1,521		5,253		5,596		73
Global Infrastructure Investors II	10/2014	6/2018	3,039		127		4%	3,163		4,434		1,206		1,637		46
Global Infrastructure Investors	9/2011	10/2014	1,040		—		5%	1,050		2,228		—		—		—
Asia Pacific Infrastructure Investors II	9/2022	9/2028	5,492		5,492		7%	—		—		—		—		—
Asia Pacific Infrastructure Investors	1/2020	9/2022	3,792		1,709		7%	2,367		396		2,117		2,287		43
Diversified Core Infrastructure Fund	12/2020	(6)	8,059		3,550		6%	4,524		155		4,524		4,602		—
Real Estate Partners Americas III	12/2020	1/2025	4,253		1,907		5%	2,401		164		2,327		2,576		—
Real Estate Partners Americas II	5/2017	12/2020	1,921		255		8%	1,901		2,476		585		811		78
Real Estate Partners Americas	5/2013	5/2017	1,229		138		16%	1,021		1,408		93		60		1
Real Estate Partners Europe II	12/2019	3/2024	2,042		760		10%	1,373		254		1,260		1,344		36
Real Estate Partners Europe	9/2015	12/2019	703		119		9%	663		613		292		336		12
Asia Real Estate Partners	6/2019	7/2023	1,682		1,195		15%	490		9		471		659		14
Real Estate Credit Opportunity Partners II	4/2019	6/2022	950		378		5%	595		114		595		599		12
Real Estate Credit Opportunity Partners	2/2017	4/2019	1,130		122		4%	1,008		394		1,008		1,041		13
Property Partners Americas	12/2019	(6)	2,569		347		19%	2,222		159		2,222		3,083		1
Co-Investment Vehicles and Other	Various	Various	5,663		1,402		Various	4,322		1,740		3,684		3,803		18

Total Real Assets			$	71,972	$	31,105		$	42,090	$	17,659	$	32,553	$	35,387	$	399

~~(1)~~

The start date represents the date on which the general partner of the applicable fund commenced investment of the fund’s capital or the date of the first closing. The end date represents the earlier of (i) the date on which the general partner of the applicable fund was or will be required by the fund’s governing agreement to cease making investments on behalf of the fund, unless extended by a vote of the fund investors or (ii) the date on which the last investment was made.

~~(2)~~

The commitment represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed on September 30, 2017, in the case of uncalled commitments.

(1)The start date represents a date on or in between the date on which the general partner of the applicable fund commenced investment of the fund's capital and the date of the first closing. The end date represents the approximate date on which the general partner of the applicable fund was or will be required by the fund's governing agreement to cease making investments (other than reserved amounts) on behalf of the fund, unless extended by a vote of the fund investors.


~~(3)~~	The remaining cost represents the initial investment of the general partner and limited partners, with the limited partners’ investment reduced for any return of capital and realized gains from which the general partner did not receive a carried interest.

(2)The commitment represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed on September 30, 2022, in the case of uncalled commitments.


~~(4)~~	~~The “Invested” and “Realized” columns include the amounts of any realized investments that restored the unused capital commitments of the fund investors, if any.~~

(3)The remaining cost represents the initial investment of the general partner and limited partners, reduced for returns of capital.


~~(5)~~	~~Three years from final closing date.~~

(4)The "Invested" and "Realized" columns do not include the amounts of any realized investments that restored the unused capital commitments of the fund investors, if any.

(5)"Unallocated Commitments" represent unallocated commitments from our strategic investor partnerships.

(6)No pre-determined date of termination.

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The ~~tables~~table below ~~present~~presents information as of September 30, ~~2017~~2022, relating to the historical performance of certain of our Private ~~Markets~~Equity and Real Assets business lines investment vehicles since inception, which we believe illustrates the benefits of our investment approach. The information presented under Total Investments includes all of the investments made by the specified investment vehicle, while the information presented under Realized/Partially Realized Investments includes only those investments that have been disposed of or have otherwise generated disposition proceeds or current income including dividends that have been distributed by the relevant fund. This data does not reflect additional capital raised since September 30, ~~2017~~2022, or acquisitions or disposals of investments, changes in investment values or distributions occurring after that date. However, the information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of future results.


	Amount				Fair Value of Investments
Private Equity and Real Assets Business Lines Investment Funds	Commitment (2)		Invested		Realized (4)		Unrealized		Total Value		Gross IRR (5)		Net IRR (5)		Gross Multiple of Invested Capital (5)
($ in millions)
Legacy Funds (1)
1976 Fund	$	31	$	31	$	537	$	—	$	537	39.5	%	35.5	%	17.1
1980 Fund	357		357		1,828		—		1,828		29.0	%	25.8	%	5.1
1982 Fund	328		328		1,291		—		1,291		48.1	%	39.2	%	3.9
1984 Fund	1,000		1,000		5,964		—		5,964		34.5	%	28.9	%	6.0
1986 Fund	672		672		9,081		—		9,081		34.4	%	28.9	%	13.5
1987 Fund	6,130		6,130		14,949		—		14,949		12.1	%	8.9	%	2.4
1993 Fund	1,946		1,946		4,143		—		4,143		23.6	%	16.8	%	2.1
1996 Fund	6,012		6,012		12,477		—		12,477		18.0	%	13.3	%	2.1
Subtotal - Legacy Funds	16,475		16,475		50,269		—		50,269		26.1	%	19.9	%	3.1
Included Funds
European Fund (1999)	3,085		3,085		8,758		—		8,758		26.9	%	20.2	%	2.8
Millennium Fund (2002)	6,000		6,000		14,123		6		14,129		22.0	%	16.1	%	2.4
European Fund II (2005)	5,751		5,751		8,507		34		8,541		6.1	%	4.5	%	1.5
2006 Fund (2006)	17,642��		17,309		36,207		1,189		37,396		11.9	%	9.3	%	2.2
Asian Fund (2007)	3,983		3,974		8,728		16		8,744		18.9	%	13.7	%	2.2
European Fund III (2008)	5,500		5,360		10,604		91		10,695		16.4	%	11.3	%	2.0
E2 Investors (Annex Fund) (2009)	196		196		200		—		200		0.6	%	0.5	%	1.0
China Growth Fund (2010)	1,010		1,010		1,056		180		1,236		5.1	%	1.1	%	1.2
Natural Resources Fund (2010)	887		887		131		44		175		(24.5)	%	(26.2)	%	0.2
Global Infrastructure Investors (2011)	1,040		1,050		2,228		—		2,228		17.6	%	15.6	%	2.1
North America Fund XI (2012)	8,718		9,769		22,579		3,450		26,029		24.4	%	19.8	%	2.7
Asian Fund II (2013)	5,825		7,120		6,246		2,386		8,632		5.7	%	4.1	%	1.2
Real Estate Partners Americas (2013)	1,229		1,021		1,408		60		1,468		16.3	%	11.5	%	1.4
Energy Income and Growth Fund (2013)	1,974		1,974		1,024		696		1,720		(4.5)	%	(7.0)	%	0.9
Global Infrastructure Investors II (2014)	3,039		3,163		4,434		1,637		6,071		19.5	%	16.8	%	1.9
European Fund IV (2015)	3,510		3,577		5,122		2,322		7,444		23.3	%	17.9	%	2.1
Real Estate Partners Europe (2015)	703		663		613		336		949		13.5	%	9.5	%	1.4
Next Generation Technology Growth Fund (2016)	659		666		863		1,108		1,971		34.1	%	29.1	%	3.0
Health Care Strategic Growth Fund (2016)	1,331		1,122		196		1,552		1,748		25.5	%	16.5	%	1.6
Americas Fund XII (2017)	13,500		12,366		4,948		18,804		23,752		27.5	%	22.2	%	1.9
Real Estate Credit Opportunity Partners (2017)	1,130		1,008		394		1,041		1,435		9.9	%	8.6	%	1.4
Core Investment Vehicles (2017)	24,621		13,289		828		20,274		21,102		21.3	%	20.0	%	1.6
Asian Fund III (2017)	9,000		7,813		5,031		10,880		15,911		33.7	%	26.3	%	2.0
Real Estate Partners Americas II (2017)	1,921		1,901		2,476		811		3,287		31.4	%	26.4	%	1.7
Global Infrastructure Investors III (2018)	7,151		6,037		1,521		5,596		7,117		9.7	%	7.1	%	1.2
Global Impact Fund (2019)	1,242		1,042		174		1,462		1,636		33.4	%	24.4	%	1.6
European Fund V (2019)	6,307		5,372		912		5,711		6,623		15.1	%	10.6	%	1.2
Energy Income and Growth Fund II (2019)	994		1,187		193		1,702		1,895		32.3	%	29.3	%	1.6
Asia Real Estate Partners (2019)	1,682		490		9		659		668		33.4	%	16.1	%	1.4
Next Generation Technology Growth Fund II (2019)	2,088		1,925		306		2,414		2,720		28.1	%	21.6	%	1.4
Real Estate Credit Opportunity Partners II (2019)	950		595		114		599		713		12.7	%	11.5	%	1.2
Asia Pacific Infrastructure Investors (2020)	3,792		2,367		396		2,287		2,683		17.8	%	10.5	%	1.1
Asian Fund IV (2020)	14,735		4,351		41		4,889		4,930		16.4	%	6.7	%	1.1
Real Estate Partners Europe II (2020)	2,042		1,373		254		1,344		1,598		20.4	%	11.3	%	1.2
Real Estate Partners Americas III (2021) (3)	4,253		2,401		164		2,576		2,740		—		—		—
Health Care Strategic Growth Fund II (2021) (3)	3,789		132		—		150		150		—		—		—
Global Infrastructure Investors IV (2021) (3)	16,487		4,385		61		4,295		4,356		—		—		—
North America Fund XIII (2021) (3)	18,400		4,063		—		4,049		4,049		—		—		—
European Fund VI (2022) (3)	6,904		—		—		—		—		—		—		—
Global Impact Fund II (2022) (3)	1,854		—		—		—		—		—		—		—
Asia Pacific Infrastructure Investors II (2022) (3)	5,492		—		—		—		—		—		—		—
Subtotal - Included Funds	220,416		145,794		150,849		104,650		255,499		16.3	%	12.5	%	1.8

All Funds	$	236,891	$	162,269	$	201,118	$	104,650	$	305,768	25.6	%	18.8	%	1.9

110

Table of Contents

Amount Fair Value of Investments
Private Markets Investment Funds Commitment
Invested ⁽⁵⁾

Realized⁽⁵⁾
Unrealized Total Value
Gross
IRR ⁽⁵⁾
Net IRR ⁽⁵⁾

Multiple of Invested
Capital ⁽⁵⁾
($ in millions)
Total Investments

Legacy Funds ⁽¹⁾

1976 Fund $ 31.4
$ 31.4
$ 537.2
$ —
$ 537.2
39.5 % 35.5 % 17.1
1980 Fund 356.8
356.8
1,827.8
—
1,827.8
29.0 % 25.8 % 5.1
1982 Fund 327.6
327.6
1,290.7
—
1,290.7
48.1 % 39.2 % 3.9
1984 Fund 1,000.0
1,000.0
5,963.5
—
5,963.5
34.5 % 28.9 % 6.0
1986 Fund 671.8
671.8
9,080.7
—
9,080.7
34.4 % 28.9 % 13.5
1987 Fund 6,129.6
6,129.6
14,949.2
—
14,949.2
12.1 % 8.9 % 2.4
1993 Fund 1,945.7
1,945.7
4,143.3
—
4,143.3
23.6 % 16.8 % 2.1
1996 Fund 6,011.6
6,011.6
12,476.9
—
12,476.9
18.0 % 13.3 % 2.1
Subtotal - Legacy Funds 16,474.5
16,474.5
50,269.3
—
50,269.3
26.1 % 19.9 % 3.1
Included Funds

European Fund (1999) ⁽²⁾
3,085.4
3,085.4
8,757.7
—
8,757.7
26.9 % 20.2 % 2.8
Millennium Fund (2002) 6,000.0
6,000.0
13,305.4
610.6
13,916.0
21.9 % 16.0 % 2.3
European Fund II (2005) ⁽²⁾
5,750.8
5,750.8
8,467.3
58.4
8,525.7
6.1 % 4.5 % 1.5
2006 Fund (2006) 17,642.2
17,304.5
26,586.4
6,960.9
33,547.3
11.5 % 8.9 % 1.9
Asian Fund (2007) 3,983.3
3,945.9
7,681.6
917.2
8,598.8
19.0 % 13.7 % 2.2
European Fund III (2008) ⁽²⁾
6,165.5
5,327.3
6,989.1
3,427.6
10,416.7
16.9 % 11.6 % 2.0
E2 Investors (Annex Fund) (2009) ⁽²⁾
195.8
195.8
195.7
1.7
197.4
0.2 % (0.5 )% 1.0
China Growth Fund (2010) 1,010.0
1,010.0
565.0
801.4
1,366.4
11.5 % 5.9 % 1.4
Natural Resources Fund (2010) 887.4
884.6
113.4
151.9
265.3
(31.2 )% (33.7 )% 0.3
Global Infrastructure Investors (2011) ⁽²⁾
1,040.2
1,011.3
844.8
775.9
1,620.7
14.5 % 12.5 % 1.6
North America Fund XI (2012) 8,718.4
9,268.2
4,344.4
11,525.2
15,869.6
26.5 % 20.7 % 1.7
Asian Fund II (2013) 5,825.0
5,782.0
1,469.1
7,070.8
8,539.9
25.9 % 18.7 % 1.5
Real Estate Partners Americas (2013) 1,229.1
993.7
776.0
631.9
1,407.9
21.1 % 15.7 % 1.4
Energy Income and Growth Fund (2013) 1,974.2
1,336.5
284.1
1,132.7
1,416.8
3.0 % 0.4 % 1.1
Global Infrastructure Investors II (2014) ⁽²⁾
3,045.4
1,412.3
192.9
1,532.5
1,725.4
18.5 % 14.0 % 1.2
European Fund IV (2015) ⁽²⁾
3,537.4
2,059.6
29.2
2,629.8
2,659.0
26.5 % 19.3 % 1.3
Real Estate Partners Europe (2015) ^{(2) (3)}
721.2
132.6
12.0
158.1
170.1
—
—
—
Next Generation Technology Growth Fund (2016) ⁽³⁾
658.9
227.6
—
325.1
325.1
—
—
—
Health Care Strategic Growth Fund (2016) ⁽³⁾
1,214.9
—
—
—
—
—
—
—
Americas Fund XII (2017) ⁽³⁾
13,500.0
—
—
5.6
5.6
—
—
—
Real Estate Credit Opportunity Partners
(2017) ⁽³⁾
1,090.0
172.0
—
—
184.4
184.4
—
—
—
Asian Fund III (2017) ⁽³⁾
9,000.0
—
—
—
—
—
—
—
Real Estate Partners Americas II (2017) ⁽³⁾
782.7
—
—
—
—
—
—
—
—
Subtotal - Included Funds 97,057.8
65,900.1
80,614.1
38,901.7
119,515.8
15.7 % 11.5 % 1.8

All Funds $ 113,532.3
$ 82,374.6
$ 130,883.4
$ 38,901.7
$ 169,785.1
25.6 % 18.8 % 2.1

(1)These funds were not contributed to KKR as part of the acquisition of the assets and liabilities of KKR & Co. (Guernsey) L.P. (formerly known as KKR Private Equity Investors, L.P.) on October 1, 2009.

(2)Where commitments are euro-denominated, such amounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate prevailing on September 30, 2022, in the case of unfunded commitments.

(3)The gross IRR, net IRR and gross multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to September 30, 2022. We therefore have not calculated gross IRRs, net IRRs and gross multiples of invested capital with respect to these funds.

Amount Fair Value of Investments
Private Markets Investment Funds Commitment
Invested ⁽⁵⁾

Realized ⁽⁵⁾
Unrealized Total Value
Multiple of Invested
Capital ⁽⁵⁾
($ in millions)
Realized/Partially Realized Investments ⁽⁴⁾

Legacy Funds ⁽¹⁾

1976 Fund $ 31.4
$ 31.4
$ 537.2
$ —
$ 537.2
17.1
1980 Fund 356.8
356.8
1,827.8
—
1,827.8
5.1
1982 Fund 327.6
327.6
1,290.7
—
1,290.7
3.9
1984 Fund 1,000.0
1,000.0
5,963.5
—
5,963.5
6.0
1986 Fund 671.8
671.8
9,080.7
—
9,080.7
13.5
1987 Fund 6,129.6
6,129.6
14,949.2
—
14,949.2
2.4
1993 Fund 1,945.7
1,945.7
4,143.3
—
4,143.3
2.1
1996 Fund 6,011.6
6,011.6
12,476.9
—
12,476.9
2.1
Subtotal - Legacy Funds 16,474.5
16,474.5
50,269.3
—
50,269.3
3.1
Included Funds

European Fund (1999)⁽²⁾
3,085.4
3,085.4
8,757.7
—
8,757.7
2.8
Millennium Fund (2002) 6,000.0
5,599.4
13,305.4
610.6
13,916.0
2.5
European Fund II (2005) ⁽²⁾
5,750.8
5,245.4
8,467.3
58.4
8,525.7
1.6
2006 Fund (2006) 17,642.2
15,439.7
26,586.4
5,159.9
31,746.3
2.1
Asian Fund (2007) 3,983.3
3,118.2
7,681.6
344.8
8,026.4
2.6
European Fund III (2008) ⁽²⁾
6,165.5
3,897.0
6,989.1
1,933.8
8,922.9
2.3
E2 Investors (Annex Fund) (2009) ⁽²⁾
195.8
94.8
195.7
—
195.7
2.1
China Growth Fund (2010) 1,010.0
427.5
565.0
179.5
744.5
1.7
Natural Resources Fund (2010) 887.4
886.9
113.4
151.9
265.3
0.3
Global Infrastructure Investors (2011) ⁽²⁾
1,040.2
1,011.2
844.8
775.9
1,620.7
1.6
North America Fund XI (2012) 8,718.4
5,164.7
4,344.4
5,905.4
10,249.8
2.0
Asian Fund II (2013) 5,825.0
2,738.7
1,469.1
3,940.7
5,409.8
2.0
Real Estate Partners Americas (2013) 1,229.1
800.9
776.0
440.1
1,216.1
1.5
Energy Income and Growth Fund (2013) 1,974.2
1,336.5
284.1
1,132.7
1,416.8
1.1
Global Infrastructure Investors II (2014) ⁽²⁾
3,045.4
599.6
192.9
538.1
731.0
1.2
European Fund IV (2015) ⁽²⁾
3,537.4
—
—
—
—
—
Real Estate Partners Europe (2015) ^{(2) (3) (4)}
721.2
—
—
—
—
—
Next Generation Technology Growth Fund (2016) ^{(3) (4)}
658.9
—
—
—
—
—
Health Care Strategic Growth Fund (2016) ^{(3) (4)}
1,214.9
—
—
—
—
—
Americas Fund XII (2017) ^{(3) (4)}
13,500.0
—
—
—
—
—
Real Estate Credit Opportunity Partners
(2017) ^{(3) (4)}
1,090.0
—
—
—
—
—
Asian Fund III (2017) ^{(3) (4)}
9,000.0
—
—
—
—
—
Real Estate Partners Americas II (2017) ^{(3) (4)}
782.7
—
—
—
—
—
Subtotal - Included Funds 97,057.8
49,445.9
80,572.9
21,171.8
101,744.7
2.1

All Realized/Partially Realized Investments $ 113,532.3
$ 65,920.4
$ 130,842.2
$ 21,171.8
$ 152,014.0
2.3
(4)An investment is considered realized when it has been disposed of or has otherwise generated disposition proceeds or current income that has been distributed by the relevant fund.

(5)IRRs measure the aggregate annual compounded returns generated by a fund's investments over a holding period. Net IRRs are calculated after giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees and organizational expenses. Gross IRRs are calculated before giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees and organizational expenses.


~~(1)~~	~~These funds were not contributed to KKR as part of the KPE Transaction.~~

~~(2)~~

The capital commitments of the European Fund, European Fund II, European Fund III, E2 Investors (Annex Fund), European Fund IV, Global Infrastructure Investors, Global Infrastructure Investors II and Real Estate Partners Europe include euro-denominated commitments of €196.5 million, €2,597.5 million, €2,882.8 million, €55.5 million, €1,626.1 million, €30.0 million, €243.8 million and €276.6 million, respectively. Such amounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate prevailing on September 30, 2017 in the case of unfunded commitments.

~~(3)~~

The gross IRR, net IRR and multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to September 30, 2017. None of the Real Estate Partners Europe, Next Generation Technology Growth Fund, Health Care Strategic Growth Fund, Americas Fund XII, Real Estate Credit Opportunity Partners,~~Asian Fund III or Real Estate Partners Americas IIhas invested for at least 24 months as of September 30, 2017. We therefore have not calculated gross IRRs, net IRRs and multiples of invested capital with respect to those funds.~~

~~(4)~~

An investment is considered partially realized when it has been disposed of or has otherwise generated disposition proceeds or current income that has been distributed by the relevant fund. In periods prior to the three months ended September 30, 2015, realized proceeds excluded current income such as dividends and interest. Realizations have not been shown for those investment funds that have either made their first investment more recently than 24 months prior to September 30, 2017 or have otherwise not had any realizations. We therefore have not calculated gross IRRs, net IRRs and multiples of invested capital with respect to the investments of those funds.

~~(5)~~

IRRs measure the aggregate annual compounded returns generated by a fund’s investments over a holding period. Net IRRs are calculated after giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees. Gross IRRs are calculated before giving effect to the allocation of carried interest and the payment of any applicable management fees.

~~The~~ multiples of invested capital measure the aggregate value generated by a ~~fund’s~~fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together the total realized and unrealized values of a ~~fund’s~~fund's investments and dividing by the total amount of capital invested by the fund. Such amounts do not give effect to the allocation of ~~any~~ realized and unrealized ~~returns on a fund’s investments to the fund’s general partner pursuant to a~~ carried interest or the payment of any applicable management ~~fees.~~fees or organizational expenses.

~~KKR Private Markets~~KKR's private equity and real assets funds may utilize ~~third party~~third-party financing facilities to provide liquidity to such funds. ~~In such event~~The above net and gross IRRs are calculated from the time capital contributions are due from fund investors to the time fund investors receive a related distribution from the fund, and the use of such financing facilities generally decreases the amount of ~~invested capital~~time that would otherwise be used to calculate IRRs, ~~and multiples of invested capital,~~ which tends to increase IRRs ~~and multiples~~ when fair value grows over time and decrease IRRs ~~and multiples~~ when fair value decreases over time. ~~KKR Private Markets~~KKR's private equity and real assets funds also generally provide in certain circumstances, which vary depending on the relevant fund documents, for a portion of capital returned to investors to be restored to unused commitments as recycled capital. For KKR's ~~Private Markets~~private equity and real assets funds that have a preferred return, we take into account recycled capital in the calculation of IRRs and multiples of invested capital because the calculation of the preferred return includes the effect of recycled capital. For KKR's ~~Private Markets~~private equity and real assets funds that do not have a preferred return, we do not take recycled capital into account in the calculation of IRRs and multiples of invested capital. The inclusion of recycled capital generally causes invested and realized amounts to be higher and IRRs and multiples of invested capital to be lower than had recycled capital not been included. The inclusion of recycled capital would reduce the composite net IRR of all Included Funds by 0.1% and the composite net IRR of all Legacy Funds by 0.5%, and would reduce the composite multiple of invested capital of Included Funds by less than 0.1 and the composite multiple of invested capital of Legacy Funds by 0.4.

~~Public Markets~~Asset Management - Credit and Liquid Strategies

~~We operate~~Through our Credit and Liquid Strategies business line, we report our ~~combined~~ credit and hedge funds ~~businesses through the Public Markets segment.~~ platforms on a combined basis.

Our credit business advises funds, collateralized loan obligation vehicles, or CLOs, separately managed accounts, and investment companies registered under the Investment Company Act of 1940, or the Investment Company Act, including business development companies or BDCs, and alternative investments funds or AIFs, which investinvests capital in ~~(i) leveraged credit strategies, including leveraged loans, high yield bonds~~a broad range of corporate debt and ~~opportunistic credit,~~collateral-backed investments across asset classes and (ii) alternative credit strategies, including special situations and private credit strategies such as private credit opportunities, direct lending and revolving credit investment strategies. The funds, accounts, registered investment companies, BDCs and CLOs in our leveraged credit and alternative credit strategies, including special situations and privatecapital structures. Our credit strategies are managed by KKR Credit Advisors (US) LLC, which is an ~~SEC‑registered~~SEC-registered investment adviser, KKR Credit Advisors (Ireland) Unlimited Company, which is regulated by the Central Bank of Ireland (“CBI”), KKR Credit Advisors (EMEA) LLP, which is regulated by the Financial Conduct Authority, and KKR Credit Advisors ~~(UK) LLP,~~(Singapore) Pte. Ltd., which is regulated by the ~~United Kingdom Financial Conduct~~Monetary Authority ~~or FCA. Our Public Markets segment~~of Singapore and also ~~includes our~~registered with the SEC. We also jointly own with a third party FS/KKR Advisor, LLC, which is the investment adviser for FS KKR Capital Corp. (NYSE: FSK) ("FSK"), a publicly listed business development company (a “BDC”).

Our hedge funds ~~business which~~platform consists of strategic ~~manager~~ partnerships with ~~third party~~third-party hedge fund managers in which KKR owns a minority ~~stakes.~~stake. Our hedge fund ~~strategic manager partners~~partnerships offer a ~~variety~~range of alternative investment strategies, including long/short equity, hedge fund-of-funds ~~equity hedge funds,~~and energy credit ~~hedge funds, and funds focused on natural catastrophe and weather risks.~~investments.

~~As of September 30, 2017, this segment had $65.7 billion of AUM, comprised of $21.5 billion of assets managed~~Credit

Our credit business pursues investments in ~~our~~two principal investment strategies: leveraged credit ~~strategies, $7.6 billion~~and alternative credit.

Leveraged Credit. Our leveraged credit strategy is principally directed at investing in leveraged loans, high-yield bonds, opportunistic credit, structured credit and revolving credit investments. Our opportunistic credit strategy seeks to deploy capital across investment themes that take advantage of ~~assets managed~~credit market dislocations, spanning asset types and liquidity profiles. Our revolving credit strategy invests in ~~our special situations~~senior secured revolving credit facilities.

Alternative Credit. Our alternative credit strategy ~~$11.2 billion~~consists of ~~assets managed in~~ our private credit strategies ~~$24.4 billion~~and debt and equity investments sourced by our strategic investments group (“SIG”).

111

Table of ~~assets managed through our hedge fund business and $1.0 billion of assets managed in other strategies.~~Contents

•Private Credit. Our private credit strategies focus on privately or directly originated and negotiated transactions. These strategies include ~~$3.2 billion of assets managed in our private opportunistic credit strategy, $7.0 billion of assets managed in~~direct lending, mezzanine debt and asset-based finance. Through our direct lending strategy, we seek to make investments in primarily senior debt financings for middle-market companies. Through our mezzanine debt strategy, investments typically consist of subordinated debt, which generates a current yield, coupled with marginal equity exposure for additional upside potential. Our asset-based finance strategy focuses on portfolios of financial loans and ~~$1.0 billion of assets managed~~loans backed by hard assets.

• SIG. Our SIG strategy seeks to pursue investments in ~~our revolving~~corporate credit ~~strategy.~~

~~On June 1, 2017, KKR completed its previously announced transaction~~and asset or real estate-backed credit where market volatility or other investment themes have created the opportunity to ~~combine Pacific Alternative Asset Management Company, LLC,~~generate outsized returns with downside-protected securities. These investments may include stressed or ~~PAAMCO, with Prisma Capital Partners LP, formerly known as KKR Prisma,~~distressed investments (including post-restructuring equity), control-oriented opportunities, rescue financing (debt or equity investments made to ~~create PAAMCO Prisma Holdings LLC. PAAMCO Prisma is a leading liquid alternatives investment firm, which operates independently of KKR. KKR owns 39.9% of PAAMCO Prisma~~address covenant, maturity or liquidity issues), debtor-in-possession or exit financing, and ~~receives certain~~ other ~~payments from PAAMCO Prisma.~~

~~Credit~~event-driven investments in debt or equity.

Performance

We generally review our performance in our credit business by investment strategy. Our leveraged credit strategies principally invest in leveraged loans and high yield bonds, or a combination of both. In certain cases, these strategies have meaningful track records and may be compared to widely-known indices. The following table presents information regarding the larger leveraged credit strategies managed by KKR from inception to September 30, ~~2017.~~2022. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of any future ~~results.~~result.

Leveraged Credit Strategies: Inception-to-Date Annualized Gross Performance vs. Benchmark by Strategy


Leveraged Credit Strategy	Inception Date	Gross Returns		Net Returns		Benchmark (1)	Benchmark Gross Returns
Bank Loans Plus High Yield	Jul 2008	6.41	%	5.81	%	65% S&P/LSTA Loan Index, 35% BoAML HY Master II Index (2)	5.04	%
Opportunistic Credit (3)	May 2008	9.94	%	8.29	%	50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (3)	5.19	%
Bank Loans	Apr 2011	4.74	%	4.16	%	S&P/LSTA Loan Index (4)	3.69	%
High-Yield	Apr 2011	5.10	%	4.52	%	BoAML HY Master II Index (5)	4.42	%

European Leveraged Loans (6)	Sep 2009	3.88	%	3.37	%	CS Inst West European Leveraged Loan Index (7)	2.98	%

European Credit Opportunities (6)	Sept 2007	4.56	%	3.74	%	S&P European Leveraged Loans (All Loans) (8)	3.49	%

($ in millions) Inception Date
Gross
Returns

Net
Returns
Benchmark (1)
Benchmark
Gross
Returns
Bank Loans Plus High Yield Jul 2008 8.04 % 7.40 %
65% S&P/ LSTA, 35% BoAML HY Master II Index ⁽²⁾
6.47 %
Opportunistic Credit ⁽³⁾
May 2008 13.18 % 11.14 %
BoAML HY Master II Index ⁽³⁾
6.79 %
Bank Loans Apr 2011 5.49 % 4.87 %
S&P/ LSTA Loan Index ⁽⁴⁾
4.24 %
High Yield Apr 2011 7.28 % 6.69 %
BoAML HY Master II Index ⁽⁵⁾
6.80 %
Bank Loans Conservative Apr 2011 4.80 % 4.19 %
S&P/ LSTA BB-B Loan Index ⁽⁶⁾
4.24 %
European Leveraged Loans ⁽⁷⁾
Sep 2009 5.60 % 5.07 %
CS Inst West European Leveraged Loan Index ⁽⁸⁾
4.88 %
High Yield Conservative Apr 2011 6.65 % 6.08 % BoAML HY BB-B Constrained 6.69 %
European Credit Opportunities ⁽⁷⁾
Sept 2007 5.80 % 4.89 % S&P LSTA European Leveraged Loans (All Loans) 4.44 %
(1)The benchmarks referred to herein include the S&P/LSTA Leveraged Loan Index (the "S&P/LSTA Loan Index"), S&P/LSTA U.S. B/BB Ratings Loan Index (the "S&P/LSTA BB-B Loan Index"), the Bank of America Merrill Lynch High Yield Master II Index (the "BoAML HY Master II Index"), the BofA Merrill Lynch BB-B US High Yield Index (the "BoAML HY BB-B Constrained"), the Credit Suisse Institutional Western European Leveraged Loan Index (the "CS Inst West European Leveraged Loan Index"), and S&P European Leveraged Loans (All Loans). The S&P/LSTA Loan Index is a daily tradable index for the U.S. loan market that seeks to mirror the market-weighted performance of the largest institutional loans that meet certain criteria. The BoAML HY Master II Index is an index for high-yield corporate bonds. It is designed to measure the broad high-yield market, including lower-rated securities. The CS Inst West European Leveraged Loan Index contains only institutional loan facilities priced above 90, excluding TL and TLa facilities and loans rated CC, C or are in default. The S&P European Leveraged Loan Index reflects the market-weighted performance of institutional leveraged loan portfolios investing in European credits. While the returns of our leveraged credit strategies reflect the reinvestment of income and dividends, none of the indices presented in the chart above reflect such reinvestment, which has the effect of increasing the reported relative performance of these strategies as compared to the indices. Furthermore, these indices are not subject to management fees, incentive allocations, or expenses.

(2)Performance is based on a blended composite of Bank Loans Plus High Yield strategy accounts. The benchmark used for purposes of comparison for the Bank Loans Plus High Yield strategy is based on 65% S&P/LSTA Loan Index and 35% BoAML HY Master II Index.

~~(1)~~

The Benchmarks referred to herein include the S&P/LSTA Leveraged Loan Index (the “S&P/LSTA Loan Index”), S&P/LSTA U.S. B/BB Ratings Loan Index (the '"S&P/ LSTA BB-B Loan Index"), the Bank of America Merrill Lynch High Yield Master II Index (the “BoAML HY Master II Index”), the BofA Merrill Lynch BB-B US High Yield Index (the “BoAML HY BB-B Constrained"), the Credit Suisse Institutional Western European Leveraged Loan Index (the “CS Inst European Leveraged Loan Index"), and S&P LSTA European Leveraged Loans (All Loans). The S&P/LSTA Loan Index is a daily tradable index for the U.S. loan market that seeks to mirror the market-weighted performance of the largest institutional loans that meet certain criteria. The S&P/ LSTA BB-B Loan Index is comprised of loans in the S&P/LSTA Loan Index, whose rating is BB+, BB, BB-, B+, B or B-. The BoAML HY Master II Index is an index for high yield corporate bonds. It is designed to measure the broad high yield market, including lower-rated securities. The BOAML HY BB-B Constrained is a subset of the BoAML HY Master II Index including all securities rated BB1 through B3, inclusive. The CS Inst European Leveraged Loan Index contains only institutional loan facilities priced above 90, excluding TL and TLa facilities and loans rated CC, C or are in default. The S&P European Leveraged Loan Index reflects the market-weighted performance of institutional leveraged loan portfolios investing in European credits. While the returns of these strategies reflect the reinvestment of income and dividends, none of the indices presented in the chart above reflect such reinvestment, which has the effect of increasing the reported relative performance of these strategies as compared to the indices. Furthermore, these indices are not subject to management fees, incentive allocations or expenses.


~~(2)~~	~~Performance is based on a blended composite of Bank Loans Plus High Yield strategy accounts. The Benchmark used for purposes of comparison for the Bank Loans Plus High Yield strategy is based on~~ ~~65%~~ ~~S&P/LSTA Loan Index and~~ ~~35%~~ ~~BoAML HY Master II Index.~~

~~(3)~~

The Opportunistic Credit strategy invests in high yield securities and corporate loans with no preset allocation. The Benchmark used for purposes of comparison for the Opportunistic Credit strategy presented herein is based on the BoAML HY Master II Index. Funds within this strategy may utilize third party financing facilities to enhance investment returns. In cases where financing facilities are used, the amounts drawn on the facility are deducted from the assets of the fund in the calculation of net asset value, which tends to increase returns when net asset value grows over time and decrease returns when net asset value decreases over time.

~~(4)~~

(3)The Opportunistic Credit strategy invests in high-yield securities and corporate loans with no preset allocation. The benchmark used for purposes of comparison for the Opportunistic Credit strategy presented herein is based on 50% S&P/LSTA Loan Index and 50% BoAML HY Master II Index. Funds within this strategy may utilize third-party financing facilities to enhance investment returns. In cases where financing facilities are used, the amounts drawn on the facility are deducted from the assets of the fund in the calculation of net asset value, which tends to increase returns when net asset value grows over time and decrease returns when net asset value decreases over time.

(4)Performance is based on a composite of portfolios that ~~primarily invest in leveraged loans. The Benchmark used for purposes of comparison for the Bank Loans strategy is based on the S&P/LSTA Loan Index.~~


~~(5)~~	Performance is based on a composite of portfolios that primarily invest in high yield securities. The Benchmark used for purposes of comparison for the High Yield strategy is based on the BoAML HY Master II Index.


~~(6)~~	Performance is based on a composite of portfolios that primarily invest in leveraged loans rated B-/Baa3 or higher. The Benchmark used for purposes of comparison for the Bank Loans strategy is based on the S&P/LSTA BB/B Loan Index.


~~(7)~~	~~The returns presented are calculated based on local currency.~~


~~(8)~~	Performance is based on a composite of portfolios that primarily invest in higher quality leveraged loans. The Benchmark used for purposes of comparison for the European Senior Loans strategy is based on the CS Inst West European Leveraged Loan Index.

~~Our alternative credit strategies~~ primarily invest in ~~more illiquid instruments through private investment funds, BDCs and separately managed accounts.~~ leveraged loans. The benchmark used for purposes of comparison for the Bank Loans strategy is based on the S&P/LSTA Loan Index.

(5)Performance is based on a composite of portfolios that primarily invest in high-yield securities. The benchmark used for purposes of comparison for the High Yield strategy is based on the BoAML HY Master II Index.

(6)The returns presented are calculated based on local currency.

(7)Performance is based on a composite of portfolios that primarily invest in higher quality leveraged loans. The benchmark used for purposes of comparison for the European Leveraged Loans strategy is based on the CS Inst West European Leveraged Loan Index.

(8)Performance is based on a composite of portfolios that primarily invest in European institutional leveraged loans. The benchmark used for purposes of comparison for the European Credit Opportunities strategy is based on the S&P European Leveraged Loans (All Loans) Index.

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The following table presents information regarding our ~~Public Markets alternative~~ credit ~~commingled~~investment funds where investors are subject to capital commitments from inception to September 30, ~~2017. Some~~2022. The information presented below is not intended to be representative of ~~these funds have been investing~~any past or future performance for ~~less~~any particular period other than ~~24 months, and thus their performance is less meaningful and not included~~the period presented below. Past performance is no guarantee of any future ~~results.~~result.

Alternative Credit Strategies: Fund Performance


		Amount				Fair Value of Investments
Credit and Liquid Strategies Investment Funds	Inception Date	Commitment		Invested (1)		Realized (1)		Unrealized		Total Value		Gross IRR (2)		Net IRR (2)		Multiple of Invested Capital (3)	Gross Accrued Carried Interest
($ in Millions)
Dislocation Opportunities Fund	May 2020	$	2,967	$	2,299	$	682	$	1,950	$	2,632	12.1	%	9.4	%	1.1	$	35
Special Situations Fund II	Dec 2014	3,525		3,241		2,215		1,552		3,767		4.2	%	2.2	%	1.2	—
Special Situations Fund	Dec 2012	2,274		2,273		1,701		388		2,089		(1.9)	%	(3.8)	%	0.9	—
Mezzanine Partners	Mar 2010	1,023		990		1,165		116		1,281		8.7	%	5.5	%	1.3	(20)
Asset-Based Finance Partners	Aug 2020	2,059		555		14		597		611		11.4	%	8.0	%	1.1	9
Private Credit Opportunities Partners II	Dec 2015	2,245		1,754		696		1,291		1,987		4.5	%	2.8	%	1.1	—
Lending Partners III	Apr 2017	1,498		805		460		775		1,235		15.5	%	12.7	%	1.5	32
Lending Partners II	Jun 2014	1,336		1,179		1,149		127		1,276		2.9	%	1.5	%	1.1	—
Lending Partners	Dec 2011	460		420		451		19		470		3.5	%	1.8	%	1.1	—
Lending Partners Europe II	Jun 2019	837		637		66		570		636		14.7	%	10.6	%	1.0	2
Lending Partners Europe	Mar 2015	848		662		379		248		627		(1.7)	%	(4.2)	%	0.9	—
Asia Credit	Dec 2020	1,084		271		—		286		286		N/A		N/A		N/A	—
Other Alternative Credit Vehicles	Various	14,011		7,308		5,648		3,716		9,364		N/A		N/A		N/A	24

All Funds		$	34,167	$	22,394	$	14,626	$	11,635	$	26,261						$	82

Amount Fair Value of Investments
Public Markets
Investment Funds
Inception Date Commitment
Invested ⁽¹⁾

Realized ⁽¹⁾
Unrealized Total Value
Gross
IRR ⁽²⁾

Net IRR ⁽²⁾

Multiple
of Invested
Capital ⁽³⁾
($ in Millions)
Special Situations Fund Dec-12 $ 2,274.3
$ 2,231.6
$ 690.1
$ 2,024.7
$ 2,714.8
7.0 % 4.9 % 1.2
Special Situations Fund II Dec-14 3,285.8
1,347.6
—
1,320.1
1,320.1
(1.2 )% (4.2 )% 1.0
Mezzanine Partners Mar-10 1,022.8
921.9
812.5
488.6
1,301.1
12.8 % 8.0 % 1.4
Private Credit Opportunities Partners II Dec-15 732.9
105.8
—
137.4
137.4
N/A
N/A
N/A
Lending Partners Dec-11 460.2
405.3
321.0
195.7
516.7
7.7 % 6.3 % 1.3
Lending Partners II Jun-14 1,335.9
1,136.7
258.9
1,158.6
1,417.5
15.2 % 12.8 % 1.2
Lending Partners III Apr-17 795.8
35.8
—
41.9
41.9
N/A
N/A
N/A
Lending Partners Europe Mar-15 847.6
324.1
42.3
344.7
387.0
22.3 % 14.7 % 1.2
Revolving Credit Partners May-15 510.0
—
27.6
(12.0 ) 15.6

⁽⁴⁾

⁽⁴⁾

⁽⁴⁾

Other Alternative Credit Vehicles Various 5,093.1
3,421.0
1,945.4
2,696.7
4,642.1
N/A
N/A
N/A
Unallocated Commitments Various 1,400.0
—
—
—
—
N/A
N/A
N/A
All Funds $ 17,758.4
$ 9,929.8
$ 4,097.8
$ 8,396.4
$ 12,494.2

(1)Recycled capital is excluded from the amounts invested and realized.

(2)These credit funds utilize ~~third party~~third-party financing facilities to provide liquidity to such funds, and in such event IRRs are calculated from the time capital contributions are due from fund investors to the time fund investors receive a related distribution from the fund. The use of such financing facilities generally decreases the amount of invested capital that would otherwise be used to calculate IRRs, which tends to increase IRRs when fair value grows over time and decrease IRRs when fair value decreases over time. IRRs measure the aggregate annual compounded returns generated by a ~~fund’s~~fund's investments over a holding period and are calculated taking into account recycled capital. Net IRRs presented are calculated after giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees. Gross IRRs are calculated before giving effect to the allocation of carried interest and the payment of any applicable management fees.

(3)The multiples of invested capital measure the aggregate value generated by a ~~fund’s~~fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together the total realized and unrealized values of a ~~fund’s~~fund's investments and dividing by the total amount of capital invested by the investors. The use of financing facilities generally decreases the amount of invested capital that would otherwise be used to calculate multiples of invested capital, which tends to increase multiples when fair value grows over time and decrease multiples when fair value decreases over time. Such amounts do not give effect to the allocation of any realized and unrealized returns on a ~~fund’s~~fund's investments to the ~~fund’s~~fund's general partner pursuant to a carried interest or the payment of any applicable management fees and are calculated without taking into account recycled capital.


~~(4)~~	The Revolving Credit Partners fund has been investing for over 24 months. However, the fund has not called any capital to date. As a result, the gross IRR, net IRR and multiple of invested capital performance measures are not meaningful and are not included above.

Hedge Funds

Our hedge fund platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. This principally consists of a 39.6% interest in Marshall Wace LLP (together with its affiliates, "Marshall Wace"), a global alternative investment manager specializing in long/short equity products. We also own (i) a 39.9% interest in PAAMCO Prisma Holdings, LLC ("PAAMCO Prisma"), an investment manager focused on liquid alternative investment solutions, including hedge fund-of-fund portfolios, and (ii) a 24.9% interest in BlackGold Capital Management L.P. ("BlackGold"), a credit-oriented investment manager focused on energy and hard asset investments.

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Credit and Liquid Strategies AUM

~~Public Markets Vehicle Structures~~

~~The table below presents information as~~As of September 30, ~~2017,~~2022, our Credit and Liquid Strategies business line had $213.0 billion of AUM, comprised of $103.7 billion of assets managed in our leveraged credit strategies, $73.3 billion of assets managed in our private credit strategy, and $7.6 billion of assets managed in our SIG strategy, $26.6 billion of assets managed through our hedge fund platform, and $1.7 billion of assets managed in other credit and liquid strategies. We manage $98.5 billion of credit investments for our Global Atlantic insurance companies, which are included in the amounts described in the preceding sentence. Our BDC has approximately $16.8 billion in assets under management, which is reflected in the AUM of our leveraged credit and private credit strategies above. We report all of the assets under management of our BDC in our AUM, but we report only a pro rata portion of the assets under management of our hedge fund partnerships based on our percentage ownership in them.


($ in millions)	AUM		FPAUM		Typical Management Fee Rate	Incentive Fee / Carried Interest	Preferred Return	Duration of Capital
Leveraged Credit:
Leveraged Credit SMAs/Funds	$	78,256	$	75,479	0.15% - 1.10%	Various (1)	Various (1)	Subject to redemptions
CLOs	23,951		23,951		0.40% - 0.50%	Various (1)	Various (1)	10-14 Years (2)
Total Leveraged Credit	102,207		99,430

Alternative Credit: (3)
Private Credit	59,574		51,361		0.30% - 1.50% (4)	10.00 - 20.00%	5.00 - 8.00%	8-15 Years (2)
SIG	7,773		3,959		0.50% - 1.75%	10.00 - 20.00%	7.00 - 12.00%	7-15 Years (2)
Total Alternative Credit	67,347		55,320

Hedge Funds (5)	26,624		26,624		0.50% - 2.00%	Various (1)	Various (1)	Subject to redemptions
BDCs (6)	16,800		16,800		0.60%	8.00%	7.00%	Indefinite

Total	$	212,978	$	198,174

(1)Certain funds and CLOs are subject to a performance fee in which the manager or general partner of the funds share up to 20% of the net profits earned by investors in excess of performance hurdles (generally tied to a benchmark or index) and subject to a provision requiring the funds and vehicles to regain prior losses before any performance fee is earned.

(2)Duration of capital is measured from inception. Inception dates for CLOs were between 2013 and 2022 and for separately managed accounts and funds investing in alternative credit strategies from 2009 through 2022.

(3)Our alternative credit funds generally have investment periods of two to five years and our newer alternative credit funds ~~vehicles or accounts offered by our Public Markets segment. Our funds, vehicles and accounts have been sorted based upon~~generally earn management fees on invested capital throughout their ~~primary investment strategies. However, the~~lifecycle.

(4)Lower fees on uninvested capital in certain vehicles.

(5)Hedge Funds represent KKR's pro rata portion of AUM and FPAUM ~~presented for each line~~of our hedge fund partnerships.

(6)Consists of FSK. We report all of the assets under management of this BDC in ~~the table includes certain investments from non-primary investment strategies, which is permitted by their investment mandates, for purposes~~our AUM and FPAUM.

114

Table of ~~presenting the fees and other terms for such funds, vehicles and accounts.~~Contents

($ in millions) AUM FPAUM
Typical
Management
Fee Rate

Incentive Fee /
Carried
Interest

Preferred
Return

Duration
of Capital
Leveraged Credit:

Leveraged Credit SMAs/Funds $ 10,394
$ 9,719
0.35%-1.50%
Various ⁽¹⁾

Various ⁽¹⁾
Subject to redemptions
CLO’s 9,803
9,803
0.40%-0.50%
Various ⁽¹⁾

Various ⁽¹⁾

10-14 Years ⁽²⁾
Total Leveraged Credit 20,197
19,522

Alternative Credit: ⁽³⁾

Special Situations 8,080
4,574

0.90%-1.75% ⁽⁴⁾
10.00-20.00% 8.00-12.00%
8-15 Years ⁽²⁾
Private Credit 8,764
4,728
0.50%-1.50% 10.00-20.00% 5.00-8.00%
8-15 Years ⁽²⁾
Total Alternative Credit 16,844
9,302

Hedge Funds ⁽⁵⁾
24,438
18,942
0.50%-2.00%
Various ⁽¹⁾

Various ⁽¹⁾
Subject to redemptions
Business Development Companies ⁽⁶⁾
4,251
4,251
1.00% 10.00% 7.00% 7 years
Total $ 65,730
$ 52,017


~~(1)~~	Certain funds and CLOs are subject to a performance fee in which the manager or general partner of the funds share in up to 20% of the net profits earned by investors in excess of performance hurdles (generally tied to a benchmark or index) and subject to a provision requiring the funds and vehicles to regain prior losses before any performance fee is earned.


~~(2)~~	Duration of capital is measured from inception. Inception dates for CLOs were between 2005 and 2016 and for separately managed accounts and funds investing in alternative credit strategies from 2009 through 2017.


~~(3)~~	~~Our alternative credit funds generally have investment periods of 3 to 5 years and our newer alternative credit funds generally earn fees on invested capital during the investment period.~~


~~(4)~~	~~Lower fees on uninvested capital in certain vehicles.~~


~~(5)~~	~~Hedge Funds represent KKR's pro-rata portion of AUM and FPAUM of our strategic manager partnerships, which consist of minority stakes in other hedge fund managers.~~

~~(6)~~

Consists of Corporate Capital Trust ("CCT") and Corporate Capital Trust II, which are BDCs sub-advised by KKR. These vehicles invest in both leveraged credit and private credit strategies. On September 21, 2017, CCT shareholders approved, among other things, a proposal for KKR Credit Advisors (US) LLC to become CCT’s sole investment adviser subject to the listing of CCT’s shares on a national securities exchange, which is pending.

Asset Management - Capital Markets

Our Capital Markets business line is comprised of our global capital markets business, ~~supports~~which is integrated with KKR's other asset management business lines, and serves our firm, our funds, our portfolio companies and third-party clients by developing and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. These services include arranging debt and equity financing, placing and underwriting securities offerings, and providing other types of capital markets ~~services.~~services that may result in the firm receiving fees, including underwriting, placement, transaction and syndication fees, commissions, underwriting discounts, interest payments and other compensation, which may be payable in cash or securities, in respect of the activities described above.

Our capital markets business underwrites credit facilities and arranges loan syndications and participations. When we are sole arrangers of a credit facility, we may advance amounts to the borrower on behalf of other lenders, subject to repayment. When we underwrite an offering of securities ~~or a loan~~ on a firm commitment basis, we commit to buy and sell an issue of securities ~~or indebtedness~~ and generate revenue by purchasing the securities ~~or indebtedness~~ at a discount or for a fee. When we act in an agency capacity or best efforts basis, we generate revenue for arranging financing or placing securities ~~or debt~~ with capital markets investors. We may also provide issuers with capital markets advice on security selection, access to markets, marketing considerations, securities pricing, and other aspects of capital markets transactions in exchange for a fee. ~~When we are sole arrangers~~Our capital markets business also provides syndication services in respect of co-investments in transactions participated in by KKR funds or third-party clients, which may entitle the firm to receive syndication fees, management fees and/or a credit facility, we generally advance amounts to the borrower on behalf of other lenders, for which such lenders are expected to repay us promptly. KKR Capital Markets LLC is an SEC-registered broker-dealercarried interest.

The capital markets business has a global footprint, with local presence and ~~a FINRA member, and we are also registered or authorized~~licenses to carry out certain broker-dealer activities in various countries in North America, Europe, Asia-Pacific and the Middle East. Our flagship capital markets subsidiary is KKR Capital Markets LLC, an SEC-registered broker-dealer and a member of the Financial Industry Regulatory Authority ("FINRA").

Asset Management - Principal Activities

Through our Principal Activities ~~segment,~~business line, we manage the firm’s own assets on our firm’s balance sheet and deploy capital to support and grow our ~~businesses. Our Principal Activities segment uses our balance sheet assets to support our investment management~~Private Equity, Real Assets, Credit and ~~capital markets businesses.~~ Liquid Strategies, and Credit Markets business lines.

Typically, the funds that we manage in our Private ~~Markets~~Equity, Real Assets and ~~Public Markets businesses~~Credit and Liquid Strategies business lines contractually require us, as general partner of the funds, to make sizable capital ~~commitments from time to time.~~commitments. We believe ~~our~~making general partner commitments ~~are indicative of the conviction we have in a given fund’s strategy, which~~ assists us in raising new funds from limited ~~partners.~~partners by demonstrating our conviction in a given fund’s strategy. Our commitments to fund capital also occur where we are the holder of the subordinated notes or the equity tranche of investment vehicles that we sponsor, including structured transactions. We also use our balance sheet to ~~acquire~~bridge investment activity during fundraising, for example by funding investments ~~in order~~for new funds and acquiring investments to ~~help~~ establish a track record for ~~fundraising purposes in~~ new investment strategies. We ~~may~~ also use our own capital ~~to seed investments for new funds,~~ to bridge capital selectively for our funds’ investments or finance strategic ~~acquisitions and partnerships,~~transactions, although the financial results of an acquired business ~~or strategic partnership~~ may be reported in our other ~~segments.~~business lines.

Our Principal Activities ~~segment~~business line also provides the required capital to fund the various commitments of our Capital Markets business line when underwriting or syndicating securities, or when providing term loan commitments for transactions involving our portfolio companies and for third parties. Our Principal Activities ~~segment~~business line also holds assets that ~~may be~~are utilized to satisfy regulatory requirements for our Capital Markets business line and risk retention requirements for ~~our CLO business.~~certain investment vehicles.

We also make opportunistic investments through our Principal Activities ~~segment,~~business line, which include co-investments alongside ~~our Private Markets and Public Markets~~the funds we manage as well as ~~make~~ Principal Activities investments that do not involve our ~~Private Markets or Public Markets~~ funds.

We endeavor to use our balance sheet strategically and opportunistically to generate an attractive risk-adjusted return on equity in a manner that is consistent with our fiduciary duties, ~~and~~ in compliance with applicable ~~laws.~~laws, and consistent with our one-firm approach.

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The chart below presents the holdings of our Principal Activities ~~segment~~business line by asset class as of September 30, ~~2017.~~2022.

Holdings by Asset Class (1)

(1)General partner commitments in our funds are included in the various asset classes shown above. Assets and revenues of other asset managers with which KKR has formed strategic partnerships where KKR does not hold more than 50% ownership interest are not included in our Principal Activities ~~segment~~business line but are reported in the financial results of our other ~~segments.~~business lines. Private Equity ~~and Other Equity~~ includes ~~KKR~~our investments in private equity funds, co-investments alongside such ~~KKR sponsored~~KKR-sponsored private equity funds, certain core ~~private~~ equity ~~co-investments,~~investments, and other opportunistic investments. ~~However, equity~~Equity investments in other asset classes, such as real estate, special situations and energy appear in these other asset classes. Other Credit consists of ~~liquid~~certain leveraged credit and specialty finance strategies.

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Insurance

Our insurance business is operated by Global Atlantic, which we acquired on February 1, 2021. As of September 30, 2022, KKR owns a 61.5% economic interest in Global Atlantic with the balance of Global Atlantic owned by third-party investors and Global Atlantic employees. Following the Global Atlantic acquisition, Global Atlantic continues to operate as a separate business with its existing brands and management team. Since the first quarter of 2021, we have presented Global Atlantic's financial results as a separate reportable segment.

Global Atlantic is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products to customers and reinsurance solutions to clients across individual and institutional markets. Global Atlantic focuses on target markets that it believes supports issuing products that have attractive risk and return characteristics. These markets allow Global Atlantic to leverage its strength in distribution and to deploy capital opportunistically across market conditions.

Global Atlantic primarily offers individual market customers fixed-rate annuities, fixed-indexed annuities, and targeted life products through a network of banks, broker-dealers, and insurance agencies. Global Atlantic provides its institutional market clients customized reinsurance solutions, including block, flow and pension risk transfer ("PRT") reinsurance, as well as funding agreements. Subject to changes in asset values, Global Atlantic's assets generally increase when individual market sales and reinsurance transactions exceed run-off of in-force policies. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of September 30, 2022, Global Atlantic served approximately three million policyholders.

Global Atlantic inflows are derived from new business production in its individual and institutional markets channels. Global Atlantic expects new business production from its individual markets channel and certain institutional markets products to be largely consistent quarter over quarter while exhibiting growth over time, subject to market and business risks. In contrast, Global Atlantic expects block reinsurance transactions generated in the institutional markets channel to be episodic rather than steady quarter over quarter. Similarly, funding agreements issued in the funding agreement backed note ("FABN") program are subject to capital markets conditions and are not expected to be consistent quarter over quarter.

The following table represents Global Atlantic’s new business volumes by business and product for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021(4)
($ in millions)
Individual market channel:
Fixed-rate annuities	$	1,206	$	854	$	3,726	$	3,437
Fixed-indexed annuities	1,261		809		3,282		2,305
Variable annuities	12		17		34		40
Total retirement products(1)	$	2,479	$	1,680	$	7,042	$	5,782

Life insurance products	$	7	$	11	$	26	$	28

Preneed life	72		64		210		164

Institutional market channel:
Block	—		16,010		2,782		17,099
Flow & pension risk transfer	2,571		1,050		6,413		3,443
Funding agreements(3)	—		1,500		2,000		2,200
Total institutional channel(2)	$	2,571	$	18,560	$	11,195	$	22,742

_________________

(1)New business volumes in individual markets are referred to as sales. In Global Atlantic's individual market channel, sales of annuities include all money paid into new and existing contracts. Individual market channel sales of life insurance products are based on commissionable premium and individual

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market channel sales for preneed life are based on the face amount of insurance. Life insurance product sales do not include the recurring premiums that policyholders may pay over time.

(2)New business volumes from Global Atlantic's institutional market channel are based on the assets assumed, net of any ceding commission, and is gross of any retrocessions to investment vehicles that participate in qualifying reinsurance transactions sourced by Global Atlantic and to other third party reinsurers.

(3)Funding agreement new business volumes represents funding agreements issued in connection with our FABN program only.

(4)For the nine month period ended September 30, 2021, the results of Global Atlantic's insurance operations included in our condensed consolidated results of operations are from February 1, 2021 through September 30, 2021.

The table below represents a breakdown of Global Atlantic’s policy liabilities by business and product type as of September 30, 2022, separated by reserves originated through its individual and institutional markets.


	Reserves as of September 30, 2022
	Individual market		Institutional market(5)		Total		Ceded		Total, net		Percentage of total
	($ in millions, except percentages, if applicable)
Fixed-rate annuity(1)	$	22,691	$	45,432	$	68,123	$	(17,465)	$	50,658	48.7	%
Fixed-indexed annuity(1)	22,514		7,566		30,080		(3,088)		26,992		21.5	%
Variable annuity	2,538		3,272		5,810		(646)		5,164		4.2	%
Indexed universal life(1)	13,521		—		13,521		(167)		13,354		9.7	%
Preneed life	2,854		—		2,854		—		2,854		2.0	%
Other life insurance(2)	583		10,165		10,748		(3,672)		7,076		7.7	%
Funding agreements(3)	2,099		5,406		7,505		—		7,505		5.4	%
Closed block	—		1,098		1,098		(1,057)		41		0.8	%
Other corporate(4)	—		47		47		(47)		—		—	%
Total reserves	$	66,800	$	72,986	$	139,786	$	(26,142)	$	113,644	100.0	%

Total general account	$	64,491	$	71,243	$	135,734	$	(26,142)	$	109,592	97.1	%
Total separate account	2,309		1,743		4,052		—		4,052		2.9	%
Total reserves	$	66,800	$	72,986	$	139,786	$	(26,142)	$	113,644	100.0	%

_________________

(1)As of September 30, 2021, 72% of the account value in its general account associated with its fixed-rate and fixed-annuity products, and 44% of account value in its general account associated with universal life products was protected by surrender charges.

(2)“Other life insurance” includes universal life, term and whole life insurance products.

(3)"Funding agreements” includes funding agreements associated with Federal Home Loan Bank advances and under our FABN program.

(4)“Other corporate” primarily includes accident & health reserves that Global Atlantic assumed as part of a reinsurance transaction in 2009.

(5)Institutional market reserves are sourced using customized reinsurance solutions such as block, flow and PRT. As of September 30, 2022, reserves sourced through for block, flow and PRT transactions were $49.3 billion, $10.7 billion, and $4.6 billion, respectively.

A new accounting standard for targeted improvements to the accounting for long-duration contracts becomes effective on January 1, 2023 with a transition date of January 1, 2021. We do not expect the adoption of this standard to have a material effect on our retained earnings and accumulated other comprehensive income (loss) as of the transition date, due to the purchase accounting associated with the acquisition of Global Atlantic on February 1, 2021. However, we continue to evaluate the impact of this guidance on the acquisition date opening balance sheet and to periods thereafter. The new guidance is expected to increase volatility in our financial statements primarily due to the requirement to measure market risk benefits at fair value, which is recorded in net income, except for changes in value attributable to changes in an entity’s non-performance risk, which is recognized in OCI. In addition, the new guidance is expected to have a significant impact on our systems, processes and controls. See “Risk Factors – Risks Related to Global Atlantic – Changes in accounting standards could adversely impact Global Atlantic's reported results of operations and reported financial condition” in our Annual Report and Note 2 "Summary of Significant Accounting Policies – Future application of accounting standards – Targeted improvements to the accounting for long-duration contracts" in this report.

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Business Environment

Economic and Market Conditions

~~Global~~ Impact of COVID-19. The outbreak of COVID-19 continues to impact various countries throughout the world. For a description of the impact that COVID-19 had and may in the future have on our business, see "Risk Factors—Risks Related to Our Business—COVID-19 continues to impact the United States and other countries throughout the world, and it has caused and may further cause disruptions to our business and adversely affect our financial results" and "Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition" in our Annual Report.

Economic Conditions. As a global investment firm, we are affected by financial and economic conditions globally. Global and regional economic conditions, including those caused by the COVID-19 pandemic, have a substantial impact on our financial condition and results of operations, impacting the values of the investments we make, our ability to exit these investments profitably, our ability to raise capital from investors, and our ability to make new investments. Financial and economic conditions in the United States, ~~the~~ European Union, China, Japan, and other major economies are significant contributors to the global economy. ~~According~~

During the quarter ended September 30, 2022, the United States continued to ~~Bloomberg consensus forecasts~~show signs of slowing economic activity, potentially indicating the early stages of a recession. Inflation continued to present a headwind for the U.S. economy. In keeping with its stated intention to bring down inflation, the U.S. Federal Reserve pursued a more restrictive monetary policy. The Federal Reserve raised interest rates by 75 basis points in July and 75 basis points in September, leading to increased market volatility. In the United States, real GDP is estimated to have expanded at a 2.6% seasonally-adjusted annualized rate in the quarter ended September 30, 2022, after contracting at a 0.6% seasonally-adjusted annualized rate in the quarter ended June 30, 2022; the U.S. unemployment rate was 3.5% as of September 30, ~~2017,~~2022, down from 3.6% as of June 30, 2022; the U.S. consumer price index rose 8.2% year-over-year as of September 30, 2022, down from 9.1% year-over-year as of June 30, 2022; the U.S. core consumer price index rose 6.6% on a year-over-year basis as of September 30, 2022, up from 5.9% on a year-over-year basis as of June 30, 2022; and the effective federal funds rate set by the U.S. Federal Reserve was 3.1% as of September 30, 2022, up from 1.6% as of June 30, 2022.

During the quarter ended September 30, 2022, the Euro Area (also known as the Eurozone) economy also experienced slowing economic activity, and the potential for recession for countries in the Euro Area is generally high amid continued disruptions to European energy markets and Russia’s ongoing invasion of Ukraine. The European Central Bank (ECB) raised interest rates by 50 basis points in July and 75 basis points in September, leading to increased market volatility. Euro Area real GDP is estimated to have been unchanged on a seasonally-adjusted quarter-over-quarter basis in the ~~United States~~quarter ended September 30, 2022, compared to a 0.8% increase recorded in the quarter ended June 30, 2022. In addition, Euro Area unemployment was 6.6% as of September 30, 2022, down from 6.7% as of June 30, 2022; Euro Area core inflation was 4.8% as of September 30, 2022, up from 3.7% as of June 30, 2022; and the short-term benchmark interest rate set by the European Central Bank was 1.25% as of September 30, 2022, up from 0.0% as of June 30, 2022. As of September 30, 2022, we have no investments in any portfolio companies whose executive headquarters are located in Russia, Ukraine or Belarus, and we believe that the direct exposure of our investment portfolio to Russia, Ukraine and Belarus is insignificant.

During the quarter ended September 30, 2022, the Chinese economy experienced headwinds related to the ongoing slowdown in China’s property sector and the effects of the government’s zero-COVID policies. Real GDP in China is estimated to have increased at3.9% on a ~~seasonally adjusted annualized rate~~seasonally-adjusted quarter-over-quarter basis in the quarter ended September 30, 2022, compared to contraction of ~~2.3%~~2.7% reported for the quarter ended June 30, 2022. Core inflation in China was 0.6% on a year-over-year basis as of September 30, 2022, down from 1.0% on a year-over-year basis as of June 30, 2022. After the quarter ended September 30, 2022, President Xi Jinping was confirmed to a third term as the general secretary of the Communist Party and seven new members were appointed to the Politiburo Standing Committee, following which, the MSCI China Index fell 8.2% on October 24, 2022.

In Japan, the economic recovery from COVID-19 has continued, despite higher energy costs and significant volatility in currency markets presenting headwinds to GDP growth. In Japan, real GDP growth for the quarter ended September 30, ~~2017 compared~~2022 is estimated to ~~3.1% for~~have been 1.4% on a seasonally-adjusted annualized basis, up from 3.5% in the quarter ended June 30, ~~2017. According~~2022; core inflation rose to ~~the Bureau of Labor Statistics, the U.S. unemployment rate was 4.2%~~2.8% on a year-over-year basis as of September 30, ~~2017, down~~2022, up from ~~4.4%~~2.2% as of June 30, 2017. Key economic and financial issues for the United States include, but are not limited to, whether or not the U.S. government will enact its proposed fiscal stimulus through tax cuts or infrastructure spending, the pace and levels at which the Federal Reserve raises interest rates and reduces its balance sheet, the U.S. debt ceiling2022; and the ~~ability~~short-term benchmark interest rate set by the Bank of ~~the U.S. government to pay its debt when due.~~ Japan was -0.1% as of September 30, 2022, unchanged from June 30, 2022.

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These and other key issues could have adverse repercussions across regional and global financial markets, which could adversely affect the valuations of our investments. For the quarter ended September 30, 2017, Bloomberg estimates suggest that Euro Area real GDP growth was 0.5% on a quarter over quarter basis, compared to actual quarter over quarter growth of 0.6% as of June 30, 2017. Euro Area core inflation was 1.1% on a year over year basis as of September 30, 2017, unchanged relative to June 30, 2017. In March 2017, the United Kingdom triggered Article 50 to formally begin the process to exit from the European Union. Continuing controversy and uncertainty surrounding key issues such as immigration, austerity, and globalization and risk of countries exiting the European Union, as well as the activities of the European Central Bank, could impair economic growth in the region and lead to financial market volatility. These and other key issues, such as heightened geopolitical risk, could have adverse repercussions across regional and global financial markets, which could adversely affect the valuations of our investments. In particular, in response to persistent inflationary pressure and central bank policy designed to combat inflation, short- and medium-term interest rates may continue to rise, which may adversely impact equity and credit markets with tightening financial conditions and slowing growth. As noted above, the U.S. Federal Reserve has continued to raise interest rates and has indicated that it is prepared to take decisive action to manage inflation, including raising interest rates further and shrinking the size of its balance sheet. In addition, commodity prices are generally expected to rise in inflationary environments, and foreign exchange rates are often affected by countries’ monetary and fiscal responses to inflationary trends. The Russia-Ukraine conflict, including the sanctions imposed in response to Russia's invasion of Ukraine, have exacerbated and may further exacerbate these issues and trends, including with respect to oil and gas prices. See "Commodities Markets" in this report below. Protectionist policies, such as restrictions on exports of food, have also increased globally as a ~~quarter over quarter, seasonally adjusted basis, China’s real GDP grew 1.7%~~result of Russia's invasion of Ukraine.

Other key issues include (i) further developments regarding infectious diseases, including COVID-19, which may prolong the adverse economic impact of the COVID-19 pandemic on the U.S. and global economies, including supply chain disruptions that promote cost inflation for critical goods and labor shortages, (ii) geopolitical uncertainty such as U.S.-China and U.S.-Russia relations, (iii) political uncertainty caused by, among other things, economic nationalist sentiments, tensions surrounding socioeconomic inequality issues, and partisan sentiments in the ~~quarter ended September 30, 2017, slightly slower than the 1.8% reported~~United States, all of which have potentially global ramifications with regards to policy, (iv) regulatory changes regarding, for ~~the quarter ended June 30, 2017. A slowdown~~example, taxation, international trade, cross-border investments, immigration, stimulus programs and rising levels of debt, (v) increased volatility and/or downturn in ~~China's economic growth could adversely impact the valuations of our~~equity or credit markets, (vi) unexpected shifts in central banks' monetary policies, (vii) rising mortgage rates, which affect demand for housing and housing-related related goods and services, (viii) technological advancements and innovations that may disrupt marketplaces and businesses, and (ix) insurance company regulatory changes regarding, for example, capital and investments ~~in China and could also adversely impact the global economy, particularly other emerging markets.~~held by insurance companies. For a further discussion of how market conditions may affect our businesses, see ~~“Risk Factors-~~ "Risk Factors—Risks Related to Our ~~Business -~~ Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial ~~condition”~~condition" in our Annual Report.

In addition, governments have enacted and may further enact significant changes in tax law, including changes in the way U.S. corporations like KKR and many of our U.S. portfolio companies are taxed.The U.S. Federal government has recently signed into law the Inflation Reduction Act of 2022 which, among other things, imposes a corporate minimum “book” tax on certain large corporations, which may apply to KKR. It also creates a new non-deductible 1% excise tax on net stock repurchases made by publicly traded corporations like KKR after December 31, 2022 and allocates additional funds to enhance the frequency and breadth of audits and other enforcement actions.In addition, New York State may propose regulations that could significantly affect the determination of the tax base for New York State tax purposes for corporations that conduct an asset management business like us. These changes could materially increase the amount of taxes and tax-related regulatory and compliance costs we and our portfolio companies are required to pay. See “Risk Factors—Risks Related to Our Business—Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rate and tax liability” in our Annual Report ~~on Form 10-K.~~and Note 18 "Income Taxes" in our financial statements.

~~Global~~ Equity and Credit Markets. Global equity and credit markets have a substantial effect on our financial condition and results of operations. Tightening liquidity conditions in equity and credit capital markets affect the availability and cost of capital for KKR and our portfolio companies, and the increased cost of credit or degradation in debt financing terms may impact our ability to identify and execute investments on attractive terms. See "Business Conditions—Our ability to successfully deploy capital" in this report below. In general, a climate of reasonable interest rates and high levels of liquidity in the debt and equity capital markets provide a positive environment for us to generate attractive investment returns, which also impacts our ability to generate incentive fees and carried interest. Periods of volatility and dislocation in the capital markets, ~~present~~as have been observed recently, raise substantial risks, but also can present us with opportunities to invest at reduced valuations that position us for future growth and investment returns. Low interest rates related to monetary stimulus and economic stagnation may negatively impact expected returns on all types of investments. Higher interest rates in conjunction with slower growth or weaker currencies in some emerging market economies have caused, and may further cause, the default risk of these countries to increase, and this could impact the operations or value of our investments that operate in these regions. Areas that have central bank quantitative easing or tightening campaigns affecting their interest rates relative to the United States could potentially experience further currency volatility relative to the U.S. dollar.

~~Many~~

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In our asset management segment, many of our investments are in equities, so a change in global equity prices or in market volatility directly impacts the value of our investments and our profitability as well as our ability to realize investment gains and the receptiveness of fund investors to our investment products. Volatility across global equity and credit markets, alongside shifting liquidity conditions in new issue activity across equity and non-investment grade credit markets, have adversely impacted (and may continue to adversely impact) the volume of capital markets activity, and therefore, the level of transaction fees that our capital markets business line is able to earn. For the quarter ended September 30, ~~2017,~~2022, global equity markets were ~~positive,~~negative, with the S&P 500 ~~Index up 4.5%~~down 4.9% and the MSCI World Index ~~up 5.0%~~down 6.1% on a total return basis including dividends. Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index ~~or the VIX,~~(VIX), a measure of volatility, ended at ~~9.5~~31.6 as of September 30, ~~2017 decreasing~~2022, increasing from ~~11.2~~28.7 as of June 30, ~~2017.~~2022. For a ~~further~~ discussion of our valuation methods, see “Risk ~~Factors-Risks~~Factors—Risks Related to the Assets We ~~Manage -~~ Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, ~~and~~which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our ~~financial condition and~~ results of ~~operations” in our Annual Report on Form 10-K~~operations and ~~“-Critical~~financial condition” and see also “—Critical Accounting ~~Policies-Fair~~Policies—Fair Value ~~Measurements-Level~~Measurements—Level III Valuation Methodologies” in ~~this report.~~our Annual Report. In our insurance business, a change in equity prices also impacts Global Atlantic’s equity-sensitive annuity and life insurance products, including with respect to hedging costs related to and fee-income earned on those products.

~~Many~~In our asset management segment, many of our investments are ~~also~~ in non-investment grade credit instruments and ~~our~~investment grade credit instruments. Our funds, ~~and~~ our portfolio companies and Global Atlantic also rely on credit financing and the ability to refinance existing debt. Consequently, any decrease in the value of credit instruments that we have invested in or any increase in the cost of credit financing reduces our returns and decreases our net income.

In ~~particular due~~our insurance segment, periods of rising or higher interest rates as we are currently experiencing may result in differing impacts on Global Atlantic’s business. See "Risk Factors—Risks Related to Global Atlantic— Interest rate fluctuations and sustained periods of low or high interest rates could adversely affect Global Atlantic’s business, financial condition, liquidity, results of operations, cash flows and prospects" in our Annual Report.

Periods of rising or higher interest rates can benefit Global Atlantic’s results of operations and financial condition. We generally expect the yield on new investment purchases and income from any floating rate investments held in Global Atlantic’s investment portfolio to increase as interest rates rise. Higher interest rates also generally tend to increase the demand for certain of Global Atlantic’s products, as the benefits and solutions Global Atlantic can offer to clients may become more attractive, potentially resulting in higher new business volumes. Rising rates are also expected to result in decreases to certain policy liabilities as a result of forthcoming accounting guidance for insurance and reinsurance companies that issue long-duration contracts such as life insurance and annuities. For a further discussion of this guidance, see "—Summary of Significant Accounting Policies—Future application of accounting standards."

On the other hand, higher interest rates can have a negative impact on Global Atlantic. For example, higher policyholder surrenders may occur in response to rising interest rates as more attractive products become available to policyholders in a higher rate environment. The majority of our investments at Global Atlantic are in investment grade credit instruments. Sales of those investments at a loss, for example to raise cash to meet policyholder obligations upon surrender earlier than expected maturity or as we rotate out of investments acquired with new reinsurance transactions to our desired asset mix during a period of rising or higher rates compared to when the investment was acquired, is expected to decrease our net income in that period and such decrease could be significant. We also expect that in a higher rate environment we will generally have a higher cost of insurance on new business, including higher hedging costs, as the benefits to policyholders on new business will be generally higher. If Global Atlantic fails to adequately cash flow match liabilities sold with higher benefits and interest rates fall while Global Atlantic holds that liability, Global Atlantic may not generate its expected earnings on those liabilities. In addition, rising interest rates will decrease the fair value of Global Atlantic’s credit investments and the value of embedded derivatives associated with funds withheld reinsurance transactions. The decrease in the fair value of these credit investments resulted in unrealized losses reported in AOCI and negative carrying value in our insurance segment as of September 30, 2022. We do not expect to incur these unrealized losses as we intend to hold the investments to recovery as part of our asset liability cash flow matching strategy. However, if the market, industry and company-specific factors relating to these investments deteriorate meaningfully, Global Atlantic may be required to recognize an impairment to goodwill and may realize losses as a result of credit defaults or impairments on investments, either of which could have a material adverse effect on our results of operations and financial condition.

Due in part to holdings of credit instruments such as CLOs on our balance sheet, the performance of the credit markets has had an amplified impact on our financial results, as we directly bear the full extent of losses from credit instruments on our balance sheet. Credit markets can also impact valuations because a discounted cash flow analysis is generally used as one of the methodologies ~~used~~ to ascertain the fair value of our investments that do not have readily observable market prices. In addition, with respect to our credit instruments, tightening credit spreads are generally expected to

lead to an increase, and widening credit

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spreads are generally expected to lead to a decrease, in the value of these credit investments, if not offset by hedging or other factors. In addition, the significant widening of credit spreads is also typically expected to negatively impact equity markets, which in turn would negatively impact our portfolio and us as noted above. Conversely, widening credit spreads may have a positive impact on our insurance business, as the margin Global Atlantic is able to earn between crediting rates offered on its insurance products and the investment income it earns from its credit investments could increase, and tightening credit spreads may negatively impact the pricing and therefore competitiveness of Global Atlantic’s products, adversely impacting sales and growth, or may negatively impact the margins that Global Atlantic earns on sales and transactions.

During the quarter ended September 30, ~~2017, US Investment Grade~~2022, U.S. investment grade corporate bond spreads ~~(BofAML~~(BofA Merrill Lynch US Corporate Index) ~~tightened~~widened by 942 basis points and ~~US High-Yield~~U.S. high-yield corporate bond spreads (BofAML HY Master II Index) ~~tightened~~widened by 23244 basis points. The non-investment grade credit indices were mixed during the quarter ended September 30, 2022, with the S&P/LSTA Leveraged Loan Index up 1.4% and the BAML US High Yield Index down 0.7%. During the quarter ended September 30, 2022, 10-year government bond yields rose 82 basis points in the United States, rose 186 basis points in the United Kingdom, rose 77 basis points in Germany, fell 7 basis points in China, and rose 1 basis point in Japan. For a further discussion of how market conditions may affect our businesses, see “Risk ~~Factors-~~ Factors—Risks Related to Our ~~Business -~~ Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial ~~condition"~~condition” and ~~"Risks~~“Risk Factors—Risks Related to the Assets We ~~Manage -~~ Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, ~~and~~which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our ~~financial condition and~~ results of ~~operations"~~operations and financial condition” in our Annual ~~Report on Form 10-K.~~Report.

The non-investment grade credit indices rose during the quarter ended September 30, 2017, with the S&P/LSTA Leveraged Loan Index up 1.0% and the BofAML HY Master II Index up 2.0%. For the quarter ended September 30, 2017, 10-year government bond yields rose 3 basis points in the United States, rose 6 basis points in China, fell 2 basis points in Japan and stayed flat in Germany. For further discussion of the impact of global credit markets on our financial condition and results of operations, see ~~“Risk Factors -~~ "Risk Factors—Risks Related to the Assets We ~~Manage -Changes~~Manage—Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategies pursued with our balance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may increase the cost of such financing or refinancing if it is obtained, which could lead to lower-yielding investments and potentially decrease our net income,~~” “-~~ " "Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, ~~and~~which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition," "Risk Factors—Risks Related to the Assets We Manage—Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in certain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of our funds to the extent those concentrated assets perform poorly" and "Risk Factors—Risks Related to Global Atlantic—Interest rate fluctuations and sustained periods of low or high interest rates could adversely affect Global Atlantic’s business, financial condition, ~~and~~liquidity, results of ~~operations”~~operations, cash flows and “- Because we hold interests in some of our portfolio companies both through our management of private equity funds as well as through separate investments in those funds and direct co-investments, fluctuation in the fair values of these portfolio companies may have a disproportionate impact on the investment income earned by us”prospects" in our Annual ~~Report on Form 10-K and “-Critical~~Report. For a further discussion of our valuation methods, see "—Critical Accounting ~~Policies-Fair~~Policies—Fair Value ~~Measurements-Level~~Measurements—Level III Valuation ~~Methodologies” in this report.~~Methodologies."

Foreign Exchange Rates. Foreign exchange rates have a substantial impact on the valuations of our investments that are denominated in currencies other than the U.S. dollar. Currency volatility can also affect our businesses and investments ~~which~~that deal in ~~cross‑border~~cross-border trade. The appreciation or depreciation of the U.S. dollar is expected to contribute to a decrease or increase, respectively, in the U.S. dollar value of our ~~non‑U.S.~~non-U.S. investments to the extent unhedged. In addition, an appreciating U.S. dollar would be expected to make the exports of U.S. based companies less competitive, which may lead to a decline in their export revenues, if any, while a depreciating U.S. dollar would be expected to have the opposite effect. Moreover, when selecting investments for our investment funds that are denominated in U.S. dollars, an appreciating U.S. dollar may create opportunities to invest at more attractive U.S. dollar prices in certain countries outside of the ~~U.S.,~~United States, while a depreciating U.S. dollar would be expected to have the opposite effect. For our investments denominated in currencies other than the U.S. dollar, the depreciation in such currencies will generally contribute to the decrease in the valuation of such investments, to the extent unhedged, and adversely affect the U.S. dollar equivalent revenues of portfolio companies with substantial revenues denominated in such currencies, while the appreciation in such currencies would be expected to have the opposite effect. For the quarter ended September 30, ~~2017,~~2022, the euro ~~rose 3.4%~~fell 6.5%, the British pound fell 8.3%, the Japanese yen fell 6.2%, and the Chinese renminbi ~~rose 1.9%, and the British pound rose 2.9%~~fell 5.9%, respectively, relative to the U.S. dollar. See “Risk Factors- Risks Related to Our Business - Difficult market conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial condition” in our Annual Report on Form 10-K. For additional information regarding our foreign exchange rate risk, see ~~“-Quantitative~~“Quantitative and Qualitative Disclosure About Market ~~Risk -~~ Risk—Exchange Rate Risk” in our Annual ~~Report~~Report.

LIBOR Transition. On March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act of 2021, was signed into law in the United States. This legislation establishes a uniform benchmark replacement mechanic for financial contracts that mature after June 30, 2023 which do not contain either clearly defined or practicable fallback provisions or are contractually silent on ~~Form 10-K.~~a benchmark replacement rate. The legislation also creates a safe harbor that shields involved parties from liability if they choose to utilize a replacement rate recommended by the Board of

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Governors of the Federal Reserve. For a discussion of the LIBOR transition that will impact certain debt obligations, see Note 2 "Summary of Significant Accounting Policies – Adoption of new accounting pronouncements—Reference rate reform" in our financial statements and Note 17 "Debt Obligations" in our financial statements.For a discussion of the risks related to the LIBOR transition, see "Risk Factors – Risks Related to Our Business – Transition away from LIBOR as a benchmark reference for interest rates may affect the cost of capital and requires amending or restructuring existing debt instruments and related hedging arrangements for us, our investment funds and our portfolio companies, and may impact the value of floating rate securities or loans based on LIBOR that we or our investment funds have held, all of which may result in additional costs or adversely affect our or our funds’ liquidity, results of results of operations and financial condition" in our Annual Report.

Commodity Markets. Our ~~Private Markets~~Real Assets business line portfolio contains energy real asset investments, and certain of our other Private ~~Markets~~Equity, Real Assets and ~~Public Markets~~Credit and Liquid Strategies business line strategies ~~and products, including private equity, direct lending, special situations and CLOs, also~~ have ~~meaningful~~ investments in or related to the energy sector. The value of these investments is heavily influenced by the price of natural gas and oil. As noted above, the actions taken by Russia in the Ukraine starting in February 2022 have also caused volatility in the commodities markets. During the quarter ended September 30, ~~2017,~~2022, the ~~long-term~~3-year forward price of WTI crude oil ~~increased~~decreased approximately 2%12%, ~~while~~and the ~~long-term~~3-year forward price of natural gas ~~was relatively stable.~~increased approximately 5%. The ~~long-term~~3-year forward price of WTI crude oil ~~increased~~decreased from approximately ~~$49~~$73.46 per barrel to ~~$50~~$64.37 per barrel, and the ~~long-term~~3-year forward price of natural gas ~~decreased~~increased from approximately ~~$2.85~~$4.36 per mcf to ~~$2.84~~$4.58 per mcf as of June 30, ~~2017~~2022 and September 30, ~~2017,~~2022, respectively.

When commodity prices decline or if a decline is not offset by other factors, we would expect the value of our energy real asset investments to be adversely ~~impacted.~~impacted, to the extent unhedged. In general, we expect downward price movements to have a negative impact on the fair value of our energy portfolio, all other things being equal, given those commodity prices are an input in our valuation models. The reverse is true for upward price movements. However, because we typically use near-term commodity derivative transactions to hedge our exposures, we expect long-term oil and natural gas prices to be a more significant driver of the valuation of our energy investments in asset management than spot prices. In addition, ~~because we hold certain~~to the extent energy ~~assets on~~real asset investments are directly held by our balance sheet, ~~which had a fair value of $0.5 billion as of September 30, 2017, these~~ price movements ~~would~~can have an amplified impact on our financial results, as we would directly bear the full extent of such gains or ~~losses.~~losses, subject to hedging. However, as of September 30, 2022, energy investments in oil and gas assets made up only approximately 1% of our assets under management, 1% of our total GAAP assets and 1% of our total segment assets. For additional information regarding our energy real assets, see ~~“-Critical~~"Critical Accounting ~~Policies-Fair~~Policies—Fair Value ~~Measurements-Level~~Measurements—Level III Valuation ~~Methodologies-Real~~Methodologies—Real Asset ~~Investments” in this report~~Investments" and ~~“Risk Factors -~~ see also "Risk Factors—Risks Related to the Assets We ~~Manage - Because we hold interests~~Manage—Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in ~~some~~certain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of our ~~portfolio companies both~~funds to the extent those concentrated assets perform poorly" in our Annual Report.

Business Conditions

Our operating revenues consist of fees, performance income, investment income and other operating income.

Our ability to grow our revenues depends in part on our ability to attract new capital and investors, our successful deployment of capital including from our balance sheet and our ability to realize investments at a profit.

Our ability to attract new capital and investors. Our ability to attract new capital and investors in our funds is driven, in part, by the extent to which they continue to see the alternative asset management industry generally, and our investment products specifically, as attractive means for capital appreciation or income. In addition, our ability to attract new capital and investors in our insurance business is driven, in part, by the extent to which they continue to see the life and annuity insurance and reinsurance industry generally, and in certain cases our reinsurance vehicles, as attractive retirement, accumulation, income or business solutions. Since 2010, we have expanded into strategies such as real assets, credit, core, growth, insurance and, through hedge fund partnerships, hedge funds. We have also reached out to new fund investors, including retail and high net worth investors. However, fundraising continues to be competitive. While our ~~management~~Asian Fund IV, European Fund V, North America Fund XIII, Real Estate Partners Americas III, Real Estate Partners Europe II, Global Infrastructure Investors IV, Next Generation Technology Growth Fund II and Health Care Strategic Growth Fund II exceeded the size of ~~private equity~~their respective predecessor funds, there is no assurance that fundraises for our other flagship investment funds or vehicles or for our newer strategies and their successor funds will experience similar success. If we are unable to successfully raise comparably sized or larger funds, our AUM, FPAUM, and associated fees attributable to new capital raised in future periods may be lower than in prior years. See "Risk Factors—Risks Related to Our Business—Our inability to raise additional or successor funds (or raise successor funds of a comparable size as our predecessor funds) could have a material adverse impact on our business" in our Annual Report.

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Our ability to successfully deploy capital. Our ability to maintain and grow our revenue base is dependent upon our ability to successfully deploy the capital available to us as well as ~~through separate~~our participation in capital markets transactions. Greater competition, high valuations, increased overall cost of credit and other general market conditions may impact our ability to identify and execute attractive investments. Additionally, because we seek to make investments that have an ability to achieve our targeted returns while taking on a reasonable level of risk, we may experience periods of reduced investment activity. We have a long-term investment horizon and the capital deployed in ~~those funds~~any one quarter may vary significantly from the capital deployed in any other quarter or the quarterly average of capital deployed in any given year. Reduced levels of transaction activity also tends to result in reduced potential future investment gains, lower transaction fees and ~~direct co-investments,~~

~~fluctuation~~lower fees for our capital markets business line, which may earn fees in the ~~fair values~~syndication of ~~these~~equity or debt. In our insurance business, we deploy capital by investing in assets that are anticipated to generate net investment income in excess of the net cost of insurance. If we are unable to originate or source attractive investments, the success and growth in revenues of our insurance business will be adversely impacted. See also “Risk Factors—Risks Related to the Assets We Manage—Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategies pursued with our balance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may ~~have a disproportionate impact on~~increase the ~~investment income earned by us”~~cost of such financing or refinancing if it is obtained, which could lead to lower-yielding investments and potentially decrease our net income” in our Annual ~~Report~~Report.

Our ability to realize investments. Challenging market and economic conditions may adversely affect our ability to exit and realize value from our investments and result in lower-than-expected returns. Although the equity markets are not the only means by which we exit investments from our funds, the strength and liquidity of the U.S. and relevant global equity markets generally, and the initial public offering market specifically, affect the valuation of, and our ability to successfully exit, our equity positions in the portfolio companies of our funds in a timely manner. We may also realize investments through strategic sales. When financing is not available or becomes too costly, it may be more difficult to find a buyer that can successfully raise sufficient capital to purchase our investments. In addition, volatile debt and equity markets may also make the exit of our investments more difficult to execute. In our insurance business, we depend on ~~Form 10-K.~~the ability of our investments to generate their anticipated returns, through the payment of interest and dividends and interest as well as return of principal, in the amounts and at the times that we expect them to be made in order to manage our obligations to make payments to our policyholders. If policyholder behavior differs from our expectations, we may be forced to sell our investments earlier than we anticipated and during market conditions where we may realize losses on the investment. We also may realize losses on investments to rotate portfolios acquired in reinsurance transactions into our preferred investment mix. In addition, material delays in payments or impairments to our anticipated investment returns could have material adverse effects to our results of operations. For additional information about how business environment and market conditions affect Global Atlantic, see "—Global Atlantic's Investment Portfolio."

Basis of Accounting

We consolidate the financial results of ~~the~~ KKR Group ~~Partnerships~~Partnership and ~~their~~its consolidated ~~subsidiaries,~~entities, which include the accounts of our investment ~~management and capital markets~~advisers, broker-dealers, Global Atlantic’s insurance companies, the general partners of certain unconsolidated investment funds, ~~and vehicles,~~ general partners of ~~certain~~consolidated investment funds ~~that are consolidated~~ and their respective consolidated investment funds and certain other entities including ~~certain consolidated CLOs and commercial real estate mortgage-backed securities, or "CMBS". We refer to CLOs and CMBS as~~ collateralized financing entities ~~or CFEs.~~("CFEs").

When an entity is consolidated, we reflect the accounts of the consolidated entity, including its assets, liabilities, ~~fees,~~revenues, expenses, investment income, cash flows and other amounts, on a gross basis. While the consolidation of ~~a consolidated~~an investment fund or entity does not have an effect on the amounts of Net Income Attributable to KKR or KKR's ~~partners' capital~~stockholders' equity that KKR reports, the consolidation does significantly impact the financial statement presentation under GAAP. This is due to the fact that the accounts of the consolidated entities are reflected on a gross basis while the allocable share of those amounts that are attributable to third parties are reflected as single line items. The single line items in which the accounts attributable to third parties are recorded are presented as noncontrolling interests on the consolidated statements of financial condition and net income (loss) attributable to noncontrolling interests on the consolidated statements of operations.

The presentation in the financial statements reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, each of which possess distinct characteristics. As a result, KKR developed a two-tiered presentation approach for the financial statements in this Management's Discussion and Analysis. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations. KKR believes that reporting Global Atlantic’s insurance operations separately is appropriate given, among other factors, the relative significance of Global Atlantic’s policy liabilities, which are not obligations of KKR (other than the insurance companies that issued them). If a traditional aggregated presentation were to be used, KKR would expect to eliminate or combine several identical or similar captions, which would condense the presentations but would reduce transparency. KKR also believes that

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using a traditional aggregated presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report. We acquired Global Atlantic on February 1, 2021; accordingly, the results of Global Atlantic's insurance operations included in our consolidated results of operations for the nine months ended September 30, 2021 are from February 1, 2021 (the closing date of the acquisition) through September 30, 2021.

All the intercompany transactions have been eliminated.

The summary of the significant accounting policies has been organized considering the two-tiered approach described above and includes a section for common accounting policies and an accounting policy section for each of the two tiers when a policy is specific to one of the tiers.

For a further discussion ofabout our ~~consolidation~~critical accounting policies, see ~~"Item 1. Condensed Consolidated~~“Management’s Discussion and Analysis of Financial ~~Statements (Unaudited)--Summary~~Condition and Results of Operations—Critical Accounting Policies” in the 2021 Form 10-K and Note 2 "Summary of Significant Accounting ~~Policies."~~Policies" in our financial statements.

Key Financial Measures Under GAAP - Asset Management

The following discussion of key financial measures under GAAP is based on KKR's asset management business as of September 30, 2022.

Revenues

Fees and Other

Fees and other consist primarily of (i) ~~transaction fees earned in connection with successful investment transactions and from capital markets activities, (ii)~~ management and incentive fees from providing investment management services to unconsolidated funds, CLOs, other vehicles, and separately managed ~~accounts,~~accounts; (ii) transaction fees earned in connection with successful investment transactions and from capital markets activities; (iii) monitoring fees from providing services to portfolio ~~companies,~~companies; (iv) ~~carried interest allocations to general partners of unconsolidated~~expense reimbursements from certain investment funds and portfolio companies; and (v) ~~revenue earned by oil and gas-producing entities that are consolidated and (vi)~~ consulting ~~fees earned by entities that employ non-employee operating consultants.~~fees. These fees are based on the contractual terms of the governing agreements and are recognized when earned, which coincides with the period during which the related services are performed and in the case of transaction fees, upon closing of the transaction. Monitoring fees may provide for a termination payment following an initial public offering or change of control. These termination payments are recognized in the period when the related transaction closes. ~~Monitoring fees also include certain expense reimbursements~~

Capital Allocation-Based Income (Loss)

Capital allocation-based income (loss) is earned from ~~certain portfolio companies~~those arrangements whereby KKR serves as general partner and ~~unconsolidated funds.~~

~~For~~includes income or loss from KKR's capital interest as well as "carried interest" which entitles KKR to a ~~further discussion~~disproportionate allocation of ~~our fee policies, see "Item 1. Condensed Consolidated Financial Statements (Unaudited)--Summary of Significant Accounting Policies."~~

investment income or loss from an investment fund's limited partners.

Expenses

Compensation and Benefits

Compensation and ~~benefits~~Benefits expense includes (i) base cash compensation consisting of salaries ~~bonuses,~~ and wages, (ii) benefits, ~~as well as~~(iii) carry pool allocations, (iv) equity-based compensation, ~~consisting of charges associated with the vesting of equity-based awards,~~and (v) discretionary cash bonuses.

To supplement base cash compensation, benefits, carry pool allocations, and other performance-based income compensation. All employees and employees of certain consolidated entities receive a base salary that is paid by KKR or its consolidated entities, and is accounted for asequity-based compensation, ~~and benefits expense. These employees are also eligible to receive~~we typically pay discretionary cash bonuses, which are included in Compensation and Benefits expense in the consolidated statements of operations, based principally on ~~performance, overall profitability~~the level of (i) management fees and other ~~matters. While~~fee revenues (including incentive fees), (ii) realized carried interest and (iii) realized investment income earned during the year. The amounts paid as discretionary cash bonuses, ~~paid~~if any, are at our sole discretion and vary from individual to ~~most employees are borne by KKR~~individual and ~~certain consolidated entities and result in customary compensation and benefits expense,~~from period to period, including having no cash bonus. We accrue discretionary cash bonuses ~~that are paid~~when payment becomes probable and reasonably estimable which is generally in the period when we make the decision to ~~certain employees are currently borne by KKR Holdings. These~~pay discretionary cash bonuses ~~have historically been funded with distributions that KKR Holdings receives on KKR Group Partnership Units held by KKR Holdings but are not then passed on to holders~~and is based upon a number of ~~unvested units~~factors, including the recognition of ~~KKR Holdings. Because employees are not entitled to receive distributions on units that are unvested, any amounts allocated to employees~~fee revenues, realized carried interest, realized investment income and other factors determined during the year.

Beginning in excess of an employee's vested equity interests are reflected as employee compensation and benefits expense. These compensation charges are currently recorded based on the amount of cash expected to be paid by KKR Holdings. Because KKR makes only fixed quarterly distributions, the distributions made on KKR Group Partnership Units underlying any unvested KKR Holdings units are generally insufficient to fund annual cash bonus compensation to the same extent as in periods prior to the fourth quarter of

2015. In addition, substantially all units in KKR Holdings have been allocated and will vest over a 5 year period, thus decreasing the amount of distributions received by KKR Holdings that are available for annual cash bonus compensation. We, therefore,2021, we expect to pay our employees by assigning a percentage range to each component of asset management segment revenues. Based on the current components and blend of our asset management segment revenues on an ~~increasing portion~~annual basis, we expect to use approximately: (i) 20‐25% of fee related revenues, (ii) 60‐70% of realized carried interest and ~~eventually all~~incentive fees not included in fee related performance revenues or earned from our hedge fund partnerships, and (iii) 10‐20% of realized investment income and hedge fund partnership incentive fees to pay our asset management employees. Because these

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ranges are applied to applicable distributable revenue components independently, and on an annual basis, the amount paid as a percentage of total distributable revenues will vary and will, for example, likely be higher in a period with relatively higher realized carried interest and lower in a period with relatively lower realized carried interest. We decide whether to pay a discretionary cash bonus and determine the percentage of applicable revenue components to pay compensation only upon the occurrence of the realization event. There is no contractual or other binding obligation that requires us to pay a discretionary cash bonus ~~payments currently borne~~to the asset management employees, except in limited circumstances.

Assuming that we had accrued compensation of (i) 65% of the unrealized carried interest earned by ~~KKR Holdings from other sources, including cash from our operations,~~the funds that allocate 40% and 43% to the carry pool and other performance-based income compensation as described below. See "Risks Related to Our Business - If we cannot retain and motivate our principals and other key personnel and recruit, retain and motivate new principals and other key personnel, our business, results and financial condition could be adversely affected"(ii) 15% of the unrealized net gains in our ~~Annual Report~~Principal Activities business line (in each case at the mid-point of the ranges above), KKR & Co. Inc. Stockholders’ Equity – Series I Preferred, Common Stock as of September 30, 2022 would have been reduced by approximately $1.52 per share, compared to our reported $19.00 per share on ~~Form 10-K regarding the adequacy~~such date, and our book value as of September 30, 2022 would have been reduced by approximately $1.48 per adjusted share, compared to our reported book value of $26.56 per adjusted share on such ~~distributions to fund future discretionary cash bonuses.~~date.

Carry Pool Allocation

~~KKR uses three different methods, which are designed to yield comparable results, to allocate carried interest and other performance income compensation.~~ With respect to ~~KKR’s investment~~our funds that provide for carried interest, ~~without~~we allocate a preferred return, KKR allocates 40% of the carried interest received from such funds to its carry pool for employees and non-employee operating consultants. In addition, for investment funds that provide for incentive fees rather than carried interest, our carry pool is supplemented by allocating 40% of the incentive fees earned from such funds to performance income compensation. Beginning with the quarter ended September 30, 2016, for investment funds that provide for carried interest with a preferred return and have accrued carried interest as of June 30, 2017, KKR also includes 40% of the management fees that would have been subject to a management fee refund as performance income compensation. Because of the different ways management fees are refunded in preferred return and non-preferred return funds that provide for carried interest, this calculation of 40% of the portion of the realized and unrealized carried interest that we earn to a carry pool established at KKR Associates Holdings L.P., which is not a KKR subsidiary, from which our asset management ~~fees subject~~employees and certain other carry pool participants are eligible to ~~refund for funds that have~~receive a ~~preferred return~~carried interest allocation. The allocation is ~~designed~~determined based upon a fixed arrangement between KKR Associates Holdings and us, and we do not exercise discretion on whether to ~~allocate to compensation~~make an ~~amount comparable to the amount that would have been allocated~~allocation to the carry pool ~~had~~upon a realization event. These amounts are accounted for as compensatory profit sharing arrangements in Accrued Expenses and Other Liabilities within the ~~fund not had a preferred return. Beginning~~accompanying consolidated statements of financial condition in conjunction with the ~~quarter ending September 30, 2017, for future and current carry generating funds with no or minimal accrued~~related carried interest income and are recorded as compensation expense. Upon a reversal of ~~June 30, 2017, KKR will allocate 43% of the~~ carried interest income, the related carry pool allocation, if any, is also reversed. Accordingly, such compensation expense is subject to both positive and negative adjustments.

In February 2021, with the approval of a majority of our independent directors, KKR amended the percentage of carried interest that is allocable to the carry pool ~~instead of 40%~~to 65% for (i) current investment funds for which no or de minimis amounts of carried ~~interest. The incremental 3% replaces~~interest was accrued as of December 31, 2020 and (ii) all future funds. For all other funds, the ~~allocation~~percentage of management fee refunds that would have been calculated for those funds and is designed, based on a historical financial analysis of certain investment funds, to allocate an amount for preferred return funds that is comparable to the management fee refunds that would have been allocatedcarried interest remains 40% or 43%, as ~~performance income compensation for those funds.~~applicable. The percentage of carried interest ~~management fee refunds, and incentive fees~~ allocable to the carry pool may be increased above 65% only with the approval of a majority of our independent directors. To account for the difference in the carry pool allocation percentages, we expect to use a portion of realized carried interest from the older funds equal to the difference between 65% and 40% or 43%, as ~~performance income~~applicable, to supplement the carry pool and to pay amounts as discretionary cash bonus compensation ~~is subject~~as described above to ~~change~~our asset management employees. The amounts paid as discretionary cash bonuses, if any, are at our discretion and vary from ~~time~~individual to ~~time. For a discussion of how management fees are refunded~~individual and from period to period, including having no cash bonus at all for ~~preferred return funds and non-preferred funds see "--Fair Value Measurements--Recognition~~certain employees. See "—Critical Accounting Policies - Asset Management—Recognition of Carried Interest in the Statement of Operations". and "—Key Financial Measures Under GAAP - Asset Management—Expenses—Compensation and Benefits."

~~The amounts allocated~~On the Sunset Date (as defined in the Reorganization Agreement), KKR will acquire control of KKR Associates Holdings and will commence making decisions regarding the allocation of carry proceeds pursuant to the limited partnership agreement of KKR Associates Holdings. Until the Sunset Date, our Co-Founders will continue to make decisions regarding the allocation of carry proceeds to themselves and others, pursuant to the limited partnership agreement of KKR Associates Holdings, provided that any allocation of carry proceeds to the Co-Founders will be on a percentage basis consistent with past practice.

Equity-based Compensation

In addition to the cash-based compensation and carry pool allocations as described above, employees receive equity awards under our Equity Incentive Plans, most of which are subject to service-based vesting typically over a three to five-year period from the date of grant, and ~~other performance-based income compensation~~some of which are ~~accounted for as compensatory profit-sharing arrangements~~also subject to the achievement of market-based conditions. Certain of these awards are subject to post-vesting transfer restrictions and recorded as compensation and benefits expense for KKR employees and general, administrative and other expense for certain non-employee consultants and service providers in the consolidated statements of operations prepared in accordance with U.S. GAAP.

minimum retained ownership requirements.

General, Administrative and Other

General, administrative and other expense consists primarily of professional fees paid to legal advisors, accountants, advisors and consultants, insurance costs, travel and related expenses, communications and information services, depreciation and amortization charges, ~~changes in fair value of contingent consideration, expenses incurred by oil~~CLOs and ~~gas-producing entities (including impairment charges)~~investment funds that ~~are~~were consolidated, and other general and operating expenses which are not borne by fund investors and are not offset by credits attributable to fund investors' noncontrolling interests in consolidated funds. General, administrative and other expense also consists of costs incurred in connection with pursuing potential investments that do not result in completed transactions ~~a substantial~~("broken-deal expenses"), expense reimbursements, placement fees and other general operating expenses. A portion of ~~which~~these general administrative and other expenses, in particular broken-deal expenses, are borne by fund investors.

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Investment Income (Loss)

Net Gains (Losses) from Investment Activities

Net gains (losses) from investment activities consist of realized and unrealized gains and losses arising from our investment ~~activities. A large portion of our net gains (losses)~~activities as well as income earned from ~~investment activities are related to our private~~certain equity method investments. Fluctuations in net gains (losses) from investment activities between reporting periods is driven primarily by changes in the fair value of our investment portfolio as well as the realization of investments. The fair value of, as well as the ability to recognize gains from, our ~~private equity and other~~ investments is significantly impacted by the global financial markets, which, in turn, affects the net gains (losses) from investment activities recognized in any given period. Upon the disposition of an investment, previously recognized unrealized gains and losses are reversed and an offsetting realized gain or loss is recognized in the current period. Since our investments are carried at fair value, fluctuations between periods could be significant due to changes to the inputs to our valuation process over time. For a further discussion of our fair value measurements and fair value of investments, see "—Critical Accounting ~~Policies—~~Policies - Combined—Fair Value Measurements."

Dividend Income

Dividend income consists primarily of distributions that we and our consolidated investment funds receive from portfolio companies or real assets investments in which ~~they~~we and our consolidated investment funds invest. Dividend income is recognized primarily in connection with (i) dispositions of operations by portfolio companies, (ii) distributions of ~~excess~~ cash generated from operations from portfolio ~~companies~~investments or real assets investments, and (iii) other significant refinancings undertaken by portfolio ~~companies.~~investments.

Interest Income

Interest income consists primarily of interest that is received on our credit instruments in which we and our consolidated investment funds, CLOs and other entities invest as well as interest on our cash ~~balances~~ and other investments.

Interest Expense

Interest expense is incurred from (i) debt issued by KKR, including debt issued by KFN, ~~which was consolidated upon completion of the acquisition of KFN,~~(ii) credit facilities entered into by KKR, (iii) debt securities issued by consolidated CFEs, (iv) financing arrangements at our majority owned investment vehicles that have been funded with borrowings that are collateralized by the investments and assets they own and (v) financing arrangements at our consolidated funds entered into primarily with the objective of managing cash flow. KFN's debt obligations are non-recourse to KKR beyond the assets of KFN. Debt securities issued by consolidated CFEs are supported solely by the investments held at the CFE and are not collateralized by assets of any other KKR entity. Our obligations under financing arrangements at our consolidated investment funds are generally limited to our ~~pro-rata~~pro rata equity interest in such funds. However, in some circumstances, we may provide limited guarantees of the obligations of our general partners in an amount equal to its pro rata equity interest in such funds. Our management companies bear no obligations with respect to financing arrangements at our consolidated funds. We also may provide other kinds of guarantees. See "—~~Liquidity"~~Liquidity."

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Key Financial Measures Under GAAP - Insurance

The following discussion of key financial measures under GAAP is based on KKR's insurance business as conducted by Global Atlantic as of September 30, 2022.

Revenues

Premiums

Premiums primarily relate to payout annuities with life contingencies and whole life and term life insurance policies, recognized when due from the policyholders. Premiums are reported net of premiums ceded under reinsurance agreements.

Policy fees

Policy fees include charges assessed against policyholder account balances for mortality, administration, separate account, benefit rider and surrender fees.

Net investment income

Net investment income reflects the income earned on our investments, net of any associated investment expenses (including management fees charged by the asset management segment) and net of ceded amounts under reinsurance agreements. Net investment income includes, amongst other things (i) interest earned on our fixed income available-for-sale and fixed-income trading investments, (ii) interest income and other related fees from our mortgage and other loan receivables, (iii) interest on funds withheld at interest receivables, (iv) proportional share of income from equity-method investments and (v) income from physical assets, such as renewable energy plants, real estate, railcars, and airplanes (net of depreciation and operating expenses).

Net investment-related gains

Net investment-related gains primarily consists of (i) realized gains and losses from the disposal of investments, including realized gains and losses on the disposal of investments not related to asset/liability matching strategies (“variable investment income”), (ii) unrealized gains and losses from investments held for trading, real estate investments accounted under investment company accounting, and investments with fair value re-measurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains and losses on funds withheld at interest receivable and payable, (iv) unrealized gains and losses from derivatives not designated in an hedging relationship and (v) allowances for credit losses, and other impairments of investments.

Other income

Other income is primarily comprised of expense allowances on ceded reinsurance, administration, management fees and distribution fees.

Expenses

Policy benefits and claims

Policy benefits and claims represent the current period expense associated with providing insurance benefits to policyholders, including claims and benefits paid, interest credited to policyholders, changes in policy liability reserves (including fair value reserves), amortization of cost of reinsurance liabilities, and amortization of deferred sales inducements.

Amortization of policy acquisition costs

Amortization of policy acquisition costs primarily consist of amortization of value of business acquired and deferred policy acquisition costs.

Insurance expense

Insurance expenses are primarily comprised of commissions expense, net of amounts capitalized, reinsurance ceding allowances, premium taxes, amortization of acquired intangibles and captive financing charges.

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Interest expense

Interest expense is incurred from insurance segment debt issued, including related interest rate swaps, credit facilities and other financing agreements.

General, administrative and other

General, administrative and other expenses are primarily comprised of employee compensation and benefit expenses, third-party administrator ("TPA") policy servicing fees, administrative and professional services, and other operating expenses.

Other Key Financial Measures Under GAAP

Income Taxes

~~The~~ KKR Group Partnerships and certain of their subsidiaries operate in the United States as partnerships for U.S. federal income tax purposes and as corporate entities in non-U.S. jurisdictions. Accordingly, these entities, in some cases, are subject to New York City unincorporated business taxes, or non-U.S. income taxes. Furthermore, we hold our interest in one of the KKR Group Partnerships through KKR Management Holdings Corp., which& Co. Inc. is ~~treated as~~ a domestic corporation for U.S. federal income tax purposes and is subject to U.S. federal, state and local income taxes at the entity level on its share of taxable income. In addition, KKR Group Partnership and certain ~~other~~of its subsidiaries operate as partnerships for U.S. federal tax purposes but as taxable entities for certain state, local or non-U.S. tax purposes. Moreover, certain corporate subsidiaries of ~~the~~ KKR, ~~Group Partnerships~~including certain Global Atlantic subsidiaries, are ~~treated as~~domestic corporations for U.S. federal income tax ~~purposes. Accordingly, certain subsidiaries of KKR, including KKR Management Holdings Corp.,~~purposes and are subject to U.S. federal, state, and local ~~corporate~~ income taxes at the entity level and the related tax provision attributable to KKR's share of this income is reflected in the financial statements. We also generate certain interest income to our unitholders and interest deductions to KKR Management Holdings Corp.

We use the asset and liability method to account for income taxes in accordance with GAAP. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized.

taxes.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions including evaluating uncertainties. We review our tax positions quarterly and adjust our tax balances as new information becomes available.

For a further discussion of our income tax policies, see Note 18 "Income Taxes" in our financial statements.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests primarily represents the ownership interests that certain third parties hold in entities that ~~are~~were consolidated in the financial statements as well as the ownership interests in ~~our~~ KKR Group ~~Partnerships that are held~~Partnership represented by ~~KKR Holdings.~~exchangeable securities. The allocable share of income and expense attributable to these interests is accounted for as net income (loss) attributable to noncontrolling interests. Given the consolidation of certain of our investment funds and the significant ownership interests in ~~our~~ KKR Group ~~Partnerships~~Partnership held by KKR Holdings, we expect a portion of net income (loss) will continue to be attributed to noncontrolling interests in our business.

For a further discussion of our noncontrolling interests policies, see ~~"Item 1. Condensed Consolidated Financial Statements (Unaudited)--Summary of Significant Accounting Policies."~~Note 22 "Equity" in the financial statements.

KeySegment ~~Operating~~ and Non-GAAP Performance Measures

The following key segment ~~key~~and non-GAAP performance measures ~~that follow~~ are used by management in making ~~operating~~operational and resource deployment decisions as well as assessing the ~~overall~~ performance of ~~each of~~ KKR's ~~reportable business segments. The reportable segments for KKR's business~~businesses. They include certain financial measures that are calculated and presented using methodologies other than in accordance with GAAP. These performance measures as described below are presented prior to giving effect to the allocation of income (loss) between KKR & Co. ~~L.P.~~Inc. and ~~KKR Holdings L.P.~~holders of exchangeable securities and as such represent the entire KKR business in total. In addition, ~~KKR's reportable segments~~these performance measures are presented without giving effect to the consolidation of the investment funds and CFEs that KKR ~~manages as well as other consolidated entities that are not subsidiaries of KKR & Co. L.P.~~manages.

~~We disclose the following financial measures in this report that are calculated and presented using methodologies other than in accordance with GAAP.~~ We believe that providing these segment and non-GAAP performance measures on a supplemental basis to our GAAP results is helpful to ~~unitholders~~stockholders in assessing the overall performance of KKR's ~~businesses.~~business. These ~~financial~~non-GAAP measures should not be considered as a substitute for ~~similar~~ financial measures calculated in accordance with GAAP, if available. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers.GAAP. Reconciliations of these non-GAAP ~~financial~~ measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable are included ~~within "Financial Statements and Supplementary Data — Note 14. Segment Reporting" and later in this report~~ under "—~~Segment Balance Sheet.~~Reconciliations to GAAP Measures."

~~Adjusted Units~~

Adjusted units are used as a measure of the total common equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the KKR & Co. L.P. 2010 Equity Incentive Plan (the "Equity Incentive Plan"), but excluding preferred units), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. and represent the fully diluted common unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total common equity ownership of KKR as if all outstanding KKR Holdings units, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for common units of KKR & Co. L.P. The Series A and Series B Preferred Units are not exchangeable for common units of KKR & Co. L.P.

~~Adjusted Units Eligible for Distribution~~

Adjusted units eligible for distribution represents the portion of total adjusted units that is eligible to receive a distribution. We believe this measure is useful to unitholders as it provides insight into the calculation of amounts available for distribution on a per unit basis. Adjusted units eligible for distribution is used in the calculation of after-tax distributable earnings per unit.

~~After-Tax~~After-tax Distributable Earnings

After-tax distributable earnings is ~~used by management as an operating~~a non-GAAP performance measure of ~~the~~KKR’s earnings, ~~excluding mark-to-market gains (losses) of KKR. KKR believes this measure~~which is ~~useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses).~~derived from KKR’s reported segment results. After-tax distributable earnings ~~excludes certain realized investment losses~~is used to assess the performance of KKR’s business operations and measures the earnings potentially available for distribution to its equity holders or reinvestment into its business. After-tax distributable earnings is equal to Distributable Operating Earnings less Interest Expense, Net Income Attributable to Noncontrolling Interests and Income Taxes Paid. Series C Mandatory Convertible Preferred Stock dividends have been

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excluded from After-tax Distributable Earnings, because the definition of Adjusted Shares used to calculate After-tax Distributable Earnings per Adjusted Share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. Income Taxes Paid represents the amount of income taxes that would be paid assuming that all pre-tax distributable earnings were allocated to KKR & Co. Inc. and taxed at the same effective rate, which assumes that all exchangeable securities were exchanged for shares of common stock of KKR & Co. Inc. Income Taxes Paid includes the benefit of tax deductions arising from equity-based compensation, which reduces income taxes paid or payable during the period. Equity based compensation expense is excluded from After-tax Distributable Earnings, because (i) KKR believes that the cost of equity awards granted to employees does not contribute to the ~~extent unrealized losses on these investments were recognized prior~~earnings potentially available for distributions to its equity holders or reinvestment into its business and (ii) excluding this expense makes KKR’s reporting metric more comparable to the ~~combination with KPE on October 1, 2009.~~corresponding metric presented by other publicly traded companies in KKR’s industry, which KKR believes enhances an investor’s ability to compare KKR’s performance to these other companies. If tax deductions from equity-based compensation were to be excluded from Income Taxes Paid, KKR’s After-tax ~~distributable~~Distributable Earnings would be lower and KKR’s effective tax rate would appear to be higher, even though a lower amount of income taxes would have actually been paid or payable during the period. KKR separately discloses the amount of tax deduction from equity-based compensation for the period reported and the effect of its inclusion in After-tax Distributable Earnings for the period. KKR makes these adjustments when calculating After-tax Distributable Earnings in order to more accurately reflect the net realized earnings that are expected to be or become available for distribution to KKR’s equity holders or reinvestment into KKR’s business. However, After-tax Distributable Earnings does not represent and is not used to calculate actual ~~distributions~~dividends under KKR’s ~~distribution policy.~~

~~The following tables present our calculations of distributable segment revenues,~~dividend policy, which is ~~our total segment revenues excluding the impact~~a fixed amount per period, and After-tax Distributable Earnings should not be viewed as a measure of mark-to-market gains (losses), distributable segment expenses, which is our total segment expenses excluding the impact of mark-to-market gains (losses), and after-tax distributable earnings on common units for the three and nine months ended September 30, 2017 and 2016. Additionally, the individual components of our calculations of after-tax distributable earnings are reconciled to the most directly comparable GAAP measure in the tables below.

~~The following table presents our calculation of distributable segment revenues for the three and nine months ended September 30, 2017 and 2016.~~

Three Months Ended Nine Months Ended
($ in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Distributable Segment Revenues
Fees and Other, Net
Management Fees $ 232,954
$ 201,508
$ 670,807
$ 599,725
Monitoring Fees 14,342
11,091
58,072
52,126
Transaction Fees 179,167
111,354
578,667
276,003
Fee Credits (70,747 ) (47,392 ) (211,148 ) (109,272 )
Total Fees and Other, Net 355,716
276,561
1,096,398
818,582

Realized Performance Income (Loss)
Incentive Fees 4,074
3,659
8,384
9,897
Carried Interest 419,438
350,469
890,310
753,032
Total Realized Performance Income (Loss) 423,512
354,128
898,694
762,929

Realized Investment Income (Loss)
Net Realized Gains (Losses) 76,053
170,078
162,684
370,594
Interest Income and Dividends 70,557
71,185
195,275
253,756
Interest Expense (45,613 ) (47,506 ) (134,348 ) (144,497 )
Total Realized Investment Income (Loss) 100,997
193,757
223,611
479,853
Total Distributable Segment Revenues $ 880,225
$ 824,446
$ 2,218,703
$ 2,061,364

~~The following table presents our calculation of distributable segment expenses for the three and nine months ended September 30, 2017 and 2016.~~

Three Months Ended Nine Months Ended
($ in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Distributable Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits $ 130,621
$ 101,967
$ 405,578
$ 299,756
Performance Income Compensation 177,705
159,151
377,689
322,671
Total Compensation and Benefits 308,326
261,118
783,267
622,427
Occupancy and Related Charges 14,672
15,877
42,448
47,486
Other Operating Expenses 70,517
55,123
177,084
166,542
Total Distributable Segment Expenses $ 393,515
$ 332,118
$ 1,002,799
$ 836,455

~~The following table presents our calculation of after-tax distributable earnings for the three and nine months ended September 30, 2017 and 2016.~~

Three Months Ended Nine Months Ended
($ in thousands except per unit data) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
After-tax Distributable Earnings
Distributable Segment Revenues $ 880,225
$ 824,446
$ 2,218,703
$ 2,061,364
Distributable Segment Expenses 393,515
332,118
1,002,799
836,455
Income (Loss) attributable to Noncontrolling Interests 1,046
760
3,810
2,002
Income taxes paid 12,869
21,869
54,228
71,191
Preferred distributions 8,341
8,201
25,023
13,894
After-tax Distributable Earnings $ 464,454
$ 461,498
$ 1,132,843
$ 1,137,822

Per Adjusted Unit Eligible for Distribution $ 0.57
$ 0.57
$ 1.39
$ 1.41

For a discussion of the components that drove the changes in our after-tax distributable earnings, see discussion of (i) management, monitoring and transaction fees, (ii) realized performance income, (iii) realized gains and net interest and dividends within investment income and (iv) expenses excluding unrealized performance income compensation, within “—Segment Analysis.”

~~The following are reconciliations of the individual components of the calculation of after-tax distributable earnings to the most directly comparable GAAP measure.~~

Three Months Ended Nine Months Ended
($ in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016

Fees and Other $ 692,877
$ 687,056
$ 2,340,617
$ 1,426,618
Plus: Management fees relating to consolidated funds and placement fees 54,012
49,017
153,414
131,335
Less: Fee credits relating to consolidated funds 106
417
3,752
2,766
Plus: Net realized and unrealized carried interest - consolidated funds 22,341
5,956
43,782
15,581
Plus: Total investment income (loss) 50,095
330,497
684,722
(245,846 )
Less: Revenue earned by oil & gas producing entities 12,441
16,191
47,096
47,977
Less: Reimbursable expenses 27,506
12,064
87,131
46,583
Less: Other 9,587
12,317
27,035
29,453
Total Segment Revenues $ 769,685
$ 1,031,537
$ 3,057,521
$ 1,200,909
Less: Unrealized Carried Interest (59,638 ) 70,351
377,707
(134,756 )
Less: Net Unrealized Gains (Losses) (50,902 ) 136,740
461,111
(725,699 )
Total Distributable Segment Revenues $ 880,225
$ 824,446
$ 2,218,703
$ 2,061,364

Three Months Ended Nine Months Ended
($ in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016

Total Expenses $ 530,247
$ 511,117
$ 1,699,989
$ 1,242,658
Less: Equity based compensation 72,250
61,552
271,226
186,032
Less: Reimbursable expenses and placement fees 37,508
18,255
132,491
72,887
Less: Operating expenses relating to consolidated funds, CFEs and other entities 21,858
20,141
56,517
85,093
Less: Expenses incurred by oil & gas producing entities 10,725
17,782
34,826
56,000
Less: Intangible amortization 2,473
22,112
13,901
35,640
Less: Other 11,744
9,764
31,067
19,275
Total Segment Expenses $ 373,689
$ 361,511
$ 1,159,961
$ 787,731
Less: Unrealized Performance Income Compensation (19,826 ) 29,393
157,162
(48,724 )
Total Distributable Segment Expenses $ 393,515
$ 332,118
$ 1,002,799
$ 836,455

~~Assets Under Management ("AUM")~~

Assets under management ("AUM") represent the assets managed or advised by KKR from which KKR is entitled to receive fees or a carried interest (either currently or upon deployment of capital), general partner capital and assets managed or advised by strategic manager partnerships in which KKR holds a minority ownership interest. We believe this measure is useful to unitholders as it provides additional insight into the capital raising activities of KKR and its strategic manager partnerships and the overall activity in their investment funds and other managed capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or carried interest; (iii) the fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs (excluding CLOs wholly-owned by KKR); (v) KKR's pro-rata portion of the AUM of strategic manager partnerships in which KKR holds a minority ownership interest, and (vi) the fair value of other assets managed by KKR. The pro-rata portion of the AUM of strategic manager partnerships is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. KKR's definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.liquidity.

Book Value

Book ~~value~~Value is a non-GAAP performance measure of the net assets of ~~KKR’s reportable segments~~KKR and is used by management primarily in assessing the unrealized value of KKR’s net assets presented on a basis that (i) deconsolidates KKR’s investment funds and CFEs that KKR manages, (ii) includes the net assets that are attributable to certain securities exchangeable into shares of common stock of KKR & Co. Inc., and (iii) includes KKR’s ownership of the net assets of Global Atlantic. We believe this measure is useful to stockholders as it provides additional insight into the net assets of KKR excluding those net assets that are allocated to investors in KKR’s investment funds and other noncontrolling interest holders. KKR's book value includes the net impact of KKR's tax assets and liabilities as calculated under GAAP. Series C Mandatory Convertible Preferred Stock has been included in book value, because the definition of adjusted shares used to calculate book value per adjusted share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. To calculate Global Atlantic book value and to make it more comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic’s industry, Global Atlantic book value excludes (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance balances and related assets, net of deferred acquisition costs and income tax.

Distributable Operating Earnings

Distributable operating earnings is a non-GAAP performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Distributable Operating Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate transaction-related charges and (iv) non-recurring items, if any. Strategic corporate transaction-related items arise from corporate actions and consist primarily of (i) impairments, (ii) non-monetary gains or losses on divestitures, (iii) transaction costs from strategic acquisitions, and (iv) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by KKR as the investment adviser for Global Atlantic insurance companies and (ii) interest income and expense based on lending arrangements where one or more KKR subsidiaries borrow from a Global Atlantic insurance subsidiary. Inter-segment transactions are recorded by each segment based on the definitive documents that contain arms' length terms and comply with applicable regulatory requirements. Distributable Operating Earnings represents operating earnings of KKR’s asset management and insurance segments, which are comprised of the following:

•Asset Management Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the asset management segment and is comprised of: (i) Fee Related Earnings, (ii) Realized Performance Income, (iii) Realized Performance Income Compensation, (iv) Realized Investment Income, and (v) Realized Investment Income Compensation. Asset Management Segment Operating Earnings excludes (i) unrealized carried interest, (ii) net unrealized gains (losses) on investments, and (iii) related unrealized carried interest. Management fees earned by KKR as the adviser, manager or sponsor for its investment funds, vehicles and accounts,

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including its Global Atlantic insurance companies and co-investment vehicles that participate in qualifying reinsurance transactions sourced by Global Atlantic (Ivy Re Limited and Ivy Re II Limited), which are included in Asset Management Segment Operating Earnings.

•Insurance Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the insurance segment and is comprised of: (i) Net Investment Income, (ii) Net Cost of Insurance, (iii) General, Administrative, and Other Expenses, (iv) Income Taxes, and (v) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings eliminate the impact of: (i) realized (gains) losses related to asset/liability matching investments strategies, (ii) unrealized investment (gains) losses, (iii) changes in the fair value of derivatives, embedded derivatives, and fair value liabilities for fixed-indexed annuities, indexed universal life contracts and variable annuities, and (iv) the associated income tax effects of all exclusions from Insurance Segment Operating Earnings except for equity-based compensation expense. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management fee expenses that are earned by KKR as the investment adviser of the Global Atlantic insurance companies.

Fee Related Earnings ("FRE")

Fee related earnings is a performance measure used to assess the asset management segment’s generation of profits from revenues that are measured and received on a recurring basis and are not dependent on future realization events. KKR believes this measure is useful to stockholders as it provides additional insight into the profitability of KKR’s fee generating asset management and capital markets businesses and other recurring revenue streams. FRE equals (i) Management Fees, including fees paid by the insurance segment to the asset management segment and fees paid by certain insurance co-investment vehicles, (ii) Transaction and Monitoring Fees, Net and (iii) Fee Related Performance Revenues, less (x) Fee Related Compensation, and (y) Other Operating Expenses.

•Fee Related Performance Revenues refers to the realized portion of Incentive Fees from certain AUM that has an indefinite term and for which there is no immediate requirement to return invested capital to investors upon the realization of investments. Fee-related performance revenues consists of performance fees (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) that are not dependent on a realization event involving investments held by the investment fund, vehicle or account.

•Fee Related Compensation refers to the compensation expense, excluding equity-based compensation, paid from (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, and (iii) Fee Related Performance Revenues.

•Other Operating Expenses represents the sum of (i) occupancy and related charges and (ii) other operating expenses.

Total Asset Management Segment Revenues

Total Asset Management Segment Revenues is a performance measure that represents the realized revenues of the asset management segment (which excludes unrealized carried interest and unrealized net gains (losses) on investments) and is the sum of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, and (v) Realized Investment Income. KKR believes that this performance measure is useful to stockholders as it provides additional insight into the realized revenues generated by KKR's asset management segment.

Other Terms and Capital Metrics

Adjusted Shares

Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include (i) the number of shares of common stock of KKR & Co. Inc. assumed to be issuable upon conversion of the Series C Mandatory Convertible Preferred Stock and (ii) shares of common stock of KKR & Co. Inc. issuable upon exchange of all exchangeable securities. Weighted average adjusted shares is used in the calculation of After-tax Distributable Earnings per Adjusted Share, and Adjusted Shares is used in the calculation of Book Value per Adjusted Share.

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Assets Under Management ("AUM")

Assets under management represent the assets ~~including carried~~managed, advised or sponsored by KKR from which KKR is entitled to receive management fees or performance income (currently or upon a future event), general partner capital, and assets managed, advised or sponsored by our strategic BDC partnership and the hedge fund and other managers in which KKR holds an ownership interest. We believe this measure is useful to ~~unitholders~~stockholders as it provides additional insight into the ~~assets and liabilities~~capital raising activities of KKR ~~excluding~~and its hedge fund and other managers and the ~~assets~~overall activity in their investment funds and ~~liabilities that are allocated to noncontrolling interest holders and to~~other managed or sponsored capital. KKR calculates the ~~holders~~amount of AUM as of any date as the sum of: (i) the fair value of the ~~Series A~~investments of KKR's investment funds and ~~Series B Preferred Units.~~

certain co-investment vehicles; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or performance income; (iii) the asset value of the Global Atlantic insurance companies; (iv) the par value of outstanding CLOs; (v) KKR's pro rata portion of the AUM of hedge fund and other managers in which KKR holds an ownership interest; (vi) all of the AUM of KKR's strategic BDC partnership; (vii) the acquisition cost of invested assets of certain non-US real estate investment trusts and (viii) the value of other assets managed or sponsored by KKR. The pro rata portion of the AUM of hedge fund and other managers is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. KKR's definition of AUM (i) is not based on any definition of AUM that may be set forth in the governing documents of the investment funds, vehicles, accounts or other entities whose capital is included in this definition, (ii) includes assets for which KKR does not act as an investment adviser, and (iii) is not calculated pursuant to any regulatory definitions.

Capital Invested

Capital invested is the aggregate amount of capital invested by (i) KKR’s investment funds and Global Atlantic insurance companies, (ii) KKR's Principal Activities ~~segment~~business line as a co-investment, if any, alongside KKR’s investment funds, and (iii) ~~the~~KKR's Principal Activities ~~segment~~business line in connection with a syndication transaction conducted by KKR's Capital Markets ~~segment,~~business line, if any. Capital invested is used as a measure of investment activity at KKR during a given period. We believe this measure is useful to ~~unitholders~~stockholders as it provides a measure of capital deployment across KKR’s business ~~segments.~~lines. Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable. Capital invested excludes (i) investments in ~~liquid~~certain leveraged credit strategies, (ii) capital invested by KKR’s Principal Activities ~~segment~~business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by ~~the~~KKR’s Principal Activities ~~segment~~business line that is not invested in connection with a syndication transaction by KKR’s Capital Markets ~~segment.~~business line. Capital syndicated by ~~our~~KKR's Capital Markets ~~segment~~business line to third parties other than KKR’s investment funds or Principal Activities ~~segment~~business line is not included in capital invested. See also syndicated capital. In the fourth quarter of 2016, the capital invested metric was changed to include capital invested by KKR's Principal Activities segment and all prior periods in this report have been adjusted.

~~Economic Net Income (Loss) (“ENI”)~~

Economic net income (loss) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of carried interest, incentive fees and related carry pool allocations and investment income. ENI is comprised of total segment revenues less total segment expenses and certain economic interests in KKR’s segments held by third parties. Pre-tax Economic Net Income (Loss) represents Economic Net Income (Loss) after equity-based compensation. After-tax Economic Net Income (Loss) represents Economic Net Income (Loss) after equity-based compensation, provision for income taxes and preferred distributions.

Fee Paying AUM ("FPAUM")

Fee paying AUM ~~("FPAUM")~~ represents only the AUM from which KKR ~~receives~~is entitled to receive management fees. We believe this measure is useful to ~~unitholders~~stockholders as it provides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's and its ~~strategic manager partnerships'~~hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments from which KKR ~~does~~is not entitled to receive a management fee are excluded ~~(i.e.~~(e.g., assets and commitments with respect to which it ~~receives~~is entitled to receive only ~~carried interest~~performance income or is otherwise not currently ~~receiving~~entitled to receive a management fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.

Uncalled Commitments

~~Fee Related Earnings ("FRE")~~

~~Fee related earnings~~ Uncalled commitments is a measure of the operating earnings of KKR and its business segments before performance income, related performance income compensation and investment income. KKR believes this measure may be useful to unitholders as it provides additional insight into the operating profitability of KKR's fee generating management companies and capital markets businesses.

~~Outstanding Adjusted Units~~

Outstanding adjusted units represents the portion of total adjusted units that would receive assets of KKR if it were to be liquidated as of a particular date. Outstanding adjusted units is used to calculate book value per outstanding adjusted unit, which we believe is useful to unitholders as it provides a measure of net assets of KKR’s reportable segments on a per unit basis.

~~Syndicated Capital~~

~~Syndicated capital is generally~~ the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in capital invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds and (iii) debt capital that is either underwritten or arranged on a best efforts basis. Syndicated capital is used as a measure of investment activity for KKR during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR's Capital Markets segment and across its investment platform.

~~Uncalled Commitments~~

~~Uncalled commitments are used as a measure~~ of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. The amount of uncalled commitments is not reduced by capital invested using borrowings under an investment fund’s subscription facility until capital is called from our fund investors. We believe this measure is useful to ~~unitholders~~stockholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds and carry paying co-investment vehicles to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing ~~arrangements.~~arrangements or investments we have committed to make but remain unfunded at the reporting date.

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~~A reconciliation~~Table of Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders on a GAAP basis to ENI, FRE and After-tax Distributable Earnings is provided below. For a discussion of the components that drove the changes in our FRE, see discussion of (i) management, monitoring and transaction fees, and (ii) expenses of our Private Markets, Public Markets and Capital Markets segments excluding unrealized performance income compensation, in “—Segment Analysis.”Contents

Three Months Ended Nine Months Ended
($ in thousands) September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders $ 153,563
$ 352,152
$ 818,552
$ 116,103
Plus: Preferred Distributions 8,341
8,201
25,023
13,894
Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. 115,434
284,834
637,146
86,659
Plus: Non-cash equity-based charges 78,728
61,552
277,704
186,032
Plus: Amortization of intangibles, placement fees and other, net 20,464
(48,299 ) 57,825
(10,273 )
Plus: Income tax (benefit) 18,420
10,826
77,500
18,761
Economic Net Income (Loss) 394,950
669,266
1,893,750
411,176
Plus: Income attributable to segment noncontrolling interests 1,046
760
3,810
2,002
Less: Total investment income (loss) 50,095
330,497
684,722
(245,846 )
Less: Net performance income (loss) 205,995
235,935
741,550
354,226
Plus: Expenses of Principal Activities Segment 51,974
38,659
156,938
116,214
Fee Related Earnings 191,880
142,253
628,226
421,012
Plus: Net interest and dividends 24,944
23,679
60,927
109,259
Less: Expenses of Principal Activities Segment 51,974
38,659
156,938
116,214
Plus: Realized performance income (loss), net 245,807
194,977
521,005
440,258
Plus: Net realized gains (losses) 76,053
170,078
162,684
370,594
Less: Income taxes paid 12,869
21,869
54,228
71,191
Less: Preferred distributions 8,341
8,201
25,023
13,894
Less: Income attributable to segment noncontrolling interests 1,046
760
3,810
2,002
After-tax Distributable Earnings $ 464,454
$ 461,498
$ 1,132,843
$ 1,137,822

~~Unaudited~~ Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)

The following is a discussion of our ~~condensed~~ consolidated results of operations on a GAAP basis for the three ~~and nine~~ months ended September 30, ~~2017~~2022 and ~~2016.~~2021. You should read this discussion in conjunction with the ~~condensed consolidated~~ financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected ~~the~~our segment results ~~of operations of our four business segments~~ in these periods, see “—"—Analysis of Segment ~~Analysis.”~~Operating Results." See "Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

~~Three~~The presentation of our consolidated results of operations that follows reflects the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, each of which possess distinct characteristics. As a result, KKR developed a two-tiered presentation approach, where Global Atlantic's insurance business is presented separately from KKR's asset management business. Additionally, for the nine months ended September 30, ~~2017 compared to three months ended~~2021, the results of Global Atlantic's insurance operations included in our consolidated results of operations are from February 1, 2021 (closing date of the acquisition) through September 30, ~~2016~~2021.


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Revenues
Asset Management
Fees and Other	$	673,929	$	718,968	$	(45,039)
Capital Allocation-Based Income (Loss)	(572,863)		1,526,667		(2,099,530)
	101,066		2,245,635		(2,144,569)
Insurance
Net Premiums	480,462		974,903		(494,441)
Policy Fees	320,206		310,381		9,825
Net Investment Income	1,094,877		758,381		336,496
Net Investment-Related Gains (Losses)	(173,830)		162,127		(335,957)
Other Income	35,632		31,938		3,694
	1,757,347		2,237,730		(480,383)
Total Revenues	1,858,413		4,483,365		(2,624,952)

Expenses
Asset Management
Compensation and Benefits	244,502		1,012,837		(768,335)
Occupancy and Related Charges	18,683		17,438		1,245
General, Administrative and Other	212,513		203,977		8,536
	475,698		1,234,252		(758,554)
Insurance
Net Policy Benefits and Claims	1,087,731		1,697,046		(609,315)
Amortization of Policy Acquisition Costs	8,222		(16,900)		25,122
Interest Expense	26,141		22,437		3,704
Insurance Expenses	158,280		89,534		68,746
General, Administrative and Other	178,443		158,873		19,570
	1,458,817		1,950,990		(492,173)
Total Expenses	1,934,515		3,185,242		(1,250,727)

Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities	(379,180)		2,116,647		(2,495,827)
Dividend Income	294,415		121,484		172,931
Interest Income	500,234		402,839		97,395
Interest Expense	(391,520)		(278,166)		(113,354)
Total Investment Income (Loss)	23,949		2,362,804		(2,338,855)

Income (Loss) Before Taxes	(52,153)		3,660,927		(3,713,080)

Income Tax Expense (Benefit)	27,434		379,282		(351,848)

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Three Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Revenues

Fees and Other $ 692,877
$ 687,056
$ 5,821

Expenses

Compensation and Benefits 368,513
358,161
10,352
Occupancy and Related Charges 15,267
16,405
(1,138 )
General, Administrative and Other 146,467
136,551
9,916
Total Expenses 530,247
511,117
19,130

Investment Income (Loss)

Net Gains (Losses) from Investment Activities 108,779
735,144
(626,365 )
Dividend Income 20,774
73,105
(52,331 )
Interest Income 317,134
256,505
60,629
Interest Expense (211,959 ) (255,105 ) 43,146
Total Investment Income (Loss) 234,728
809,649
(574,921 )

Income (Loss) Before Taxes 397,358
985,588
(588,230 )

Income Taxes 18,420
10,826
7,594

Net Income (Loss) 378,938
974,762
(595,824 )

Net Income (Loss) Attributable to Redeemable Noncontrolling Interests 20,876
3,121
17,755
Net Income (Loss) Attributable to Noncontrolling Interests 196,158
611,288
(415,130 )

Net Income (Loss) Attributable to KKR & Co. L.P. 161,904
360,353
(198,449 )

Less: Net Income Attributable to Series A Preferred Unitholders 5,822
5,822
—
Less: Net Income Attributable to Series B Preferred Unitholders 2,519
2,379
140

Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders $ 153,563
$ 352,152
$ (198,589 )


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)

Net Income (Loss)	(79,587)		3,281,645		(3,361,232)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests	1,601		1,519		82
Net Income (Loss) Attributable to Noncontrolling Interests	(6,792)		2,123,569		(2,130,361)
Net Income (Loss) Attributable to KKR & Co. Inc.	(74,396)		1,156,557		(1,230,953)

Series A Preferred Stock Dividends	—		—		—
Series B Preferred Stock Dividends	—		7,953		(7,953)
Series C Mandatory Convertible Preferred Stock Dividends	17,250		17,250		—

Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders	$	(91,646)	$	1,131,354	$	(1,223,000)

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~~Fees and Other~~

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Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Asset Management

Revenues

For the three months ended September 30, ~~2017~~2022 and ~~2016, fees and other~~2021, revenues consisted of the following:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees	$	419,876	$	349,249	$	70,627
Fee Credits	(136,996)		(164,720)		27,724
Transaction Fees	328,483		437,619		(109,136)
Monitoring Fees	29,683		29,823		(140)
Incentive Fees	1,402		6,962		(5,560)
Expense Reimbursements	10,733		34,857		(24,124)

Consulting Fees	20,748		25,178		(4,430)
Total Fees and Other	673,929		718,968		(45,039)

Carried Interest	(477,681)		1,216,433		(1,694,114)
General Partner Capital Interest	(95,182)		310,234		(405,416)
Total Capital Allocation-Based Income (Loss)	(572,863)		1,526,667		(2,099,530)

Total Revenues - Asset Management	$	101,066	$	2,245,635	$	(2,144,569)

Three Months Ended
September 30, 2017 September 30, 2016 Change
Management Fees $ 178,942
$ 152,491
$ 26,451
Transaction Fees 181,280
113,056
68,224
Monitoring Fees 41,848
23,367
18,481
Fee Credits (70,641 ) (46,975 ) (23,666 )
Carried Interest 337,459
414,864
(77,405 )
Incentive Fees 2,519
3,800
(1,281 )
Oil and Gas Revenue 12,441
16,191
(3,750 )
Consulting Fees 9,029
10,262
(1,233 )
Total Fees and Other $ 692,877
$ 687,056
$ 5,821
Fees and Other

~~Management fees, transaction fees, monitoring fees~~Total Fees and ~~fee credits all increased in~~Other for the three months ended September 30, ~~2017~~2022 decreased compared to the three months ended September 30, ~~2016.~~ 2021 primarily as a result of the decrease in transaction fees, partially offset by the increase in management fees.

For a more detailed discussion of the factors that affected our ~~management fees,~~ transaction fees ~~monitoring fees and fee credits~~ during the period, see “—"—Analysis of Asset Management Segment ~~Analysis.”~~Operating Earnings."

The increase in management fees was primarily attributable to (i) management fees earned from European Fund VI and Global Impact II Fund and (ii) management fees earned on assets managed by KJRM, which we acquired in 2022. The increase was partially offset by a decrease in ~~carried interest~~management fees earned from Asian Fund III as a result of a decrease in its invested capital following the end of its investment period, which resulted in the calculation of lower fees.

Management fees due from consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is increased by the amount of fees that are eliminated. Accordingly, the elimination of these fees does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. For a more detailed discussion on the factors that affect our management fees during the period including the fees earned from unconsolidated investment funds and other vehicles see "—Analysis of Asset Management Segment Operating Earnings."

Fee credits decreased compared to the prior period as a result of a lower level of transaction fees in our Private Equity and Credit and Liquid Strategies business lines in the current period. Fee credits owed to consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is decreased by the amount of fee credits that are eliminated. Accordingly, the elimination of these fee credits does not impact the net income (loss) attributable to KKR or KKR stockholders' equity.

Transaction and monitoring fees are earned from KKR portfolio companies and are not eliminated upon consolidation because these fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our Capital Markets business line are not shared with fund investors. Accordingly, certain transaction fees are reflected in revenues without a corresponding fee credit.

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Capital Allocation-Based Income (Loss)

Capital Allocation-Based Income (Loss) for the three months ended September 30, ~~2017~~2022 was due primarily to an overall lower level of appreciation in the value of our private equity portfolio as compared to the prior period. For a more detailed discussion of the factors that affected our Private Markets and Public Markets carried interest during the period, see “—Segment Analysis -- Private Markets -- Segment Revenues -- Performance Income” and “—Segment Analysis -- Public Markets -- Segment Revenues -- Performance Income.”

~~Compensation and Benefits Expenses~~

~~The increase was~~negative primarily due to ~~increased cash compensation and benefits as compared to~~ the ~~prior period as well as increased equity-based compensation relating to KKR Holdings Units. Partially offsetting this increase was a decrease in carry pool allocations reflecting a lower level~~net depreciation of ~~appreciation in~~ the ~~value~~underlying investments at many of our ~~private equity portfolio during~~carry earning investment funds, most notably Americas Fund XII, Asian Fund III, and North America Fund XI. Capital Allocation-Based Income (Loss) for the three months ended September 30, ~~2017~~2021 was positive primarily due to the net appreciation of the underlying investments at our carry earning investment funds, most notably Asian Fund III, North America Fund XI, and Americas Fund XII.

KKR generally calculates the carried interest that would be due to KKR for each investment fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (a) positive performance resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount due to KKR to be less than the amount previously recognized, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it is necessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and to make the required positive or negative adjustments.

Investment Income (Loss) - Asset Management

For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Net Gains (Losses) from Investment Activities for the three months ended September 30, ~~2016.~~

~~General Administrative and Other Expenses~~

2022

The ~~increase was primarily due to an increase in (i) expenses that are creditable to our~~net losses from investment ~~funds and (ii) professional fees and other expenses incurred as compared to the prior period. These increases were partially offset by (i) the write off of intangible assets during~~activities for the three months ended September 30, ~~2016~~2022 were comprised of net realized gains of $329.0 million and net unrealized losses of $(708.2) million.

Investment gains and losses relating to our general partner capital interest in ~~connection~~our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.

Realized Gains and Losses from Investment Activities

For the ~~termination~~three months ended September 30, 2022, net realized gains related primarily to the sale of ~~management contracts for~~our investment in Fiserv, Inc. (NASDAQ: FISV) and the sale of real estate equity investments held in certain consolidated real estate opportunistic funds. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds and energy funds.

Unrealized Gains and Losses from Investment Activities

For the three months ended September 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) investments held by certain consolidated energy funds, (ii) PetVet Care Centers, LLC (healthcare sector), and (iii) investments held in certain consolidated alternative credit funds. These unrealized losses were partially offset by mark-to-market gains related to (i) USI, Inc. (financial services sector), (ii) foreign exchanged derivative contracts, and (iii) 1-800 Contacts Inc. (healthcare sector).

For a discussion of other factors that ~~were wound down while no such charge was incurred during~~affected KKR's realized investment income for the ~~current period and (ii) a decrease in depreciation, depletion and amortization~~three months ended September 30, 2022, see "—Analysis of our consolidated oil and gas producing entities primarily caused by a lower cost basis due to previously recorded impairments, resulting in a lower unit of production depletion rate compared to the prior period.

Asset Management Segment Operating Results."

Net Gains (Losses) from Investment Activities

~~The following is a summary of net gains (losses) from investment activities:~~

Three Months Ended
September 30,
2017 2016
($ in thousands)
Private Equity Investments $ 151,782
$ 209,855
Credit & Other Investments (11,064 ) (6,689 )
Investments of Consolidated CFE's (39,892 ) 21,352
Real Assets Investments 80,696
99,503
Debt Obligations 20,959
174,625
Other Net Gains (Losses) from Investment Activities (93,702 ) 236,498
Net Gains (Losses) from Investment Activities $ 108,779
$ 735,144

for the three months ended September 30, 2021

The net gains from investment activities for the three months ended September 30, ~~2017~~2021 were comprised of net realized gains of $609.6 million and net unrealized gains of ~~$156.2 million~~$1,507.0 million.

Realized Gains and ~~net realized losses of $(47.4) million.~~ Losses from Investment Activities

For the three months ended September 30, ~~2017,~~2021, net realized gains related primarily to the sales of our investments in Mr. Cooper Group Inc. (NASDAQ: COOP), FanDuel Inc. (technology sector), and Darktrace Limited (LON: DARK.L). Partially

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offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated credit funds.

Unrealized Gains and Losses from Investment Activities

For the three months ended September 30, 2021, net unrealized gains were driven primarily by (i) mark-to-market gains infrom private equity, growth equity and core investments held by KKR and certain consolidated ~~entities,~~funds, the most significant of which were ~~unrealized gains in The Hut Group (retail~~PetVet Care Centers, LLC and Heartland Dental, LLC (healthcare sector), and Axel Springer (media sector) and (ii) mark-to-market gains from certain investments held in our consolidated real estate funds. These unrealized gains were partially offset by (i) the reversal of previously recognized unrealized ~~losses~~gains relating to the ~~sale of~~realization activity described above, (ii) mark-to-market losses related to certain investments held by consolidated CLOs. Partially offsetting these unrealized gains were unrealized losses, the most significant of which were unrealized losses relating to (i) the reversal of unrealized gains on the partial sale of First Data Corporation (NYSE: FDC), PRA Health Sciences, Inc. (NASDAQ: PRAH) and US Foods Holding Corp. (NYSE: USFD), and (ii) losses on alternative credit assets held in our consolidated ~~special situations~~credit funds, and ~~held directly by KKR. For the three months ended September 30, 2017, net realized losses were comprised primarily of realized losses~~(iii) an unrealized loss on (i) the sale of investments held by consolidated CLOs and (ii) losses on alternative credit assets in our consolidated special situations funds and other consolidated credit funds. Partially offsetting these realized losses were realized gains, the most significant of which were realized gains on the partial sale of PRA Health Sciences,BridgeBio Pharma, Inc.~~, First Data Corporation and US Foods Holding Corp.~~ (NASDAQ: BBIO).

For a discussion of other factors that affected KKR's realized investment income ~~see "--Segment Analysis."~~

~~The net gains from investment activities~~ for the three months ended September 30, ~~2016 were comprised~~2022, see "—Analysis of net realized gains of $288.6 million and net unrealized gains of $446.5 million. For the three months ended September 30, 2016, net realized gains were comprised primarily of the net impact of (i) realized gains on sales of private equity investments held directly by KKR, including the partial sales of Walgreens Boots Alliance, Inc. (NASDAQ: WBA) and Zimmer Biomet Holdings, Inc. (NYSE: ZBH) and (ii) realized gains on debt held at consolidated CLOs. For the three months ended September 30, 2016, net unrealized gains were driven primarily by (i) mark-to-market gains in our private equity portfolio held directly by KKR which includes unrealized gains in First Data Corporation and (ii) mark-to-market gains in assets in our consolidated special situations and real assets funds. These unrealized gains are partially offset by the reversal of unrealized gains on the partial sales of Walgreens Boots Alliance, Inc. and Zimmer Biomet Holdings, Inc.

Asset Management Segment Operating Results."

Dividend Income

During the three months ended September 30, ~~2017,~~2022, the most significant dividends received included ~~$6.7~~(i) $54.2 million from ~~real estate, credit and other~~ investments held ~~directly by KKR, $5.4~~in our infrastructure core funds, (ii) $47.5 million from ~~KFN,~~Koki Holdings Co. Ltd. (industrial sector), held in a consolidated multi-strategy fund, and ~~$4.8 million~~dividends received from ~~our consolidated real estate~~certain alternative credit funds. During the three months ended September 30, ~~2016,~~2021, the most significant dividends received included ~~$36.5 million from our consolidated special situations funds, $17.8 million from credit and real estate investments held directly by KKR and $10.4~~$51.3 million from our consolidated real estate and infrastructure funds and $23.5 million from our consolidated energy funds.

Significant dividends from portfolio companies and consolidated funds are generally not recurring quarterly dividends, and while they may occur in the future, their size and frequency are variable. For a discussion of other factors that affected KKR's dividend income, see ~~"--Segment Analysis.~~"—Analysis of Asset Management Segment Operating Results."

Interest Income

The increase in interest income ~~was primarily due to a higher level of interest earned related to (i) an increase in~~during the ~~amount of investments held by KKR Real Estate Finance Trust Inc., our real estate investment trust or REIT,~~three months ended September 30, 2022 compared to the prior period, (ii) an increase in the amount of investments held at our India debt financing company, (iii) an increase in the amount of investments in our consolidated special situations funds and (iv) the impact of the consolidation of three additional CLOs subsequent to the three months ended September 30, ~~2016. These increases were partially offset by a decrease in interest~~

~~income at KFN~~2021 was primarily due to (i) the impact of closing CLOs that were consolidated subsequent to September 30, 2021 and higher interest rates on assets held in consolidated CLOs, and (ii) a ~~smaller portfolio generating recurring income.~~higher level of interest income from investments held in certain of our consolidated alternative credit funds, primarily related to an increase in the amount of capital deployed and higher interest rates. Partially offsetting these increases was the deconsolidation of KKR Real Estate Finance Trust Inc. (NYSE: KREF) ("KREF") in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest income, see ~~"--Segment Analysis.~~"—Analysis of Asset Management Segment Operating Results."

Interest Expense

The ~~decrease~~increase in interest expense ~~was primarily due to interest expense associated with certain notes issued by consolidated CLOs~~ during the three months ended September 30, 2016 being called for redemption. Third party CLO subordinated note holders receive the residual interest after all other payments have been made and as a result of a paydown made in August 2016, KKR recorded interest expense of $59.9 million and an incremental $8.7 million of accelerated accretion of debt discounts during the three months ended September 30, 2016. This decrease was partially offset by an increase in interest expense primarily due to (i) increased borrowings at our India debt financing company and (ii) the impact of the consolidation of three additional CLOs subsequent2022 compared to the three months ended September 30, ~~2016.~~2021 was primarily due to (i) the increase in the amount of borrowings outstanding from consolidated funds and other vehicles, (ii) impact of closing CLOs that were consolidated after September 30 2021 and higher interest rates on debt obligations held in consolidated CLOs, and (iii) the impact of issuances of our senior notes after September 30, 2021. Partially offsetting these increases was the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest expense, see ~~"--Segment Analysis.~~"—Analysis of Non-GAAP Performance Measures."

~~Income (Loss) Before Taxes~~Expenses - Asset Management

Compensation and Benefits Expense

The decrease in ~~income (loss) before taxes was due primarily to a lower level of net gains from investment activities as described above.~~

~~Income Taxes~~

~~The increase in income taxes is due primarily to a higherlevel of fees earned by our management companies~~compensation and ~~capital markets companies, partially offset by a lower level of carried interest gains accrued by certain general partner entities subject to corporate income tax~~benefits expense during the three months ended September 30, ~~2017~~2022 compared to the three months ended September 30, 2021 was primarily due to the reversal of previously recognized accrued carried interest compensation, partially offset by (i) higher equity-based compensation charges and (ii) a higher level of discretionary cash compensation accrued resulting from a higher level of fee revenue and realized performance income in the current period.

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General, Administrative and Other

The increase in general, administrative and other expenses during the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily due to a higher level of (i) professional fees, information technology and other administrative costs in connection with the overall growth of the firm and (ii) travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

In periods of significant fundraising and to the extent that we use third parties to assist in our capital raising efforts, our General, Administrative and Other are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.

Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Insurance

As discussed above, our insurance segment consists solely of the operations of Global Atlantic, which was acquired on February 1, 2021. Accordingly, prior periods have been excluded for insurance segment results. For the nine month period ended September 30, 2021, the results of Global Atlantic's insurance operations included in our condensed consolidated results of operations are from February 1, 2021 through September 30, 2021.

Assumption review

The assumptions on which reserves, deferred revenue and expenses are based are intended to represent an estimation of the benefits that are expected to be payable to, and fees or premiums that are expected to be collectible from, policyholders in future periods. Global Atlantic reviews the adequacy of its reserves, deferred revenue and expenses and the assumptions underlying those items at least annually, usually in the third quarter. As Global Atlantic analyzes its assumptions, to the extent Global Atlantic chooses to update one or more of those assumptions, there may be an “unlocking” impact. Generally, favorable unlocking means the change in assumptions required a reduction in reserves, or in deferred revenue liabilities or an increase in deferred expenses, and unfavorable unlocking means the change in assumptions required an increase in reserves or in deferred revenue liabilities, or a reduction in deferred expenses.

The following table reflects the impact on net income by financial statement line item and to insurance segment adjusted operating earnings from Global Atlantic’s assumption review:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Impacts of assumption review, by statement of income line item:
Policy fees	$	(14)	$	182	$	(196)
Policy benefits and claims	(23,079)		20,904		(43,983)
Amortization of policy acquisition costs	7,686		(2,119)		9,805
Income tax impact	3,236		(3,983)		7,219
Total assumption review impact on net income	$	(12,171)	$	14,984	$	(27,155)
Assumption review impact on adjustments to derive insurance segment adjusted operating earnings	(157)		(97)		(60)
Non-controlling interests' share of assumption review impact	4,749		(5,734)		10,483
Total assumption review impact on insurance segment adjusted operating earnings	$	(7,579)	$	9,153	$	(16,732)

For the three months ended September 30, 2022, the net unfavorable unlocking impact on net income and insurance segment adjusted operating earnings was primarily due to an increase in expected future surrender experience of annuity policies partially as a result of higher interest rates, and a decrease in expected future surrender experience of life insurance policies. For the three months ended September 30, 2021, the net favorable unlocking impact on net income and insurance segment adjusted operating earnings was primarily due to lower expected future mortality rates.

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Revenues

For the three months ended September 30, 2022 and 2021, revenues consisted of the following:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Net Premiums	$	480,462	$	974,903	$	(494,441)
Policy Fees	320,206		310,381		9,825
Net Investment Income	1,094,877		758,381		336,496
Net Investment-Related Losses	(173,830)		162,127		(335,957)
Other Income	35,632		31,938		3,694
Total Insurance Revenues	$	1,757,347	$	2,237,730	$	(480,383)

Net Premiums

Net premiums decreased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to lower initial reserves related to fewer new reinsurance transactions with life contingencies assumed during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021. These lower net premiums are offset by a comparable decrease in policy reserves reported within net policy benefits and claims (as discussed below).

Policy fees

Policy fees increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to higher administrative and rider fees due to growth in the individual market channel.

Net investment income

Net investment income increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) increased average assets under management due to growth in assets in our institutional market channel as a result of new reinsurance transactions and individual market channel sales from new business growth, (ii) growth in portfolio yields due to higher market interest rates on floating rate investments, and (iii) rotation into higher yielding assets.

Net investment-related losses

The components of net investment-related losses were as follows:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Funds withheld payable at interest embedded derivatives	$	836,395	$	103,971	$	732,424
Equity futures contracts	37,247		1,783		35,464
Foreign currency forwards	42,136		(4,776)		46,912
Credit risk contracts	370		(196)		566
Equity index options	(156,561)		(25,854)		(130,707)
Interest rate contracts	(107,494)		(24,135)		(83,359)
Funds withheld receivable embedded derivatives	3,211		(10,001)		13,212

Net gains on derivative instruments	655,304		40,792		614,512
Net other investment gains (losses)	(829,134)		121,335		(950,469)
Net investment-related gains (losses)	$	(173,830)	$	162,127	$	(335,957)

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Net gains on derivative instruments

The increase in the fair value of embedded derivatives on funds withheld at interest payable was driven primarily by the change in fair value of the underlying investments in the funds withheld payable at interest portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables and other investments. The underlying investments in the funds withheld payable at interest portfolio declined in value in the current period primarily due to an increase in market interest rates and wider credit spreads. The underlying investments in the funds withheld payable at interest portfolio declined in value in the prior period primarily due to a smaller increase in market interest rates, as compared to the current period.

The increase in realized gains on foreign currency forward contracts relative to the spot exchange rates was primarily due to strengthening of the U.S. dollar relative to hedged foreign currencies during the three months ended September 30, 2022, as compared to the three months ended September 30, 2021.

The increase in the fair value of equity futures contracts was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in net policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which decreased during the three months ended September 30, 2022, as compared to the increase during the three months ended September 30, 2021, resulting in a gain on equity futures contracts in both periods.

The decrease in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 index, which decreased during the three months ended September 30, 2022, as compared to the increase during the three months ended September 30, 2021.

The decrease in the fair value of interest rate contracts was primarily driven by an increase in market interest rates during the three months ended September 30, 2022 as compared to a significantly smaller increase in market interest rates during the three months ended September 30, 2021.

Net other investment losses

The components of net other investment losses were as follows:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized gains (losses) on investments not supporting asset-liability matching strategies	$	27,634	$	51,492	$	(23,858)
Realized gains (losses) on equity investments	—		51,520		(51,520)
Realized gains (losses) on available-for-sale fixed maturity debt securities	(8,277)		(15,026)		6,749
Credit loss allowances	(25,885)		(76,872)		50,987
Unrealized gains (losses) on fixed maturity securities classified as trading	(720,418)		(133,118)		(587,300)
Unrealized gains (losses) on investments classified as trading or accounted under a fair-value option	(22,995)		303,021		(326,016)
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting	(34,479)		9,997		(44,476)
Realized gains (losses) on funds withheld at interest payable portfolio	3,652		(12,272)		15,924
Realized gains (losses) on funds withheld at interest receivable portfolio	3,858		2,633		1,225
Other	(52,224)		(60,040)		7,816
Net other investment gains (losses)	$	(829,134)	$	121,335	$	(950,469)

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The decrease in net other investment (losses) gains was primarily due to an increase in unrealized losses on fixed maturity securities classified as trading, and investments classified as trading or accounted under a fair-value option, primarily driven by an increase in interest rates and widening credit spreads in the current period compared to a significantly smaller increase in interest rates in the prior period, and the non-recurrence of an unrealized gain on the valuation of equity interest in our solar facility developers reported in the prior period.

Expenses

Net Policy benefits and claims

Net policy benefits and claims decreased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) lower initial reserves related to fewer new reinsurance transactions with life contingencies in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, (ii) a decrease in the value of embedded derivatives in our indexed universal life and fixed indexed annuity products, as a result of lower equity market returns (as discussed above under "–Net investment-related losses–Gains on derivatives," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims). These decreases were offset by (i) an increase in net policy benefits and claims due to new business originated from both individual and institutional market channel sales (net of retrocessions), (ii) higher funding costs on new business, and (iii) unfavorable unlocking related to the assumption review described above under “—Notable Items—Assumption Review.”

Amortization of policy acquisition costs

Amortization of policy acquisition costs increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to growth in our individual market channel, which was offset by favorable unlocking related to the assumption review described above under “—Notable Items—Assumption Review.”

Insurance expenses

Insurance expenses increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) increased commission expense related to increased sales in our individual market and (ii) increased reinsurance ceding expense allowances paid for policy administration services as a result of an increase in reinsurance transactions.

General, administrative and other

General, administrative and other expenses increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) increased employee compensation and benefits-related expenses, (ii) increased professional service fees, and (iii) increased third-party administrator ("TPA") policy servicing fees, all due to growth of the business.

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Other Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)

Income Tax Expense (Benefit)

For the three months ended September 30, 2022, income tax was an expense of $27.4 million compared to an income tax expense of $379.3 million in the prior period. In the current period, a current tax expense was generated on earnings from the Global Atlantic offset by a deferred tax benefit generated primarily due to pre-tax unrealized losses driven by net capital allocation-based losses and investment losses that are not currently deductible for tax purposes. Our effective tax rate under GAAP for the three months ended September 30, 2022 was (52.6)%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" to the financial statements included elsewhere in this report. The amount of U.S. federal or state corporate income taxes we pay in future periods may be materially increased if adverse tax laws become enacted. See “—Business Environment— Economic and Market Conditions” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net ~~income~~Income (Loss) attributable to noncontrolling interests for the three months ended September 30, ~~2017~~2022 relates primarily to net income (loss) attributable to ~~KKR Holdings L.P.~~(i) exchangeable securities representing ~~its~~ ownership interests in ~~the~~ KKR Group ~~Partnerships as well as third party~~Partnership, (ii) third-party limited partner interests in ~~those~~consolidated investment funds and (iii) interests that ~~we consolidate. The decrease from the prior period is due primarily to a lower level of income recorded by certain consolidated fund entities that is~~co-investors and rollover investors hold in Global Atlantic. Net loss attributable to ~~third party limited partners as well as lower amounts attributed~~noncontrolling interests for the three months ended September 30, 2022 was primarily due to ~~KKR Holdings L.P.~~net losses from investment activities at our consolidated investment funds, partially offset by positive income allocable to interests that co-investors and rollover investors hold in ~~connection with a lower level of income as compared to the prior period.~~Global Atlantic.

Net Income (Loss) Attributable to KKR & Co. ~~L.P.~~Inc.

The ~~decrease~~net loss attributable to KKR & Co. Inc. for the three months ended September 30, ~~2017,~~2022 was primarily due ~~primarily~~ to (i) net capital allocation-based losses and (ii) net losses from investment activities, partially offset by (i) a ~~lower~~higher level of ~~investment~~management fees and (ii) a reversal of previously recognized accrued carried interest ~~gains in~~compensation, as described above.

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Consolidated Results of Operations (GAAP Basis)

The following is a discussion of our consolidated results of operations on a GAAP basis for the ~~current period as compared to the prior period.~~

~~Nine months ended September 30, 2017 compared to~~ nine months ended September 30, ~~2016~~2022 and 2021. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. See "Business Environment" for more information about factors that may affect our business, financial performance, operating results and valuations.


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Revenues
Asset Management
Fees and Other	$	2,069,704	$	1,887,805	$	181,899
Capital Allocation-Based Income (Loss)	(2,442,080)		5,736,707		(8,178,787)
	(372,376)		7,624,512		(7,996,888)
Insurance
Net Premiums	627,104		1,698,912		(1,071,808)
Policy Fees	964,349		824,326		140,023
Net Investment Income	2,839,371		1,919,659		919,712
Net Investment-Related Gains (Losses)	(968,836)		32,983		(1,001,819)
Other Income	102,888		82,160		20,728
	3,564,876		4,558,040		(993,164)
Total Revenues	3,192,500		12,182,552		(8,990,052)

Expenses
Asset Management
Compensation and Benefits	779,050		3,419,057		(2,640,007)
Occupancy and Related Charges	55,693		51,289		4,404
General, Administrative and Other	701,010		608,270		92,740
	1,535,753		4,078,616		(2,542,863)
Insurance
Net Policy Benefits and Claims	1,768,384		3,593,563		(1,825,179)
Amortization of Policy Acquisition Costs	13,693		(57,409)		71,102
Interest Expense	58,330		44,482		13,848
Insurance Expenses	406,088		242,591		163,497
General, Administrative and Other	516,549		371,656		144,893
	2,763,044		4,194,883		(1,431,839)
Total Expenses	4,298,797		8,273,499		(3,974,702)

Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities	(1,350,388)		8,032,900		(9,383,288)
Dividend Income	1,104,120		323,051		781,069
Interest Income	1,244,339		1,151,548		92,791
Interest Expense	(1,002,005)		(794,978)		(207,027)
Total Investment Income (Loss)	(3,934)		8,712,521		(8,716,455)

Income (Loss) Before Taxes	(1,110,231)		12,621,574		(13,731,805)

Income Tax Expense (Benefit)	(128,836)		1,161,688		(1,290,524)

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Nine Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Revenues

Fees and Other $ 2,340,617
$ 1,426,618
$ 913,999

Expenses

Compensation and Benefits 1,234,317
780,062
454,255
Occupancy and Related Charges 44,150
49,159
(5,009 )
General, Administrative and Other 421,522
413,437
8,085
Total Expenses 1,699,989
1,242,658
457,331

Investment Income (Loss)

Net Gains (Losses) from Investment Activities 1,085,655
9,089
1,076,566
Dividend Income 100,144
167,987
(67,843 )
Interest Income 893,832
753,194
140,638
Interest Expense (597,403 ) (607,812 ) 10,409
Total Investment Income (Loss) 1,482,228
322,458
1,159,770

Income (Loss) Before Taxes 2,122,856
506,418
1,616,438

Income Taxes 77,500
18,761
58,739

Net Income (Loss) 2,045,356
487,657
1,557,699

Net Income (Loss) Attributable to Redeemable Noncontrolling Interests 64,196
4,616
59,580
Net Income (Loss) Attributable to Noncontrolling Interests 1,137,585
353,044
784,541

Net Income (Loss) Attributable to KKR & Co. L.P. 843,575
129,997
713,578

Less: Net Income Attributable to Series A Preferred Unitholders 17,466
11,515
5,951
Less: Net Income Attributable to Series B Preferred Unitholders 7,557
2,379
5,178

Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders $ 818,552
$ 116,103
$ 702,449


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Net Income (Loss)	(981,395)		11,459,886		(12,441,281)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests	1,546		2,856		(1,310)
Net Income (Loss) Attributable to Noncontrolling Interests	(41,341)		7,315,362		(7,356,703)
Net Income (Loss) Attributable to KKR & Co. Inc.	(941,600)		4,141,668		(5,083,268)

Series A Preferred Stock Dividends	—		23,656		(23,656)
Series B Preferred Stock Dividends	—		12,991		(12,991)
Series C Mandatory Convertible Preferred Stock Dividends	51,750		51,750		—

Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders	$	(993,350)	$	4,053,271	$	(5,046,621)

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Consolidated Results of Operations (GAAP Basis) - Asset Management

Revenues

For the nine months ended September 30, ~~2017~~2022 and ~~2016, fees and other~~2021, revenues consisted of the following:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees	$	1,236,151	$	931,624	$	304,527
Fee Credits	(388,315)		(322,402)		(65,913)
Transaction Fees	973,310		978,399		(5,089)
Monitoring Fees	99,605		98,164		1,441
Incentive Fees	15,600		13,092		2,508
Expense Reimbursements	77,612		122,642		(45,030)

Consulting Fees	55,741		66,286		(10,545)
Total Fees and Other	2,069,704		1,887,805		181,899

Carried Interest	(1,999,678)		4,553,527		(6,553,205)
General Partner Capital Interest	(442,402)		1,183,180		(1,625,582)
Total Capital Allocation-Based Income (Loss)	(2,442,080)		5,736,707		(8,178,787)

Total Revenues - Asset Management	$	(372,376)	$	7,624,512	$	(7,996,888)

Nine Months Ended
September 30, 2017 September 30, 2016 Change
Management Fees $ 517,393
$ 468,390
$ 49,003
Transaction Fees 581,410
277,776
303,634
Monitoring Fees 145,203
99,388
45,815
Fee Credits (207,396 ) (106,506 ) (100,890 )
Carried Interest 1,224,235
602,695
621,540
Incentive Fees 3,637
6,045
(2,408 )
Oil and Gas Revenue 47,096
47,977
(881 )
Consulting Fees 29,039
30,853
(1,814 )
Total Fees and Other $ 2,340,617
$ 1,426,618
$ 913,999

Fees and Other

~~Management fees, transaction fees, monitoring fees~~Total Fees and ~~fee credits all increased in~~Other for the nine months ended September 30, ~~2017~~2022 increased compared to the nine months ended September 30, ~~2016.~~ 2021 primarily as a result of the increase in management fees.

The increase in ~~carried interest gains~~management fees was primarily attributable to management fees earned from North America Fund XIII, Global Infrastructure Investors IV, and European Fund VI. The increase was partially offset by a decrease in management fees earned from Americas Fund XII and Global Infrastructure Investors III as a result of entering their post-investment period and now earning fees based on capital invested rather than capital committed.

Management fees due from consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is increased by the amount of fees that are eliminated. Accordingly, the elimination of these fees does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. For a more detailed discussion on the factors that affect our management fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."

Fee credits increased compared to the prior period as a result of a higher level of transaction fees in our private equity and real asset business lines. Fee credits owed to consolidated investment funds are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds is decreased by the amount of fee credits that are eliminated. Accordingly, the elimination of these fee credits does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. Transaction and monitoring fees earned from KKR portfolio companies are not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our capital markets business are not shared with fund investors. Accordingly, certain transaction fees are reflected in revenues without a corresponding fee credit.

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Capital Allocation-Based Income (Loss)

Capital Allocation-Based Income (Loss) for the nine months ended September 30, ~~2017~~2022 was due primarily to an overall higher level of appreciation in the value of our private equity and credit portfolios. For a more detailed discussion of the factors that affected our Private Markets and Public Markets carried interest during the period, see “—Segment Analysis -- Private Markets -- Segment Revenues -- Performance Income and —Segment Analysis -- Public Markets -- Segment Revenues -- Performance Income."

~~Compensation and Benefits Expenses~~

~~The increase was~~negative primarily due to ~~(i) a higher level~~the net depreciation of ~~carry pool allocations reflecting higher appreciation in~~ the ~~value~~underlying investments at many of our ~~private equity~~carry earning investment funds, most notably Americas Fund XII, Asian Fund II, and ~~credit portfolios, (ii) an increase in cash compensation and benefits and (iii) an increase in equity-based compensation relating to KKR Holdings units during~~Asian Fund III. Capital Allocation-Based Income (Loss) for the nine months ended September 30, ~~2017~~2021 was positive primarily due to the net appreciation of the underlying investments at our carry earning investment funds, most notably Americas Fund XII, Asian Fund III, and North America Fund XI.

KKR generally calculates the carried interest that would be due to KKR for each investment fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of the reporting date, irrespective of whether such amounts have been realized. Since the fair value of the underlying investments varies between reporting periods, it is necessary to make adjustments to the amounts recorded as carried interest to reflect either (a) positive performance resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount due to KKR to be less than the amount previously recognized, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it is necessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and to make the required positive or negative adjustments.

Investment Income (Loss) - Asset Management

For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Net Gains (Losses) from Investment Activities for the nine months ended September 30, ~~2016.~~

~~General Administrative and Other Expenses~~

2022

The ~~increase was~~net losses from investment activities for the nine months ended September 30, 2022 were comprised of net realized gains of $1,158.6 million and net unrealized losses of $(2,509.0) million.

Investment gains and losses relating to our general partner capital interest in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.

Realized Gains and Losses from Investment Activities

For the nine months ended September 30, 2022, net realized gains related primarily ~~due~~ to (i) ~~an increase~~the sale of our investment in ~~placement fees incurred~~Fiserv, Inc., (ii) the sale of Internet Brands, Inc. (technology sector) held in ~~connection with capital raising~~one of our consolidated funds, and (iii) the sale of real estate equity investments held in certain consolidated real estate opportunistic funds. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds.

Unrealized Gains and Losses from Investment Activities

For the nine months ended September 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) investments held in certain consolidated alternative credit funds, (ii) OutSystems Holdings S.A. (technology sector), and (iii) the reversal of previously recognized unrealized gains relating to the realization activity ~~the most significant of which relates to Asia Fund III and Lending Partners III and (ii) an increase in expenses that are creditable to investment funds.~~described above. These ~~increases~~unrealized losses were partially offset by mark-to-market gains related to (i) investments held in certain consolidated energy funds, (ii) USI, Inc., (iii) Clarify Health Solutions Inc. (healthcare sector), and (iv) foreign exchanged derivative contracts.

For a ~~lower level~~discussion of ~~financing costs incurred relating to debt at new consolidated CLOs for which the fair value option has been elected, (ii) the write off~~other factors that affected KKR's realized investment income, see "—Analysis of intangible assets during the three months ended September 30, 2016 in connection with the termination of management contracts for certain credit funds that were wound down while no such charge was incurred during the current period and (iii) a decrease in depreciation, depletion and amortization of our consolidated oil and gas producing entities primarily caused by a lower cost basis due to previously recorded impairments, resulting in a lower unit of production depletion rate compared to the prior period.

Asset Management Segment Operating Results".

Net Gains (Losses) from Investment Activities

~~The following is a summary of net gains (losses) from investment activities:~~

Nine Months Ended
September 30,
2017 2016
($ in thousands)
Private Equity Investments $ 574,884
$ (42,037 )
Credit & Other Investments 107,354
(389,020 )
Investments of Consolidated CFE's (16,725 ) 307,597
Real Assets Investments 199,400
108,085
Debt Obligations (7,190 ) (167,566 )
Other Net Gains (Losses) from Investment Activities 227,932
192,030
Net Gains (Losses) from Investment Activities $ 1,085,655
$ 9,089

for the nine months ended September 30, 2021

The net gains from investment activities for the nine months ended September 30, ~~2017~~2021 were comprised of net realized gains of $1,533.0 million and net unrealized gains of ~~$1,088.3 million~~$6,499.9 million.

Realized Gains and ~~net realized losses of $(2.7) million.~~ Losses from Investment Activities

For the nine months ended September 30, ~~2017,~~2021, net realized gains related primarily to the sales of our investments in FanDuel Inc., Mr. Cooper Group Inc., and BridgeBio Pharma, Inc. Partially offsetting these realized gains were realized losses

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primarily relating to certain investments held in our consolidated credit funds and realized losses related to certain hedging instruments.

Unrealized Gains and Losses from Investment Activities

For the nine months ended September 30, 2021, net unrealized gains were driven primarily by (i) mark-to-market gains ~~in our~~from private equity, ~~portfolio~~growth equity and core investments held ~~directly~~ by KKR and certain consolidated funds, the most significant of which were ~~unrealized gains in First Data Corporation,~~PetVet Care Centers, LLC, Heartland Dental, LLC, and OutSystems Holdings S.A. and (ii) mark-to-market gains infrom certain ~~consolidated entities, the most significant of which were unrealized gains in The Hut Group, (iii) mark-to-market gains on alternative credit assets~~investments held in our consolidated special situations funds and KFN and (iv) mark-market gains and the reversal of unrealized losses on the sale of investments in our consolidated energy funds and infrastructure portfolios held directly by KKR. Offsetting thesereal estate funds. These unrealized gains were ~~unrealized losses, the most significant of which were unrealized losses relating to~~partially offset by (i) the reversal of previously recognized unrealized gains relating to the realization activity described above and (ii) an unrealized loss on ~~the final sales of Galenica AG (VTX: GALN) and HCA Holdings,~~BridgeBio Pharma, Inc. (NYSE: HCA) and the partial sale of US Foods Holding Corp. For the nine months ended September 30, 2017, realized losses were comprised primarily of realized losses related to (i) the sale of investments in our energy portfolio held directly by KKR, (ii) alternative credit assets in our consolidated special situations funds and (iii) the sale of investments held by our consolidated CLOs. Partially offsetting these realized losses were realized gains on sales of private equity investments held directly by KKR, including the final sale of Galenica AG and HCA Holdings, Inc. and partial sales of First Data Corporation and US Foods Holding Corp.

For a discussion of other factors that affected KKR's realized investment income, see ~~"--Segment Analysis."~~

~~The net gains from investment activities for the nine months ended September 30, 2016 were comprised~~"—Analysis of net realized gains of $354.1 million and net unrealized losses of $(345.0) million. For the nine months ended September 30, 2016, net realized gains were comprised primarily of the net impact of (i) realized gains on sales of private equity investments held directly by KKR, including the partial sales of Walgreens Boots Alliance, Inc., Zimmer Biomet Holdings, Inc. and HCA Holdings, Inc., (ii) realized losses on assets held at consolidated CLOs and (iii) realized gains on debt held at consolidated CLOs. For the nine months ended September 30, 2016, net unrealized losses were driven primarily by (i) mark-to-market losses in our private equity portfolio held directly by KKR including unrealized losses in First Data Corporation, (ii) mark-to-market losses on assets in our consolidated special situations funds, (iii) mark-to-market losses on debt held through consolidated CMBS and (iv) the reversal of unrealized gains on the partial sales of Walgreens Boots Alliance, Inc., Zimmer Biomet Holdings, Inc. and HCA Holdings, Inc., as well as the reversal of unrealized gains on debt realizations at our consolidated CLOs. Partially offsetting these unrealized losses were unrealized gains, the most significant of which were unrealized gains relating to investments held through consolidated CMBS structures and reversals of unrealized losses on asset realizations in our consolidated CLOs.

Asset Management Segment Operating Results".

Dividend Income

During the nine months ended September 30, ~~2017,~~2022, the most significant dividends received included ~~$45.5 million from our consolidated special situations funds, $18.1~~(i) $406.7 million from investments ~~across multiple strategies~~ held ~~directly by KKR, $16.0 million from~~in our consolidated real estate core plus and real estate opportunistic equity funds and ~~$11.1~~(ii) $86.6 million from ~~KFN.~~our investment in Exact Group B.V. (technology sector) held in our consolidated core vehicles. During the nine months ended September 30, ~~2016,~~2021, the most significant dividends received included ~~$49.0~~(i) $138.0 million from our consolidated ~~special situations~~real estate and infrastructure funds, (ii) $33.9 million from our consolidated energy funds, and ~~dividends~~(iii) $26.9 million from ~~US Foods Holding Corp. of $23.4 million, Sedgwick Claims Management Services (financial services sector) of $12.7 million and PRA Health Sciences, Inc. of $4.1 million.~~ our investment in Viridor Limited (infrastructure).

Interest Income

The increase in interest income ~~was primarily due to a higher level of interest earned related to (i) an increase in~~during the ~~amount of investments held by our REIT~~nine months ended September 30, 2022 compared to the prior period, (ii) an increase in the amount of investments held at our India debt financing company, (iii) an increase in the amount of investments in our consolidated special situations funds and (iv) the impact of the consolidation of three additional CLOs subsequent to the nine months ended September 30, ~~2016. These increases~~2021 was primarily due to (i) the impact of closing additional CLOs that were ~~partially offset by~~consolidated subsequent to September 30, 2021 and higher interest rates on assets held in consolidated CLOs and (ii) a ~~decrease in~~higher level of interest income ~~at KFN associated with the paydown~~from investments held in certain of ~~CLO 2007-1~~our consolidated alternative credit funds, primarily related to an increase in the ~~second~~amount of capital deployed and higher interest rates. Partially offsetting these increases was the deconsolidation of KREF in the fourth quarter of ~~2016.~~2021. For a discussion of other factors that affected KKR's interest income, see ~~"--Segment Analysis.~~"—Analysis of Asset Management Segment Operating Results."

Interest Expense

The ~~decrease~~increase in interest expense ~~was primarily due to lower interest expense associated with certain notes issued by consolidated CLOs~~ during the ~~three~~nine months ended September 30, 2016 being called for redemption. Third party CLO subordinated note holders receive the residual interest after all other payments have been made and as a result of a paydown made in August 2016, KKR recorded interest expense of $59.9 million and an incremental $8.7 million of accelerated accretion of debt discounts during the three months ended September 30, 2016. The paydown of CLO 2007-1 in the second quarter of 2016 also contributed to the decrease. These decreases were partially offset by an increase in interest expense associated with (i) increased CMBS issuances by our REIT, (ii) increased borrowings at our India debt financing company and (iii) the impact of the consolidation of three additional CLOs subsequent2022 compared to the nine months ended September 30, ~~2016.~~2021 was primarily due to the (i) increase in the amount of borrowings outstanding from consolidated funds and other vehicles, (ii) impact of closing additional CLOs that were consolidated subsequent to September 30, 2021 and higher interest rates on debt obligations held in consolidated CLOs, and (iii) the impact of issuances of our senior notes after September 30, 2021. Partially offsetting these increases was the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest expense, see ~~"--Segment Analysis.~~"—Analysis of Non-GAAP Performance Measures."

~~Income (Loss) Before Taxes~~Expenses - Asset Management

Compensation and Benefits Expenses

The ~~increase~~decrease in ~~income (loss) before taxes was due primarily to higher carried interest gains accrued in our private equity~~compensation and ~~credit portfolios and higher net gains from investment activities, partially offset by an increase in expenses, in each case as described above.~~

~~Income Taxes~~

~~The increase in income taxes is due primarily to a higherlevel of fees earned by our management companies and capital markets companies and carried interest gains accrued by certain general partner entities subject to corporate income tax~~benefits expense during the nine months ended September 30, ~~2017~~2022 compared to the nine months ended September 30, 2021 was primarily due to the reversal of previously recognized accrued carried interest, partially offset by (i) higher equity-based compensation charges and (ii) a higher level of discretionary cash compensation accrued resulting from a higher level of fee revenue and realized performance income in the current period.

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General, Administrative and Other

The increase in general, administrative and other expenses during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily due to a higher level of (i) expenses at our consolidated funds and investment vehicles, (ii) strategic corporate transaction-related charges, (iii) broken-deal expenses, (iv) professional fees, information technology and other administrative costs, and (v) travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

The level of broken-deal expenses can vary significantly period to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, the size and complexity of investments being pursued and the number of investment funds currently in their investment period. Also, in periods of significant fundraising and to the extent that we use third parties to assist in our capital raising efforts, our General, Administrative and Other are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.

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Consolidated Results of Operations (GAAP Basis) - Insurance

For the nine months ended September 30, 2021, the results of Global Atlantic's insurance operations included in our consolidated results of operations are from the acquisition date, February 1, 2021, through September 30, 2021.

Assumption review

The following table reflects the impact on net income by financial statement line item and to insurance segment adjusted operating earnings from Global Atlantic’s annual assumption review completed in the third quarter (which as a result, is identical to the table presented above for the three months ended September 30, 2022 and 2021) :


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Impacts of assumption review, by statement of income line item:
Policy fees	$	(14)	$	182	$	(196)
Policy benefits and claims	(23,079)		20,904		(43,983)
Amortization of policy acquisition costs	7,686		(2,119)		9,805
Income tax impact	3,236		(3,983)		7,219
Total assumption review impact on net income	$	(12,171)	$	14,984	$	(27,155)
Assumption review impact on adjustments to derive insurance segment adjusted operating earnings	(157)		(97)		(60)
Non-controlling interests' share of assumption review impact	4,749		(5,734)		10,483
Total assumption review impact on insurance segment adjusted operating earnings	$	(7,579)	$	9,153	$	(16,732)

For the nine months ended September 30, 2022, the net unfavorable unlocking impact on net income and insurance segment adjusted operating earnings was primarily due to an increase in expected future surrender experience of annuity policies partially as a result of higher interest rates, and a decrease in expected future surrender experience of life insurance policies. For the nine months ended September 30, 2021, the net favorable unlocking impact on net income and insurance segment adjusted operating earnings was primarily due to lower expected future mortality rates.

Revenues

For the nine months ended September 30, 2022 and 2021, revenues consisted of the following:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Net Premiums	$	627,104	$	1,698,912	$	(1,071,808)
Policy Fees	964,349		824,326		140,023
Net Investment Income	2,839,371		1,919,659		919,712
Net Investment-Related Gains	(968,836)		32,983		(1,001,819)
Other Income	102,888		82,160		20,728
Total Insurance Revenues	$	3,564,876	$	4,558,040	$	(993,164)

Net Premiums

Net premiums decreased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to lower initial premiums related to fewer reinsurance transactions with life contingencies assumed during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The decrease was partially offset by lower retrocessions to third party reinsurers during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The initial premiums on assumed reinsurance are offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below).

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Policy fees

Policy fees increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to one less month of activity reported in the prior period as a result of the GA Acquisition on February 1, 2021.

Net investment income

Net investment income increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased average assets under management due to growth in assets in our institutional market channel as a result of new reinsurance transactions and individual market channel sales, (iii) higher yields on floating-rate investments due to higher market interest rates and (iv) rotation into higher yielding assets.

Net investment-related losses

The components of net investment-related losses were as follows:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Funds withheld payable embedded derivatives	$	3,380,530	$	48,799	$	3,331,731
Equity futures contracts	199,432		(171,982)		371,414
Foreign currency forwards	70,048		(675)		70,723
Credit risk contracts	705		(254)		959
Equity index options	(884,786)		275,035		(1,159,821)
Interest rate contracts	(331,395)		(149,274)		(182,121)
Funds withheld receivable embedded derivatives	(64,130)		68,449		(132,579)

Net gains on derivative instruments	2,370,404		70,098		2,300,306
Net other investment losses	(3,339,240)		(37,115)		(3,302,125)
Net investment-related gains	$	(968,836)	$	32,983	$	(1,001,819)

Net gains on derivative instruments

The increase in the fair value of embedded derivatives on funds withheld at interest payable was primarily driven by the change in fair value of the underlying investments in the funds withheld payable at interest portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables, and other investments. The underlying investments in the funds withheld payable at interest portfolio declined in value in the current period primarily due to an increase in market interest rates and wider credit spreads.

The increase in the fair value of equity futures was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in net policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which decreased during the nine months ended September 30, 2022, as compared to an increase during the nine months ended September 30, 2021, resulting in respectively, a gain, and a loss, on equity futures contracts in the respective periods.

The increase in realized gains on foreign currency forward contracts relative to the spot exchange rates were primarily due to strengthening of the U.S. dollar relative to hedged foreign currencies during the nine months ended September 30, 2022, as compared to the prior period.

The decrease in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 index, which decreased during the nine months ended September 30, 2022, as compared to the increase during the nine months ended September 30, 2021.

The decrease in the fair value of interest rate contracts was driven by an increase in market interest rates during both the nine months ended September 30, 2022 and the prior period, resulting in a loss on interest rate contracts.

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The decrease in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to widening of credit spreads during the nine months ended September 30, 2022, as compared to the tightening of credit spreads in the nine months ended September 30, 2021.

Net other investment losses

The components of net other investment losses were as follows:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized gains (losses) on investments not supporting asset-liability matching strategies	$	87,198	$	98,933	$	(11,735)
Realized gains (losses) on equity investments	—		76,645		(76,645)
Realized gains (losses) on available-for-sale fixed maturity debt securities	(539,000)		(88,300)		(450,700)
Credit loss allowances	(84,690)		(244,775)		160,085
Unrealized gains (losses) on fixed maturity securities classified as trading	(2,748,542)		(130,228)		(2,618,314)
Unrealized gains (losses) on investments classified as trading or fair-value option	(63,923)		350,442		(414,365)
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting	88,609		20,264		68,345
Realized gains (losses) on funds withheld at interest, payable	5,992		(31,384)		37,376
Realized gains (losses) on funds withheld at interest, receivable	7,296		10,250		(2,954)
Other	(92,180)		(98,962)		6,782
Net investment-related gains	$	(3,339,240)	$	(37,115)	$	(3,302,125)

The increase in net other investment losses were primarily due to (i) increase in unrealized losses on fixed maturity securities classified as trading primarily due to an increase in interest rates and widening credit spreads in the current period, (ii) the increase in realized losses on available-for-sale fixed maturity debt securities primarily due to portfolio rotation in a higher interest rate environment, and (iii) the non-recurrence of unrealized gains on the valuation of our equity interests in solar facility developers reported in the prior period.

Offsetting these losses were (i) a higher credit loss allowance on mortgage and other loan receivables in the prior period primarily due to the recognition of an initial credit loan loss allowance upon the adoption of the current expected credit loss accounting standard concurrent with the GA Acquisition, and (ii) unrealized gains on real estate investments recognized at fair value under investment company accounting.

Other income

Other income increased for the nine months ended September 30, 2022 as compared to the prior period primarily due to one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021.

Expenses

Net policy benefits and claims

Net policy benefits and claims decreased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) lower initial reserves related to fewer new reinsurance transactions with life contingencies in the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, and (ii) a decrease in the value of embedded derivatives in Global Atlantic's indexed universal life and fixed indexed annuity products, as a result of lower equity market returns (as discussed above under "–Net investment related losses–Gains on derivatives," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims). This decrease was offset by (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) an increase in net flows from both individual and institutional market channel sales, (iii) an increase in variable annuity reserves primarily due to lower equity market returns, (iv) higher funding costs on new business, and (v) unfavorable unlocking related to the assumption review described above under “—Notable Items—Assumption Review.”

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Amortization of policy acquisition costs

Amortization of policy acquisition costs increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) a decrease in the net benefit (that is, a reduction to expense) from the amortization of the net negative insurance intangibles recognized as part of purchase accounting of the GA Acquisition, as the underlying business runs off, and (ii) growth in our individual market channel. Offsetting these increases in expense was a decrease in amortization due to realized investment losses, and (ii) favorable unlocking related to the assumption review described above under “—Notable Items—Assumption Review.”

Interest expense

Interest expense increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) a net increase in debt outstanding, including a draw on the revolving credit facility in the quarter ended March 31, 2022, and (ii) the impact of one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021.

Insurance expenses

Insurance expenses increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased commission expense related to increased sales in our individual market and increased reinsurance transactions, and (iii) increased reinsurance ceding expense allowances paid for policy administration services as a result of an increase in reinsurance transactions.

General, administrative and other

General, administrative and other expenses increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased employee compensation and benefits related expenses, (iii) increased professional service fees, and (iv) increased TPA policy servicing fees, all due to growth of the business.

Other Consolidated Results of Operations (GAAP Basis)

Income Tax Expense (Benefit)

For the nine months ended September 30, 2022, income tax was a benefit of $128.8 million compared to an income tax expense of $1,161.7 million in the prior period. In the current period, a deferred tax benefit was generated primarily due to pre-tax unrealized losses driven by net capital allocation-based losses and investment losses that are not currently deductible for tax purposes. Our effective tax rate under GAAP for the nine months ended September 30, 2022 was 11.6%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" to the financial statements included elsewhere in this report. The amount of U.S. federal and state corporate income taxes we pay in future periods may be materially increased if adverse tax laws become enacted. See “—Business Environment— Economic and Market Conditions” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net ~~income~~Income (Loss) attributable to noncontrolling interests for the nine months ended September 30, ~~2017~~2022 relates primarily to net income (loss) attributable to ~~KKR Holdings L.P.~~(i) exchangeable securities representing ~~its~~ ownership interests in ~~the~~ KKR Group ~~Partnerships as well as third party~~Partnership, (ii) third-party limited partner interests in ~~those~~consolidated investment funds, and (iii) interests that ~~we consolidate.~~co-investors and rollover investors hold in Global Atlantic. The ~~increase from the prior period is due primarily to a higher level of income recorded by certain consolidated fund entities that is~~net loss attributable to ~~third party limited partners as well as higher amounts attributed to KKR Holdings L.P. in connection with higher income recognized~~noncontrolling interests for the nine months ended September 30, ~~2017 as compared~~2022 was primarily due to (i) net losses from investment activities at our consolidated investment funds and (ii) a net loss attributable to exchangeable securities in the ~~prior~~current period.

Net Income (Loss) Attributable to KKR & Co. ~~L.P.~~Inc.

The ~~increase in Net income~~net loss attributable to KKR & Co. ~~L.P.~~Inc. for the nine months ended September 30, 2022 was primarily due to ~~higher carried interest gains~~(i) net capital allocation-based losses and ~~higher~~(ii) net ~~investment gains~~losses from investment activities, ~~in the current period~~partially offset by (i) a higher level of management fees and (ii) a reversal of previously recognized accrued carried interest compensation, as ~~compared to the prior period and to a lesser extent, increased fee income.~~described above.

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Condensed Consolidated Statements of Financial Condition (GAAP Basis - Unaudited)

The following table provides ~~the~~our condensed consolidated statements of financial condition on a GAAP ~~Basis~~basis as of September 30, ~~2017~~2022 and December 31, ~~2016.~~2021.


(Amounts in thousands, except per share amounts)
	As of		As of
	September 30, 2022		December 31, 2021

Assets
Asset Management
Cash and Cash Equivalents	$	6,911,691	$	6,699,668
Investments	89,720,859		88,775,514
Other Assets	6,748,929		4,244,894
	103,381,479		99,720,076
Insurance
Cash and Cash Equivalents	4,147,146		3,391,934
Investments	118,772,273		123,763,675
Other Assets	39,947,742		37,409,755
	162,867,161		164,565,364
Total Assets	$	266,248,640	$	264,285,440

Liabilities and Equity
Asset Management
Debt Obligations	$	38,257,833	$	36,669,755
Other Liabilities	7,579,996		8,359,619
	45,837,829		45,029,374
Insurance
Debt Obligations	1,920,906		1,908,006
Other Liabilities	166,507,110		159,208,840
	168,428,016		161,116,846
Total Liabilities	$	214,265,845	$	206,146,220

Redeemable Noncontrolling Interests	82,133		82,491

Stockholders' Equity

Stockholders' Equity - Series C Mandatory Convertible Preferred Stock	1,115,792		1,115,792
Stockholders' Equity - Common Stock	16,335,253		16,466,372
Noncontrolling Interests	34,449,617		40,474,565
Total Equity	51,900,662		58,056,729
Total Liabilities and Equity	$	266,248,640	$	264,285,440

KKR & Co. Inc. Stockholders' Equity - Common Stock Per Outstanding Share of Common Stock	$	19.00	$	27.64

KKR & Co. Inc. Stockholders’ Equity - Common Stock per Outstanding Share of Common Stock was $19.00 as of September 30, 2022, down from $27.64 as of December 31, 2021. The decrease was primarily due to the (i) unrealized losses on available-for-sale-securities from Global Atlantic that are recorded in other comprehensive income, (ii) repurchases of common stock, (iii) dividends to common stockholders, and (iv) a net loss attributable to KKR & Co. Inc. common stockholders during the nine months ended September 30, 2022.

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(Amounts in thousands, except common unit and per common unit amounts)
As of As of
September 30, 2017 December 31, 2016

Assets
Cash and Cash Equivalents $ 2,436,566
$ 2,508,902
Investments 37,251,837
31,409,765
Other 4,617,236
5,084,230
Total Assets 44,305,639
39,002,897

Liabilities and Equity
Debt Obligations 20,290,714
18,544,075
Other Liabilities 4,149,491
3,340,739
Total Liabilities 24,440,205
21,884,814

Redeemable Noncontrolling Interests 570,134
632,348

Equity
Series A Preferred Units 332,988
332,988
Series B Preferred Units 149,566
149,566
KKR & Co. L.P. Capital - Common Unitholders 6,380,654
5,457,279
Noncontrolling Interests 12,432,092
10,545,902
Total Equity 19,295,300
16,485,735
Total Liabilities and Equity $ 44,305,639
$ 39,002,897

KKR & Co. L.P. Capital Per Outstanding Common Unit - Basic $ 13.49
$ 12.06

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Condensed Consolidated Statements of Cash Flows (GAAP Basis - Unaudited)

The ~~accompanying condensed~~following is a discussion of our consolidated cash flows for the nine months ended September 30, 2022 and 2021. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report.

The consolidated statements of cash flows include the cash flows of our consolidated entities, which include certain consolidated investment funds, CLOs and ~~CFEs~~certain variable interest entities formed by Global Atlantic notwithstanding the fact that we may hold only a minority economic interest in those investment funds and CFEs.

The assets of our consolidated investment funds and CFEs, on a gross basis, can be substantially larger than the assets of our business and, accordingly, could have a substantial effect on the cash flows reflected in our ~~condensed~~ consolidated statements of cash flows. The primary cash flow activities of our consolidated funds and CFEs involve: (i) capital contributions from fund investors; (ii) using the capital of fund investors to make investments; (iii) financing certain investments with indebtedness; (iv) generating cash flows through the realization of investments; and (v) distributing cash flows from the realization of investments to fund investors. Because our consolidated funds ~~and CFEs~~ are treated as investment companies for accounting purposes, certain of these cash flow amounts are included in our cash flows from operations.

Net Cash Provided (Used) by Operating Activities

Our net cash provided (used) by operating activities was ~~$(2.2)~~$(4.6) billion and ~~$(0.6)~~$(3.6) billion during the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. These amounts primarily included: (i) investments purchased (asset management), net of proceeds from ~~sales~~investments (asset management) of ~~investments net of purchases of investments of $(3.5)~~$(8.9) billion and ~~$(0.8)~~$(7.1) billion during the nine months ended September 30, ~~2017~~2022 and ~~2016, respectively;~~2021, respectively, (ii) net realized gains (losses) on asset management investments of ~~$(2.7)~~$1.2 billion and $1.5 billion during the nine months ended September 30, 2022 and 2021, respectively, (iii) change in unrealized gains (losses) on investments (asset management) of $(2.5) billion and $6.5 billion during the nine months ended September 30, 2022 and 2021, respectively, (iv) capital allocation-based income (loss) of $(2.4) billion and $5.7 billion during the nine months ended September 30, 2022 and 2021, respectively, and (v) net realized gains (losses) on insurance operations of $(235.9) million and ~~$354.1~~$(642.6) million during the nine months ended September 30, ~~2017~~2022 and 2016, respectively; (iii) change in unrealized gains (losses) on investments of $1,088.3 million and $(345.0) million during the nine months ended September 30, 2017 and 2016, respectively; and (iv) carried interest allocated as a result of changes in fund fair value of $1,224.2 million and $602.7 million during the nine months ended September 30, 2017 and 2016,2021, respectively. Investment funds are ~~for GAAP purposes,~~ investment companies under GAAP and reflect their investments and other financial instruments at fair value.

Net Cash Provided (Used) by Investing Activities

Our net cash provided (used) by investing activities was ~~$96.1 million~~$(10.7) billion and ~~$23.2~~$(7.0) billion during the nine months ended September 30, 2022 and 2021, respectively. Our investing activities included: (i) investments purchased (insurance), net of proceeds from investments (insurance) of $(8.9) billion and $(5.8) billion during the nine months ended September 30, 2022 and 2021, respectively, (ii) acquisitions, net of cash acquired of $(1.7) billion and $(473.8) million during the nine months ended September 30, ~~2017~~2022 and ~~2016, respectively. Our investing activities included: (i) a change in restricted cash~~2021, respectively, and ~~cash equivalents (that primarily funds collateral requirements)~~(iii) the purchase of ~~$168.0~~fixed assets of $(58.6) million and ~~$33.0~~$(82.5) million during the nine months ended September 30, ~~2017~~2022 and 2016, respectively; (ii) the purchase of fixed assets of $(70.8) million and $(8.2) million during the nine months ended September 30, 2017 and 2016, respectively; and (iii) development of oil and natural gas properties of $(1.0) million and $(1.6) million for the nine months ended September 30, 2017 and 2016,2021, respectively.

Net Cash Provided (Used) by Financing Activities

Our net cash provided (used) by financing activities was ~~$2.1~~$16.7 billion and ~~$1.7~~$16.1 billion during the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Our financing activities primarily included: (i) ~~distributions to,~~contributions by, net of ~~contributions by,~~distributions to, our noncontrolling and redeemable noncontrolling interests of ~~$1.1~~$5.3 billion and ~~$0.8~~$4.9 billion during the nine months ended September 30, ~~2017~~2022 and ~~2016, respectively;~~2021, respectively, (ii) proceeds received net of repayment of debt obligations of ~~$1.3~~$4.9 billion and ~~$1.0~~$6.7 billion during the nine months ended September 30, ~~2017~~2022 and ~~2016, respectively;~~2021, respectively, (iii) ~~distributions~~additions to, ~~our partners~~net of ~~$(230.8)~~withdrawals from contractholder deposit funds of $6.8 billion and $5.1 billion during nine months ended September 30, 2022 and 2021, respectively, (iv) common stock dividends of $(310.9) million and ~~$(213.5)~~$(246.7) million during the nine months ended September 30, ~~2017~~2022 and ~~2016, respectively; (iv) unit repurchases~~2021, respectively, (v) net delivery of ~~$(291.9)~~common stock of $(34.9) million and $(106.9) million during the nine months ended September 30, ~~2016; (v) issuance~~2022 and 2021, respectively, (vi) repurchases of ~~Preferred Units~~common stock of ~~$482.6~~$(346.7) million and $(135.9) million during the nine months ended September 30, ~~2016;~~2022 and ~~(vi)~~2021, respectively, (vii) Series A and B Preferred ~~Units distributions~~Stock dividends of ~~$(25.0) million and $(13.9)~~$(19.2) million during the nine months ended September 30, ~~2017~~2021, (viii) Series C Mandatory Convertible Preferred Stock dividends of $(51.8) million during the nine months ended September 30, 2022 and ~~2016.~~2021, respectively, and (ix) private placement share issuance of $38.5 million during nine months ended September 30, 2021.

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Analysis of Segment ~~Analysis~~Operating Results

The following is a discussion of the results of our ~~four reportable~~ business ~~segments~~on a segment basis for the three ~~and nine~~ months ended September 30, ~~2017~~2022 and ~~2016.~~2021. You should read this discussion in conjunction with the information included under ~~“—Basis of Financial Presentation—~~"—Key Segment and Non-GAAP Performance Measures and Other Terms and Operating ~~and Performance Measures”~~Metrics" and the ~~condensed consolidated~~ financial statements and related notes included elsewhere in this report. See "Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

~~Expense Allocations~~

Certain expenses are allocated among our operating segments. Specifically, as described below, (i) a portion of expenses, except for broken deal expenses, originating in our Private Markets, Public Markets and Capital Markets segments are reflected inFor the ~~Principal Activities segment and (ii) corporate expenses are allocated across all segments.~~

~~Expenses Allocated to Principal Activities~~

~~KKR allocates certain expenses to its Principal Activities segment. The Principal Activities segments incurs its own direct costs, and an allocation from~~nine months ended September 30, 2021, the other segments is also made to reflect the estimated amount of costs that are necessary to operate our Principal Activities segment, which are incremental to those costs incurred directly by the Principal Activities segment. These allocable expenses consist of a portionresults of our ~~cash compensation and benefits, occupancy and related charges and other operating expenses that~~insurance segment are initially recognized within our Private Markets, Public Markets and Capital Markets segments. Consistent with prior years, the total amount of expenses (other than its direct costs) that is allocated to Principal Activities is based on the proportion of revenue earned by Principal Activities, relative to other operating segments revenue, over the preceding four calendar years. Beginning in 2017, however, KKR has determined that this allocation percentage will not be less than the allocation percentage calculated using the cumulative amount of such revenues since 2009 (the year we completed the KPE transaction). For 2017, KKR determined that this allocation percentage is 25.7%. This allocation percentage is expected to be updated annually or more frequently if there are material changes to our business.

~~Below is a summary~~from February 1, 2021 (closing date of the ~~allocation to Principal Activities, relative to other operating segments, for the 2017 and 2016 periods.~~acquisition) through September 30, 2021.

~~2017 Allocation: 25.7%, based on cumulative revenues earned since 2009~~

~~2016 Allocation: 22.6%, based on revenues earned in 2015, 2014, 2013 and 2012~~Analysis of Asset Management Segment Operating Results

The 2016 allocation to Principal Activities was based on revenues earned by Principal Activities, relative to other operating segments revenue, over the preceding four calendar years. Had the allocation for 2016 been based on cumulative revenues earned by Principal Activities since 2009, consistent with our allocation methodology adopted in 2017, the expense allocation to Principal Activities would have been 28.7% and would have had the following impact on Economic Net Income across each of our reporting segments:

Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016

Private Markets $ 4,856
$ 14,515
Public Markets 3,400
10,103
Capital Markets 739
2,188
Principal Activities (8,995 ) (26,806 )
Total Economic Net Income $ —
$ —

Once the total amount of expense to be allocated to the Principal Activities segment is estimated for each reporting period, the amount of this expense will be allocated from the Private Markets, Public Markets and Capital Markets segments based on the proportion of headcount in each of these three segments.

~~Allocations of Corporate Expenses~~

Corporate expenses are allocated to each of the Private Markets, Public Markets, Capital Markets and Principal Activities segments based on the proportion of revenues earned by each segment over the preceding four calendar years. However, to the extent that expenses allocated to Principal Activities, as described above, is based on the cumulative amount of such revenues since 2009, corporate expenses will be allocated in the same manner.

~~Below is a summary of the allocations percentages used for corporate expenses to each of our operating segments for the 2017 and 2016 periods.~~

Expense Allocation
Segment 2017 2016

Private Markets 59.6 % 61.6 %
Public Markets 9.0 % 10.1 %
Capital Markets 5.7 % 5.7 %
Principal Activities 25.7 % 22.6 %
Total Reportable Segments 100.0 % 100.0 %

Allocation basis Cumulative revenue since 2009 Revenue earned in 2015, 2014, 2013 & 2012

~~Private Markets Segment~~

The following tables set forth information regarding ~~the~~KKR's asset management segment operating results ~~of operations~~ and certain key ~~operating~~capital metrics for ~~our Private Markets segment for~~ the ~~three and nine months ended September 30, 2017 and 2016.~~

~~Three months ended September 30, 2017 compared to~~ three months ended September 30, ~~2016~~2022 and 2021:

Three Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 153,841
$ 117,795
$ 36,046
Monitoring Fees 14,342
11,091
3,251
Transaction Fees 82,258
53,223
29,035
Fee Credits (59,854 ) (37,127 ) (22,727 )
Total Management, Monitoring and Transaction Fees, Net 190,587
144,982
45,605

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest 419,438
350,469
68,969
Unrealized Carried Interest (96,571 ) 53,339
(149,910 )
Total Performance Income 322,867
403,808
(80,941 )

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 513,454
548,790
(35,336 )

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 63,482
47,858
15,624
Realized Performance Income Compensation 176,075
157,688
18,387
Unrealized Performance Income Compensation (36,379 ) 22,588
(58,967 )
Total Compensation and Benefits 203,178
228,134
(24,956 )
Occupancy and related charges 8,537
9,248
(711 )
Other operating expenses 42,376
32,031
10,345
Total Segment Expenses 254,091
269,413
(15,322 )

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ 259,363
$ 279,377
$ (20,014 )

Assets Under Management $ 87,609,800
$ 75,181,600
$ 12,428,200
Fee Paying Assets Under Management $ 61,706,500
$ 44,010,300
$ 17,696,200
Capital Invested $ 2,972,300
$ 2,370,600
$ 601,700
Uncalled Commitments $ 39,421,900
$ 31,839,100
$ 7,582,800




	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees	$	670,534	$	559,016	$	111,518
Transaction and Monitoring Fees, Net	167,455		249,670		(82,215)
Fee Related Performance Revenues	49,924		9,897		40,027
Fee Related Compensation	(199,780)		(184,224)		(15,556)
Other Operating Expenses	(146,370)		(104,772)		(41,598)
Fee Related Earnings	541,763		529,587		12,176
Realized Performance Income	497,860		432,784		65,076
Realized Performance Income Compensation	(322,927)		(274,955)		(47,972)
Realized Investment Income	284,979		447,565		(162,586)
Realized Investment Income Compensation	(42,747)		(67,142)		24,395
Asset Management Segment Operating Earnings	$	958,928	$	1,067,839	$	(108,911)

~~Segment Revenues~~

Management ~~Monitoring~~Fees

The following table presents management fees by business line:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees
Private Equity	$	295,234	$	261,906	$	33,328
Real Assets	178,652		123,786		54,866
Credit and Liquid Strategies	196,648		173,324		23,324
Total Management Fees	$	670,534	$	559,016	$	111,518

The increase in Private Equity management fees was primarily attributable to management fees earned from European Fund VI and ~~Transaction Fees, Net~~

Global Impact Fund II. The ~~net~~ increase was ~~primarily due to an increase~~partially offset by a decrease in management fees earned from European Fund V as a result of entering its post-investment period in the first quarter of 2022 and, ~~transaction fees.~~ consequently, we now earn fees based on capital invested rather than capital committed and at a lower fee rate.

The increase in Real Asset management fees was primarily due to (i) ~~Americas Fund XII entering its investment period~~an increase in ~~the first quarter of 2017, in which it earns~~ management fees ~~on a larger pool of capital than its predecessor fund North America Fund XI, which entered its post investment period,~~earned from Global Atlantic, (ii) ~~Asian Fund III entering its investment period in the second quarter of 2017, in which it earns~~ management fees earned on ~~a larger pool of capital than its predecessor fund Asian Fund II,~~assets managed by KJRM, which ~~entered its post investment period~~we acquired in 2022, and (iii) new capital raised in our Health Care Strategic Growth Fund. This net increase was partially offset by decreases due to (i) North America Fund XI and Asian Fund II entering their post investment periods, during which they earn fees at a lower rate and based on invested capital rather than committed capital, and (ii) lower invested capital as a result of realizations primarily in our 2006 Fund, Asian Fund and China Growth Fund. As investments held in our funds that pay management fees ~~based on invested capital are sold, our management fees are expected to decline unless offset by new fee-paying capital raised.~~ earned from Global Infrastructure Investors IV.

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The increase in ~~transaction~~Credit and Liquid Strategies management fees was primarily attributable to (i) an increase in ~~both~~management fees earned from Global Atlantic, (ii) new CLO issuances, and (iii) a higher level of invested capital within our alternative credit strategy.

Transaction and Monitoring Fees, Net

The following table presents transaction and monitoring fees, net by business line:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity	$	41,436	$	43,368	$	(1,932)
Real Assets	6,730		5,843		887
Credit and Liquid Strategies	3,224		4,397		(1,173)
Capital Markets	116,065		196,062		(79,997)
Total Transaction and Monitoring Fees, Net	$	167,455	$	249,670	$	(82,215)

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The decrease in capital markets transaction fees was primarily due to a decrease in the number of capital markets transactions for the three months ended September 30, 2022, compared to the three months ended September 30, 2021. Overall, we completed 47 capital markets transactions for the three months ended September 30, 2022, of which 6 represented equity offerings and ~~size~~41 represented debt offerings, as compared to 87 transactions for the three months ended September 30, 2021, of which 15 represented equity offerings and 72 represented debt offerings. We earned fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we earn for similar transactions generally correlates with overall transaction sizes.

Our Capital Markets business line fees are generated in connection with our Private Equity, Real Assets and Credit and Liquid Strategies business lines as well as from third-party companies. For the three months ended September 30, 2022, approximately 3% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 23% for the three months ended September 30, 2021. Our transaction fees are comprised of fees earned in North America, Europe, and the Asia-Pacific region. For the three months ended September 30, 2022, approximately 38% of our transaction fees were generated outside of North America as compared to approximately 23% for the three months ended September 30, 2021. Our Capital Markets business line is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads, and market volatility. Our Capital Markets business line does not generate monitoring fees.

Our Private Equity, Real Assets and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are required to share all or a portion of such fees with our fund investors. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

The decrease in Private Equity business line transaction and monitoring fees, net, was primarily attributable to a lower level of transaction ~~fee-generating investments.~~fees. During the three months ended September 30, ~~2017,~~2022, there were 1416 transaction fee-generating investments that paid an average fee of ~~$5.9~~$7.1 million compared to 1316 transaction fee-generating investments ~~paying~~that paid an average fee of ~~$4.1~~$8.2 million during the three months ended September 30, ~~2016. The majority of these transaction fees~~2021. For the three months ended September 30, 2022, approximately 93% were paid from companies in North America, 5% were paid from companies in the Asia-Pacific region, and 2% were paid by companies ~~located~~ in ~~North America.~~Europe. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular ~~discussions~~agreements as to the amount of the fees, the complexity of the transaction, and ~~KKR’s~~KKR's role in the transaction.

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Fee Related Performance Revenues

The following table presents fee related performance revenues by business line:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Fee Related Performance Revenues
Private Equity	$	—	$	—	$	—
Real Assets	39,284		1,568		37,716
Credit and Liquid Strategies	10,640		8,329		2,311
Total Fee Related Performance Revenues	$	49,924	$	9,897	$	40,027

Fee related performance revenues represent performance fees that are (i) to be received from our investment funds, vehicles, and accounts on a recurring basis and (ii) not dependent on a realization event involving investments held by the investment fund, vehicle or account. These performance fees are primarily earned from (i) our business development company, FSK in our Credit and Liquid Strategies business line, and (ii) our open-ended core real estate fund, KKR Property Partners Americas ("KPPA"), our registered closed-end real estate equity fund, KKR Real Estate Select Trust Inc. ("KREST"), and our real estate credit investment trust, KKR Real Estate Finance Trust Inc. ("KREF"), all of which are in our Real Assets business line. Fee related performance revenues were higher for the three months ended September 30, 2022 compared to the prior period primarily due to performance revenues earned from KPPA in the current period.

Fee Related Compensation

The increase in fee ~~credits is~~related compensation for the three months ended September 30, 2022 compared to the prior period was primarily due ~~primarily~~ to a higher level of ~~transaction fees. Recurring monitoring fees increased $3.3 million, which~~compensation recorded in connection with the higher level of revenues included within fee related earnings.

Other Operating Expenses

The increase in other operating expenses for the three months ended September 30, 2022 compared to the prior period was primarily ~~the result~~due to (i) a higher level of professional fees, information technology and other administrative costs and (ii) an increase in travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

Fee Related Earnings

The increase in fee related earnings for the ~~number~~three months ended September 30, 2022 compared to the prior period was primarily due to a higher level of ~~portfolio companies paying fees.~~management fees and performance revenues, partially offset by a lower level of transaction fees and a higher level of other operating expenses, as described above.

Realized Performance Income

The following table presents realized performance income by business line:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized Performance Income
Private Equity	$	484,560	$	401,902	$	82,658
Real Assets	11,934		11,212		722
Credit and Liquid Strategies	1,366		19,670		(18,304)
Total Realized Performance Income	$	497,860	$	432,784	$	65,076

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	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Private Equity
North America Fund XI	$	363,384	$	72,313	$	291,071
2006 Fund	64,189		81,356		(17,167)
Asian Fund III	53,204		—		53,204
Co-Investment Vehicles and Other	3,783		22,514		(18,731)
Americas Fund XII	—		207,559		(207,559)
Next Generation Technology Growth Fund	—		18,160		(18,160)



Total Realized Carried Interest (1)	484,560		401,902		82,658

Incentive Fees	—		—		—
Total Realized Performance Income	$	484,560	$	401,902	$	82,658


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Real Assets
Global Infrastructure Investors II	$	8,502	$	—	$	8,502
Real Estate Partners Americas II	3,432		—		3,432

Real Estate Partners Europe	—		11,212		(11,212)






Total Realized Carried Interest (1)	11,934		11,212		722

Incentive Fees	—		—		—
Total Realized Performance Income	$	11,934	$	11,212	$	722


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Credit and Liquid Strategies

Alternative Credit Vehicles	$	—	$	—	$	—
Total Realized Carried Interest (1)	—		—		—

Incentive Fees	1,366		19,670		(18,304)
Total Realized Performance Income	$	1,366	$	19,670	$	(18,304)

(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.

Realized performance income includes (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.

Realized carried interest in our Private Equity business line for the three months ended September 30, 2022 consisted primarily of realized proceeds from the sales of our investments in CHI Overhead Doors, Inc. (manufacturing sector) held by North America Fund XI, Fiserv, Inc. held by 2006 Fund, and Max Healthcare Institute Limited (NSE:MAXHEALTH) held by Asian Fund III.

Realized carried interest in our Private Equity business line for the three months ended September 30, 2021 consisted primarily of realized proceeds from the sales of our investments in The Bountiful Company (consumer products sector), Ingersoll Rand Inc. (NASDAQ: IR), and Academy Sports & Outdoors Inc. (NASDAQ: ASO).

Realized carried interest in our Real Assets business line for the three months ended September 30, 2022 consisted primarily of realized proceeds from (i) the sale of our investment in Telxius Telecom, S.A. (infrastructure) held by Global Infrastructure Investors II and (ii) dividends received and sales of various investments held by Real Estate Partners Americas II.

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Realized carried interest in our Real Assets business line for the three months ended September 30, 2021 consisted primarily of realized proceeds from dividends received by Real Estate Partners Europe.

During the three months ended September 30, 2022 and September 30, 2021, there was no realized carried interest earned in our Credit and Liquid Strategies business line.

Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR's credit vehicles, and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a third party asset management firm. Incentive fees in our Credit and Liquid Strategies business line decreased for the three months ended September 30, 2022 compared to the prior period as a result of a lower level of performance fees earned from our hedge fund partnerships.

Realized Performance Income Compensation

The increase in realized performance income compensation for the three months ended September 30, 2022 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of realized performance income.

Realized Investment Income

The following table presents realized investment income in our Principal Activities business line:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)	$	162,716	$	389,837	$	(227,121)
Interest Income and Dividends	122,263		57,728		64,535
Total Realized Investment Income	$	284,979	$	447,565	$	(162,586)

The decrease in realized investment income is primarily due to a lower level of net realized gains, partially offset by a higher level of interest income and dividends. The amount of realized investment income depends on the transaction activity of our funds and balance sheet, which can vary from period to period.

For the three months ended September 30, ~~2017 we had 50~~2022, net realized gains were comprised of realized gains primarily from the sale of our investments in Fiserv, Inc., CHI Overhead Doors, Inc., and Viridor Limited. Partially offsetting these realized gains were realized losses, the most significant of which were realized losses from the sale of revolving credit facilities and a realized loss on an underwritten debt offering transaction.

For the three months ended September 30, 2021, net realized gains were comprised of realized gains primarily from the sale of our Private Equity business line investments in Mr. Cooper Group Inc., FanDuel Inc., and The Bountiful Company. Partially offsetting these realized gains were realized losses related to certain alternative credit investments.

For the three months ended September 30, 2022, interest income and dividends were comprised of (i) $65.0 million of interest income, primarily from our investments in CLOs, and (ii) $57.3 million of dividend distributions primarily from our real estate investments, as well as a dividend distribution received from our infrastructure investment in Veresen Midstream (infrastructure).

For the three months ended September 30, 2021, interest income and dividends were comprised of (i) $29.3 million of dividend income primarily from our real asset investments including our investment in KREF and (ii) $28.4 million of interest income from our investments in CLOs. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

We expect realized performance income and realized investment income to be greater than $350 million in the fourth quarter of 2022 relating to (i) realized incentive fees from Marshall Wace and (ii) realized carried interest and realized investment income from completed, or signed and expected to be completed sales, partial sales or secondary sales subsequent to September 30, 2022 with respect to certain private equity portfolio companies ~~paying an average monitoring fee~~and other investments. Some of ~~$0.3~~these

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transactions are not complete, and are subject to the satisfaction of closing conditions, including but not limited to regulatory approvals; there can be no assurance if or when any of these transactions will be completed.

Prior to the acquisition of KKR Capstone on January 1, 2020, (i) KKR Capstone's financial results were consolidated with KKR's financial results in accordance with GAAP, and as such the fees and expenses attributable to KKR Capstone were included in KKR's consolidated revenues and expenses, and (ii) KKR Capstone's financial results were excluded from KKR's non-GAAP financial measures, because KKR presented its non-GAAP financial measures prior to the effect to the consolidation of certain entities that were not subsidiaries of KKR. Following the acquisition of KKR Capstone on January 1, 2020, after-tax distributable earnings includes the net income (loss) from KKR Capstone within realized investment income (loss).

For the quarter ended September 30, 2022, total fees attributable to KKR Capstone were $20.7 million ~~compared~~and total expenses attributable to ~~42 portfolio companies paying an average monitoring fee~~KKR Capstone were $20.2 million. For KKR Capstone-related adjustments in reconciling asset management segment revenues to GAAP revenues see "—Analysis of ~~$0.3 million~~Non-GAAP Performance Measures—Reconciliations to GAAP Measures".

Realized Investment Income Compensation

The decrease in realized investment income compensation for the three months ended September 30, ~~2016. There were no termination payments~~2022 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.

Other Operating and Capital Measures

The following table presents certain key operating and capital metrics as of September 30, 2022 and June 30, 2022:


	As of
	September 30, 2022		June 30, 2022		Change
	($ in millions)
Assets Under Management	$	496,219	$	490,692	$	5,527
Fee Paying Assets Under Management	$	397,627	$	384,470	$	13,157
Uncalled Commitments	$	112,589	$	115,300	$	(2,711)

The following table presents one of our key capital metrics for the three months ended September 30, ~~2017~~2022 and 2016. These termination payments may occur in the future; however, they are infrequent in nature and are generally correlated with the initial public offering ("IPO") and other realization activity in our private equity portfolio, and may be smaller in size and number in the future compared to current and prior periods.2021:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in millions)
Capital Invested	$	15,683	$	24,415	$	(8,732)

~~Performance Income~~

Assets Under Management

The net decrease is attributable to a lower level of carried interest primarily reflecting a lower level of net appreciation in value of our private equity portfolio in the current period compared to the prior period.

Realized carried interest for the three months ended September 30, 2017, consisted primarily of realized gains from the sale of Capsugel (manufacturing sector) and partial sales of PRA Health Sciences, Inc. and US Foods Holding Corp.Private Equity

Realized carried interest for the three months ended September 30, 2016 consisted primarily of realized gains from the sale or partial sale of Walgreens Boots Alliance, Inc., Alliance Tire Group B.V. (manufacturing sector) and Zimmer Biomet Holdings, Inc.

The following table ~~presents performance income by investment vehicle~~reflects the changes in our Private Equity business line AUM from June 30, 2022 to September 30, 2022:


	($ in millions)
June 30, 2022	$	171,541
New Capital Raised	1,006

Distributions and Other	(4,507)
Change in Value	(2,570)
September 30, 2022	$	165,470

AUM for the ~~three months ended~~Private Equity business line was $165.5 billion at September 30, ~~2017 and 2016:~~2022, a decrease of $6.0 billion, compared to $171.5 billion at June 30, 2022.

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Three Months Ended September 30,
2017 2016
($ in thousands)
Realized Carried Interest Unrealized Carried Interest
Total
Carried Interest
Realized Carried Interest Unrealized Carried Interest
Total
Carried
Interest
North America Fund XI $ 90,394
$ 48,982
$ 139,376
$ 14,845
$ 139,705
$ 154,550
Co-Investment Vehicles and Other 16,255
51,948
68,203
705
25,985
26,690
European Fund III 4,500
38,143
42,643
—
22,529
22,529
European Fund IV —
24,365
24,365
—
1,339
1,339
Asian Fund II —
21,801
21,801
—
86,365
86,365
Asian Fund —
21,268
21,268
95,883
(71,490 ) 24,393
Global Infrastructure Investors II —
7,155
7,155
—
—
—
Next Generation Technology Growth —
5,885
5,885
—
943
943
Global Infrastructure Investors —
3,145
3,145
16,845
(10,383 ) 6,462
Real Estate Partners Americas 10,365
(7,439 ) 2,926
—
1,970
1,970
Millennium Fund —
2,370
2,370
—
(15,889 ) (15,889 )
E2 Investors —
—
—
—
(234 ) (234 )
European Fund —
—
—
—
(2,102 ) (2,102 )
European Fund II 2,142
(2,146 ) (4 ) 63,721
(62,304 ) 1,417
2006 Fund 295,782
(301,978 ) (6,196 ) 155,612
(64,174 ) 91,438
China Growth Fund —
(7,597 ) (7,597 ) 2,858
5,265
8,123
Management Fee Refunds —
(2,473 ) (2,473 ) —
(4,186 ) (4,186 )
Total ⁽¹⁾
$ 419,438
$ (96,571 ) $ 322,867
$ 350,469
$ 53,339
$ 403,808

⁽¹⁾The ~~above table excludes any funds for which there~~decrease was ~~no carried interest during either of the periods presented.~~

~~Unrealized carried interest reflects the difference between total carried interest and realized carried interest. The recognition~~primarily attributable to distributions to fund investors, primarily as a result of realized ~~carried interest results~~proceeds, most notably from North America Fund XI, Asian Fund III, and 2006 Fund, and to a lesser extent, a decrease in the reversal of accumulated unrealized carried interest, generally resulting in minimal impact on total performance income. Additionally, because unrealized carried interest can be reversed upon a realization event, in periods where there is significant realized carried interest, unrealized carried interest can be negative even in periods of portfolio appreciation.investment value at Americas Fund XII, Asian Fund III, and Asian Fund II. Partially offsetting these decreases was new capital raised for Global Impact Fund II and Next Generation Technology Growth Fund III.

For the three months ended September 30, ~~2017,~~2022, the value of our traditional private equity investment portfolio ~~increased 3.9%~~decreased 4%. This was comprised of a ~~2.6% increase~~19% decrease in ~~the~~ share prices of various publicly held ~~or publicly indexed~~ investments and a ~~4.6% increase~~2% decrease in value of our privately held ~~investments. Additionally,~~investments, as discussed further below. For the three months ended September 30, 2022, the value of our ~~infrastructure~~growth equity portfolio increased 2% and our core private equity investment portfolio ~~which is comprised predominately of private investments, increased 6.6%.~~ remained flat. See "Business Environment" for more information about certain factors that impact our business, financial performance, operating results and valuations.

The most significant decreases in share prices of our publicly held private equity investments were decreases in Applovin Corporation (NASDAQ: APP), GoTo Group (IDX: GOTO), and Brightview Holdings, Inc. (NYSE: BV). These decreases were partially offset by increases in share prices of various publicly held orinvestments. The most significant of these were increases in J.B. Chemicals and Pharmaceuticals Ltd. (NYSE: JBCP) and Fiserv, Inc. The prices of publicly ~~indexed~~held companies may experience volatile changes following the reporting period.

The most significant decreases in the value of our privately held investments ~~were gains~~related to Kokusai Electric Corporation (manufacturing sector), PetVet Care Centers, LLC, and Global Medical Response, Inc. (health care sector) These decreases in ~~Gardner Denver Holdings, Inc. (NYSE: GDI), China International Capital Corporation Limited (HK: 3908) and Pets At Home Group Plc (LSE: PETS). These increases~~value were partially offset by ~~decreased share prices of various publicly held investments, the most significant of which were losses~~increases in ~~Laureate Education, Inc. (NASDAQ: LAUR), First Data Corporation and Beijing Capital Grand Limited (HK: 1329). Our privately held investments contributed the remainder of the change in~~ value the most significant of which were gains relating to Internet Brands, Inc. (technology sector), Colonial Pipeline Company (infrastructure sector) and United Group (telecom sector). The unrealized gains on our privately held investments were partially offset by unrealized losses relating primarily to ~~Optiv Inc.~~OneStream Software, LLC (technology sector), ~~Academy Ltd. (retail sector)~~USI, Inc., and ~~Sundrop Farms Holding Ltd. (agriculture~~Minnesota Rubber and Plastics (industrial sector). The ~~increased~~decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) ~~an increase~~a decrease in the value of market comparables and (ii) ~~individual company performance.~~an unfavorable business outlook, both influenced by economic outlook and market environment. The ~~decreased~~increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance ~~or, in certain cases, an unfavorable business outlook~~ and (ii) ~~a decrease in the value of market comparables.~~

~~Subsequent to September 30, 2017, realization activity such as dividends and agreements to sell, including partial sales and secondary sales, are expected,~~ with respect to ~~certain private equity portfolio companies,~~Minnesota Rubber and Plastics, an increase in valuation reflecting an agreement to exit the ~~most significant of which are~~investment.

Alliant Insurance Services (financial services sector), Gland Pharma (manufacturing sector), Visma AS (technology sector) and Groupe SMCP S.A.S. (retail sector). These transactions have been consummated subsequent to September 30, 2017, and represent distributable earnings of approximately $130 million. Some or all of these transactions are subject to the satisfaction of closing conditions prior to their completion, and there can be no assurance if or when any of these transactions will be completed.

For the three months ended September 30, ~~2016,~~2021, the value of our traditional private equity investment portfolio increased ~~5.8%~~9%. This was comprised of a ~~7.0% increase in the share prices of various publicly held or publicly indexed investments and a 5.1%~~11% increase in the value of our privately held ~~investments. The most significant~~investments and a 2% increase in share prices of various publicly held ~~or publicly indexed~~investments. For the three months ended September 30, 2021, the value of our growth equity and core equity investment portfolios increased 8% and 7%, respectively.

The most significant increase in the value of our privately held investments ~~were gains~~related to Kokusai Electric Corporation, PetVet Care Centers, LLC, and Internet Brands, Inc. These increases in ~~First Data Corporation, PRA Health Sciences, Inc. and Qingdao Haier Co., Ltd. (CH: 600690). These increases~~value were partially offset by decreased share prices of various publicly held investments, the most significant of which were Walgreens Boots Alliance, Inc., US Foods Holding Corp. and Fujian Sunner Development Co. Ltd. (SZ:002299). Our privately held investments contributed the remainder of the changedecreases in value ~~the most significant of which were gains~~ relating primarily to ~~Sedgwick Claims Management Services (financial services~~Magneti Marelli (industrial sector), ~~Panasonic Healthcare Co., Ltd. (healthcare sector)~~Upfield (consumer products), and GenesisCare (healthcare sector). The unrealized gains on our privately held investments were partially offset by unrealized losses the most significant of which were Aricent Inc. (technology sector), Crosby and Acco Material Handling Solutions (manufacturing sector) and OEG Management PartnersMonterra Energy (energy sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) ~~in the case of Sedgwick Claims Management Services and GenesisCare, valuations that reflect agreements to sell all or a portion of these investments,~~individual company performance, (ii) an increase in the value of market comparables, (iii) transactional activity related to new rounds of funding, and ~~(iii) individual company performance.~~(iv) with respect to Kokusai Electric Corporation, an increase in valuation reflecting an agreement to sell a minority stake in the company. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) ~~individual company performance or, in certain cases,~~ an unfavorable business outlook and (ii) a decrease in the value of market ~~comparables.~~comparables, which were influenced by the impact of COVID-19 on the economic outlook and overall market environment.

~~Segment Expenses~~

~~Compensation and Benefits~~

The ~~net decrease was due primarily to lower performance income compensation resulting from a lower level~~most significant increases in share prices of ~~carried interest gains~~various publicly held investments were increases in ~~our private equity portfolio in the current period as described above as well as a greater amount of compensation~~Max Healthcare Institute Limited, Darktrace Limited, and ~~benefits expense allocated to Principal Activities as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments.~~ForgeRock, Inc. (NYSE: FORG). These ~~decreases~~increases were partially offset by ~~increased cash compensation~~decreases in share prices of various publicly held investments. The most significant of these were decreases in AppLovin Corporation, KnowBe4, Inc. (NASDAQ: KNBE), and ~~benefits.~~BridgeBio Pharma, Inc. The prices of publicly held companies may experience volatile changes following the reporting period. See "Business Environment—Equity and Credit Markets" for more information about factors, such as volatility, that may impact our business, financial performance, operating results and valuations.

~~Occupancy and Other Operating Expenses~~

The increase is primarily due to an increase in professional fees and expenses that are creditable to our investment funds which include expenses for unconsummated transactions, also known as broken-deal expenses. Partially offsetting these increases was a decrease relating to a greater amount of other operating expenses allocated to Principal Activities as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments.

~~Economic Net Income (Loss)~~

The decrease was primarily due to lower levels of performance income gains in the current period compared to the prior period, partially offset by higher management and transaction fees and a decrease in compensation and benefits in the current period.

~~Assets Under Management~~

~~The following table reflects the changes in our Private Markets AUM from June 30, 2017 to September 30, 2017:~~

($ in thousands)
June 30, 2017 $ 84,984,000
New Capital Raised 4,287,200
Distributions (3,798,300 )
Change in Value 2,136,900
September 30, 2017 $ 87,609,800

AUM for the Private Markets segment was $87.6 billion at September 30, 2017, an increase of $2.6 billion, compared to $85.0 billion at June 30, 2017. The increase was primarily attributable to new capital raised primarily in two new strategic investor partnerships and our Real Estate Credit Opportunity Partners fund, and to a lesser extent, an increase in the value of our Private Markets portfolio. Our strategic investor partnerships include separately managed accounts that provide for investments to be made in multiple funds and across investment strategies and for the reinvestment or recycling of investment proceeds. Those strategic investor partnerships also generally provide for the netting of investment returns over negotiated periods of time among funds and other investments, which may give rise to the clawback of previously recognized carried interest or incentive fees. These increases were offset by distributions to Private Markets fund investors primarily as a result of realizations, most notably in our 2006 Fund, North America Fund XI and certain carry co-investment vehicles.

The increase in the value of our Private Markets portfolio was driven primarily by net gains of $0.8 billion in our North America Fund XI and $0.3 billion in each of our European Fund III and European Fund IV. The drivers of the overall change in value for Private Markets were consistent with those noted in the Performance Income commentary above. See “-- Private Markets - Segment Revenues - Performance Income.”

Certain investments included in our AUM are denominated in currencies other than the U.S. dollar. Those investments expose our AUM to the risk that the value of the investments will be affected by changes in exchange rates between the currency in which the investments are denominated and the currency in which the investments are made. ~~Our policy is~~We generally seek to ~~minimize~~reduce these risks ~~in certain cases~~ by employing hedging ~~techniques,~~transactions in connection with certain investments, including using foreign currency options and foreign exchange forward contracts to reduce exposure to changes in exchange rates when a meaningful amount of capital has been invested in currencies other than the currencies in which the investments are denominated. We do not, however, hedge our currency exposure in all currencies or for all investments. See ~~“-Quantitative~~"Quantitative and Qualitative Disclosures about Market ~~Risk --~~ Risk—Exchange Rate ~~Risk”~~Risk" and ~~“Risk Factors-Risks~~"Risk Factors—Risks Related to the Assets We ~~Manage--We~~Manage—We make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United ~~States”~~States" in our Annual Report.

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Real Assets

The following table reflects the changes in our Real Assets business line AUM from June 30, 2022 to September 30, 2022:


	($ in millions)
June 30, 2022	$	113,789
New Capital Raised	5,721
Acquisitions and Other(1)	1,049
Distributions and Other	(1,812)
Change in Value	(976)
September 30, 2022	$	117,771

(1)Represents an adjustment reflecting a change in the fee base of Global Atlantic's management fees from market value to book value.

AUM for the Real Assets business line was $117.8 billion at September 30, 2022, an increase of $4.0 billion, compared to $113.8 billion at June 30, 2022.

The increase was primarily attributable to (i) new capital raised from Global Atlantic, Asia Pacific Infrastructure Investors II, and Diversified Core Infrastructure Fund, and to a lesser extent (ii) changing the fee base for Global Atlantic's management fees from fair market value to book value. Partially offsetting these increases were payments to Global Atlantic policyholders and distributions to fund investors for Global Infrastructure Investors III, and to a lesser extent, the decrease in value primarily due to the impact of the decline in the value of the Japanese yen associated with assets managed by KJRM.

For the three months ended September 30, 2022, the value of our ~~Annual Report~~real estate portfolio decreased 1%, and the value of our infrastructure and energy investment portfolios remained flat. See "Business Environment" for more information about certain factors that impact our business, financial performance, operating results and valuations.

The most significant increase in the value of our privately held investments related to University Partners (real estate), FiberCop S.p.A. (infrastructure), and ADNOC Oil Pipelines (infrastructure). These increases in value were partially offset by decreases in value relating primarily to Telefonica Chile S.A. (infrastructure) and Hyperoptic Ltd. (infrastructure). The increased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to individual company or asset performance. The decreased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to (i) a decrease in the value of market comparables, (ii) an unfavorable business outlook, both influenced by the economic outlook and market environment, and (iii) changes in foreign exchange rates.

For the three months ended September 30, 2021, the value of our real estate, infrastructure and energy investment portfolios increased 11%, 4%, and 3%, respectively.

The most significant increase in the value of our privately held investments related to KRE AIP LLC (real estate), Rocky Mountain Midstream LLC (infrastructure), and Viridor Limited. These increases in value were partially offset by decreases in value relating primarily to Telefonica Chile S.A. The increased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to individual company or asset performance. The decreased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to (i) a decrease in the value of market comparables and (ii) an unfavorable business outlook, both influenced by the economic outlook and market environment.

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Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line AUM from June 30, 2022 to September 30, 2022:


	($ in millions)
June 30, 2022	$	205,362
New Capital Raised	6,709
Acquisitions and Other(1)	7,997


Distributions and Other	(3,791)
Redemptions	(1,420)
Change in Value	(1,879)
September 30, 2022	$	212,978

(1)Represents an adjustment reflecting a change in the fee base of Global Atlantic's management fees from market value to book value.

AUM in our Credit and Liquid Strategies business line totaled $213.0 billion at September 30, 2022, an increase of $7.6 billion compared to $205.4 billion at June 30, 2022.

The increase was primarily attributable to (i) changing the fee base for Global Atlantic's management fees from fair market value to book value and (ii) new capital raised from various alternative credit funds and Global Atlantic. Partially offsetting these increases were (i) distributions to fund investors at certain leveraged and alternative credit funds, (ii) payments to Global Atlantic policyholders, (iii) redemptions at our hedge fund partnerships, and (iv) a decline in investment value on ~~Form 10-K for~~ the ~~year ended December 31, 2016.~~assets managed across our alternative credit portfolio.

~~Fee-Paying~~Fee Paying Assets Under Management

Private Equity

The following table reflects the changes in our Private ~~Markets~~Equity business line FPAUM from June 30, ~~2017~~2022 to September 30, ~~2017:~~2022:


	($ in millions)
June 30, 2022	$	98,316
New Capital Raised	2,135

Distributions and Other	(936)

Change in Value	(416)
September 30, 2022	$	99,099

($ in thousands)
June 30, 2017 $ 62,008,900
New Capital Raised 1,202,900
Distributions and Other (1,968,700 )
Change in Value 463,400
September 30, 2017 $ 61,706,500

FPAUM in our Private ~~Markets segment~~Equity business line was ~~$61.7~~$99.1 billion at September 30, ~~2017, a decrease~~2022, an increase of ~~$0.3~~$0.8 billion, compared to ~~$62.0~~$98.3 billion at June 30, ~~2017.~~ 2022.

The ~~decrease~~increase was ~~due~~ primarily attributable to new capital raised from Global Impact Fund II, our core private equity strategy, and certain multi-strategy investment funds. Partially offsetting this increase were decreases from distributions to fund investors, primarily ~~related to realizations in our 2006 Fund and~~as a result of realized proceeds, most notably from North America Fund ~~XI. These decreases were partially offset by new capital raised in our Americas~~XI and Asian Fund ~~XII (relating to one of our strategic investor partnerships) and Health Care Strategic Growth Fund, and capital deployed in our North America Fund XI.~~ III.

Uncalled capital commitments from private equity and multi-strategy investment funds from which KKR is currently not earning management fees amounted to approximately ~~9.0~~$19.7 billion at September 30, ~~2017,~~2022, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately ~~0.9%~~1.0%. ~~We will~~The date on which we begin to earn fees (as specified above) is not ~~begin earning~~guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

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Real Assets

The following table reflects the changes in our Real Assets business line FPAUM from June 30, 2022 to September 30, 2022:


	($ in millions)
June 30, 2022	$	93,258
New Capital Raised	9,764
Acquisitions and Other(1)	1,049
Distributions and Other	(1,353)
Net Changes in Fee Base of Certain Funds	(1,125)
Change in Value	(1,239)
September 30, 2022	$	100,354

(1)Represents an adjustment reflecting a change in the fee base of Global Atlantic's management fees from market value to book value.

FPAUM in our Real Assets business line was $100.4 billion at September 30, 2022, an increase of $7.1 billion, compared to $93.3 billion at June 30, 2022.

The increase was primarily attributable to (i) new capital raised in Asia Pacific Infrastructure Investors II and by Global Atlantic and (ii) changing the fee base for Global Atlantic's management fees from fair market value to book value. Partially offsetting these increases were (i) the decrease in value primarily due to the impact of the decline in the value of the Japanese yen associated with the assets managed by KJRM, (ii) a change in fee base of Asia Pacific Infrastructure Investors as a result of it entering its post investment period, during which we earn fees on invested capital rather than committed capital, and (iii) payments to Global Atlantic policyholders and distributions to fund investors.

Uncalled capital commitments from real assets investment funds from which KKR is currently not earning management fees amounted to approximately $11.9 billion at September 30, 2022, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital ~~until it~~ is ~~deployed~~approximately 1.2%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Credit and Liquid Strategies

The following table reflects the ~~related~~changes in our Credit and Liquid Strategies business line FPAUM from June 30, 2022 to September 30, 2022:


	($ in millions)
June 30, 2022	$	192,896
New Capital Raised	4,392
Acquisitions and Other(1)	7,997


Distributions and Other	(4,103)
Redemptions	(1,420)
Change in Value	(1,588)
September 30, 2022	$	198,174

(1)Represents an adjustment reflecting a change in the fee base of Global Atlantic's management fees from market value to book value.

FPAUM in our Credit and Liquid Strategies business line was $198.2 billion at September 30, 2022, an increase of $5.3 billion, compared to $192.9 billion at June 30, 2022.

The increase was primarily attributable to (i) changing the fee base for Global Atlantic's management fees from fair market value to book value and (ii) new capital raised from Global Atlantic, various alternative credit funds, and our hedge fund partnership, Marshall Wace. Partially offsetting these increases were (i) payments to Global Atlantic policyholders, (ii) distributions to fund investors at certain leveraged and alternative credit funds, (iii) redemptions at our hedge fund partnerships, and (iv) a decline in investment value on the assets managed across our credit portfolio.

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Uncalled capital commitments from investment funds in our Credit and Liquid Strategies business line from which KKR is currently not earning management fees amounted to approximately $11.0 billion at September 30, 2022. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 0.7%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period ~~commences, neither~~ of ~~which is guaranteed.~~time. If and when such management fees are earned, which will occur over an extended period of time, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Uncalled Commitments

Private Equity

As of September 30, 2022, our Private Equity business line had $66.7 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $71.0 billion as of June 30, 2022. The decrease was primarily attributable to capital called from fund investors to make investments during the period, which was partially offset by new commitments from fund investors.

Real Assets

As of September 30, 2022, our Real Assets business line had $31.2 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $31.9 billion as of June 30, 2022. The decrease was primarily attributable to capital called from fund investors to make investments during the period, partially offset by new commitments from fund investors.

Credit and Liquid Strategies

As of September 30, 2022, our Credit and Liquid Strategies business line had $14.7 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $12.5 billion as of June 30, 2022. The increase was primarily attributable to new commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Equity

For the three months ended September 30, 2022, our Private Equity business line had $4.0 billion of capital invested as compared to $6.3 billion for the three months ended September 30, 2021. The ~~increase~~decrease was driven primarily by a ~~$0.4~~$2.4 billion ~~increase~~decrease in capital invested in our traditional private equity ~~platform and a $0.2 billion increase~~strategy. During the three months ended September 30, 2022, 85% of capital deployed in ~~capital invested in our real assets and other platforms. Generally, the portfolio companies acquired through our~~ private equity ~~funds have higher transaction values~~(including core and ~~result~~growth equity (including impact) investments) was in ~~higher capital invested relative to~~ transactions in ~~our real assets funds.~~North America, 13% was in the Asia-Pacific region and 2% was in Europe. The number of large private equity investments made in any quarter is volatile and, consequently, a significant amount of capital invested in one quarter or a few quarters may not be indicative of a similar level of capital deployment in future quarters.

Real Assets

For the three months ended September 30, 2022, our Real Assets business line had $4.6 billion of capital invested as compared to $8.4 billion for the three months ended September 30, 2021. The decrease was driven primarily by a $2.6 billion decrease in capital invested in our infrastructure strategy and a $1.1 billion decrease in our real estate strategy. During the three months ended September 30, ~~2017, 64%~~2022, 61% of capital deployed in ~~private equity~~real assets was in

transactions in North America, ~~27%~~32% was in Europe, and 7% was in the Asia-Pacific ~~region,~~region.

Credit and 9%Liquid Strategies

For the three months ended September 30, 2022, our Credit and Liquid Strategies business line had $7.0 billion of capital invested as compared to $9.7 billion for the three months ended September 30, 2021. The decrease was primarily due to a lower level of capital deployed across our direct lending strategies. During the three months ended September 30, 2022, 86% of capital deployed was in ~~Europe. As~~transactions in North America, 11% was in Europe, and 3% was in the Asia-Pacific region.

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Table of ~~October 26, 2017, our Private Markets business had announced transactions that were subject to closing conditions which aggregated approximately $3.1 billion. Some or all~~Contents

Analysis of ~~these transactions are subject~~Insurance Segment Operating Results

The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the three months ended September 30, 2022 and 2021:


	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Net Investment Income	$	1,054,757	$	771,982	$	282,775
Net Cost of Insurance	(642,443)		(436,415)		(206,028)
General, Administrative and Other	(161,242)		(139,489)		(21,753)
Pre-tax Insurance Operating Earnings	251,072		196,078		54,994
Income Taxes	(44,468)		(9,046)		(35,422)
Net Income Attributable to Noncontrolling Interests	(79,582)		(72,043)		(7,539)
Insurance Segment Operating Earnings	$	127,022	$	114,989	$	12,033

Insurance segment operating earnings

Insurance segment operating earnings increased for the three months ended September 30, 2022 as compared to the ~~satisfaction of closing conditions prior to their completion, and there can be no assurance if or when any of these transactions will be completed.~~

~~Uncalled Commitments~~

~~As of~~three months ended September 30, ~~2017, our Private Markets segment had $39.4 billion~~2021 primarily due to higher net investment income. Higher net investment income was primarily due to (i) an increase in average assets under management due to growth of ~~remaining uncalled capital commitments that could be called for~~the business, (ii) growth in portfolio yields due to higher market interest rates on floating rate investments, ~~in new transactions.~~and (iii) rotation into higher yielding assets. The increase ~~from~~due to net investment income was offset in part by (i) higher net cost of insurance, primarily due to the growth in both our individual market and institutional market channels and higher funding costs on new business, (ii) a corresponding increase in general and administrative expenses, and (iii) an increase in income tax expense.

Net investment income

Net investment income increased for the three months ended September 30, ~~2016~~2022 as compared to the three months ended September 30, 2021 primarily due to (i) growth in portfolio yields due to higher market interest rates on floating rate investments, (ii) rotation into higher yielding assets, and (iii) increased average assets under management due to growth in assets in our institutional market channel as a result of new reinsurance transactions and individual market channel sales from new business growth.

Net cost of insurance

Net cost of insurance increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (ii) higher funding costs on new business originated, and offset by the impact of assumption review (as described in “ –Notable Items–Assumption Review” above).

General, administrative and other expenses

General and administrative expenses increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 primarily due to (i) increased employee compensation and benefits related expenses, (ii) increased professional service fees, and (iii) increased TPA policy servicing fees, all due to growth of the business.

Income taxes

Insurance segment income tax expense reflects the annual estimated effective tax rate for the insurance segment on an operating basis, including the benefit of investment tax credits for the three months ended September 30, 2021.

Net income (loss) attributable to non-controlling interests

Net income (loss) attributable to non-controlling interests increased for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 proportional to the increase in insurance segment operating earnings for the comparable period. Net income (loss) attributable to non-controlling interests represent the proportionate interest in the insurance segment operating earnings attributable to other investors in Global Atlantic.

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Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the three months ended September 30, 2022 and 2021:



	Three Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Asset Management Segment Operating Earnings	$	958,928	$	1,067,839	$	(108,911)
Insurance Segment Operating Earnings	127,022		114,989		12,033
Distributable Operating Earnings	1,085,950		1,182,828		(96,878)

Interest Expense	(83,335)		(63,446)		(19,889)
Preferred Dividends	—		(2,519)		2,519
Net Income Attributable to Noncontrolling Interests	(4,932)		(6,072)		1,140
Income Taxes Paid	(173,949)		(185,645)		11,696
After-tax Distributable Earnings	$	823,734	$	925,146	$	(101,412)

Distributable Operating Earnings

The decrease in distributable operating earnings for the three months ended September 30, 2022 compared to the prior period is primarily due to a lower level of asset management segment operating earnings partially offset by a higher level of insurance segment operating earnings. For a discussion of the asset management and insurance segment operating earnings, see "—Analysis of Asset Management Segment Operating Results and Analysis of Insurance Segment Operating Results."

Interest Expense

The increase in interest expense for the three months ended September 30, 2022 compared to the prior period is due primarily to ~~new capital raised~~debt issuances by KKR's financing subsidiaries subsequent to September 30, 2021.

Preferred Dividends

The decrease in ~~our Asian Fund III, two new strategic investor partnerships and Americas Fund XII, partially offset by capital called from fund investors to fund investments during~~preferred dividends for the ~~period.~~

~~Nine~~three months ended September 30, ~~2017~~2022 compared to ~~nine~~the prior period was attributable to the redemption of all of our Series A and B preferred stock.

Income Taxes Paid

The decrease in income taxes paid for the three months ended September 30, ~~2016~~

Nine Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues

Management, Monitoring and Transaction Fees, Net

Management Fees $ 419,606
$ 354,376
$ 65,230
Monitoring Fees 58,072
52,126
5,946
Transaction Fees 237,392
114,021
123,371
Fee Credits (177,254 ) (93,042 ) (84,212 )
Total Management, Monitoring and Transaction Fees, Net 537,816
427,481
110,335

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest 890,310
749,194
141,116
Unrealized Carried Interest 305,945
(131,386 ) 437,331
Total Performance Income 1,196,255
617,808
578,447

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 1,734,071
1,045,289
688,782

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 183,943
142,500
41,443
Realized Performance Income Compensation 374,335
317,178
57,157
Unrealized Performance Income Compensation 126,677
(47,377 ) 174,054
Total Compensation and Benefits 684,955
412,301
272,654
Occupancy and related charges 24,174
27,212
(3,038 )
Other operating expenses 97,255
95,166
2,089
Total Segment Expenses 806,384
534,679
271,705

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ 927,687
$ 510,610
$ 417,077

Assets Under Management $ 87,609,800
$ 75,181,600
$ 12,428,200
Fee Paying Assets Under Management $ 61,706,500
$ 44,010,300
$ 17,696,200
Capital Invested $ 11,079,800
$ 5,475,300
$ 5,604,500
Uncalled Commitments $ 39,421,900
$ 31,839,100
$ 7,582,800

~~Segment Revenues~~

~~Management, Monitoring and Transaction Fees, Net~~

~~The net increase~~2022 compared to the prior period was primarily due to ~~an increase~~a lower level of asset management segment operating earnings.

After-tax Distributable Earnings

The decrease in ~~transaction fees, partially offset by~~after-tax distributable earnings for the three months ended September 30, 2022 compared to the prior period was primarily due to a ~~corresponding increase in fee credits~~lower level of distributable operating earnings and an increase in interest expense, partially offset by lower income taxes paid as described above.

The amount of tax benefit from equity-based compensation included in income taxes paid for the three months ended September 30, 2022 and 2021 was $18.3 million and $9.5 million, respectively, and its inclusion in after-tax distributable earnings had the effect of increasing this measure by 2% and 1%, respectively.

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Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's asset management ~~fees. The increase in transaction fees was primarily attributable to an increase in both the number~~segment operating results and ~~size~~certain key capital metrics as of ~~transaction fee-generating investments. During~~and for the nine months ended September 30, 2017, there were 38 transaction fee-generating investments that paid an average fee of $6.2 million compared to 33 transaction fee-generating investments paying an average fee of $3.5 million during the nine months ended September 30, 2016. Approximately 44% of these transaction2022 and 2021.




	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees	$	1,950,389	$	1,478,878	$	471,511
Transaction and Monitoring Fees, Net	580,794		645,108		(64,314)
Fee Related Performance Revenues	71,974		34,760		37,214
Fee Related Compensation	(585,748)		(485,760)		(99,988)
Other Operating Expenses	(409,489)		(309,483)		(100,006)
Fee Related Earnings	1,607,920		1,363,503		244,417
Realized Performance Income	1,837,925		1,222,403		615,522
Realized Performance Income Compensation	(1,180,990)		(797,965)		(383,025)
Realized Investment Income	911,221		1,277,701		(366,480)
Realized Investment Income Compensation	(136,683)		(191,663)		54,980
Asset Management Segment Operating Earnings	$	3,039,393	$	2,873,979	$	165,414

Management Fees

The following table presents management fees ~~were paid~~ by companies located in North America, 37% were paid from companies located in the Asia-Pacific region and 19% were paid from companies in Europe. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular discussions as to the amount of the fees, the complexity of the transaction and KKR’s role in the transaction. business line:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Management Fees
Private Equity	$	876,517	$	694,924	$	181,593
Real Assets	494,172		296,032		198,140
Credit and Liquid Strategies	579,700		487,922		91,778
Total Management Fees	$	1,950,389	$	1,478,878	$	471,511

The increase in ~~fee credits is due~~Private Equity business line management fees was primarily attributable to ~~a higher level of transaction fees.~~management fees earned from North America Fund XIII and European Fund VI. The increase was partially offset by a decrease in management fees earned from European Fund V and Americas Fund XII as a result of entering their post-investment periods and, consequently, we now earn fees based on capital invested rather than capital committed and at a lower fee rate.

The increase in Real Assets business line management fees was primarily due to (i) ~~Americas Fund XII entering its investment period in the first quarter of 2017, in which it earns~~ management fees ~~on a larger pool of capital than its predecessor fund North America Fund XI, which entered its post investment period,~~earned from Global Infrastructure Investors IV, (ii) ~~Asian Fund III entering its investment period~~an increase in ~~the second quarter of 2017, in which it earns~~ management fees ~~on a larger pool of capital than its predecessor fund Asian Fund II, which entered its post investment period~~earned from Global Atlantic and (iii) ~~new capital raised~~management fees earned on assets managed by KJRM, which we acquired in ~~our Health Care Strategic Growth Fund. This net increase was~~2022. These increases were partially offset by ~~decreases due to (i) North America Fund XI and Asian Fund II entering their post investment periods during the first nine months of 2017,~~a decrease in ~~which they earn~~management fees ~~at a lower rate and based on invested capital rather than committed capital, and (ii) lower invested capital~~earned from Global Infrastructure Investors III as a result of ~~realizations~~entering its post-investment period and, consequently, we now earn fees based on capital invested rather than capital committed.

The increase in Credit and Liquid Strategies business line management fees was primarily attributable to (i) an increase in management fees earned from Global Atlantic and (ii) a higher level of management fees from FSK, our ~~2006 Fund, China Growth Fund~~business development company.

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Table of Contents

Transaction and ~~Asian Fund. Recurring~~Monitoring Fees, Net

The following table presents transaction and monitoring fees, ~~increased $5.3 million~~net by business line:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity	$	91,301	$	96,443	$	(5,142)
Real Assets	15,929		12,896		3,033
Credit and Liquid Strategies	17,642		8,569		9,073
Capital Markets	455,922		527,200		(71,278)
Total Transaction and Monitoring Fees, Net	$	580,794	$	645,108	$	(64,314)

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The decrease in transaction fees was primarily ~~the result of an increase~~due to a decrease in the number of portfolio companies paying fees. For the nine months ended September 30, 2017, we had 53 portfolio companies that were paying an average monitoring fee of $0.8 million compared with 49 portfolio companies that were paying an average monitoring fee of $0.8 millioncapital markets transactions for the nine months ended September 30, 2016. For the nine months ended September 30, 2017, we also received termination payments of $16.0 million in connection with the IPO of Gardner Denver Holdings, Inc. compared to $15.3 million of termination payments received in the nine months ended September 30, 2016, in connection with the IPO of US Foods Holding Corp. These termination payments may occur in the future; however, they are infrequent in nature and are generally correlated with the IPO and other realization activity in our private equity portfolio, and may be smaller in size and number in the future compared to current and prior periods.

~~Performance Income~~

~~The net increase is attributable to a higher level of net carried interest gains in the nine months ended September 30, 2017,~~2022, compared to the nine months ended September 30, ~~2016, primarily reflecting a higher level of appreciation in the value of our private equity portfolio in the current period compared to the prior period.~~

~~Realized carried interest~~2021. Overall, we completed 194 capital markets transactions for the nine months ended September 30, ~~2017, consisted primarily~~2022, of ~~realized gains from the sale of Capsugel (manufacturing sector)~~which 22 represented equity offerings and ~~the partial sales of US Foods Holding Corp. and PRA Health Sciences, Inc.~~

~~Realized carried interest~~172 represented debt offerings, as compared to 225 transactions for the nine months ended September 30, ~~2016 consisted primarily of realized gains from the sale or partial sale of Walgreens Boots Alliance, Inc., Alliance Tire Group B.V. and HCA Holdings, Inc.~~

~~The following table presents performance income by investment vehicle for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended September 30,
2017 2016
($ in thousands)
Realized Carried Interest Unrealized Carried Interest
Total
Carried Interest
Realized Carried Interest Unrealized Carried Interest
Total
Carried
Interest
North America Fund XI $ 129,576
$ 333,354
$ 462,930
$ 61,898
$ 146,192
$ 208,090
2006 Fund 511,935
(347,899 ) 164,036
351,115
(329,865 ) 21,250
Co-Investment Vehicles and Other 23,088
137,510
160,598
7,245
6,829
14,074
European Fund III 83,045
42,260
125,305
35,231
92,783
128,014
Asian Fund II 29,351
93,419
122,770
—
168,145
168,145
European Fund IV —
68,274
68,274
—
(197 ) (197 )
Asian Fund 17,846
15,771
33,617
126,820
(41,251 ) 85,569
Global Infrastructure Investors II —
25,453
25,453
—
(272 ) (272 )
Global Infrastructure Investors 14,772
9,012
23,784
16,845
7,079
23,924
Real Estate Partners Americas 12,050
(60 ) 11,990
—
5,035
5,035
Next Generation Technology Growth —
8,165
8,165
—
943
943
Millennium Fund 28,266
(22,140 ) 6,126
59,707
(84,129 ) (24,422 )
European Fund —
—
—
1,503
(4,395 ) (2,892 )
E2 Investors —
(306 ) (306 ) —
1,328
1,328
China Growth Fund 20,130
(23,315 ) (3,185 ) 2,858
9,845
12,703
European Fund II 20,251
(25,940 ) (5,689 ) 85,972
(98,410 ) (12,438 )
Management Fee Refunds —
(7,613 ) (7,613 ) —
(11,046 ) (11,046 )
Total ⁽¹⁾
$ 890,310
$ 305,945
$ 1,196,255
$ 749,194
$ (131,386 ) $ 617,808

⁽¹⁾~~The above table excludes any funds for which there was no carried interest during either of the periods presented.~~

Unrealized carried interest reflects the difference between total carried interest and realized carried interest. The recognition of realized carried interest results in the reversal of accumulated unrealized carried interest, generally resulting in minimal impact on total performance income. Additionally, because unrealized carried interest can be reversed upon a realization event, in periods where there is significant realized carried interest, unrealized carried interest can be negative even in periods of portfolio appreciation.

For the nine months ended September 30, 2017, the value of our private equity investment portfolio increased 15.9%. This was comprised of a 24.9% increase in the share prices of various publicly held or publicly indexed investments and an 11.2% increase in value of our privately held investments. Additionally, our infrastructure investment portfolio, which is comprised predominately of private investments, increased 20.0%. The most significant increases in share prices of various publicly held or publicly indexed investments were gains in Gardner Denver Holdings, Inc., First Data Corporation and Qingdao Haier Co., Ltd. These increases were partially offset by decreased share prices of various publicly held investments, the most significant2021, of which were losses in Fujian Sunner Development Co. Ltd., Laureate Education, Inc. and US Foods Holding Corp. Our privately held investments contributed the remainder of the change in value, the most significant of which were gains relating to Internet Brands, Inc. (technology sector), Weld North (education sector) and Colonial Pipeline Company (infrastructure sector). The unrealized gains on our privately held investments were partially offset by unrealized losses relating primarily to Academy Ltd. (retail sector), Toys R Us, Inc. (retail sector) and Santanol Pty Ltd (forestry sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) an increase in the value of market comparables and (ii) individual company performance. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance or, in certain cases, an unfavorable business outlook and (ii) a decrease in the value of market comparables.

For the nine months ended September 30, 2016, the value of our private equity investment portfolio increased 8.9%. This was comprised of a 1.7% increase in the share prices of various publicly held or publicly indexed investments and a 14.5% increase in value of our privately held investments. The most significant increases in share prices of various publicly held or

publicly indexed investments were gains in US Foods Holding Corp., PRA Health Sciences, Inc. and HCA Holdings, Inc. These increases were partially offset by decreased share prices of various publicly held investments, the most significant of which were losses in First Data Corporation, Walgreens Boots Alliance, Inc. and Qingdao Haier Co., Ltd. Our privately held investments contributed the remainder of the change in value, the most significant of which were gains relating to Panasonic Healthcare Co., Ltd., Sedgwick Claims Management Services and Alliance Tire Group B.V. (manufacturing sector). The unrealized gains on our privately held investments were partially offset by unrealized losses relating primarily to Aricent Group (technology sector), OEG Management Partners Limited (energy sector) and MMI Holdings Limited (technology sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) in the case of Sedgwick Claims Management Services and Alliance Tire Group B.V., valuations that reflect agreements to sell all or a portion of these investments, (ii) an increase in the value of market comparables and (iii) individual company performance. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance or, in certain cases, an unfavorable business outlook and (ii) a decrease in the value of market comparables.

~~Segment Expenses~~

~~Compensation and Benefits~~

The net increase was due primarily to higher performance income compensation resulting from a higher level of gains in our private equity portfolio in the current period compared to the prior period as described above as well as increased cash compensation and benefits. These increases were partially offset by a greater amount of compensation and benefits expense allocated to Principal Activities as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments.

~~Occupancy and Other Operating Expenses~~

The decrease is primarily due to a decrease in expenses that are creditable to our investment funds, which includes broken-deal expenses, as well as a decrease relating to a greater amount of other operating expenses allocated to Principal Activities as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments. These decreases were partially offset by an increase in professional fees.

~~Economic Net Income (Loss)~~

The increase was primarily due to a higher level of performance income in the current period compared to the prior period and higher fees partially offset by an increase in compensation and benefits as described above.

~~Assets Under Management~~

~~The following table reflects the changes in our Private Markets AUM from December 31, 2016 to September 30, 2017:~~

($ in thousands)
December 31, 2016 $ 73,815,500
New Capital Raised 15,367,500
Distributions and Other (9,166,800 )
Change in Value 7,593,600
September 30, 2017 $ 87,609,800

AUM for the Private Markets segment was $87.6 billion at September 30, 2017, an increase of $13.8 billion, compared to $73.8 billion at December 31, 2016. The increase was primarily attributable to (i) new capital raised primarily in our Asian Fund III, two new strategic investor partnerships and our Real Estate Credit Opportunity Partners fund and (ii) to a lesser extent, an increase in the value of our Private Markets portfolio. These increases were partially offset by (i) distributions to Private Markets fund investors primarily as a result of realizations most notably in our 2006 Fund, North America Fund XI and European Fund III and (ii) a decrease of $0.8 billion reflecting expired commitments that are no longer eligible to be called for investments. Our flagship private equity funds like our Asian Fund III, which represents $9.0 billion of AUM at September 30, 2017, are raised only episodically toward the end of the investment period of their predecessor funds or when their predecessor funds' capital becomes largely invested or allocated for investment.

The increase in the value of our Private Markets portfolio was driven primarily by net gains of $2.4 billion in our North America Fund XI, $0.9 billion in each of our 2006 Fund and European Fund III and $0.6 billion in each of our Asian Fund II and European Fund IV. The drivers of the overall change in value for Private Markets were consistent with those noted in the Performance Income commentary above. See “-- Private Markets - Segment Revenues -~~Performance Income.”~~

~~Fee-Paying Assets Under Management~~

~~The following table reflects the changes in our Private Markets FPAUM from December 31, 2016 to September 30, 2017:~~

($ in thousands)
December 31, 2016 $ 52,204,800
New Capital Raised 14,653,000
Distributions and Other (3,719,400 )
Net Changes in Fee Base of Certain Funds (2,418,800 )
Change in Value 986,900
September 30, 2017 $ 61,706,500

FPAUM in our Private Markets segment was $61.7 billion at September 30, 2017, an increase of $9.5 billion, compared to $52.2 billion at December 31, 2016. The increase was primarily attributable to new capital raised in our Asian Fund III (which reached its $8.5 billion limit on fee paying limited partner capital during the second quarter of 2017) and capital invested in our Asian Fund II and North America Fund XI. These increases were partially offset by (i) distributions and other activity primarily relating to realizations in our 2006 Fund and European Fund III and (ii) net changes in the fee base of our Asian Fund II as a result of it entering into its post investment period, during which it earns fees based on invested capital rather than committed capital.

~~Capital Invested~~

The increase was driven primarily by a $4.1 billion increase in capital invested in our private equity platform, which includes an increase in core private equity of $1.0 billion consisting of an investment in USI, Inc. made by us and one of our investment funds, and a $1.5 billion increase in capital invested in our real assets and other platforms. Generally, the portfolio companies acquired through our private equity funds have higher transaction values and result in higher capital invested relative to transactions in our real assets funds. The number of large private equity investments made in any quarter is volatile and consequently, a significant amount of capital invested in one quarter or a few quarters may not be indicative of a similar level of capital deployment in future quarters. During the nine months ended September 30, 2017, 38% of capital deployed in private equity, excluding core private equity, was in transactions in the Asia-Pacific region, 38% was in North America and 24% was in Europe.

~~Uncalled Commitments~~

As of September 30, 2017, our Private Markets segment had $39.4 billion of remaining uncalled capital commitments that could be called for investments in new transactions. The increase from September 30, 2016 is due primarily to new capital raised in our Asian Fund III, two new strategic investor partnerships and Americas Fund XII, partially offset by capital called from fund investors to fund investments during the period.

~~Public Markets Segment~~

The following tables set forth information regarding the results of operations and certain key operating metrics for our Public Markets segment for the three and nine months ended September 30, 2017 and 2016.

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

Three Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ 79,113
$ 83,713
$ (4,600 )
Monitoring Fees —
—
—
Transaction Fees 11,469
10,748
721
Fee Credits (10,893 ) (10,265 ) (628 )
Total Management, Monitoring and Transaction Fees, Net 79,689
84,196
(4,507 )

Performance Income

Realized Incentive Fees 4,074
3,659
415
Realized Carried Interest —
—
—
Unrealized Carried Interest 36,933
17,012
19,921
Total Performance Income 41,007
20,671
20,336

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 120,696
104,867
15,829

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 16,257
22,022
(5,765 )
Realized Performance Income Compensation 1,630
1,463
167
Unrealized Performance Income Compensation 16,553
6,805
9,748
Total Compensation and Benefits 34,440
30,290
4,150
Occupancy and related charges 1,535
2,570
(1,035 )
Other operating expenses 7,672
8,894
(1,222 )
Total Segment Expenses 43,647
41,754
1,893

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ 77,049
$ 63,113
$ 13,936

Assets Under Management $ 65,729,700
$ 55,920,200
$ 9,809,500
Fee Paying Assets Under Management $ 52,016,500
$ 49,143,500
$ 2,873,000
Capital Invested $ 1,639,200
$ 1,484,400
$ 154,800
Uncalled Commitments $ 7,828,600
$ 6,428,200
$ 1,400,400

~~Segment Revenues~~

~~Management, Monitoring and Transaction Fees, Net~~

The net decrease was primarily due to a decrease in management fees. The decrease in management fees was primarily due to a reduction in management fees from KKR Prisma as a result of the PAAMCO Prisma transaction that closed in the second quarter of 2017. KKR reports its investment in PAAMCO Prisma using the equity method of accounting, and on a segment basis, KKR reflects its allocation of the net income of PAAMCO Prisma as management fees and realized incentive fees. Accordingly, the management fees and other revenues and expenses of Prisma that had been reported on a gross basis prior to the closing of the transaction on June 1, 2017 are reflected on a net basis as part of our allocation of the net income of PAAMCO Prisma after June 1, 2017 resulting in a decrease in our reported gross management fees when compared to the prior period. See "-- Business Segments - Public Markets." This decrease was partially offset by capital invested in our Special Situations Fund II, Lending Partners II Fund, Lending Partners III Fund and Lending Partners Europe Fund as well as an increase in management fees from our strategic manager partnerships.

~~Performance Income~~

The net increase was primarily attributable to a higher level of net carried interest gains in the three months ended September 30, 2017, compared to the three months ended September 30, 2016. The carried interest gains in the current period were primarily the result of net increases in the value of our credit portfolio, the most significant of which was in our mezzanine strategy.

~~Segment Expenses~~

~~Compensation and Benefits~~

The increase was primarily due to higher net performance income compensation in connection with a higher level of net carried interest gains for the three months ended September 30, 2017, as compared to three months ended September 30, 2016, as described above, partially offset by decreased cash compensation and benefits due primarily to the PAAMCO Prisma transaction which closed on June 1, 2017. KKR reports its investment in PAAMCO Prisma using the equity method of accounting. Accordingly, the compensation expenses of Prisma that had been reported on a gross basis prior to the closing of the transaction on June 1, 2017 are reflected as part of our allocation of the net income of PAAMCO Prisma after June 1, 2017 resulting in a decrease in our reported cash compensation and benefits expense when compared to the prior period. See "-- Business Segments - Public Markets."

~~Occupancy and Other Operating Expenses~~

The decrease was primarily driven by lower operating expenses as a result of having transferred certain leased office space and other operating expenses as part of the PAAMCO Prisma transaction. See "-- Business Segments - Public Markets."

~~Economic Net Income (Loss)~~

~~The increase is primarily attributable to the increase in performance income, partially offset by the increase in compensation and benefits expense as described above.~~

~~Assets Under Management~~

~~The following table reflects the changes in our Public Markets AUM from June 30, 2017 to September 30, 2017:~~

($ in thousands)
June 30, 2017 $ 63,499,000
New Capital Raised 3,392,200
Distributions (1,273,400 )
Redemptions (559,500 )
Change in Value 671,400
September 30, 2017 $ 65,729,700

AUM in our Public Markets segment totaled $65.7 billion at September 30, 2017, an increase of $2.2 billion compared to AUM of $63.5 billion at June 30, 2017. The increase was primarily due to new capital raised across multiple strategies, most

notably $1.4 billion in two new strategic investor partnerships, $0.7 billion in our CLOs and $0.7 billion with our strategic manager partnerships. The increases due to change in value were driven primarily by $0.2 billion in our European CLOs, $0.1 billion with our strategic manager partnerships and $0.1 billion in our European liquid credit mandates. Partially offsetting these increases were redemptions and distributions from certain investment vehicles, most notably with our strategic manager partnerships and our CLOs. For the three months ended September 30, 2017, new capital raised has outpaced redemptions with our strategic manager partnerships.

~~Fee-Paying Assets Under Management~~

~~The following table reflects the changes in our Public Markets FPAUM from June 30, 2017 to September 30, 2017:~~

($ in thousands)
June 30, 2017 $ 50,637,300
New Capital Raised 2,950,000
Distributions (1,752,100 )
Redemptions (559,500 )
Change in Value 740,800
September 30, 2017 $ 52,016,500

FPAUM in our Public Markets segment was $52.0 billion at September 30, 2017, an increase of $1.4 billion compared to FPAUM of $50.6 billion at June 30, 2017. The increase was primarily due to new capital raised across multiple strategies most notably $0.7 billion with our strategic manager partnerships, $0.7 billion in our CLOs, $0.5 billion in our Special Situations II Fund and $0.2 billion in our Lending Partners III Fund. New capital raised includes capital that was raised in previous periods but began earning fees upon deployment of capital. Partially offsetting these increases were redemptions and distributions from certain investment vehicles including $1.1 billion across multiple alternative credit strategies, $0.5 billion at our strategic manager partnerships and $0.4 billion from our CLOs. For the three months ended September 30, 2017, new capital raised has outpaced redemptions with our strategic manager partnerships. Uncalled capital commitments from investment funds from which KKR is currently not earning management fees amounted to approximately $5.4 billion. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.1%. We will not begin earning fees on this capital until it is deployed or the related investment period commences, neither of which is guaranteed. If and when such management fees are earned, which will occur over an extended period of time, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

~~Capital Invested~~

Capital invested increased for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. The increase is primarily due to a higher level of net capital deployed primarily in our direct lending strategy.

~~Uncalled Commitments~~

As of September 30, 2017, our Public Markets segment had $7.8 billion of uncalled capital commitments that could be called for investments in new transactions. The increase from September 30, 2016 is due to new capital raised primarily in two new strategic investor partnerships and Lending Partners III Fund, partially offset by capital called from limited partners to fund investments during the period.

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Nine Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ 251,201
$ 245,349
$ 5,852
Monitoring Fees —
—
—
Transaction Fees 41,040
17,768
23,272
Fee Credits (33,894 ) (16,230 ) (17,664 )
Total Management, Monitoring and Transaction Fees, Net 258,347
246,887
11,460

Performance Income

Realized Incentive Fees 8,384
9,897
(1,513 )
Realized Carried Interest —
3,838
(3,838 )
Unrealized Carried Interest 71,762
(3,370 ) 75,132
Total Performance Income 80,146
10,365
69,781

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 338,493
257,252
81,241

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 58,991
61,193
(2,202 )
Realized Performance Income Compensation 3,354
5,493
(2,139 )
Unrealized Performance Income Compensation 30,485
(1,347 ) 31,832
Total Compensation and Benefits 92,830
65,339
27,491
Occupancy and related charges 5,140
7,252
(2,112 )
Other operating expenses 24,244
28,102
(3,858 )
Total Segment Expenses 122,214
100,693
21,521

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ 216,279
$ 156,559
$ 59,720

Assets Under Management $ 65,729,700
$ 55,920,200
$ 9,809,500
Fee Paying Assets Under Management $ 52,016,500
$ 49,143,500
$ 2,873,000
Capital Invested $ 3,825,900
$ 3,049,400
$ 776,500
Uncalled Commitments $ 7,828,600
$ 6,428,200
$ 1,400,400

~~Segment Revenues~~

~~Management, Monitoring and Transaction Fees, Net~~

The net increase was primarily due to an increase in transaction fees, partially offset by a corresponding increase in fee credits, and an increase in management fees. The increase in transaction fees was driven primarily by a $18.5 million breakup fee received in the nine months ended September 30, 2017 in connection with a terminated transaction, compared to no such breakup fees in the nine months ended September 30, 2016. The net amount of this fee attributable to us after credits to our limited partners was $4.6 million. The increase in management fees related primarily to capital invested in our Special Situations Fund II, Lending Partners II Fund, and Lending Partners Europe Fund as well as an increase in management fees with our strategic manager partnerships. These increases were partially offset by a reduction in management fees from KKR Prisma as a result of the PAAMCO Prisma transaction that closed in the second quarter of 2017. KKR reports its investment in PAAMCO Prisma using the equity method of accounting, and on a segment basis, KKR reflects its allocation of the net income of PAAMCO Prisma as management fees and realized incentive fees. Accordingly, the management fees and other revenues and expenses of Prisma that had been reported on a gross basis prior to the closing of the transaction on June 1, 2017 are reflected on a net basis as part of our allocation of the net income of PAAMCO Prisma after June 1, 2017 resulting in a decrease in our reported gross management fees when compared to the prior period.

~~Performance Income~~

The net increase was primarily attributable to higher net carried interest gains in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. The carried interest gains in the current period were primarily the result of increases in the value of our private credit portfolio, with the most significant carried interest gains arising in our mezzanine and direct lending strategies. In the prior period, net carried interest losses were experienced in our mezzanine strategy.

~~Segment Expenses~~

~~Compensation and Benefits~~

The increase was primarily due to higher net performance income compensation in connection with higher net carried interest gains for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, as described above. These increases were partially offset by decreased cash compensation and benefits due primarily to (i) a greater amount of compensation and benefits expense allocated to Principal Activities as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments and (ii) the PAAMCO Prisma transaction which closed on June 1, 2017. KKR reports its investment in PAAMCO Prisma using the equity method of accounting. Accordingly, the compensation expenses of Prisma that had been reported on a gross basis prior to the closing of the transaction on June 1, 2017 are reflected as part of our allocation of the net income of PAAMCO Prisma after June 1, 2017 resulting in a decrease in our reported cash compensation and benefits expense when compared to the prior period.

~~Occupancy and Other Operating Expenses~~

~~Economic Net Income (Loss)~~

The increase is primarily attributable to the increase in performance income and transaction and management fees, partially offset by an increase in compensation and benefits expense as described above.

~~Assets Under Management~~

~~The following table reflects the changes in our Public Markets AUM from December 31, 2016 to September 30, 2017:~~

($ in thousands)
December 31, 2016 $ 55,740,200
New Capital Raised 7,608,900
Impact of Other Transactions 3,811,400
Distributions (2,516,200 )
Redemptions (2,029,600 )
Change in Value 3,115,000
September 30, 2017 $ 65,729,700

AUM in our Public Markets segment totaled $65.7 billion at September 30, 2017, an increase of $10.0 billion compared to AUM of $55.7 billion at December 31, 2016. The increase for the period was primarily due to new capital raised across multiple strategies most notably $1.4 billion in two new strategic investor partnerships, $1.3 billion in our liquid credit strategies, $1.9 billion with our strategic manager partnerships, $1.3 billion in our CLOs and $0.8 billion in our Lending Partners III Fund. The "Impact of Other Transactions" represents the closing of the PAAMCO Prisma transaction. This resulted in a net increase of approximately $3.8 billion reflecting the excess of our pro-rata portion of the AUM of PAAMCO Prisma over the historical AUM of Prisma Capital Partners, our former hedge funds solutions platform. For the nine months ended September 30, 2017, new capital raised outpaced our redemptions with our strategic manager partnerships. The increases due to change in value were driven primarily by our strategic manager partnerships, our domestic private credit strategies and our European liquid credit and European CLOs. Partially offsetting these increases were redemptions and distributions from certain investment vehicles across multiple strategies, primarily with our strategic manager partnerships, our private credit strategies and our CLOs.

~~Fee-Paying Assets Under Management~~

~~The following table reflects the changes in our Public Markets FPAUM from December 31, 2016 to September 30, 2017:~~

($ in thousands)
December 31, 2016 $ 49,268,600
New Capital Raised 7,630,100
Impact of Other Transactions (1,600,000 )
Distributions (3,794,600 )
Redemptions (2,029,600 )
Change in Value 2,542,000
September 30, 2017 $ 52,016,500

FPAUM in our Public Markets segment was $52.0 billion at September 30, 2017, an increase of $2.7 billion compared to FPAUM of $49.3 billion at December 31, 2016. The increase was primarily due to new capital raised across multiple strategies, most notably $1.9 billion with our strategic manager partnerships, $1.3 billion in our liquid credit strategies, $1.3 billion in our CLOs, $0.8 billion in our Special Situations Fund II and $0.5 billion in our Lending Partners Fund III. New capital raised includes capital that was raised in previous periods but began earning fees upon deployment of capital. For the nine months ended September 30, 2017, new capital raised has outpaced redemptions with our strategic manager partnerships. Change in value was driven primarily by $0.9 billion with our strategic manager partnerships, $0.6 billion in our liquid credit strategies and $0.5 billion in our European CLOs. Partially offsetting these increases were redemptions and distributions from certain investment vehicles across multiple strategies driven by $1.4 billion with our strategic manager partnerships, $2.3 billion from our private credit strategies and $1.0 billion from our CLOs. The "Impact of Other Transactions" represents the closing of the PAAMCO Prisma transaction. This resulted in a net decrease of approximately $1.6 billion reflecting the excess of our historical FPAUM of Prisma Capital Partners, our former hedge funds solutions platform, over our pro-rata portion of the FPAUM of PAAMCO Prisma. FPAUM excludes assets under advisement of PAAMCO Prisma.

~~Capital Invested~~

Capital invested increased for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2017. The increase is primarily due to a higher level of net capital deployed in our direct lending and special situations strategies.

~~Uncalled Commitments~~

~~Capital Markets~~

The following tables set forth information regarding the results of operations and certain key operating metrics for our Capital Markets segment for the three and nine months ended September 30, 2017 and 2016.

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

Three Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ —
$ —
$ —
Monitoring Fees —
—
—
Transaction Fees 85,440
47,383
38,057
Fee Credits —
—
—
Total Management, Monitoring and Transaction Fees, Net 85,440
47,383
38,057

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest —
—
—
Unrealized Carried Interest —
—
—
Total Performance Income —
—
—

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 85,440
47,383
38,057

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 16,924
7,803
9,121
Realized Performance Income Compensation —
—
—
Unrealized Performance Income Compensation —
—
—
Total Compensation and Benefits 16,924
7,803
9,121
Occupancy and related charges 760
330
430
Other operating expenses 6,293
3,552
2,741
Total Segment Expenses 23,977
11,685
12,292

Income (Loss) attributable to noncontrolling interests 1,046
760
286

Economic Net Income (Loss) $ 60,417
$ 34,938
$ 25,479

Syndicated Capital $ 533,300
$ 537,000
$ (3,700 )

~~Segment Revenues~~

~~Management, Monitoring and Transaction Fees, Net~~

Transaction fees increased due primarily to an increase in both the number and size of capital markets transactions for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. Overall, we completed 48 capital markets transactions for the three months ended September 30, 2017, of which 241 represented equity offerings and ~~46 represented debt offerings, as compared to 31 transactions for the three months ended September 30, 2016, of which 2 represented equity offerings and 29~~184 represented debt offerings. We earned fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this ~~segment~~business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we ~~collect~~earn for ~~like~~similar transactions generally correlates with overall transaction sizes.

Our capital markets fees are ~~sourced from~~generated in connection with activity involving our ~~Private Markets~~private equity, real assets and ~~Public Markets businesses~~credit funds as well as ~~third party~~from third-party companies. For the ~~three~~nine months ended September 30, ~~2017,~~2022, approximately ~~38%~~16% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately ~~11%~~25% for the ~~three~~nine months ended September 30, ~~2016.~~2021. Our transaction fees are comprised of fees earned from North America, Europe, and the Asia-Pacific ~~including India.~~region. For the ~~three~~nine months ended September 30, ~~2017,~~2022, approximately ~~21%~~39% of our transaction fees were ~~sourced~~generated outside of ~~the United States~~North America as compared to approximately ~~11%~~36% for the ~~three~~nine months ended September 30, ~~2016.~~2021. Our ~~capital markets~~Capital Markets business line is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads, and volatility. Our ~~capital markets~~Capital Markets business line does not generate ~~management or~~ monitoring fees.

~~Segment Expenses~~Our Private Equity, Real Assets and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are generally required to share all or a portion of such fees with our fund investors. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

~~Compensation~~The increase in Credit and ~~Benefits~~Liquid Strategies business line transaction and ~~Other Operating Expenses~~monitoring fees, net was primarily attributable to a greater portion of transactions fees that were not required to be shared with our fund investors or Global Atlantic in the current period.

~~Segment expenses have increased~~The decrease in our Private Equity business line transaction and monitoring fees, net, was primarily attributable to a lower level of transaction fees. During the nine months ended September 30, 2022, there were 55 transaction fee-generating investments that paid an average fee of $5.6 million compared to 56 transaction fee-generating investments that paid an average fee of $4.9 million during the nine months ended September 30, 2021. For the nine months ended September 30, 2022, approximately 50% of Private Equity transaction fees were paid by companies in North America, 26% were paid from companies in Europe, and 24% were paid from companies in the Asia-Pacific region. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the amount of the fees as set forth in the governing agreements, the complexity of the transaction, and KKR's role in the transaction.

169

Table of Contents

Fee Related Performance Revenues

The following table presents fee related performance revenues by business line:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Fee Related Performance Revenues
Private Equity	$	—	$	—	$	—
Real Assets	42,709		4,821		37,888
Credit and Liquid Strategies	29,265		29,939		(674)
Total Fee Related Performance Revenues	$	71,974	$	34,760	$	37,214

Fee related performance revenues represent performance fees that are (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) not dependent on a realization event involving investments held by the investment fund, vehicle or account. These performance fees are primarily earned from FSK (our business development company), KPPA (our open-ended core real estate fund), KREST (our registered closed-end real estate equity fund) and KREF (our real estate credit investment trust). Fee related performance revenues were higher for the nine months ended September 30, 2022 compared to the prior period primarily due to performance revenues earned from KPPA in the current period.

Fee Related Compensation

The increase in fee related compensation for the nine months ended September 30, 2022 compared to the prior period was primarily due to a higher level of compensation ~~and benefits expense as a result~~recorded in connection with the higher level of ~~higher transactions fees.~~ revenues included within fee related earnings.

Other Operating Expenses

The increase in other operating expenses for the nine months ended September 30, 2022 compared to the prior period was primarily due to (i) a higher level of professional fees, information technology and other administrative costs and (ii) an increase in travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

Fee Related Earnings

The increase in fee related earnings for the nine months ended September 30, 2022 compared to the prior period is primarily ~~attributable~~due to ~~increased professional~~a higher level of management fees ~~in connection with increased transaction costs.~~

~~Economic Net Income (Loss)~~

~~The increase is primarily attributable to the increase in transaction fees,~~from our Private Equity, Real Assets, and Credit and Liquid Strategies business lines and a higher level of fee related performance revenues, partially offset by ~~the increase in~~a higher level of fee related compensation and ~~benefits expense~~other operating expenses, as described above.

~~Syndicated Capital~~Realized Performance Income

Syndicated capital for the three months ended September 30, 2017 is essentially flat as compared to the three months ended September 30, 2016. Overall, we completed one syndication transaction for the three months ended September 30, 2017, as compared to two syndication transactions for the three months ended September 30, 2016.The following table presents realized performance income by business line:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized Performance Income
Private Equity	$	1,722,529	$	1,112,541	$	609,988
Real Assets	97,244		57,225		40,019
Credit and Liquid Strategies	18,152		52,637		(34,485)
Total Realized Performance Income	$	1,837,925	$	1,222,403	$	615,522

170

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Table of Contents

Nine Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ —
$ —
$ —
Monitoring Fees —
—
—
Transaction Fees 300,235
144,214
156,021
Fee Credits —
—
—
Total Management, Monitoring and Transaction Fees, Net 300,235
144,214
156,021

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest —
—
—
Unrealized Carried Interest —
—
—
Total Performance Income —
—
—

Investment Income (Loss)

Net Realized Gains (Losses) —
—
—
Net Unrealized Gains (Losses) —
—
—
Total Realized and Unrealized —
—
—
Interest Income and Dividends —
—
—
Interest Expense —
—
—
Net Interest and Dividends —
—
—
Total Investment Income (Loss) —
—
—

Total Segment Revenues 300,235
144,214
156,021

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 57,053
23,374
33,679
Realized Performance Income Compensation —
—
—
Unrealized Performance Income Compensation —
—
—
Total Compensation and Benefits 57,053
23,374
33,679
Occupancy and related charges 2,052
1,901
151
Other operating expenses 15,320
10,870
4,450
Total Segment Expenses 74,425
36,145
38,280

Income (Loss) attributable to noncontrolling interests 3,810
2,002
1,808

Economic Net Income (Loss) $ 222,000
$ 106,067
$ 115,933

Syndicated Capital $ 2,167,600
$ 1,213,500
$ 954,100


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Private Equity
North America Fund XI	$	926,496	$	365,772	$	560,724
Core Investment Vehicles	262,219		80,937		181,282
2006 Fund	144,764		215,741		(70,977)
Americas Fund XII	122,277		207,559		(85,282)
Asian Fund III	104,601		110,515		(5,914)
European Fund IV	86,233		43,976		42,257
Co-Investment Vehicles and Other	51,883		68,252		(16,369)
Next Generation Technology Growth Fund	—		18,160		(18,160)
European Fund III	—		353		(353)







Total Realized Carried Interest (1)	1,698,473		1,111,265		587,208

Incentive Fees	24,056		1,276		22,780
Total Realized Performance Income	$	1,722,529	$	1,112,541	$	609,988

~~Segment Revenues~~


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Real Assets
Real Estate Partners Americas II	$	88,742	$	—	$	88,742
Global Infrastructure Investors II	8,502		36,215		(27,713)
Real Estate Partners Europe	—		14,690		(14,690)
Co-Investment Vehicles and Other	—		3,283		(3,283)
Global Infrastructure Investors	—		3,037		(3,037)










Total Realized Carried Interest (1)	97,244		57,225		40,019

Incentive Fees	—		—		—
Total Realized Performance Income	$	97,244	$	57,225	$	40,019

~~Management, Monitoring~~


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Credit and Liquid Strategies
Alternative Credit Vehicles	$	4,153	$	15,336	$	(11,183)

Total Realized Carried Interest (1)	4,153		15,336		(11,183)

Incentive Fees	13,999		37,301		(23,302)
Total Realized Performance Income	$	18,152	$	52,637	$	(34,485)

(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.

Realized performance income includes (i) realized carried interest from our carry earning funds and ~~Transaction Fees, Net~~(ii) incentive fees not included in Fee Related Performance Revenues.

~~Transaction fees increased due to an increase~~Realized carried interest in ~~both the number and size of capital markets transactions~~our Private Equity business line for the nine months ended September 30, ~~2017 compared to~~2022 consisted primarily of realized proceeds from the ~~nine months ended September 30, 2016. Overall, we completed 144 capital markets transactions~~sales of our investments in Internet Brands, Inc. and CHI Overhead Doors, Inc. held by North America Fund XI and performance income from our core investment vehicles.

171

Table of Contents

Realized carried interest in our Private Equity business line for the nine months ended September 30, ~~2017~~2021 consisted primarily of ~~which 20 represented equity offerings~~realized proceeds from the sales of our investments in The Bountiful Company, Ingersoll Rand Inc., Academy Sports & Outdoors Inc. and ~~124 represented debt offerings, as compared to 82 transactions~~Endeavor Group Holdings, Inc. (NASDAQ: EDR).

Realized carried interest in our Real Assets business line for the nine months ended September 30, ~~2016~~2022 consisted primarily of ~~which 11 represented equity offerings~~realized proceeds from dividends received and ~~71 represented debt offerings. We earned fees~~sales of various investments held by Real Estate Partners Americas II.

Realized carried interest in ~~connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this segment is separately negotiated,~~ our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we collect for like transactions generally correlates with overall transaction sizes. Our capital markets fees are sourced from our Private Markets and Public Markets businesses as well as third party companies. For the nine months ended September 30, 2017 approximately 28% of our transaction fees were earned from third parties as compared to approximately 15%Real Assets business line for the nine months ended September 30, ~~2016. Our transaction fees are comprised~~2021 consisted primarily of ~~fees earned~~realized proceeds from ~~North America, Europe, Asia-Pacific and India. For~~(i) the ~~nine months ended September 30, 2017 approximately 36%~~sale of our ~~transaction fees were sourced outside~~infrastructure investment, Calisen PLC (LSE: CLSN LN) and (ii) dividends received from and sales of ~~the United States as compared to approximately 31%~~various investments in our European real estate strategy.

Realized carried interest in our Credit and Liquid Strategies business line decreased for the nine months ended September 30, 2016. Our capital markets business is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads and volatility. Our capital markets business does not generate management or monitoring fees.

~~Segment Expenses~~

~~Compensation and Benefits and Other Operating Expenses~~

~~Segment expenses have increased~~2022 compared to the prior period ~~primarily due to higher compensation and benefits expense~~ as a result of ~~higher transactions fees.~~ a lower level of realization activity at certain leveraged credit investment funds from which we are eligible to receive carried interest.

Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR sponsored investment vehicles, and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a third party asset management firm.

Incentive fees in our Private Equity business line increased for the nine months ended September 30, 2022 compared to the prior period as a result of incentive fees being earned from certain levered multi-asset investment vehicles in 2022. Incentive fees in our Credit and Liquid Strategies business line decreased for the nine months ended September 30, 2022 compared to the prior period as a result of a lower level of performance fees earned from our hedge fund partnership, Marshall Wace.

Realized Performance Income Compensation

The increase in ~~other operating expenses as~~realized performance income compensation for the nine months ended September 30, 2022 compared to the prior period is primarily ~~attributable~~due to ~~increased professional fees~~a higher level of compensation recorded in connection with ~~increased transaction costs.~~the higher level of realized performance income.

~~Economic Net~~Realized Investment Income ~~(Loss)~~

~~The increase is primarily attributable to the increase in transaction fees, which is partially offset by the increase in compensation and benefits expense as described above.~~

~~Syndicated Capital~~

The increase is primarily due to an increase in both the number and average size of syndication transactions in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. Overall, we completed ten syndication transactions for the nine months ended September 30, 2017 as compared to eight syndications for the nine months ended September 30, 2016.

~~Principal Activities~~

The following ~~tables set forth information regarding the results of operations and certain key operating metrics for~~table presents realized investment income from our Principal Activities ~~segment for the three and nine months ended September 30, 2017 and 2016.~~business line:

~~Three months ended September 30, 2017 compared to three months ended September 30, 2016~~

Three Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ —
$ —
$ —
Monitoring Fees —
—
—
Transaction Fees —
—
—
Fee Credits —
—
—
Total Management, Monitoring and Transaction Fees, Net —
—
—

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest —
—
—
Unrealized Carried Interest —
—
—
Total Performance Income —
—
—

Investment Income (Loss)

Net Realized Gains (Losses) 76,053
170,078
(94,025 )
Net Unrealized Gains (Losses) (50,902 ) 136,740
(187,642 )
Total Realized and Unrealized 25,151
306,818
(281,667 )
Interest Income and Dividends 70,557
71,185
(628 )
Interest Expense (45,613 ) (47,506 ) 1,893
Net Interest and Dividends 24,944
23,679
1,265
Total Investment Income (Loss) 50,095
330,497
(280,402 )

Total Segment Revenues 50,095
330,497
(280,402 )

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 33,958
24,284
9,674
Realized Performance Income Compensation —
—
—
Unrealized Performance Income Compensation —
—
—
Total Compensation and Benefits 33,958
24,284
9,674
Occupancy and related charges 3,840
3,729
111
Other operating expenses 14,176
10,646
3,530
Total Segment Expenses 51,974
38,659
13,315

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ (1,879 ) $ 291,838
$ (293,717 )

~~Segment Revenues~~

~~Investment Income~~


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)	$	435,260	$	1,026,310	$	(591,050)
Interest Income and Dividends	475,961		251,391		224,570
Total Realized Investment Income	$	911,221	$	1,277,701	$	(366,480)

The ~~net~~ decrease in realized investment income is ~~primarily~~ due to a lower level of net realized gains partially offset by a higher level of interest income and ~~unrealized gains during~~dividends. The amount of realized investment income depends on the ~~three~~transaction activity of our funds and our subsidiaries, which can vary from period to period.

For the nine months ended September 30, ~~2017, compared to the prior period.~~

For the three months ended September 30, 2017, net realized gains were primarily comprised of gains from the sale of private markets investments including the sales or partial sales of First Data Corporation, Sentio Healthcare Properties (real estate sector), and Capsugel. Net unrealized losses were primarily attributable the reversal of unrealized gains on the sale of the Private Markets investments mentioned above offset by mark-to-market gains on various Private Markets investments including The Hut Group, Veresen Midstream (infrastructure sector) and Gardner Denver Holdings, Inc.

As of September 30, 2017, $305.1 million of investments in CLOs and our $325.0 million investment in our REIT, were carried at cost. As of September 30, 2017, the cumulative net unrealized gain or loss relating to changes in fair value for these investments was a $16.9 million loss for CLOs and a $16.9 million gain for the real estate investment trust.

~~For the three months ended September 30, 2016,~~2022, net realized gains were comprised of realized gains primarily from the sale of ~~the sales or partial sales of private equity~~our investments in Fiserv, Inc., Internet Brands, Inc., CHI Overhead Doors, Inc., and Viridor Limited. Partially offsetting these realized gains were realized losses, the most significant of which were ~~Walgreens Boots Alliance, Inc.~~(i) a realized loss on an alternative credit investment, (ii) a realized loss on an underwritten debt offering transaction, and ~~Zimmer Biomet Holdings, Inc. These~~(iii) realized losses from the sales of revolving credit facilities.

For the nine months ended September 30, 2021, net realized gains were ~~partially offset by losses~~comprised of realized gains primarily from the sale of ~~certain alternative credit investments. Net unrealized~~our investments in FanDuel Inc., Mr. Cooper Group Inc., Fiserv, Inc., The Bountiful Company, and BridgeBio Pharma, Inc. Partially offsetting these realized gains were ~~primarily attributable~~realized losses related to ~~the mark to market gains on First Data Corporation and~~ certain ~~energy investments offset by the reversal~~hedging instruments.

172

Table of ~~unrealized gains on the sale or partial sales of Walgreens Boots Alliance, Inc. and Zimmer Biomet Holdings, Inc.~~Contents

For the ~~three~~nine months ended September 30, ~~2017, net~~2022, interest income and dividends were comprised of (i) ~~$42.6~~$310.2 million of dividend income primarily from levered multi-asset investment vehicles and our investments in Exact Holdings B.V., Internet Brands, Inc. and Veresen Midstream, and (ii) $165.8 million of interest income ~~which consists~~ primarily ~~of interest that is received~~ from our ~~Public Markets~~ investments including CLOs and other credit investments and to a lesser extent our capital markets business and our cash balances, (ii) $27.9 million of dividend income from distributions received primarily through our private equity investments and real estate investments including our investment in ~~our REIT and (iii) $45.6 million of interest expense primarily relating to the senior notes outstanding for KKR and KFN.~~CLOs.

For the ~~three~~nine months ended September 30, ~~2016, net~~2021, interest income and dividends were comprised of (i) ~~$43.8~~$140.3 million of dividend income primarily from distributions received from our real asset investments, including our investment in KREF, as well as dividends received from our investments in Kokusai Electric Corporation, Internet Brands, Inc. and US Foods Holding Corp. (NYSE: USFD) and (ii) $111.1 million of interest income ~~which consists~~ primarily ~~of interest that is received~~ from our ~~Public Markets~~ investments ~~including~~in CLOs and to a lesser extent our cash balances and other ~~assets, (ii) $27.3 million~~credit investments. See "—Analysis of dividend income from distributions received primarily through our private equity investments, real estate funds and Public Markets investments and (iii) $47.5 million of interest expense primarily relating to the senior notes outstanding for KKR and KFN.Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

~~Segment Expenses~~

~~Compensation and Benefits~~

The increase was primarily due to a greater amount of compensation and benefits expenses allocated from the other operating segments to Principal Activities, as well as a greater amount of corporate compensation allocated to Principal Activities, in each case as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments as well as an increase in the absolute amount of compensation recorded. See "-Segment Analysis" for a discussion of expense allocations among segments.

~~Occupancy and Other Operating Expenses~~

The increase was primarily due to a greater amount of other operating expenses allocated from the other operating segments to Principal Activities, as well as a greater amount of corporate other operating expenses allocated to Principal Activities, in each case as a result of an increase in the proportion of revenue earned by Principal Activities relative to other operating segments.

~~Economic Net Income (Loss)~~

~~The decrease in economic net income for the three months ended September 30, 2017 was primarily driven by the decrease in net investment income as described above.~~

~~Nine months ended September 30, 2017 compared to nine months ended September 30, 2016~~

Nine Months Ended
September 30, 2017 September 30, 2016 Change
($ in thousands)
Segment Revenues
Management, Monitoring and Transaction Fees, Net

Management Fees $ —
$ —
$ —
Monitoring Fees —
—
—
Transaction Fees —
—
—
Fee Credits —
—
—
Total Management, Monitoring and Transaction Fees, Net —
—
—

Performance Income

Realized Incentive Fees —
—
—
Realized Carried Interest —
—
—
Unrealized Carried Interest —
—
—
Total Performance Income —
—
—

Investment Income (Loss)

Net Realized Gains (Losses) 162,684
370,594
(207,910 )
Net Unrealized Gains (Losses) 461,111
(725,699 ) 1,186,810
Total Realized and Unrealized 623,795
(355,105 ) 978,900
Interest Income and Dividends 195,275
253,756
(58,481 )
Interest Expense (134,348 ) (144,497 ) 10,149
Net Interest and Dividends 60,927
109,259
(48,332 )
Total Investment Income (Loss) 684,722
(245,846 ) 930,568

Total Segment Revenues 684,722
(245,846 ) 930,568

Segment Expenses

Compensation and Benefits

Cash Compensation and Benefits 105,591
72,689
32,902
Realized Performance Income Compensation —
—
—
Unrealized Performance Income Compensation —
—
—
Total Compensation and Benefits 105,591
72,689
32,902
Occupancy and related charges 11,082
11,121
(39 )
Other operating expenses 40,265
32,404
7,861
Total Segment Expenses 156,938
116,214
40,724

Income (Loss) attributable to noncontrolling interests —
—
—

Economic Net Income (Loss) $ 527,784
$ (362,060 ) $ 889,844

~~Segment Revenues~~

~~Investment Income~~

~~The net increase is primarily due to unrealized gains during~~ For the nine months ended September 30, ~~2017,~~2022, total fees attributable to KKR Capstone were $55.7 million and total expenses attributable to KKR Capstone were $59.6 million. For KKR Capstone-related adjustments in reconciling asset management segment revenues to GAAP revenues see "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures".

Realized Investment Income Compensation

The decrease in realized investment income compensation for the nine months ended September 30, 2022 compared to ~~unrealized losses in~~ the prior period ~~partially offset by~~is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.

Other Operating and Capital Measures

The following table presents certain key operating and capital metrics as of September 30, 2022 and December 31, 2021:


	As of
	September 30, 2022		December 31, 2021		Change
	($ in millions)
Assets Under Management	$	496,219	$	470,555	$	25,664
Fee Paying Assets Under Management	$	397,627	$	357,389	$	40,238
Uncalled Commitments	$	112,589	$	111,822	$	767

The following table presents one of our key capital metrics for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in millions)
Capital Invested	$	55,710	$	49,833	$	5,877

Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line AUM from December 31, 2021 to September 30, 2022:


	($ in millions)
December 31, 2021	$	173,745
New Capital Raised	15,894

Distributions and Other	(12,539)
Change in Value	(11,630)
September 30, 2022	$	165,470

AUM for the Private Equity business line was $165.5 billion at September 30, 2022, a decrease of $8.2 billion, compared to $173.7 billion at December 31, 2021.

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The decrease was primarily attributable to distributions to fund investors primarily as a result of realized proceeds, most notably from North America Fund XI, 2006 Fund, and Asian Fund III, and a decrease in ~~net interest~~investment value from Americas Fund XII, Asian Fund III, and ~~dividends of $49.6 million.~~Asian Fund II. Partially offsetting these decreases was new capital raised from a new strategic investor partnership, European Fund VI, and Global Impact Fund II.

For the nine months ended September 30, ~~2017, net realized gains were primarily~~2022, the value of our traditional private equity investment portfolio decreased by 14%. This was comprised of ~~gains from~~a 51% decrease in share prices of various publicly held investments and a 2% decrease in value of our privately held investments. For the ~~sale~~nine months ended September 30, 2022, the value of ~~private~~our growth equity investment portfolio decreased 9% and our core equity investment portfolio increased 1%. See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

The most significant decreases in share prices of our publicly held investments ~~including the sales or partial sales of HCA~~were decreases in AppLovin Corporation, Max Healthcare Institute Limited, and PHC Holdings ~~Inc., Galenica AG and First Data~~ Corporation (TYO: 6523). These decreases were partially offset by ~~losses~~increases in share prices of other publicly held investments. The most significant of these was an increase in Hensoldt AG (FRA: HAG). The prices of publicly held companies may experience volatile changes following the reporting period. See "Business Environment—Equity and Credit Markets" for more information about factors, such as volatility, that may impact our business, financial performance, operating results and valuations.

The most significant increases in the value of our privately held investments related to CHI Overhead Doors, Inc., Internet Brands, Inc., and Wella Co. (consumer products sector). These increases in value on the sale of Fortune Creek Partnership (energy sector) and the restructurings of Algeco Scotsman (industrial sector) and Aurora Eaglebine (energy sector). Net unrealized gains were primarily attributable to mark-to-market gains on various Private Marketsour privately held investments ~~including First Data Corporation, an oil field services investment in our special situations strategy, and Veresen Midstream. These increases~~ were partially offset by decreases in value relating primarily ~~by unrealized losses due~~ to ~~the reversal~~Kokusai Electric Corporation, Koki Holdings Co., Ltd., and Unzer GmbH (financial services sector). The increased valuations of ~~unrealized gains on the sales of private equity investments mentioned above.~~

~~As of September 30, 2017, $305.1 million of~~individual companies in our privately held investments, in ~~CLOs~~the aggregate, generally related to (i) individual company performance, (ii) with respect to CHI Overhead Doors, Inc., an increase in valuation reflecting an agreement to exit the investment and ~~our $325.0 million investment~~(iii) with respect to Internet Brands, Inc. an increase in valuation driven by a partial sale transaction. The decreased valuations of individual companies in our ~~REIT, were carried at cost. As~~privately held investments, in the aggregate, generally related to (i) an unfavorable business outlook and (ii) a decrease in the value of ~~September 30, 2017,~~market comparables, both influenced by the ~~cumulative net unrealized gain or loss relating to changes in fair value for these investments was a $16.9 million loss for CLOs~~economic outlook and ~~a $16.9 million gain for our REIT.~~overall market environment.

For the nine months ended September 30, ~~2016, net realized gains were primarily~~2021, the value of our traditional private equity investment portfolio increased by 38%. This was comprised of ~~gains from~~a 60% increase in share prices of various publicly held investments and a 31% increase in value of our privately held investments. For the ~~sale~~nine months ended September 30, 2021, the value of ~~private~~our growth equity and core equity investment portfolios increased 58% and 33%, respectively.

The most significant increases in share prices of various publicly held or publicly indexed investments ~~including the sales or partial sales of Walgreens Boots Alliance, Inc., HCA Holdings, Inc.~~were increases in AppLovin Corporation, Max Healthcare Institute Limited, and ~~Zimmer Biomet Holdings, Inc.,~~J.B. Chemicals and Pharmaceuticals Ltd. These increases were partially offset by decreases in share prices of various publicly held investments. The most significant of these was an increase in Fiserv, Inc. The prices of publicly held or publicly indexed companies may experience volatile changes following the ~~loss~~reporting period. See "Business Environment—Equity and Credit Markets" for more information about factors, such as volatility, that may impact our business, financial performance, operating results and valuations.

The most significant increases in the value of our privately held investments related to increases in Kokusai Electric Corporation, PetVet Care Centers, LLC, and Internet Brands, Inc. These increases in value on our privately held investments were partially offset by decreases in value relating primarily to Magneti Marelli, Upfield, and Channel Control Merchants (retail sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, (iii) transactional activity related to new rounds of funding, and with respect to Kokusai Electric Corporation, an increase in valuation reflecting an agreement to sell a minority stake in the company. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) an unfavorable business outlook and (ii) a decrease in the value of market comparables, both influenced by the impact of COVID-19 on the economic outlook and overall market environment.

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Real Assets

The following table reflects the changes in our Real Assets business line AUM from ~~the redemption of limited partner interests in a fund managed by BlackGold Capital Management, as well as certain CLOs being called and the sale of certain alternative credit investments. As of~~December 31, 2021 to September 30, ~~2016, KKR no longer holds any limited partner interests in BlackGold Capital Management, although we continue to own~~2022:


	($ in millions)
December 31, 2021	$	83,303
New Capital Raised	26,947
Acquisitions and Other(1)	13,779
Distributions and Other	(4,990)
Change in Value	(1,268)
September 30, 2022	$	117,771

(1)Reflects the AUM of KJRM at closing of $12,730 million and represents an ~~interest~~adjustment reflecting a change in the ~~general partner and~~fee base of Global Atlantic's management ~~company. Net unrealized losses were~~fees from market value to book value.

AUM for the Real Assets business line was $117.8 billion at September 30, 2022, an increase of $34.5 billion, compared to $83.3 billion at December 31, 2021.

The increase was primarily attributable to ~~mark-to-market losses on various Private Markets investments including First Data Corporation~~(i) assets managed by KJRM, which we acquired in 2022 and (ii) new capital raised by Global Atlantic and Asia Pacific Infrastructure Investors II. Partially offsetting these increases were payments to Global Atlantic policyholders and distributions to fund investors as a ~~lesser extent Walgreens Boots Alliance, Inc., mark-to-market losses on various alternative credit investments~~result of realized proceeds, most notably from Global Infrastructure Investors III and ~~unrealized losses on energy investments, and reversals of unrealized gains on the sales of private equity investments.~~Real Estate Partners Americas II.

For the nine months ended September 30, ~~2017, net interest and dividends were comprised~~2022, the value of ~~(i) $117.2 million~~our energy investment portfolio increased by 22%, the value of ~~interest income which consists primarily of interest that is received from~~ our Public Markets investments including CLOs and other credit investments and to a lesser extent our capital markets business and our cash balances, (ii) $78.1 million of dividend income from distributions received primarily through our private equity investments and real estate investment portfolio increased by 11%, and the value of our infrastructure investment portfolio increased 4%. See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

The most significant increases in the value of our privately held investments ~~including our investment~~related to Viridor Limited, Galaxy Investments II Pte. Ltd. (infrastructure), Metronet Holdings, LLC. (infrastructure) and Mirastar Logistics (real estate). These increases in value were partially offset by decreases in value relating primarily to Hyperoptic Ltd. The increased valuations of individual companies or assets in our ~~REIT~~privately held investments, in the aggregate, generally related to individual company or asset performance. The decreased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to (i) a decrease in the value of market comparables and (ii) an unfavorable business outlook, both influenced by economic outlook and market environment and (iii) ~~$134.4 million~~changes in foreign exchange rates.

The most significant increases in share prices of ~~interest expense primarily relating to~~our publicly held investments were increases in Crescent Energy Company (NYSE: CRGY). These increases were partially offset by decreases in share prices of other publicly held investments. The most significant of these was a decrease in First Gen Corporation (PM: FGEN). The prices of publicly held companies may experience volatile changes following the ~~senior notes outstanding~~reporting period. See "Business Environment—Equity and Credit Markets" for ~~KKR~~more information about factors, such as volatility, that may impact our business, financial performance, operating results and ~~KFN.~~valuations.

For the nine months ended September 30, ~~2016, net interest and dividends were comprised~~2021, the value of ~~(i) $139.8 million~~our energy investment portfolio increased by 21%, the value of ~~interest income which consists primarily of interest that is received from~~ our Public Markets investments including CLOs and to a lesser extent our cash balances and other assets, (ii) $113.9 million of dividend income from distributions received primarily through our private equity investments, real estate ~~funds~~investment portfolio increased by 23%, and ~~Public Markets investments and (iii) $144.5 million~~the value of ~~interest expense primarily relating to the senior notes outstanding for KKR and KFN.~~our infrastructure investment portfolio increased 10%.

The ~~net decrease in net interest and dividends is due primarily to the lower amount of capital invested in CLOs described above, as well as a lower level of dividends~~most significant increases in the ~~2017 period,~~value of our privately held investments related to Telxius Telecom, S.A., KRE AIP LLC, and Viridor Limited. These increases in value were partially offset by ~~lower interest expense due~~decreases in value relating primarily to Colonial Enterprises, Inc. (infrastructure) and Cascade Senior Living Portfolio (real estate). The increased valuations of individual companies or assets in our privately held investments, in the ~~redemption~~aggregate, generally related to individual company performance. The decreased valuations of individual companies or assets in our privately held investments, in the aggregate, generally related to (i) a decrease in the value of market comparables and ~~paydown~~(ii) an unfavorable business outlook, both influenced by economic outlook and market environment.

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Credit and ~~other debt after~~Liquid Strategies

The following table reflects the ~~third quarter~~changes in our Credit and Liquid Strategies business line AUM from December 31, 2021 to September 30, 2022:


	($ in millions)
December 31, 2021	$	213,507
New Capital Raised	22,120
Acquisitions and Other(1)	7,997

Distributions and Other	(11,406)
Redemptions	(4,088)
Change in Value	(15,152)
September 30, 2022	$	212,978

(1)Represents an adjustment reflecting a change in the fee base of ~~2016,~~Global Atlantic's management fees from market value to book value.

AUM in our Credit and Liquid Strategies business line totaled $213.0 billion at September 30, 2022, a ~~portion~~decrease of ~~which~~$0.5 billion compared to AUM of $213.5 billion at December 31, 2021.

The decrease was ~~replaced with debt bearing~~primarily attributable to (i) a ~~lower rate~~decline in investment value on the assets managed across our alternative credit portfolio, including for Global Atlantic and our strategic partnerships, (ii) distributions to fund investors at certain alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was new capital raised by or from (i) various leveraged and alternative credit funds, (ii) Global Atlantic, (iii) our hedge fund partnerships, (iv) new CLO issuances and (v) the change in fee base for Global Atlantic's management fees from fair market value to book value.

See also "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Fee Paying Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line FPAUM from December 31, 2021 to September 30, 2022:


	($ in millions)
December 31, 2021	$	87,890
New Capital Raised	17,272

Distributions and Other	(3,405)
Net Changes in Fee Base of Certain Funds	(1,573)
Change in Value	(1,085)
September 30, 2022	$	99,099

FPAUM in our Private Equity business line was $99.1 billion at September 30, 2022, an increase of ~~interest.~~$11.2 billion, compared to $87.9 billion at December 31, 2021.

~~Segment Expenses~~

~~Compensation and Benefits~~

The increase was primarily ~~due~~attributable to ~~a greater amount of compensation~~new capital raised from European Fund VI, Global Impact Fund II, and ~~benefits expenses allocated~~new investment vehicles for Internet Brands, Inc. Partially offsetting this increase were decreases from ~~the other operating segments~~(i) distributions to ~~Principal Activities, as well as a greater amount of corporate compensation allocated to Principal Activities, in each case~~fund investors, primarily as a result of realized proceeds, most notably from North America Fund XI and Asian Fund II, and (ii) a change in fee base for European Fund V as a result of these funds entering its post investment period, during which we earn fees on invested capital rather than committed capital.

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Real Assets

The following table reflects the changes in our Real Assets business line FPAUM from December 31, 2021 to September 30, 2022:


	($ in millions)
December 31, 2021	$	66,965
New Capital Raised	28,826
Acquisitions and Other(1)	13,779
Distributions and Other	(3,626)
Net Changes in Fee Base of Certain Funds	(1,125)
Change in Value	(4,465)
September 30, 2022	$	100,354

(1)Reflects the AUM of KJRM at closing of $12,730 million and represents an adjustment reflecting a change in the fee base of Global Atlantic's management fees from market value to book value.

FPAUM in our Real Assets business line was $100.4 billion at September 30, 2022, an increase ~~in the proportion~~ of ~~revenue earned by Principal Activities relative~~$33.4 billion, compared to ~~other operating segments as well as an increase in the absolute amount of compensation recorded. See "-Segment Analysis" for a discussion of expense allocations among segments.~~$67.0 billion at December 31, 2021.

~~Occupancy and Other Operating Expenses~~

The increase was primarily attributable to (i) assets managed by KJRM, which we acquired in 2022, and (ii) new capital raised by Global Atlantic, Asia Pacific Infrastructure Investors II, and Diversified Core Infrastructure Fund. Partially offsetting these increases were (i) the decrease in value primarily due to the impact of the decline in the value of the Japanese yen associated with the assets managed by KJRM, (ii) payments to Global Atlantic policyholders and our fund investors and (iii) a ~~greater amount of other operating expenses allocated from the other operating segments to Principal Activities, as well as a greater amount of corporate other operating expenses allocated to Principal~~

~~Activities,~~change in ~~each case~~fee base for Asia Pacific Infrastructure Investors as a result of entering its post investment period, during which we earn fees on invested capital rather than committed capital.

Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line FPAUM from December 31, 2021 to September 30, 2022:


	($ in millions)
December 31, 2021	$	202,534
New Capital Raised	17,172
Acquisitions and Other(1)	7,997

Distributions and Other	(11,128)
Redemptions	(4,088)
Change in Value	(14,313)
September 30, 2022	$	198,174

(1)Represents an ~~increase~~adjustment reflecting a change in the ~~proportion~~fee base of ~~revenue earned by Principal Activities relative~~Global Atlantic's management fees from market value to ~~other operating segments.~~book value.

~~Economic Net Income (Loss)~~

FPAUM in our Credit and Liquid Strategies business line was $198.2 billion at September 30, 2022, a decrease of $4.3 billion compared to $202.5 billion at December 31, 2021.

The decrease was primarily attributable to (i) a decline in investment value in assets managed across our credit portfolio, including for Global Atlantic, (ii) distributions to fund investors at certain leveraged and alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was (i) new capital raised from Global Atlantic, various leveraged and alternative credit funds and our hedge fund partnerships and (ii) changing the fee base for Global Atlantic's management fees from fair market value to book value.

See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

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Uncalled Commitments

Private Equity

As of September 30, 2022, our Private Equity business line had $66.7 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $66.3 billion as of December 31, 2021. The increase was primarily attributable to new capital commitments from fund investors, which were partially offset by capital called from fund investors to make investments during the period.

Real Assets

As of September 30, 2022, our Real Assets business line had $31.2 billion of remaining uncalled capital commitments that could be called for investments in ~~economic net income~~new transactions as compared to $35.2 billion as of December 31, 2021. The decrease was primarily attributable to capital called from fund investors to make investments during the period, partially offset by new capital commitments from fund investors.

Credit and Liquid Strategies

As of September 30, 2022, our Credit and Liquid Strategies business line had $14.7 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $10.3 billion as of December 31, 2021. The increase was primarily attributable to new commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Equity

For the nine months ended September 30, 2022, $14.1 billion of capital was invested by our Private Equity business line, as compared to $11.8 billion for the nine months ended September 30, ~~2017~~2021. The increase was driven primarily by a $2.3 billion increase in capital invested in our traditional private equity strategy. During the nine months ended September 30, 2022, 60% of capital deployed in private equity was in transactions in North America, 20% was in Europe, and 20% was in the Asia-Pacific region. The number of large private equity investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.

Real Assets

For the nine months ended September 30, 2022, $21.7 billion of capital was invested by our Real Assets business line, as compared to $15.2 billion for the nine months ended September 30, 2021. The increase was driven primarily by a $3.7 billion increase in capital invested in our real estate strategy and a $1.9 billion increase in capital invested in our infrastructure strategy. During the nine months ended September 30, 2022, 77% of capital deployed in real assets was in transactions in North America, 14% was in Europe, and 9% was in the Asia-Pacific region.

Credit and Liquid Strategies

For the nine months ended September 30, 2022, $19.8 billion of capital was invested by our Credit and Liquid Strategies business line, as compared to $22.8 billion for the nine months ended September 30, 2021. The decrease was primarily ~~driven by~~due to a lower level of capital deployed across our direct lending and SIG strategies. During the nine months ended September 30, 2022, 88% of capital deployed was in transactions in North America, 9% was in Europe, and 3% was in the Asia-Pacific region.

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Analysis of Insurance Segment Operating Results

As discussed above, our insurance segment consists solely of the operations of Global Atlantic, which was acquired on February 1, 2021. For the nine months ended September 30, 2021, the results of our insurance segment is from the acquisition date, February 1, 2021, through September 30, 2021.

The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the nine months ended September 30, 2022 and 2021:


	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Net Investment Income	$	2,881,567	$	1,977,383	$	904,184
Net Cost of Insurance	(1,664,664)		(1,076,566)		(588,098)
General, Administrative and Other	(472,795)		(338,325)		(134,470)
Pre-tax Insurance Operating Earnings	744,108		562,492		181,616
Income Taxes	(125,927)		(63,148)		(62,779)
Net Income Attributable to Noncontrolling Interests	(238,118)		(193,570)		(44,548)
Insurance Segment Operating Earnings	$	380,063	$	305,774	$	74,289

Insurance segment operating earnings

Insurance segment operating earnings increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021 and (ii) higher net investment income resulting from an increase in average assets under management due to growth of the business. The increase was offset in part by (i) higher net cost of insurance, primarily due to the growth in both our individual market and institutional market channels, (ii) a corresponding increase in general and administrative expenses, and (iii) an increase in income tax expense.

Net investment income

Net investment income increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the ~~current~~prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) growth in portfolio yields due to higher market interest rates on floating rate investments, (iii) rotation into higher yielding assets, and (iv) increased average assets under management due to growth in assets in our institutional market channel as a result of new reinsurance transactions and individual market channel sales from new business growth.

Net cost of insurance

Net cost of insurance increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (iii) higher funding costs on new business originated, and offset by the impact of assumption review (as described ~~above.~~in “ –Notable Items–Assumption Review” above).

General, administrative and other expenses

General and administrative expenses increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased employee compensation and benefits-related expenses, (iii) increased professional service fees, and (iv) increased TPA policy servicing fees, all due to growth of the business.

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Income taxes

Net Income attributable to non-controlling interests

Net income attributable to non-controlling interests increased for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 is proportional to the increase in insurance segment operating earnings for the comparable period. Net income attributable to non-controlling interests represent the proportionate interest in the insurance segment operating earnings attributable to other investors in Global Atlantic.

Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the nine months ended September 30, 2022 and 2021:



	Nine Months Ended
	September 30, 2022		September 30, 2021		Change
	($ in thousands)
Asset Management Segment Operating Earnings	$	3,039,393	$	2,873,979	$	165,414
Insurance Segment Operating Earnings	380,063		305,774		74,289
Distributable Operating Earnings	3,419,456		3,179,753		239,703

Interest Expense	(229,414)		(185,100)		(44,314)
Preferred Dividends	—		(19,201)		19,201
Net Income Attributable to Noncontrolling Interests	(17,083)		(14,678)		(2,405)
Income Taxes Paid	(540,909)		(449,814)		(91,095)
After-tax Distributable Earnings	$	2,632,050	$	2,510,960	$	121,090

For the nine months ended September 30, 2021, the results of our insurance segment above are from February 1, 2021 (closing date of the GA Acquisition) through September 30, 2021.

Distributable Operating Earnings

The increase in distributable operating earnings for the nine months ended September 30, 2022 compared to the prior period is primarily due to a higher level of asset management segment operating earnings and insurance segment operating earnings. For a discussion of the asset management and insurance segment operating earnings, see "—Analysis of Asset Management Segment ~~Balance Sheet~~Operating Results and Analysis of Insurance Segment Operating Results."

Interest Expense

The increase in interest expense for the nine months ended September 30, 2022 compared to the prior period is due primarily to debt issuances by KKR's financing subsidiaries subsequent to September 30, 2021.

Preferred Dividends

The decrease in preferred dividends for the nine months ended September 30, 2022 compared to the prior period was attributable to the redemption of all of our Series A and B preferred stock.

Income Taxes Paid

The increase in income taxes paid for the nine months ended September 30, 2022 compared to the prior period was primarily due to a higher level of asset management segment operating earnings.

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After-tax Distributable Earnings

~~Our segment balance sheet is~~The increase in after-tax distributable earnings for the ~~balance sheet~~nine months ended September 30, 2022 compared to the prior period was primarily due to a higher level of distributable operating earnings, partially offset by an increase in income taxes paid and interest expense, as discussed above.

For the nine months ended September 30, 2022 and 2021, the amount of the tax benefit from equity-based compensation included in income taxes paid was $46.0 million and $89.2 million, respectively. The inclusion of the tax benefit from equity-based compensation in After-tax Distributable Earnings had the effect of increasing this measure by 2% and 4% for the nine months ended September 30, 2022 and 2021.

Non-GAAP Balance Sheet Measures

Book Value

The following table presents our calculation of book value as of September 30, 2022 and December 31, 2021:



		As of
		September 30, 2022		December 31, 2021
		($ in thousands)

(+)	Cash and Short-term Investments	$	4,248,213	$	4,869,203
(+)	Investments	17,685,528		17,763,542
(+)	Net Unrealized Carried Interest (1)	2,672,647		4,967,401

(+)	Other Assets, Net (2)	6,637,886		4,706,108
(+)	Global Atlantic Book Value	3,563,911		3,372,498

(-)	Debt Obligations - KKR (excluding KFN and Global Atlantic)	6,830,070		5,836,267
(-)	Debt Obligations - KFN	948,517		948,517
(-)	Tax Liabilities, Net	1,710,896		2,697,317
(-)	Other Liabilities	1,671,451		774,711
(-)	Noncontrolling Interests	30,759		33,058

	Book Value	$	23,616,492	$	25,388,882

	Book Value Per Adjusted Share	$	26.56	$	28.77
	Adjusted Shares	889,121,824		882,589,036

(1)The following table provides net unrealized carried interest by business line:


	As of
	September 30, 2022		December 31, 2021
	($ in thousands)
Private Equity Business Line	$	2,352,336	$	4,697,134
Real Assets Business Line	220,848		159,709
Credit and Liquid Strategies Business Line	99,463		110,558
Total	$	2,672,647	$	4,967,401

(2)Other Assets, Net include our (i) ownership interest in FS/KKR ~~& Co. L.P.~~Advisor, (ii) minority ownership interests in hedge fund partnerships and ~~its subsidiaries on~~(iii) the net assets of KJRM.

Book value per adjusted share decreased 8% from December 31, 2021. The decrease was primarily attributable to (i) a ~~segment basis which includes, but is not limited~~reduction in net unrealized carried interest due to the reversal of previously recognized carried interest from our carried interest eligible investment ~~management companies, broker-dealer companies, general partners~~funds, most notably Americas Fund XII and Asian Fund II, (ii) a reduction in the value of our ~~investment funds and KFN. Our~~asset management segment ~~balance sheet excludes the assets and liabilities~~investments of 5% (iii) repurchases of our common stock and (iv) payment of dividends during the period. Partially offsetting these decreases was the positive impact of our after-tax distributable earnings recognized during the period. For a further discussion, see "—Unaudited Consolidated Results of Operations (GAAP Basis) - Asset Management—Unrealized Gains and Losses from Investment Activities." For a discussion of the changes in KKR's investment ~~funds~~portfolio, see "—Analysis of Asset Management Segment Operating Results—Assets Under Management." For a discussion of factors that impacted KKR's after-tax distributable earnings, see "—Analysis of Non-GAAP Performance Measures— After-tax

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Distributable Earnings" and ~~CFEs~~for more information about the factors that may impact our business, financial performance, operating results and ~~other consolidated entities that~~valuations, see "—Business Environment."

The following table presents the holdings of our investments in the asset management segment by asset class as of September 30, 2022. To the extent investments are ~~not subsidiaries~~realized at values below their cost in future periods, after-tax distributable earnings would be adversely affected by the amount of ~~KKR & Co. L.P.~~such loss, if any, during the period in which the realization event occurs.


	As of September 30, 2022
	($ in thousands)
Investments (1)	Cost		Fair Value		Fair Value as a Percentage of Total Investments

Traditional Private Equity	$	1,805,833	$	3,277,068	18.5	%
Core Private Equity	2,685,259		5,436,110		30.7	%
Growth Equity	292,429		805,866		4.6	%
Private Equity Total	4,783,521		9,519,044		53.8	%

Energy	894,614		969,901		5.5	%
Real Estate	1,815,588		2,146,540		12.1	%
Infrastructure	924,238		1,082,905		6.1	%
Real Assets Total	3,634,440		4,199,346		23.7	%

Leveraged Credit	1,281,300		1,009,867		5.7	%
Alternative Credit	882,023		881,922		5.0	%
Credit Total	2,163,323		1,891,789		10.7	%

Other	2,410,323		2,075,349		11.8	%

Total Investments	$	12,991,607	$	17,685,528	100.0	%

~~Investments~~

(1)Investments is a term used solely for purposes of financial presentation of a portion of KKR's balance sheet and includes majority ownership of subsidiaries that operate KKR's asset management and ~~other~~insurance businesses, including the general partner interests of KKR's investment funds. Investments presented are principally the assets measured at fair value that are held by KKR's asset management segment, which, among other things, does not include the underlying investments held by Global Atlantic and Marshall Wace.

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~~Cash and Short-Term Investments~~
























	As of September 30, 2022
	($ in thousands)
Top 20 Investments: (1)	Cost		Fair Value
USI, Inc.	$	531,425	$	1,250,310
PetVet Care Centers, LLC	243,211		1,143,092
Heartland Dental, LLC	320,656		833,705
Exact Group B.V.	213,362		468,972
Arnott's Biscuits Limited	250,841		430,578
1-800 Contacts Inc.	300,178		390,217
Internet Brands, Inc.	340,312		373,695
Barracuda Networks, Inc.	344,083		344,083
Crescent Energy Company (NYSE: CRGY)	539,992		341,233
Teaching Strategies, LLC	307,162		307,162
Fiserv, Inc. (NASDAQ: FISV)	127,010		273,049
ERM Worldwide Group Limited	228,710		251,581
Resolution Life Group Holdings, L.P.	262,191		228,659
Roompot B.V.	193,578		212,607
Atlantic Aviation FBO Inc.	170,274		186,672
Viridor Limited	132,023		169,225
The Bay Clubs Company, LLC	160,127		160,127
Veresen Midstream	92,602		152,365
GenesisCare Pty Ltd.	196,104		142,986
PortAventura	155,803		141,831
Total Top 20 Investments	$	5,109,644	$	7,802,149

~~Cash and short-term~~(1)This list of investments ~~represent cash and liquid short-term~~identifies the twenty largest companies or assets based on their fair values as of September 30, 2022. It does not deduct fund or vehicle level debt, if any, incurred in connection with funding the investment. This list excludes (i) investments expected to be syndicated, (ii) investments expected to be transferred in connection with a new fundraising, (iii) investments in ~~high-grade, short-duration cash management strategies used~~funds and other entities that are owned by one or more third parties and established for the purpose of making investments and (iv) the portion of any investment that may be held through collateralized loan obligations or levered multi-asset investment vehicles, if any. For additional information about the asset classes of the investments held on KKR's balance sheet see "—Our Business—Principal Activities" for the "Holdings by Asset Class" pie chart. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

With respect to ~~generate additional yield on our excess liquidity and is used by management~~KKR's book value relating to its insurance business, KKR includes Global Atlantic's book value, which consists of KKR's pro rata equity interest in evaluating KKR's liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR's available liquidity. Cash and short-term investments differ from cash and cash equivalentsGlobal Atlantic on a GAAP basis, asexcluding (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance embedded derivative balances and related assets, net of deferred acquisition costs and income tax. KKR believes this presentation of Global Atlantic's book value is comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic's industry. As of September 30, 2022, KKR's pro rata interest in Global Atlantic's book value was $3.6 billion. For more information about the composition and credit quality of Global Atlantic's investments on a ~~result~~consolidated basis, please see "—Global Atlantic's Investment Portfolio" below.

Global Atlantic's Investment Portfolio

As of September 30, 2022, 95% and 85% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from the Securities Valuation Office of the ~~inclusion~~National Association of ~~liquid short-term investments~~Insurance Commissioners ("NAIC") and nationally recognized statistical rating organizations ("NRSROs"), respectively. As of December 31, 2021, 97% and 87% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from NAIC and nationally recognized statistical rating organizations ("NRSROs"), respectively. Securities where a rating by an NRSRO was not available are considered investment grade if they have an NAIC designation of “1” or “2.” The three largest asset categories in cash and short-term investments. The impact that these liquid short-term investments have on cash and cash equivalents on a GAAP basis is reflected in the consolidated statements of cash flows within cash flows from operating activities. Accordingly, the exclusion of these investments from cash and cash equivalents on a GAAP basis has no impact on cash provided (used) by operating activities, investing activities or financing activities.

~~The following tables present information with respect to our segment balance sheet~~Global Atlantic's AFS fixed-maturity security portfolio as of September 30, ~~2017~~2022 were Corporate, RMBS and CMBS securities, comprising 29%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 94%, 96% and 99% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 94%, 44% and 53% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of September 30, 2022. The three largest asset categories in Global Atlantic's available-for-sale fixed-maturity security portfolio as of December 31, 2021 were Corporate, RMBS and CMBS securities, comprising 34%, 6% and

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5% of Global Atlantic's investment portfolio, respectively. Within these categories, 95%, 96% and 99% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 95%, 38% and 62% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of December 31, 2021. NRSRO and NAIC ratings have different methodologies. Global Atlantic believes the NAIC ratings methodology, which considers the likelihood of recovery of amortized cost as opposed to the recovery of all contractual payments including the principal at par, as the more appropriate way to view the ratings quality of its AFS fixed maturity portfolio since a large portion of its holdings were purchased at a significant discount to par value. The portion of Global Atlantic's investment portfolio consisting of floating rate assets was 22% and 20% as of September 30, 2022 and December 31, ~~2016:~~2021, respectively.

Within the funds withheld receivable at interest portfolio, 96% and 96% of the fixed maturity securities were investment grade by NAIC designation as of September 30, 2022 and December 31, 2021, respectively .

Trading fixed maturity securities back funds withheld payable at interest where the investment performance is ceded to reinsurers under the terms of the respective reinsurance agreements.

Credit quality of AFS fixed maturity securities

The Securities Valuation Office of the NAIC evaluates the AFS fixed maturity security investments of insurers for regulatory reporting and capital assessment purposes and assigns securities to one of six credit quality categories called “NAIC designations.” Using an internally developed rating is permitted by the NAIC if no rating is available. These designations are generally similar to the credit quality designations of NRSROs for marketable fixed maturity securities, except for certain structured securities as described below. NAIC designations of “1,” highest quality, and “2,” high quality, include fixed maturity securities generally considered investment grade by NRSROs. NAIC designations “3” through “6” include fixed maturity securities generally considered below investment grade by NRSROs.

Consistent with the NAIC Process and Procedures Manual, an NRSRO rating was assigned based on the following criteria: (i) the equivalent S&P rating where the security is rated by one NRSRO; (ii) the equivalent S&P rating of the lowest NRSRO when the security is rated by two NRSROs; and (iii) the equivalent S&P rating of the second lowest NRSRO if the security is rated by three or more NRSROs. If the lowest two NRSROs’ ratings are equal, then such rating will be the assigned rating. NRSROs’ ratings available for the periods presented were S&P, Fitch, Moody’s, DBRS, Inc. and Kroll Bond Rating Agency, Inc. If no rating is available from a rating agency, then an internally developed rating is used.

Substantially all of the AFS fixed maturity securities portfolio, 95% and 97% as of September 30, 2022 and December 31, 2021, respectively, were invested in investment grade assets with a NAIC rating of 1 or 2.

The portion of the AFS fixed maturity securities portfolio that was considered below investment grade by NAIC designation was 5% and 3% as of September 30, 2022 and December 31, 2021, respectively. Pursuant to Global Atlantic's investment guidelines, Global Atlantic actively monitors the percentage of its portfolio that is held in investments rated NAIC 3 or lower and must obtain an additional approval from Global Atlantic's management investment committee before making a significant investment in an asset rated NAIC 3 or lower.

As of September 30, 2022 and December 31, 2021, the non-rated AFS fixed-maturity securities include $227.2 million and $118.8 million, respectively, of private placement securities for which Global Atlantic has not sought individual ratings from the NRSROs.

Corporate fixed maturity securities

Global Atlantic maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. As of September 30, 2022 and December 31, 2021, 57% and 60%, respectively, of the AFS fixed maturity securities portfolio was invested in corporate fixed maturity securities.

As of September 30, 2022 and December 31, 2021, 94% and 95% of the total fair value of corporate fixed maturity securities is rated NAIC investment grade and 94% and 95% is rated NRSROs investment grade, respectively.

Residential mortgage-backed securities

As of September 30, 2022 and December 31, 2021, 11% and 11% of the AFS fixed maturity securities portfolio was invested in RMBS, respectively. RMBS are securities constructed from pools of residential mortgages and backed by payments from those pools. Excluding limitations on access to lending and other extraordinary economic conditions, Global Atlantic

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As of As of
September 30, 2017 December 31, 2016
($ in thousands, except per unit amounts)
Cash and Short-term Investments $ 3,623,773
$ 3,387,673
Investments 8,123,514
6,958,873
Unrealized Carry ⁽¹⁾
1,474,693
1,213,692
Other Assets 1,964,794
1,611,678
Corporate Real Estate 161,225
161,225
Total Assets $ 15,347,999
$ 13,333,141

Debt Obligations - KKR (ex-KFN) $ 2,000,000
$ 2,000,000
Debt Obligations - KFN 639,767
398,560
Preferred Shares - KFN 373,750
373,750
Other Liabilities 596,079
244,676
Total Liabilities 3,609,596
3,016,986

Noncontrolling Interests 20,849
19,564
Preferred Units 500,000
500,000

Book Value $ 11,217,554
$ 9,796,591

Book Value Per Outstanding Adjusted Unit $ 13.80
$ 12.15

(1) Unrealized Carry

Private Markets $ 1,347,729
$ 1,141,610
Public Markets 126,964
72,082
Total $ 1,474,693
$ 1,213,692

would expect prepayments of principal on the underlying loans to accelerate with decreases in market interest rates and diminish with increases in market interest rates.

The NAIC designations for RMBS, including prime, sub-prime, alt-A, and adjustable rate mortgages with variable payment options ("Option ARM"), are based upon a comparison of the bond’s amortized cost to the NAIC’s loss expectation for each security. Accordingly, an investment in the same security at a lower cost may result in a higher quality NAIC designation in recognition of the lower likelihood the investment would result in a realized loss. Prime residential mortgage lending includes loans to the most creditworthy borrowers with high quality credit profiles. Alt-A is a classification of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.

As of September 30, 2022 and December 31, 2021, 94% and 93%, respectively, of RMBS securities that are below investment grade as rated by the NRSRO, carry an NAIC 1 ("highest quality") designation.

As of September 30, 2022, Alt-A, Option ARM, Re-Performing and Sub-prime represent 31%, 28%, 13% and 11% of the total RMBS portfolio ($6.7 billion), respectively. As of December 31, 2021, Alt-A, Option ARM, Re-Performing and Sub-prime represent 33%, 30%, 14% and 12% of the total RMBS portfolio ($7.7 billion), respectively.

Unrealized gains and losses for AFS fixed maturity securities

Global Atlantic's investments in AFS fixed maturity securities are reported at fair value with changes in fair value recorded in other comprehensive income as unrealized gains or losses, net of taxes and offsets. Unrealized gains and losses can be created by changes in interest rates or by changes in credit spreads.

As of September 30, 2022 and December 31, 2021, Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $748.2 million and $80.3 million based on NRSRO rating and $122.1 million and $13.5 million based on NAIC ratings, respectively.

Mortgage and other loan receivables - Credit quality indicators

Mortgage and other loan receivables consist of commercial and residential mortgage loans, and other loan receivables. As of September 30, 2022 and December 31, 2021, 29% and 23%, respectively, of Global Atlantic's total investments consisted of mortgage and other loan receivables. Global Atlantic invests in U.S. mortgage loans, comprised of first lien and mezzanine real estate loans, residential mortgage loans, consumer loans, and other loan receivables.

Global Atlantic's commercial mortgage loans may also be rated based on NAIC designations, with designations “CM1” and “CM2” considered to be investment grade. As of September 30, 2022 and December 31, 2021, 97% and 96% of the commercial mortgage loan portfolio was rated investment grade based on NAIC designation, respectively. 100% of the commercial mortgage loan portfolio is in current status.

As of September 30, 2022, 97% of the residential mortgage loan portfolio is in current status, and approximately $179.6 million is over 90 days past due (representing 2% of the total residential mortgage portfolio).

The loan-to-value ratio is expressed as a percentage of the current amount of the loan relative to the value of the underlying collateral. Approximately 85% of the commercial mortgage loans has a loan-to-value ratio of 70% or less and 0.2% has loan-to-value ratio over 90%.

Changing economic conditions affect Global Atlantic’s valuation of commercial mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that Global Atlantic performs for monitored loans and may contribute to the establishment of (or increase or decrease in) a commercial mortgage loan valuation allowance for losses. In addition, Global Atlantic continuously monitors its commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events or have deteriorating credit.

The weighted average loan-to-value ratio for residential mortgage loans was 62% and 68% as of September 30, 2022 and December 31, 2021, respectively.

Global Atlantic's residential mortgage loan portfolio is comprised mainly of re-performing loans that were purchased at a discount after they were modified and returned to performing status, as well as prime jumbo loans and mortgage loans backed by single family rental properties. Global Atlantic has also extended financing to counterparties in the form of repurchase agreements secured by mortgage loans, including performing and non-performing mortgage loans.

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Global Atlantic’s consumer loan portfolio is primarily comprised of home improvement loans, solar panel loans, student loans and auto loans.

Reconciliations to GAAP Measures

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with GAAP to KKR's non-GAAP financial measures for the three and nine months ended September 30, 2022 and 2021:

Revenues


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	($ in thousands)
Total GAAP Revenues	$	1,858,413	$	4,483,365	$	3,192,500	$	12,182,552
Impact of Consolidation and Other	207,822		134,524		593,340		392,883
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)	572,863		(1,526,667)		2,442,080		(5,736,707)
Realized Carried Interest	496,494		413,114		1,799,870		1,183,826
Realized Investment Income	284,979		447,565		911,221		1,277,701
Capstone Fees	(20,748)		(25,178)		(55,743)		(66,286)
Expense Reimbursements	(10,733)		(34,857)		(77,612)		(122,642)
Insurance Adjustments:
Net Premiums	(480,462)		(974,903)		(627,104)		(1,698,912)
Policy Fees	(320,206)		(310,381)		(964,349)		(824,326)
Other Income	(35,632)		(31,938)		(102,888)		(82,160)
Investment Gains and Losses	(11,584)		(156,909)		176,559		83,153
Derivative Gains and Losses	184,303		53,179		945,996		47,151
Total Segment Revenues (1)	$	2,725,509	$	2,470,914	$	8,233,870	$	6,636,233

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Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders


	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
	($ in thousands)
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders (GAAP)	$	(91,646)	$	1,131,354	$	(993,350)	$	4,053,271
Preferred Stock Dividends	17,250		25,203		51,750		88,397
Net Income (Loss) Attributable to Noncontrolling Interests	(5,191)		2,125,088		(39,795)		7,318,218
Income Tax Expense (Benefit)	27,434		379,282		(128,836)		1,161,688
Income (Loss) Before Tax (GAAP)	$	(52,153)	$	3,660,927	$	(1,110,231)	$	12,621,574
Impact of Consolidation and Other	92,767		(1,478,384)		(185,329)		(5,000,537)
Equity-based Compensation - KKR Holdings(1)	19,500		8,764		119,834		35,734
Preferred Stock Dividends	—		(2,519)		—		(19,201)
Income Taxes Paid	(173,949)		(185,645)		(540,909)		(449,814)
Asset Management Adjustments:
Net Unrealized (Gains) Losses	233,265		(598,304)		1,734,293		(2,890,326)
Unrealized Carried Interest	1,094,782		(911,156)		3,946,182		(3,872,150)
Unrealized Carried Interest Compensation (Carry Pool)	(468,785)		397,449		(1,629,011)		1,667,447
Strategic Corporate Transaction-Related Charges (2)	17,925		7,362		88,129		17,497
Equity-based Compensation	50,566		44,488		156,259		138,196
Equity-based Compensation - Performance based	58,943		18,022		176,727		50,073

Insurance Adjustments:(3)
Net (Gains) Losses from Investments and Derivatives(3)	(54,585)		(75,241)		(120,033)		183,842
Strategic Corporate Transaction-Related Charges(3)	4,413		3,931		14,120		15,947
Equity-based and Other Compensation(3)	41,102		40,086		94,711		64,061
Amortization of Acquired Intangibles(3)	4,411		4,412		13,235		11,765
Income Taxes(3)	(44,468)		(9,046)		(125,927)		(63,148)
After-tax Distributable Earnings	$	823,734	$	925,146	$	2,632,050	$	2,510,960
Interest Expense	83,335		63,446		229,414		185,100
Preferred Stock Dividends	—		2,519		—		19,201
Net Income Attributable to Noncontrolling Interests	4,932		6,072		17,083		14,678
Income Taxes Paid	173,949		185,645		540,909		449,814
Distributable Operating Earnings	$	1,085,950	$	1,182,828	$	3,419,456	$	3,179,753
Insurance Segment Operating Earnings	(127,022)		(114,989)		(380,063)		(305,774)
Realized Performance Income	(497,860)		(432,784)		(1,837,925)		(1,222,403)
Realized Performance Income Compensation	322,927		274,955		1,180,990		797,965
Realized Investment Income	(284,979)		(447,565)		(911,221)		(1,277,701)
Realized Investment Income Compensation	42,747		67,142		136,683		191,663
Fee Related Earnings	$	541,763	$	529,587	$	1,607,920	$	1,363,503
Insurance Segment Operating Earnings	127,022		114,989		380,063		305,774
Realized Performance Income	497,860		432,784		1,837,925		1,222,403
Realized Performance Income Compensation	(322,927)		(274,955)		(1,180,990)		(797,965)
Realized Investment Income	284,979		447,565		911,221		1,277,701
Realized Investment Income Compensation	(42,747)		(67,142)		(136,683)		(191,663)
Depreciation and Amortization	9,045		6,064		24,411		18,257
Adjusted EBITDA	$	1,094,995	$	1,188,892	$	3,443,867	$	3,198,010

(1)Represents equity-based compensation expense in connection with the allocation of units of KKR Holdings, which were not dilutive to common stockholders of KKR & Co. Inc.

(3)Amounts include the portion allocable to noncontrolling interests (~39%).

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KKR & Co. Inc. Stockholders' Equity - Common Stock


	As of
	September 30, 2022		December 31, 2021
	($ in thousands)
KKR & Co. Inc. Stockholders' Equity - Series I and II Preferred Stock, Common Stock	$	16,335,253	$	16,466,372
Series C Mandatory Convertible Preferred Stock	1,115,792		1,115,792
Impact of Consolidation and Other	381,772		(1,048,569)
KKR Holdings and Other Exchangeable Securities	181,508		8,595,510
Accumulated Other Comprehensive Income (AOCI) and Other (Insurance)	5,602,167		259,777
Book Value	$	23,616,492	$	25,388,882

The following table ~~presents the~~provides a reconciliation of KKR's GAAP Shares of Common Stock Outstanding to Adjusted Shares:


	As of
	September 30, 2022	December 31, 2021
GAAP Shares of Common Stock Outstanding	859,833,444	595,663,618
Adjustments:
KKR Holdings Units	—	258,726,163
Exchangeable Securities (1)	2,465,810	1,376,655
Common Stock - Series C Mandatory Convertible Preferred Stock (2)	26,822,570	26,822,600
Adjusted Shares (3)	889,121,824	882,589,036




Unvested Equity Awards and Exchangeable Securities (4)	35,300,207	39,000,561

(1)Consists of vested restricted holdings units granted under our 2019 Equity Incentive Plan, which are exchangeable for shares of KKR & Co. Inc. common stock on a one-for-one basis.

(2)Assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted into shares of KKR & Co. Inc. common stock on September 30, 2022 and December 31, 2021.

(3)Amounts exclude unvested equity awards granted under our ~~segment balance sheet by asset class~~Equity Incentive Plans.

(4)Represents equity awards granted under our Equity Incentive Plans. Excludes market condition awards that did not meet their market-price based vesting conditions as of September 30, 2017. To the extent investments on our segment balance sheet, for example in energy, direct lending, CLOs and specialty finance, are realized at values below their cost, after-tax distributable earnings would be adversely affected by the amount of such loss, if any, during the period in which the realization event occurs.

As of September 30, 2017

Investments Cost
Carrying
Value

Carrying Value as a Percentage of
Total Investments

Private Equity Co-Investments and Other Equity $ 2,281,693
$ 2,697,619
33.2 %
Private Equity Funds 1,026,481
1,348,599
16.6 %
Private Equity Total 3,308,174
4,046,218
49.8 %

Energy 933,568
549,607
6.8 %
Real Estate ⁽¹⁾
744,935
795,042
9.8 %
Infrastructure 285,695
370,318
4.6 %
Real Assets Total 1,964,198
1,714,967
21.2 %

Special Situations 810,251
820,148
10.1 %
Direct Lending 100,188
97,111
1.2 %
Mezzanine 34,681
39,052
0.5 %
Alternative Credit Total 945,120
956,311
11.8 %
CLOs ⁽¹⁾
951,194
578,587
7.1 %
Liquid Credit 143,349
152,699
1.9 %
Specialty Finance 283,898
209,755
2.6 %
Credit Total 2,323,561
1,897,352
23.4 %

Other 439,839
464,977
5.6 %

Total Investments $ 8,035,772
$ 8,123,514
100.0 %

As of September 30, 2017
Significant Investments: ⁽²⁾
Cost
Carrying
Value
Carrying Value as a Percentage of
Total Investments
First Data Corporation (NYSE: FDC) $ 956,454
$ 1,279,098
15.7 %
USI, Inc. (financial services sector) 500,111
503,711
6.2 %
KKR Real Estate Finance Trust Inc. (NYSE: KREF) 324,997
325,000
4.0 %
PortAventura Entertainment S.A. (hotels/leisure sector) 233,132
255,821
3.1 %
Natural Gas Midstream Investment (infrastructure sector) 150,330
209,728
2.6 %
Total Significant Investments 2,165,024
2,573,358
31.6 %

Other Investments 5,870,748
5,550,156
68.4 %
Total Investments $ 8,035,772
$ 8,123,514
100.0 %

(1) Includes approximately $305.1 million and $325.0 million of CLOs and our ownership of KKR Real Estate Finance Trust Inc., respectively, that are not held for investment purposes and are held at cost.
(2) The significant investments include the top five investments (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their carrying values as of September 30, 2017. The carrying value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

~~The following tables provide reconciliations of KKR’s GAAP Condensed Consolidated Statements of Financial Condition to Total Reportable Segments Balance Sheet as of September 30, 2017~~2022 and December 31, ~~2016.~~2021.

As of September 30, 2017
(Amounts in thousands)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (GAAP BASIS) 1 2 3 4 5 TOTAL REPORTABLE SEGMENTS BALANCE SHEET

Assets
Cash and Cash Equivalents $ 2,436,566
—
—
1,187,207
—
—
$ 3,623,773
Cash and Short-term Investments
Investments 37,251,837
(26,522,559 ) (1,131,071 ) (1,474,693 ) —
—
8,123,514
Investments
—
—
1,474,693
—
—
1,474,693
Unrealized Carry
Other Assets 4,617,236
(1,002,082 ) —
(1,348,432 ) —
(301,928 ) 1,964,794
Other Assets
—
—
161,225
—
—
161,225
Corporate Real Estate
Total Assets $ 44,305,639
(27,524,641 ) (1,131,071 ) —
—
(301,928 ) $ 15,347,999

Liabilities and Equity
Debt Obligations $ 20,290,714
(17,650,947 ) —
(639,767 ) —
—
$ 2,000,000
Debt Obligations - KKR (ex-KFN)
—
—
639,767
—
—
639,767
Debt Obligations - KFN
—
—
373,750
—
—
373,750
Preferred Shares - KFN
Other Liabilities 4,149,491
(2,245,511 ) (1,131,071 ) —
—
(176,830 ) 596,079
Other Liabilities
Total Liabilities 24,440,205
(19,896,458 ) (1,131,071 ) 373,750
—
(176,830 ) 3,609,596

Redeemable Noncontrolling Interests 570,134
(570,134 ) —
—
—
—
—

Equity
Series A Preferred Units 332,988
—
—
(332,988 ) —
—
—

Series B Preferred Units 149,566
—
—
(149,566 ) —
—
—

KKR & Co. L.P. Capital - Common Unitholders 6,380,654
166,480
—
(17,446 ) 4,812,964
(125,098 ) 11,217,554
Book Value
Noncontrolling Interests 12,432,092
(7,224,529 ) —
(373,750 ) (4,812,964 ) —
20,849
Noncontrolling Interests
—
—
500,000
—
—
500,000
Preferred Units
Total Liabilities and Equity $ 44,305,639
(27,524,641 ) (1,131,071 ) —
—
(301,928 ) $ 15,347,999

1 IMPACT OF CONSOLIDATION OF INVESTMENT VEHICLES AND OTHER ENTITIES
2 CARRY POOL RECLASSIFICATION
3 OTHER RECLASSIFICATIONS
4 NONCONTROLLING INTERESTS HELD BY KKR HOLDINGS L.P. AND OTHER
5 EQUITY IMPACT OF KKR MANAGEMENT HOLDINGS CORP.

As of December 31, 2016
(Amounts in thousands)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (GAAP BASIS) 1 2 3 4 5 TOTAL REPORTABLE SEGMENTS BALANCE SHEET

Assets
Cash and Cash Equivalents $ 2,508,902
—
—
878,771
—
—
$ 3,387,673
Cash and Short-term Investments
Investments 31,409,765
(22,249,206 ) (987,994 ) (1,213,692 ) —
—
6,958,873
Investments
—
—
1,213,692
—
—
1,213,692
Unrealized Carry
Other Assets 5,084,230
(2,118,364 ) —
(1,039,996 ) —
(314,192 ) 1,611,678
Other Assets
—
—
161,225
—
—
161,225
Corporate Real Estate
Total Assets $ 39,002,897
(24,367,570 ) (987,994 ) —
—
(314,192 ) $ 13,333,141

Liabilities and Equity
Debt Obligations $ 18,544,075
(16,145,515 ) —
(398,560 ) —
—
$ 2,000,000
Debt Obligations - KKR (ex-KFN)
—
—
398,560
—
—
398,560
Debt Obligations - KFN
—
—
373,750
—
—
373,750
Preferred Shares - KFN
Other Liabilities 3,340,739
(1,945,039 ) (987,994 ) —
—
(163,030 ) 244,676
Other Liabilities
Total Liabilities 21,884,814
(18,090,554 ) (987,994 ) 373,750
—
(163,030 ) 3,016,986

Redeemable Noncontrolling Interests 632,348
(632,348 ) —
—
—
—

Equity
Series A Preferred Units 332,988
—
—
(332,988 ) —
—

Series B Preferred Units 149,566
—
—
(149,566 ) —
—

KKR & Co. L.P. Capital - Common Unitholders 5,457,279
118,635
—
(17,446 ) 4,389,285
(151,162 ) 9,796,591
Book Value
Noncontrolling Interests 10,545,902
(5,763,303 ) —
(373,750 ) (4,389,285 ) —
19,564
Noncontrolling Interests
—
—
500,000
—
—
500,000
Preferred Units
Total Liabilities and Equity $ 39,002,897
(24,367,570 ) (987,994 ) —
—
(314,192 ) $ 13,333,141

1 IMPACT OF CONSOLIDATION OF INVESTMENT VEHICLES AND OTHER ENTITIES
2 CARRY POOL RECLASSIFICATION
3 OTHER RECLASSIFICATIONS
4 NONCONTROLLING INTERESTS HELD BY KKR HOLDINGS L.P. AND OTHER
5 EQUITY IMPACT OF KKR MANAGEMENT HOLDINGS CORP.

~~The following tables provide reconciliations of KKR’s GAAP Common Units Outstanding to Adjusted Units, Adjusted Units Eligible for Distribution and Outstanding Adjusted Units:~~

As of As of
September 30, 2017 December 31, 2016
GAAP Common Units Outstanding - Basic 473,134,387
452,380,335
Adjustments:

Unvested Common Units ⁽¹⁾
31,116,886
37,519,436
Other Exchangeable Securities ⁽²⁾
3,987,713
4,600,320
GAAP Common Units Outstanding - Diluted 508,238,986
494,500,091
Adjustments:

KKR Holdings Units ⁽³⁾
339,845,707
353,757,398
Adjusted Units 848,084,693
848,257,489
Adjustments:
Unvested Common Units (31,116,886 ) (37,519,436 )
Adjusted Units Eligible for Distribution 816,967,807
810,738,053
Adjustments:
Vested Other Exchangeable Securities ⁽²⁾
(3,987,713 ) (4,600,320 )
Outstanding Adjusted Units 812,980,094
806,137,733

~~(1)~~

Represents equity awards granted under the Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under the Equity Incentive Plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business. Year-end 2016 equity awards were granted before December 31, 2016 (except for awards to our named executive officers), rather than, as has been historical practice, after the end of the year. As a result, adjusted units increased in the fourth quarter of 2016, rather than in the first quarter of 2017.


~~(2)~~	~~Represents securities in a subsidiary of a KKR Group Partnership and of KKR & Co. L.P. that are exchangeable into KKR & Co. L.P. common units issued in connection with the acquisition of Avoca.~~


~~(3)~~	~~Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.~~

Liquidity

We manage our liquidity and capital requirements by (i) focusing on our cash flows before the consolidation of our funds and CFEs and the effect of changes in short term assets and liabilities, which we anticipate will be settled for cash within one ~~year.~~year, and (ii) seeking to maintain access to sufficient liquidity through various sources. The overall liquidity framework and cash management approach of our insurance business are also based on seeking to build an investment portfolio that is cash flow matched, providing cash inflows from insurance assets that meet our insurance companies' expected cash outflows to pay their liabilities. Our primary cash flow activities ~~on a segment basis~~ typically involve: (i) generating cash flow from operations; (ii) generating income from investment activities, by investing in investments that generate yield (namely interest and dividends), as well as through the sale of investments and other assets; (iii) funding capital commitments that we have made to, and advancing capital to, our funds and CLOs; (iv) developing and funding new investment strategies, investment products, and other growth initiatives, including acquisitions of other investments, assets, and businesses; (v) underwriting and funding commitments in our capital markets business; (vi) distributing cash flow to our ~~unitholders, certain holders of certain exchangeable securities~~stockholders and holders of our ~~Series A and Series B Preferred Units;~~preferred stock; and (vii) paying borrowings, interest payments, and repayments under credit agreements, our senior and subordinated notes, and other borrowing arrangements. See ~~"-Liquidity -~~ "—Liquidity—Liquidity ~~Needs - Distributions.~~Needs—Dividends."

See "Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

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Sources of Liquidity

Our primary sources of liquidity consist of amounts received from: (i) our operating activities, including the fees earned from our funds, portfolio companies, and capital markets transactions; (ii) realizations on carried interest from our investment funds; (iii) interest and dividends from investments that generate yield, including our investments in CLOs; (iv) in our insurance business, cash inflows in respect of new premiums, policyholder deposits, reinsurance transactions and funding agreements, including through memberships in Federal Home Loan Banks; (v) realizations on and sales of investments and other assets, including the transfers of investments or other assets for fund formations (including CLOs and ~~(v)~~other investment vehicles); and (vi) borrowings, including advances under our revolving credit facilities, debt offerings, committed repurchase agreements, uncommitted financing, and other borrowing arrangements. In addition, we may generate cash proceeds from ~~sales~~issuances of our or our subsidiaries' equity securities.

Many of our investment funds provide carried interest. With respect to our private equity funds, carried interest is distributed to the general partner of a private equity fund with a clawback provision only after all of the following are met: (i) a realization event has occurred (e.g., sale of a portfolio company, dividend, etc.); (ii) the vehicle has achieved positive overall investment returns since its inception, in excess of performance hurdles where ~~applicable;~~applicable, and is accruing carried interest; and (iii) with respect to investments with a fair value below cost, cost has been returned to fund investors in an amount sufficient to reduce remaining cost to the

investments' fair value. As of September 30, ~~2017,~~2022, certain of our funds had met the first and second criteria, as described above, but did not meet the third criteria. In these cases, carried interest accrues on the consolidated statement of operations, but will not be distributed in cash to us as the general partner of an investment fund upon a realization event. For a fund that has a fair value above cost, overall, and is otherwise accruing carried interest, but has one or more investments where fair value is below cost, the shortfall between cost and fair value for such investments is referred to as a "netting hole." When netting holes are present, realized gains on individual investments that would otherwise allow the general partner to receive carried interest distributions are instead used to return invested capital to our funds' limited partners in an amount equal to the netting hole. Once netting holes have been filled with either (a) return of capital equal to the netting hole for those investments where fair value is below cost or (b) increases in the fair value of those investments where fair value is below cost, then realized carried interest will be distributed to the general partner upon a realization event. A fund that is in a position to pay cash carry refers to a fund for which carried interest is expected to be paid to the general partner upon the next material realization event, which includes funds with no netting holes as well as funds with a netting hole that is sufficiently small in size such that the next material realization event would be expected to result in the payment of carried interest. Strategic investor partnerships with fund investors may require netting across the various funds in which they invest, which may reduce the carried interest we otherwise would have earned if such fund investors were to have invested in our funds without the existence of athe strategic investor partnership. See "Risk Factors—Risks Related to Our Business—Strategic investor partnerships have longer investment periods and invest in multiple strategies, which may increase the possibility of a 'netting hole,' which will result in less carried interest for us, as well as clawback liabilities" in our Annual Report.

As of September 30, ~~2017,~~2022, netting holes in excess of $50 million existed at ~~five~~none of our private equity, funds, which were our European Fund IV, European Fund III, Millennium Fund, Asian Fund II and North America Fund XI which had netting holes of approximately $149 million, $108 million, $82 million, $63 million and $62 million, respectively.growth, impact, or infrastructure funds. In accordance with the criteria set forth above, other funds currently have and may in the future develop netting holes, and netting holes for those and other funds may otherwise increase or decrease in the future.

We have access to funding under various credit facilities, other borrowing arrangements and other sources of liquidity that we have entered into with major financial institutions or which we receive from the capital markets. ~~The following describes these sources of liquidity.~~

~~Revolving Credit Agreements, Senior Notes, KFN Debt Obligations & KFN Securities~~

For a discussion of ~~KKR's~~our debt obligations, including our debt securities, revolving credit agreements ~~senior notes, KFN debt obligations~~ and ~~KFN securities,~~loans, see Note 1017 "Debt Obligations" ~~to the audited financial statements included~~ in our Annual Report on Form 10-K. The information presented below supplements and updates, and should be read in conjunction with, such information. No amounts were borrowed under our corporate credit agreement with HSBC Bank USA for the three and nine months ended September 30, 2017. With respect to the KCM Credit Agreement, no amounts were borrowed and repaid for the three months ended September 30, 2017. For the nine months ended September 30, 2017, $847 million was borrowed and repaid. As of September 30, 2017, no amounts were drawn under the KCM Credit Agreement, but a letter of credit was outstanding in the amount of $12 million which reduces the overall capacity of the KCM Credit Agreement.financial statements.

~~KCM Short-Term Credit Agreement~~

On June 29, 2017, KKR Capital Markets entered into a 364-day revolving credit agreement (the “KCM Short-Term Credit Agreement”) with a major financial institution for use in KKR’s capital markets business. This financial institution also provides the existing KCM Credit Agreement. The KCM Short-Term Credit Agreement provides for revolving borrowings of up to $750 million, expires on June 28, 2018, and ranks pari passu with the KCM Credit Agreement. Borrowings under the KCM Short-Term Credit Agreement may only be used to facilitate the settlement of debt transactions syndicated by KKR’s capital markets business. Obligations under the KCM Short-Term Credit Agreement are limited solely to entities involved in KKR’s capital markets business, and liabilities under the KCM Short-Term Credit Agreement are non-recourse to other parts of KKR. For the three and nine months ended September 30, 2017, $145 million was borrowed and repaid under the KCM Short-Term Credit Agreement.

~~Preferred Units~~

For a discussion of KKR's Series A and Series B Preferred Units, see Note 15 "Equity" to the audited financial statements and "--Liquidity Needs--Preferred Units" in the management's discussion and analysis of financial condition and results of operations, each of which is included in our Annual Report on Form 10-K.

~~Common Units~~

On May 16, 2014, KKR & Co. L.P. filed a registration statement with the Securities and Exchange Commission for the sale by us from time to time of up to 5,000,000 common units of KKR & Co. L.P. to generate cash proceeds (a) up to (1) the amount of withholding taxes, social benefit payments or similar payments payable by us in respect of awards granted pursuant to the Equity Incentive Plan, and (2) the amount of cash delivered in respect of awards granted pursuant to the Equity Incentive Plan that are settled in cash instead of common units; and (b) to the extent the net proceeds from the sale of common units exceeds the amounts due under clause (a), for general corporate purposes. This registration statement expired on June 4, 2017 with 4,173,039 common units issued and sold.

Liquidity Needs

We expect that our primary liquidity needs will consist of cash required to:

•continue to support and grow our Asset Management business lines, including ~~seeding new strategies,~~ funding our capital commitments made to existing and future funds, ~~co-investments~~pay the costs related to fundraising and ~~any net capital requirements~~launching of ~~our capital markets companies~~new strategies, and otherwise supporting investment vehicles which we sponsor;

•continue to support and grow our Insurance businesses;

•to grow and expand our businesses generally, including by acquiring or launching new, complementary or adjacent businesses;

~~warehouse investments in portfolio companies~~

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Table of Contents

•seed or ~~other~~warehouse investments for the benefit of ~~one~~new strategies or ~~more of our~~ funds, ~~vehicles, accounts or~~including CLOs, pending the contribution of committed capital by the investors in such ~~vehicles,~~funds, and advancing capital to ~~them~~our funds for operational or other needs;

•pay interest expense;

•service debt obligations, including the payment of obligations upon maturity or redemption, as well as any contingent liabilities that may give rise to future cash ~~payments;~~payments, including funding requirements to levered investment vehicles or structured transactions;

•fund cash operating expenses and contingencies, including litigation ~~matters;~~ matters and guarantees;

•pay corporate income taxes and other taxes;

•pay policyholders and amounts in our insurance business related to investment, reinvestment, reinsurance or funding agreement activity;

•pay amounts that may become due under our tax receivable agreement with KKR Holdings;

~~make~~•pay cash ~~distributions~~dividends in accordance with our ~~distribution~~dividend policy for our common ~~units~~stock or the terms of our preferred ~~units;~~ stock;

•underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets ~~business;~~business, and fund any net capital or regulatory requirements of our capital markets companies;

~~make future purchase price payments~~•post or return collateral in ~~connection with our proprietary investments, such as our strategic manager partnership with Marshall Wace, to the extent not paid by newly issued common units;~~respect of derivative contracts;

•support and acquire other assets for our Principal Activities ~~segment,~~business line, including other businesses, investments and ~~assets;~~assets, some of which may be required to satisfy risk retention requirements for CLOs (to the extent they may apply); and

•repurchase ~~KKR & Co. L.P.~~KKR's common ~~units~~stock or retire equity awards pursuant to the ~~unit~~share repurchase program ~~announced on October 27, 2015 and subsequently increased on February 9, 2017.~~or repurchase or redeem other securities issued by KKR.

~~KKR & Co. L.P. Unit Repurchase Program~~

~~On October 27, 2015, KKR announced the authorization~~For a discussion of a program providing for the repurchase by KKR of up to $500 million in the aggregate of its outstanding common units. On February 9, 2017, KKR announced the authorization of an incremental $250 million under this unit repurchase program. Under this unitKKR's share repurchase program, ~~units may be repurchased from time to time~~see Note 22 "Equity" in ~~open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount~~our financial statements.

190

Table of any unit repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. KKR expects that the program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used to repurchase common units. The program does not require KKR to repurchase any specific number of common units, and the program may be suspended, extended, modified or discontinued at any time. Since inception of the unit repurchase program through October 23, 2017, KKR has repurchased and canceled approximately 31.7 million outstanding common units for approximately $459 million. There is $291 million remaining as of October 23, 2017 under the current repurchase program. No units were repurchased during the first nine months of 2017.Contents

In addition to the purchases of common units above, (1) cash may be used to pay the amount of withholding taxes, social benefit payments or similar payments payable by KKR in respect of awards granted pursuant to the Equity Incentive Plan and (2) cash may be delivered in respect of certain awards granted pursuant to the Equity Incentive Plan and Other Exchangeable Securities. During the first nine months of 2017, KKR canceled equity awards representing 3.1 million common units to satisfy tax and cash-settlement obligations of $58.0 million in connection with their vesting. See "--Item 2. Unregistered Sales of Equity Securities and Use of Proceeds."

Capital Commitments

The agreements governing our active investment funds generally require the general partners of the funds to make minimum capital commitments to such funds, which ~~usually~~generally range from 2% to 8% of a fund's total capital commitments at final ~~closing; however, the size of our general partner commitment to~~closing, but may be greater for certain funds (i) where we are pursuing newer strategies, ~~may exceed this range.~~ (ii) where third party investor demand is limited, and (iii) where a larger commitment is consistent with the asset allocation strategy for our Principal Activities business line, including core investments and exposure to the Asia-Pacific region.

The following table presents our uncalled commitments to our active investment funds and other vehicles as of September 30, ~~2017:~~2022:

Uncalled
Commitments
Private Markets ($ in thousands)
Americas Fund XII $ 975,000
Asian Fund III 500,000
Health Care Strategic Growth Fund 150,000
Real Estate Partners Americas II 150,000
Next Generation Technology Growth Fund 97,100
Energy Income and Growth 86,400
European Fund IV 79,800
Global Infrastructure Investors II 74,200
Real Estate Partners Europe 58,300
Real Estate Credit Opportunity Partners 45,000
Other Private Markets Vehicles 332,500
Total Private Markets Commitments 2,548,300

Public Markets
Special Situations Fund II 173,700
Lending Partners Europe 26,700
Lending Partners III 24,700
Other Public Markets Vehicles 164,000
Total Public Markets Commitments 389,100

Total Uncalled Commitments $ 2,937,400


	Uncalled Commitments
Private Equity	($ in millions)
Core Investment Vehicles	$	3,717
European Fund VI	750
Asian Fund IV	393
North America Fund XIII	389
Global Impact Fund II	145
Health Care Strategic Growth Fund II	137
Next Generation Technology Growth Fund II	26












Other Private Equity Vehicles	1,884
Total Private Equity Commitments	7,441

Real Assets
Asia Pacific Infrastructure Investors II	357
Global Infrastructure Investors IV	345
Asia Real Estate Partners	176
Diversified Core Infrastructure Fund	150
Asia Pacific Infrastructure Investors	107
Real Estate Partners Americas III	96
Real Estate Partners Europe II	78
Real Estate Credit Opportunity Partners II	20











Other Real Assets Vehicles	391
Total Real Assets Commitments	1,720

Credit and Liquid Strategies
Asset-Based Finance Partners	101
Asia Credit	97
Dislocation Opportunities Fund	96
Lending Partners Europe II	13
Lending Partners III	12








Other Credit and Liquid Strategies Vehicles	1,184
Total Credit and Liquid Strategies Commitments	1,503

Total Uncalled Commitments	$	10,664

Other Commitments

In addition to the uncalled commitments to our investment funds as shown above, KKR has entered into contractual commitments primarily with respect to ~~(i) the purchase of investments and other assets in its Principal Activities segment, and (ii)~~ underwriting transactions, debt financing, revolving credit facilities, and equity syndications in our Capital Markets ~~segment.~~business line. As of September 30, ~~2017,~~2022, these commitments amounted to ~~$93.4 million and $255.7 million, respectively.~~ $0.7 billion.

Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. ~~The unfunded commitments shown for our Capital Markets segment are shown without reflecting arrangements that may reduce the actual amount of contractual commitments shown.~~ Our capital ~~market~~markets business ~~entered into an arrangement that reduces~~has arrangements with third parties, which reduce our risk under certain circumstances when underwriting certain debt ~~transactions.~~transactions, and thus our unfunded commitments as of September 30, 2022 have been reduced to reflect the amount to be funded by such third parties. In the case of purchases of investments or assets in our Principal Activities ~~segment,~~business line, the amount to be funded includes

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amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be ~~less than shown.~~

~~Prisma Capital Partners~~

~~As of September 30, 2017, no amounts were due under the contingent consideration arrangement~~less. For more information about our capital markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to risks, and our risk management strategy may not be effective or sufficient" in connection with the acquisition of the equity interests of Prisma on October 1, 2012. The final measurement date for such contingent consideration was June 30, 2017. On June 1, 2017, KKR completed its previously announced transaction to combine Pacific Alternative Asset Management Company, LLC, or PAAMCO, with Prisma Capital Partners LP, formerly known as KKR Prisma. See "--Overview - Business Segments - Public Markets."

~~Investment in Marshall Wace~~

On November 2, 2015, KKR entered into a long-term strategic relationship with Marshall Wace and its affiliates and acquired a 24.9% interest in Marshall Wace through a combination of cash and common units. Subject to the exercise of a put option by Marshall Wace or a call option by KKR, at subsequent closings to occur in the second, third and fourth years following the initial closing described above, and subject to satisfaction or waiver of certain closing conditions, including regulatory approvals, KKR may at each such closing subscribe (or be required to subscribe) for an incremental 5% equity interest, for ultimate aggregate ownership of up to 39.9% of Marshall Wace. The exercise of such options would require the use of cash and/or KKR common units. KKR's investment in Marshall Wace is accounted for using the equity method of accounting.

our Annual Report.

Tax Receivable Agreement

~~We and certain intermediate holding companies that are taxable corporations for U.S. federal, state and local income tax purposes, may be required to acquire~~On May 31, 2022, KKR ~~Group Partnership Units from time to time pursuant to our exchange agreement with KKR Holdings. KKR Management Holdings L.P. made an election under Section 754 of~~terminated the Internal Revenue Code that will remain in effect for each taxable year in which an exchange of KKR Group Partnership Units for common units occurs, which may result in an increase in our intermediate holding companies' share of the tax basis of the assets of the KKR Group Partnerships at the time of an exchange of KKR Group Partnership Units. Certain of these exchanges are expected to result in an increase in our intermediate holding companies' share of the tax basis of the tangible and intangible assets of the KKR Group Partnerships, primarily attributable to a portion of the goodwill inherent in our business that would not otherwise have been available. This increase in tax basis may increase depreciation and amortization deductions for tax purposes and therefore reduce the amount of income tax our intermediate holding companies would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

~~We have entered into a~~ tax receivable agreement with KKR Holdings ~~which requires our intermediate holding companies~~other than with respect to ~~pay to KKR Holdings, or to current and former principals who have exchanged~~exchanges of KKR Holdings units ~~for KKR common units as transferees of KKR Group Partnership Units, 85%~~prior to the closing of the ~~amount~~Reorganization Mergers. As of ~~cash savings, if any,~~September 30, 2022, an undiscounted payable of $400.1 million has been recorded in ~~U.S. federal, state and local income tax that~~due to affiliates in the ~~intermediate holding companies realize as a result~~financial statements representing management's best estimate of the ~~increase in tax basis described above, as well as 85% of the amount of any such savings the intermediate holding companies realize as a result of increases in tax basis that arise due~~amounts currently expected to future payments under the agreement. We expect our intermediate holding companies to benefit from the remaining 15% of cash savings, if any, in income tax that they realize. A termination of the agreement or a change of control could give rise to similar payments based on tax savings that we would be deemed to realize in connection with such events. In the event that other of our current or future subsidiaries become taxable as corporations and acquire KKR Group Partnership Units in the future, or if we become taxable as a corporation for U.S. federal income tax purposes, we expect that each will become subject to a tax receivable agreement with substantially similar terms.

These payment obligations are obligations of our intermediate holding companies and not the KKR Group Partnerships. As such, cash payments received by common unitholders may vary from those received by holders of KKR Group Partnership Units held by KKR Holdings and its current and former principals to the extent payments are made to those partiesowed under the tax receivable agreement. ~~Payments made under the tax receivable agreement are required to be made within 90 days~~As of the filing of the tax returns of our intermediate holding companies, which may result in a timing difference between the tax savings received by KKR's intermediate holdings companies and the cash payments made to the selling holders of KKR Group Partnership Units.

~~For the three and nine months ended~~ September 30, ~~2017 and 2016, no~~2022, approximately $60.4 million of cumulative cash payments have been made under the tax receivable agreement. As of September 30, 2017, $4.2 million of cumulative income tax savings have been realized. See "-Liquidity-Other Liquidity Needs- Contractual Obligations, Commitments and Contingencies" for a discussion of amounts payable and cumulative cash payments made under this agreement.

~~Distributions~~Dividends

A ~~distribution~~dividend of ~~$0.17~~$0.155 per share of our common ~~unit~~stock has been declared ~~which~~and will be paid on November ~~21, 2017~~29, 2022 to holders of record of our common ~~units~~stock as of the close of business on November ~~6, 2017. Under KKR's current distribution policy for its common units, KKR intends to make equal quarterly distributions to holders~~14, 2022.

A dividend of ~~common units in an amount~~$0.75 per share of ~~$0.17 per common unit per quarter, beginning with the financial results reported for the first quarter of 2017.~~

~~A distribution of $0.421875 per~~ Series AC Mandatory Convertible Preferred ~~Unit~~Stock has been declared and set aside for payment on December 15, ~~2017~~2022 to holders of record of Series AC Mandatory Convertible Preferred ~~Units~~Stock as of the close of business on December 1, ~~2017. A distribution of $0.406250 per Series B Preferred Unit has been declared and set aside for payment on December 15, 2017 to~~2022.

When KKR & Co. Inc. receives distributions from KKR Group Partnership, holders of ~~record~~exchangeable securities receive their pro rata share of ~~Series B Preferred Units as of the close of business on December 1, 2017.~~ such distributions from KKR Group Partnership.

The declaration and payment of dividends to our common stockholders will be at the sole discretion of our board of directors, and our dividend policy may be changed at any ~~future distributions on preferred or common units are~~time. The declaration of dividends is subject to the discretion of ~~the~~our board of directors based on a number of factors, including KKR’s future financial performance and other considerations that the ~~general partner~~board deems relevant, and compliance with the terms of KKR & Co. ~~L.P.~~Inc.'s certificate of incorporation and applicable law. For U.S. federal income tax purposes, any dividends we pay (including dividends on our preferred stock) generally will be treated as qualified dividend income for U.S. individual stockholders to the ~~terms~~extent paid out of ~~its limited partnership agreement.~~our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. There can be no assurance that future ~~distributions~~dividends will be made as intended or at all ~~that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR & Co. L.P.~~ or that any particular ~~distribution~~dividend policy for our common ~~units~~stock will be maintained. Furthermore, the declaration and payment of distributions by ~~the~~ KKR Group ~~Partnerships~~Partnership and our other subsidiaries may also be subject to legal, contractual and regulatory restrictions, including restrictions contained in our debt agreements and the terms of the preferred units of ~~the~~ KKR Group ~~Partnerships.~~Partnership.

When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships.

Other Liquidity Needs

~~We may also be required~~From time to time, we fund various underwriting, ~~syndications~~syndication and fronting commitments in our capital markets business in connection with the arranging or underwriting of loans, securities or other financial instruments, for which ~~has increased in significance in the first nine months~~we may draw all or substantially all of ~~2017 and may continue to be significant in future quarters.~~our availability for borrowings under our available credit facilities. We generally expect ~~that~~these borrowings by our Capital Markets business line to be repaid promptly as these commitments ~~will be~~are syndicated to third parties or otherwise fulfilled or terminated, although we may in some instances elect to retain a portion of the commitments for our own investment.

For more information about our Capital Markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to risks, and our risk management strategy may not be effective or sufficient" in our Annual Report.

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, we (including Global Atlantic) and our consolidated funds and CFEs enter into contractual arrangements that may require future cash payments. ~~The following table sets forth information relating~~Contractual arrangements include (1) commitments to ~~anticipated future cash payments~~fund the purchase of investments or other assets (including obligations to fund capital commitments as the general partner of ~~September 30, 2017 excluding consolidated funds~~our investment funds) or to fund collateral for derivative transactions or otherwise, (2) obligations arising under our senior notes, subordinated notes, and ~~CFEs~~other indebtedness, (3) commitments by our capital markets business to underwrite transactions or to lend capital, (4) obligations arising under insurance policies written, (5) other contractual obligations, including servicing agreements with ~~a reconciliation~~third-party administrators for insurance policy administration, and (6) commitments to fund the business, operations or investments of ~~such amounts to the anticipated future cash payments of KKR including consolidated funds and CFEs.~~our subsidiaries.

192

Payments due by Period
Types of Contractual Obligations <1 Year 1-3 Years 3-5 Years >5 Years Total
($ in millions)
Uncalled commitments to investment funds ⁽¹⁾
$ 2,937.4
$ —
$ —
$ —
$ 2,937.4
Debt payment obligations ⁽²⁾
—
500.0
—
2,139.8
2,639.8
Interest obligations on debt ⁽³⁾
143.2
282.5
218.8
2,027.3
2,671.8
Underwriting commitments ⁽⁴⁾
137.3
—
—
—
137.3
Lending commitments ⁽⁵⁾
118.4
—
—
—
118.4
Purchase commitments ⁽⁶⁾
77.6
15.5
0.3
—
93.4
Lease obligations 51.7
95.0
31.9
17.0
195.6
Corporate real estate ⁽⁷⁾
—
292.5
—
—
292.5
Total Contractual Obligations of KKR 3,465.6
1,185.5
251.0
4,184.1
9,086.2
Plus: Uncalled commitments of consolidated funds ⁽⁸⁾
2,285.1
—
—
—
2,285.1
Plus: Debt payment obligations of consolidated funds and CFEs ⁽⁹⁾
740.7
1,475.2
606.4
14,101.2
16,923.5
Plus: Interest obligations of consolidated funds and CFEs ⁽¹⁰⁾
567.1
1,132.6
1,054.2
2,257.8
5,011.7
Total Consolidated Contractual Obligations $ 7,058.5
$ 3,793.3
$ 1,911.6
$ 20,543.1
$ 33,306.5

Table of Contents

~~(1)~~

These uncalled commitments represent amounts committed by us to fund a portion of the purchase price paid for each investment made by our investment funds which are actively investing. Because capital contributions are due on demand, the above commitments have been presented as falling due within one year. However, given the size of such commitments and the pace at which our investment funds make investments, we expect that the capital commitments presented above will be called over a period of several years. See "—Liquidity—Liquidity Needs."


~~(2)~~	Amounts include (i) 2020 Senior Notes, 2043 Senior Notes and 2044 Senior Notes of $2.0 billion gross of unamortized discount, (ii) KFN 2032 Senior notes of $0.4 billion gross of unamortized discount and (iii) KFN Junior Subordinated Notes of $0.2 billion, gross of unamortized discount. KFN's debt obligations are non-recourse to KKR beyond the assets of KFN.

~~(3)~~

These interest obligations on debt represent estimated interest to be paid over the maturity of the related debt obligation, which has been calculated assuming the debt outstanding at September 30, 2017 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of September 30, 2017, including both variable and fixed rates, as applicable, provided for by the relevant debt agreements. The amounts presented above include accrued interest on outstanding indebtedness.


~~(4)~~	Represents various commitments in our capital markets business in connection with the underwriting of loans, securities and other financial instruments. These commitments are shown net of amounts syndicated.


~~(5)~~	~~Represents obligations in our capital markets business to lend under various revolving credit facilities.~~


~~(6)~~	~~Represents commitments of KKR and KFN to fund the purchase of various investments.~~


~~(7)~~	Represents the purchase price due upon delivery of a new KKR office being constructed, all or a portion of which represents construction financing obtained by the developer and may be refinanced upon delivery of the completed office.


~~(8)~~	~~Represents uncalled commitments of our consolidated funds excluding KKR's portion of uncalled commitments as the general partner of the respective funds.~~

~~(9)~~

Amounts include (i) financing arrangements entered into by our consolidated funds with the objective of providing liquidity to the funds of $2.5 billion, (ii) debt securities issued by our consolidated CLOs of $9.4 billion and (iii) debt securities issued by our consolidated CMBS entities of $5.0 billion. Debt securities issued by consolidated CLOs and CMBS entities are supported solely by the investments held at the CLO and CMBS vehicles and are not collateralized by assets of any other KKR entity. Obligations under financing arrangements entered into by our consolidated funds are generally limited to our pro-rata equity interest in such funds. Our management companies bear no obligations to repay any financing arrangements at our consolidated funds.

~~(10)~~

The interest obligations on debt of our consolidated funds and CFEs represent estimated interest to be paid over the maturity of the related debt obligation, which has been calculated assuming the debt outstanding at September 30, 2017 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of September 30, 2017, including both variable and fixed rates, as applicable, provided for by the relevant debt agreements. The amounts presented above include accrued interest on outstanding indebtedness.

The commitment table above excludes contractual amounts owed under the tax receivable agreement because the ultimate amount and timing of the amounts due are not presently known. As of September 30, 2017, a payable of $141.9 million has been recorded in due to affiliates in the condensed consolidated financial statements representing management's best estimate of the amounts currently expected to be owed under the tax receivable agreement. As of September 30, 2017, approximately $24.0 million of cumulative cash payments have been made under the tax receivable agreement. See "—Liquidity Needs—Tax Receivable Agreement."

We may incur contingent liabilities for claims that may be made against us in the future. We enter into contracts that contain a variety of representations, warranties and covenants, including indemnifications. For example, we and certain of our investment funds ~~and KFN~~ have provided certain indemnities relating to environmental and other matters and have provided nonrecourse carve-out guarantees for violations of bankruptcy remoteness restrictions and for fraud, willful misconduct and other ~~customary~~ wrongful acts, each in connection with the financing of (i) certain real estate investments that we have ~~made. In addition,~~made, including KKR's corporate real estate, and (ii) certain investment vehicles we ~~have also provided~~manage or sponsor.

We provide credit support to certain ~~of our subsidiaries’~~subsidiaries' obligations in connection with a limited number of investment vehicles that we manage. For example, ~~KKR has~~we have guaranteed the obligations of a general partner to post collateral on behalf of its investment vehicle in connection with such ~~vehicle’s~~vehicle's derivative ~~transactions,~~transactions. We have also entered into a contingent guarantee for a subsidiary's loan repayment obligations, which does not become effective unless and until its loan becomes accelerated due to certain specified events of default involving the investment vehicles managed by it. We also (i) provided credit support regarding repayment and funding obligations to third party lenders on behalf of certain employees, excluding executive officers, in connection with their personal investments in KKR investment funds and a levered multi-asset investment vehicle and (ii) provided credit support to one of our hedge fund partnerships.

We expect to continue to guarantee, from time to time, the obligations of our subsidiaries' funding obligations to our investment vehicles. These include KKR's obligations to fund its capital commitments to various levered multi-asset investment vehicles, which are special purpose entities that invest in various funds and co-investments sponsored by KKR. In addition, we have also agreed for certain of our investment vehicles, including certain levered multi-asset investment vehicles, to fund or otherwise be liable for ~~certain~~a portion of their investment losses (up to a maximum of approximately $116 million) and/or ~~for providing~~to provide them with liquidity inupon certain termination events (the maximum amount of which is unknown until the ~~events specified in~~scheduled termination date of the ~~governing documents of another~~ investment ~~vehicle. Our maximum exposure under these arrangements is currently unknown as our liabilities for these matters would require a claim to be made against us in the future.~~vehicle).

The partnership documents governing our carry-paying funds ~~including funds and vehicles relating to private equity, mezzanine, infrastructure, energy, direct lending and special situations investments,~~ generally include a "clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. Excluding carried interest received by the general partners of funds that were not contributed to us in the KPE Transaction, as of September 30, 2017, $47.3 million of carried interest was subject to this clawback obligation, assuming that all applicable carry paying funds were liquidated at their September 30, 2017 fair values. Had the investments in such funds been liquidated at zero value, the clawback obligation would have been $1,990.7 million. Carried interest is recognized in the statement of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of our investment balance as this is where carried interest is initially recorded.

Prior to the KPE Transaction in 2009, certain principals who received carried interest distributions with respect to certain private equity funds contributed to us had personally guaranteed, on a several basis and subject to a cap, the contingent obligations of the general partners of such private equity funds to repay amounts to fund investors pursuant to the general partners' clawback obligations. The terms of the KPE Transaction require that principals remain responsible for any clawback obligations relating to carry distributions received prior to the KPE Transaction, up to a maximum of $223.6 million. Through investment realizations, the principals' potential exposure has been reduced to $72.2 million as of September 30, 2017. Using valuations as of September 30, 2017, $19.7 million would be due with respect to the clawback obligation required to be funded by principals. Carry distributions arising subsequent to the KPE Transaction may give rise to clawback obligations that may be allocated generally to us and to persons who participate in the carry pool. In addition, ~~guarantees~~Global Atlantic is obligated to make annual payments out of available cash to its former owner, and Global Atlantic has also arranged or ~~similar arrangements relating~~participated in letters of credit in lieu of funding certain loan facilities to ~~clawback obligations in favor of~~ third party ~~investors~~borrowers. See Note 24 "Commitments and Contingencies—Contingent Repayment Guarantees" to our financial statements included elsewhere in ~~an individual investment partnership by entities we own may limit distributions~~this report for further information.

We have also indemnified employees and non-employees against potential liabilities, in connection with their service as described under "Certain Relationships and Related Transactions, and Director Independence—Indemnification of ~~carried interest more generally.~~ Directors, Officers and Others" in our Annual Report.

Off Balance Sheet Arrangements

~~Other~~We do not have any off-balance sheet financings or liabilities other than contractual commitments and other legal contingencies incurred in the normal course of our ~~business, we do not have any off-balance sheet financings or liabilities.~~business.

Critical Accounting ~~Policies~~

Estimates

The preparation of our ~~condensed consolidated~~ financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of fees, expenses and investment income. Our management bases these estimates and judgments on available information, historical experience and other assumptions that we believe are reasonable under the circumstances. However, these estimates, judgments and assumptions are often subjective and may be impacted negatively based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in the ~~condensed consolidated~~ financial statements in the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying estimates, judgments or assumptions.

~~The following~~For a further discussion ~~details certain of~~about our critical accounting ~~policies.~~ policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report and Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.

193

Table of Contents

Recently Issued Accounting Pronouncements

For a full discussion of ~~all critical~~recently issued accounting ~~policies, please~~pronouncements, see ~~the notes to the condensed consolidated financial statements "--Item 1. Condensed Consolidated Financial Statements (Unaudited)--Summary~~Note 2 "Summary of Significant Accounting ~~Policies."~~ Policies" in our financial statements.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Except for certain of KKR's equity method investments and debt obligations, KKR's investments and other financial instruments are recorded at fair value or at amounts whose carrying values approximate fair value. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levels of management estimation and judgment, the degree of which is dependent on a variety of factors.

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. ~~Market price observability is affected by a number of factors, including the type of~~Investments and other financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

~~Financial~~ instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I

Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. ~~The types of financial instruments included in this category are publicly-listed equities, credit investments and securities sold short.~~

~~We classified 7.3% of total investments measured and reported at fair value as Level I at September 30, 2017.~~

Level II

Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies. The types of financial instruments included in this category are credit investments, investments and debt obligations of consolidated CLO entities, convertible debt securities indexed to publicly-listed securities, less liquid and restricted equity securities and certain over-the-counter derivatives such as foreign currency option and forward contracts.

~~We classified 38.3% of total investments measured and reported at fair value as Level II at September 30, 2017.~~

Level III

Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments generally included in this category are private portfolio companies, real assets investments, credit investments, equity method investments for which the fair value option was elected and investments and debt obligations of consolidated CMBS entities.

~~We classified 54.4% of total investments measured and reported at fair value as Level III at September 30, 2017. The~~ valuation of our Level III investments at September 30, ~~2017~~2022 represents management's best estimate of the amounts that we would anticipate realizing on the sale of these investments in an orderly transaction at such date.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. ~~Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset.~~

A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value.

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level III. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels I, II, and III, which we recognize at the beginning of the reporting period.

Investments and other financial instruments that have readily observable market prices (such as those traded on a securities exchange) are stated at the last quoted sales price as of the reporting date. We do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably affect the quoted price.

~~Level II Valuation Methodologies~~

~~Investments and Debt Obligations of Consolidated CLO Vehicles:~~ Investments of consolidated CLO vehicles are valued using the same valuation methodology as described above for credit investments. Under ASU 2014-13, KKR measures CLO debt obligations on the basis of the fair value of the financial assets of the CLO.

~~Restricted Equity Securities:~~ ~~The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction.~~

~~Derivatives:~~ ~~The valuation incorporates observable inputs comprising yield curves, foreign currency rates and credit spreads.~~

Level III Valuation Methodologies

~~Financial assets and liabilities categorized as Level III consist primarily of the following:~~

~~Private Equity Investments:~~ We generally employ two valuation methodologies when determining the fair value of a private equity investment. The first methodology is typically a market comparables analysis that considers key financial inputs and recent public and private transactions and other available measures. The second methodology utilized is typically a discounted cash flow analysis, which incorporates significant assumptions and judgments. Estimates of key inputs used in this methodology include the weighted average cost of capital for the investment and assumed inputs used to calculate terminal values, such as exit EBITDA multiples. In certain cases the results of the discounted cash flow approach can be significantly impacted by these estimates. Other inputs are also used in both methodologies. Also, as discussed in greater detail under "—Business Environment" in this report and "Risk Factors—Risks Related to the Assets We Manage—Our investments and financial instruments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, ~~but~~which may have a significant ~~adverse~~ impact on the ~~value~~valuation of our ~~investments" in our Annual Report~~investments and, therefore, on ~~Form 10-K,~~the carried interest and investment income we realize. Additionally, a change in interest rates could have a significant impact on valuations. In addition, when a definitive agreement has been executed to sell an investment, KKR generally considers a significant determinant of fair value to be the consideration to be received by KKR pursuant to the executed definitive agreement.

When determining the weighting ascribed to each valuation methodology, we consider, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis, the expected hold period and manner of realization for the investment, and in the case of investments being sold pursuant to an executed definitive agreement, we estimated probability of such a sale being completed. These factors can result in different weightings among investments in the portfolio and in certain instances may result in up to a 100% weighting to a single methodology. Across the total Level III private equity investment portfolio (including core equity investments), and including investments in both consolidated and unconsolidated investment funds, approximately ~~78%~~60% of the fair value is derived from investments that are valued based exactly 50% on market comparables and 50% on a discounted cash flow analysis. Less than 5% of the fair value of this Level III private equity investment portfolio is derived from investments that are valued either based 100% on market comparables or 100% on a discounted cash flow analysis. As of September 30, ~~2017,~~2022, the overall weights ascribed to the market comparables methodology, the discounted cash flow methodology, and a methodology based on pending sales for this portfolio of Level III private equity investments were ~~43%~~38%, ~~48%~~54%, and 9%8%, respectively.

~~When an illiquidity discount~~There is to be applied, we seek to take a uniform approach across our portfolio and generally apply a minimum 5% discount to all private equity investments. We then evaluate such private equity investments to determine if

factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include (i) whether we are unable to freely sell the portfolio company or conduct an initial public offering of the portfolio company due to the consent rights of a third party or similar factors, (ii) whether the portfolio company is undergoing significant restructuring activity or similar factors and (iii) characteristics about the portfolio company regarding its size and/or whether the portfolio company is experiencing, or expected to experience, a significant decline in earnings. These factors generally make it less likely that a portfolio company would be sold or publicly offeredinherent uncertainty involved in the ~~near term at a price indicated by using just a market multiples and/or discounted cash flow analysis,~~valuation of Level III investments, and ~~these factors tend to reduce~~there is no assurance that, upon liquidation, KKR will realize the number of opportunities to sell an investment and/or increase the time horizon over which an investment may be monetized. Depending on the applicability of these factors, we determine the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time we hold the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by usvalues reflected in our valuations.

~~In the case of growth equity investments, enterprise values~~ Our valuations may be determined using the market comparables analysis and discounted cash flow analysis described above. A scenario analysis may also be conducted to subject the estimated enterprise values to a downside, base and upside case, which involves significant assumptions and judgments. A milestone analysis may also be conducted to assess the current level of progress towards value drivers that we have determined to be important, which involves significant assumptions and judgments. The enterprise value in each case may then be allocated across the investment’s capital structure to reflect the terms of the security and subjected to probability weightings. In certain cases,differ significantly from the values ~~of growth equity investments may be based on recent or expected financings.~~

~~Real Assets Investments:~~ Real asset investments in infrastructure, energy and real estate are valued using one or more of the discounted cash flow analysis, market comparables analysis and direct income capitalization, which in each case incorporates significant assumptions and judgments. Infrastructure investments are generally valued using the discounted cash flow analysis. Key inputs used in this methodology can include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as exit EBITDA multiples. Energy investments are generally valued using a discounted cash flow analysis. Key inputs used in this methodology that require estimates include the weighted average cost of capital. In addition, the valuations of energy investments generally incorporate both commodity prices as quoted on indices and long-term commodity price forecasts, which may be substantially different from, and are currently higher than, commodity prices on certain indices for equivalent future dates. Certain energy investments do not include an illiquidity discount. Long-term commodity price forecasts are utilized to capture the value of the investments across a range of commodity prices within the energy investment portfolio associated with future development and to reflect a range of price expectations. Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Key inputs used in such methodologies that require estimates include an unlevered discount rate and current capitalization rate, and certain real estate investments do not include a minimum illiquidity discount. The valuations of real assets investments also use other inputs.

On a segment basis, our energy real asset investments in oil and gas producing properties as of September 30, 2017 had a fair value of approximately $550 million. Based on this fair value, we estimate that an immediate, hypothetical 10% decline in the fair value of these energy investments from one or more adverse movements to the investments' valuation inputs would result in a decline in investment income of $55.0 million and a decline in net income attributable to KKR & Co. L.P. of $32.0 million, after deducting amounts that are attributable to noncontrolling interests held by KKR Holdings L.P. As of September 30, 2017, if we were to value our energy investments using only the commodity prices as quoted on indices and did not use long-term commodity price forecasts, and also held all other inputs to their valuation constant, we estimate that investment income would have been ~~approximately $34 million lower, resulting in a lower amount of net income attributable to KKR & Co. L.P. of approximately 58.2% of~~used had an active market for the ~~overall decrease in investment income, after deducting amounts~~investments existed, and it is reasonably possible that ~~are attributable to noncontrolling interests held by KKR Holdings L.P.~~

~~These hypothetical declines relate only to investment income. There would~~the difference could be ~~no current~~material. See "Business Environment" for more information on factors that may impact on KKR's carried interest since all of the investment funds which hold these types of energy investments have investment values that are either below their cost or not currently accruing carried interest. Additionally, there would be no impact on fees since fees earned from investment funds which hold investments in oilour business, financial performance, operating results and ~~gas producing properties are based on either committed capital or capital invested.~~

For GAAP purposes, where KKR holds energy investments consisting of working interests in oil and gas producing properties directly and not through an investment fund, such working interests are consolidated based on the proportion of the working interests held by us. Accordingly, we reflect the assets, liabilities, revenues, expenses, investment income and cash

flows of the consolidated working interests on a gross basis and changes in the value of these energy investments are not reflected as unrealized gains and losses in the consolidated statements of operations. Accordingly, a change in fair value for these investments does not result in a decrease in net gains (losses) from investment activities, but may result in an impairment charge reflected in general, administrative and other expenses. For segment purposes, these directly held working interests are treated as investments and changes in value are reflected in our segment results as unrealized gains and losses.

~~Credit Investments:~~ Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, credit investments are generally valued by us based on ranges of valuations determined by an independent valuation firm. Valuation models are based on discounted cash flow analyses, for which the key inputs are determined based on market comparables, which incorporate similar instruments from similar issuers.

~~Other Investments:~~ With respect to other investments including equity method investments for which the fair value election has been made, we generally employ the same valuation methodologies as described above for private equity investments when valuing these other investments.

~~Investments and Debt Obligations of Consolidated CMBS Vehicles:~~ Under ASU 2014-13, we measure CMBS investments on the basis of the fair value of the financial liabilities of the CMBS. Debt obligations of consolidated CMBS vehicles are valued based on discounted cash flow analyses. The key input is the expected yield of each CMBS security using both observable and unobservable factors, which may include recently offered or completed trades and published yields of similar securities, security-specific characteristics (e.g. securities ratings issued by nationally recognized statistical rating organizations, credit support by other subordinate securities issued by the CMBS and coupon type) and other characteristics.

valuations.

Key unobservable inputs that have a significant impact on our Level III ~~investment~~ valuations as described above are included in Note 510 "Fair Value Measurements" in our financial statements.

194

Table of the financial statements included elsewhere in this report. We utilize several unobservable pricing inputs and assumptions in determining the fair value of our Level III investments. These unobservable pricing inputs and assumptions may differ by investment and in the application of our valuation methodologies. Our reported fair value estimates could vary materially if we had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if we only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies. For valuations determined for periods other than at year end, various inputs may be estimated prior to the end of the relevant period.Contents

Level III Valuation Process

For ~~Private Markets~~private equity and real asset investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and other factors. KKR begins its procedures to determine the fair values of its Level III assets approximately one month prior to the end of a reporting period, and KKR follows additional procedures to ensure that its determinations of fair value for its Level III assets are appropriate as of the relevant reporting date. These preliminary valuations are reviewed by an independent valuation firm engaged by KKR to perform certain procedures in order to assess the reasonableness of ~~KKR’s~~KKR's valuations annually for all Level III private equity and real asset investments ~~in Private Markets~~ and quarterly for investments other than certain investments, which have values less than ~~pre-set~~preset value thresholds and which in the aggregate comprise less than 5%1% of the total value of ~~KKR’s~~KKR's Level III ~~Private Markets~~private equity and real asset investments. The valuations of certain real asset investments are determined solely by an independent valuation ~~firm~~firms without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation ~~firm relies~~firms rely on valuation information available to it as a broker or valuation firm. For credit investments, ~~and debt obligations of consolidated CMBS vehicles,~~ an independent valuation firm is generally engaged ~~quarterly~~ by KKR to assist with ~~respect to~~the valuations of most investments classified as Level III. The valuation firm either provides a value, or provides a valuation range from which ~~KKR’s~~KKR's investment professionals select a point in the range to determine the ~~preliminary~~ valuation, or performs certain procedures in order to assess the reasonableness ~~and provide positive assurance~~ of ~~KKR’s~~KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted ~~to their respective~~for review and approval by KKR's valuation ~~sub-committees.~~committees. As of September 30, ~~2017,~~2022, less than 6%2% of the total value of our Level III credit investments ~~are~~were not valued with the engagement of an independent valuation firm.

For Level III investments in Asset Management, KKR has a global valuation committee ~~comprised~~that is responsible for coordinating and implementing the firm's valuation process to ensure consistency in the application of ~~senior employees including investment professionals~~valuation principles across portfolio investments and ~~professionals from business operations functions, and includes one of our Co-Presidents and Co-Chief Operating Officers and our Chief Financial Officer, General Counsel and Chief Compliance Officer.~~between periods. The global valuation committee is assisted by the asset class-specific valuation ~~sub-committees and investment professionals for each business strategy. All preliminary Level III valuations are reviewed and approved by the valuation sub-committees~~committees that exist for private equity (including core equity investments and certain impact investments), growth equity (including certain impact investments), real estate, energy, ~~and~~ infrastructure and ~~credit, as applicable. For periods prior to the completion of the PAAMCO Prisma transaction, when Level III valuations were required to be performed on hedge fund investments, a~~credit. The asset class-specific valuation ~~sub-committee for hedge funds reviewed these valuations. The valuation~~

~~sub-committees~~committees are responsible for the review and approval of all preliminary Level III valuations in their respective ~~business lines~~asset classes on a quarterly basis. The members of ~~the~~these valuation ~~sub-committees~~committees are comprised of investment professionals, including the heads of each respective strategy, and professionals from business operations functions such as legal, compliance and finance, who are not primarily responsible for the management of the investments.

~~The global valuation committee provides general oversight of the valuation sub-committees. The global valuation committee is responsible~~ All Level III valuations for ~~coordinating and implementing the firm’s valuation process to ensure consistency~~investments in ~~the application of valuation principles across portfolio investments and between periods. All valuations~~Asset Management are also subject to approval by the global valuation ~~committee.~~committee, which is comprised of senior employees including investment professionals and professionals from business operations functions, and includes one of KKR's Co-Chief Executive Officers and its Chief Financial Officer, General Counsel and Chief Compliance Officer. When valuations are approved by the global valuation committee after reflecting any input from it, the valuations of Level III investments, as well as the valuations of Level I and Level II investments, are presented to the ~~audit committee~~Audit Committee of the ~~board~~Board of ~~directors of the general partner~~Directors of KKR & Co. ~~L.P.~~Inc. and are then reported to the ~~board~~Board of ~~directors.~~Directors.

Level III investments held by Global Atlantic are valued on the basis of pricing services, broker-dealers or internal models. Global Atlantic performs a quantitative and qualitative analysis and review of the information and prices received from independent pricing services as well as broker-dealers to verify that it represents a reasonable estimate of fair value. As of September 30, 2022, approximately 74% of these investments were priced via external sources, while approximately 26% were valued on the basis of internal models. For all the internally developed models, Global Atlantic seeks to verify the reasonableness of fair values by analyzing the inputs and other assumptions used. These preliminary valuations are reviewed, based on certain thresholds, by an independent valuation firm engaged by Global Atlantic to perform certain procedures in order to assess the reasonableness of Global Atlantic's valuations. When valuations are approved by Global Atlantic's management, the valuations of its Level III investments, as well as the valuations of Level I and Level II investments, are presented to the Audit Committee of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.

As of September 30, ~~2017,~~2022, upon completion by, where applicable, an independent valuation ~~firm~~firms of certain limited procedures requested to be performed by them on certain Level III investments, the independent valuation ~~firm~~firms concluded that the fair values, as determined by KKR (including Global Atlantic), of those investments reviewed by them were reasonable. The limited procedures did not involve an audit, review, compilation or any other form of examination or attestation under generally accepted auditing standards and were not conducted on all Level III investments. We are responsible for determining the fair value of investments in good faith, and the limited procedures performed by an independent valuation firm are supplementary to the inquiries and procedures that we are required to undertake to determine the fair value of the commensurate investments.

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As described above, Level II and Level III investments were valued using internal models with significant unobservable inputs, and our determinations of the fair values of these investments may differ materially from the values that would have resulted if readily observable inputs had existed. Additional external factors may cause those values, and the values of investments for which readily observable inputs exist, to increase or decrease over time, which may create volatility in our earnings and the amounts of assets and ~~partners' capital~~stockholders' equity that we report from time to time.

Changes in the fair value of investments impacts the amount of carried interest that is recognized as well as the amount of investment income that is recognized for investments held directly in Asset Management and through our consolidated funds as described below. We estimate that an immediate 10% decrease in the fair value of investments held directly and through consolidated investment funds generally would result in a commensurate change in the amount of net gains (losses) from investment activities for investments held directly and through investment funds and a more significant impact to the amount of carried interest recognized, regardless of whether the investment was valued using observable market prices or management estimates with significant unobservable pricing inputs. With respect to consolidated investment funds, the impact that the consequential decrease in investment income would have on net income attributable to KKR would generally be significantly less than the amount described above, given that a majority of the change in fair value of our consolidated funds would be attributable to noncontrolling interests and therefore we are only impacted to the extent of our carried interest and our balance sheet investments. With respect to Insurance, a decrease in investment income for certain assets where investment gains and losses are recognized through the statement of operations would impact KKR only to the extent of our economic ownership interest in Global Atlantic.

As of September 30, ~~2017,~~2022, there were no investments which represented greater than 5%of total investments on a GAAP basis. On a ~~segment~~non-GAAP basis, as of September 30, ~~2017,~~2022, investments which represented greater than 5% of total ~~reportable segments~~non-GAAP investments consisted of ~~First Data Corporation and~~ USI, Inc. ~~(financial services sector)~~and PetVet Care Centers, LLC and valued at ~~$1,279.1~~$1,250 million and ~~$503.7~~$1,143 million, respectively. Our investment income on a GAAP basis and our book value can be impacted by volatility in the public markets related to our holdings of publicly traded securities, including our sizable holdings of First Data Corporation. For the quarter ended September 30, 2017, the reduction in the stock price of First Data Corporation reduced economic net income on a segment basis by approximately $27 million. For the nine months ended September 30, 2017, the increase in the stock price of First Data Corporation increased economic net income on a segment basis by approximately $355 million.Fiserv, Inc. and Crescent Energy Company. See ~~"--Business~~"—Business Environment" for a discussion onof factors that may impact the ~~impact~~valuations of ~~global equity markets on~~ our investments, financial ~~condition~~results, operating results and ~~"--Segment~~valuations, and "—Non-GAAP Balance ~~Sheet"~~Sheet Measures" for additional information regarding our largest holdings on a ~~segment basis in our Annual Report on Form 10-K.~~non-GAAP basis.

~~Recognition~~

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Table of ~~Investment Income~~Contents

Investment income consists primarily of the net impact of: (i) realized and unrealized gains and losses on investments, (ii) dividends, (iii) interest income, (iv) interest expense and (v) foreign exchange gains and losses relating to mark-to-market activity on foreign exchange forward contracts, foreign currency options, foreign denominated debt and debt securities issued by consolidated CFEs. Unrealized gains or losses resulting from the aforementioned activities are included in net gains (losses) from investment activities. Upon disposition of an instrument that is marked-to-market, previously recognized unrealized gains or losses are reversed and a realized gain or loss is recognized. While this reversal generally does not significantly impact the

~~net amounts of gains (losses) that we recognize from investment activities, it affects the manner in which we classify our gains and losses for reporting purposes.~~

Certain of our investment funds are consolidated. When a fund is consolidated, the portion of our funds' investment income that is allocable to our carried interests and capital investments is not shown in the condensed consolidated financial statements. For funds that are consolidated, all investment income (loss), including the portion of a funds' investment income (loss) that is allocable to KKR's carried interest, is included in investment income (loss) on the consolidated statements of operations. The carried interest that KKR retains in net income (loss) attributable to KKR & Co. L.P. is reflected as an adjustment to net income (loss) attributable to noncontrolling interests. However, because certain of our funds remain consolidated and because we hold a minority economic interest in these funds' investments, our share of the investment income is less than the total amount of investment income presented in the condensed consolidated financial statements for these consolidated funds.

~~Recognition of Carried Interest in the Statement of Operations~~

Carried interest entitles the general partner of a fund to a greater allocable share of the fund's earnings from investments relative to the capital contributed by the general partner and correspondingly reduces noncontrolling interests' attributable share of those earnings. Carried interest is earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment returns decrease or turn negative in subsequent periods, recognized carried interest will be reversed and reflected as losses in the statement of operations. For funds that are not consolidated, amounts earned pursuant to carried interest are included in fees and other in the consolidated statements of operations. Amounts earned pursuant to carried interest at consolidated funds are eliminated from fees and other upon consolidation of the fund and are included as investment income (loss) in net gains (losses) from investment activities along with all of the other investment gains and losses at the consolidated fund.

Carried interest is recognized in the statement of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Due to the extended durations of our private equity funds, we believe that this approach results in income recognition that best reflects our periodic performance in the management of those funds. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of our investment balance as this is where carried interest is initially recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition.

Prior to January 1, 2016, most of our historical private equity funds that provide for carried interest do not have a preferred return. For these funds, the management company is required to refund up to 20% of any management fees earned from its limited partners in the event that the fund recognizes carried interest. At such time as the fund recognizes carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, a liability due to the fund’s limited partners is recorded and revenue is reduced for the amount of the carried interest recognized, not to exceed 20% of the management fees earned. The refunds to the limited partners are paid, and liabilities relieved, at such time that the underlying investment is sold and the associated carried interest is realized. In the event that a fund’s carried interest is not sufficient to cover all or a portion of the amount that represents 20% of the earned management fees, such management fees would be retained and not returned to the funds’ limited partners.

Most of our newer investment funds that provide for carried interest, however, have a preferred return. In this case, the management company does not refund the management fees earned from the limited partners of the fund as described above. Instead, the management fee is effectively returned to the limited partners through a reduction of the realized gain on which carried interest is calculated. To calculate the carried interest, KKR calculates whether a preferred return has been achieved based on an amount that includes all of the management fees paid by the limited partners as well as the other capital contributions and expenses paid by them to date. To the extent the fund has exceeded the preferred return at the time of a realization event, and subject to any other conditions for the payment of carried interest like netting holes, carried interest is distributed to the general partner. Until the preferred return is achieved, no carried interest is recorded. Thereafter, the general partner is entitled to a catch up allocation such that the general partner’s carried interest is paid in respect of all of the fund’s net gains, including the net gains used to pay the preferred return, until the general partner has received the full percentage amount of carried interest that the general partner is entitled to under the terms of the fund. In general, investment funds that entitle the

~~management company to receive an incentive fee have a preferred return and are calculated on a similar basis that takes into account management fees paid.~~

~~Recently Issued Accounting Pronouncements~~

For a full discussion of recently issued accounting pronouncements, please see the notes to the condensed consolidated financial statements "--Item 1. Condensed Consolidated Financial Statements (Unaudited)--Summary of Significant Accounting Policies."

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~RISK.

~~There~~Except for the item disclosed below, there was no material change into our market risks during the three ~~and nine~~ months ended September 30, ~~2017.~~2022. For ~~additional information,~~a discussion of our market risks in general, please refer to our Annual ~~Report~~Report. In addition, for a discussion of current market conditions and uncertainties, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Environment."

Insurance Segment Market Risks

Sensitivities

Interest rate risk

Effect of interest rate sensitivity

In the table below, we estimate the impact of a 50 basis point increase/(decrease) in interest rates, for a parallel shift in the yield curve, from levels as of September 30, 2022 to Global Atlantic's AOCI.


	September 30, 2022
	Hypothetical change(1)
	+50 Basis points		-50 Basis points
($ in thousands)
Total estimated AOCI sensitivity (point in time)	$	(1,126,584)	$	1,211,764

The estimated point in time impact is driven by a net (decrease)/increase in the value of Global Atlantic's available-for-sale fixed maturity securities which are carried at fair value with unrealized gains and losses, net of certain offsets, reported in AOCI. The estimated changes include the impact of related amortization of deferred revenue and expenses and related income tax impacts.

The effect of interest rate sensitivity on ~~Form 10-K for the year ended~~AOCI decreased from December 31, ~~2016, filed with~~2021 as a result of (i) the ~~SEC on February 24, 2017.~~overall decrease in market value of the available-for-sale fixed maturity security portfolio, (ii) the positive convexity of the corporate fixed maturity security portfolio which results in lower sensitivity to interest rate moves, and (iii) a smaller portion of the overall investment portfolio consisting of fixed maturity securities that are subject to interest rate sensitivity.

ITEM 4. CONTROLS AND ~~PROCEDURES~~PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC’s~~SEC's rules and forms and such information is accumulated and communicated to management, including the Co-Chief Executive Officers and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired ~~controls.~~control objectives.

~~As of the period ended September 30, 2017, we~~We carried out an evaluation, under the supervision and with the participation of our management, including the Co-Chief Executive Officers and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and ~~procedures.~~procedures as of September 30, 2022. Based upon that evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of ~~the period ended~~ September 30, ~~2017,~~2022, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the ~~three or nine months~~quarter ended September 30, ~~2017~~2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Table of Contents

PART ~~II.~~ II —OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The section entitled ~~“Litigation”~~"Litigation" appearing in Note ~~17 “Commitments~~24 "Commitments and ~~Contingencies” of~~Contingencies" to our financial statements included elsewhere in this report is incorporated herein by reference.

ITEM 1A. RISK FACTORS.

~~For a discussion~~Other than as set forth in "Management's Discussion and Analysis of ~~our potential risks~~Financial Condition and ~~uncertainties, see~~Results of Operations—Business Environment" in this report, there were no material changes to the ~~information under the heading “Risk Factors”~~risk factors disclosed in our Annual ~~Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on February 24, 2017.~~Report.

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Table of Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~Common Unit~~Share Repurchases in the Third Quarter of ~~2017~~2022

As of October 28, 2022, there is approximately $78 million remaining under KKR's share repurchase program.

~~As announced on October 27, 2015 and February 9, 2017,~~ Under our current repurchase program, KKR is authorized to repurchase ~~up to $750 million in the aggregate of~~ its ~~outstanding~~ common ~~units. Under this unit repurchase program, units may be repurchased~~stock from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any ~~unit~~common stock repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. KKR expects that the program, which has no expiration date, will continue to be in effect until the maximum approved dollar amount has been ~~used to repurchase common units.~~used. The program does not require KKR to repurchase any specific number of shares of common ~~units,~~stock, and the program may be suspended, extended, modified or discontinued at any time.

In addition to the repurchases of common stock described above, subsequent to May 3, 2018, the repurchase program has been used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards issued pursuant to our Equity Incentive Plans representing the right to receive shares of common stock. From October 27, 2015 through September 30, 2022, KKR has paid approximately $608 million in cash to satisfy tax withholding and cash settlement obligations in lieu of issuing shares of common stock or its equivalent upon the vesting of equity awards representing 23.1 million shares of common stock. Of these amounts, equity awards representing 11.0 million shares of common stock or its equivalent were retired for $190 million prior to May 3, 2018 and did not count against the amounts remaining under the repurchase program.

The table below sets forth the information with respect to ~~purchases~~repurchases made by or on behalf of KKR & Co. ~~L.P.~~Inc. or any ~~“affiliated purchaser”~~"affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common ~~units during~~stock for the ~~third quarter of 2017.~~

Issuer Purchases of Common Units
(amounts in thousands, except unit and per unit amounts)

Total Number of Units Purchased Average Price Paid Per Units Cumulative Number of Units Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Units that May Yet Be Purchased Under the Plans or Programs
Month #1
(July 1, 2017 to
July 31, 2017)
—
$ —
31,674,162
$ 291,225
Month #2
(August 1, 2017 to
August 31, 2017)
—
$ —
31,674,162
$ 291,225
Month #3
(September 1, 2017 to
September 30, 2017)
—
$ —
31,674,162
$ 291,225
Total through September 30, 2017 —

Purchases subsequent to September 30, 2017:
(October 1, 2017 to
October 26, 2017)
—
$ —
31,674,162
$ 291,225
Total through October 26, 2017 —

In addition to the purchases of common units above, (1) cash may be used to pay the amount of withholding taxes, social benefit payments or similar payments payable by KKR in respect of awards granted pursuant to the Equity Incentive Plan and (2) cash may be delivered in respect of certain awards granted pursuant to the Equity Incentive Plan and Other Exchangeable Securities. During 2017, KKR canceled equity awards representing 3.1 million common units to satisfy tax and cash-settlement obligations of $58.0 million in connection with their vesting, bringing cumulative cancellations of equity awards representing 8.2 million common units to satisfy tax and cash-settlement obligations of approximately $136.9 million since October 27, 2015.

periods presented. During the third quarter of ~~2017, 3,163,286 KKR Group Partnership Units~~2022, no shares of common stock were ~~exchanged by (i) KKR Holdings~~repurchased, and ~~(ii) holders of other exchangeable securities issued in connection with the acquisition of Avoca for an equal number of our common units. This resulted in an increase in our ownership~~no equity awards were retired. From inception of the ~~KKR Group Partnerships and~~repurchase program in 2015 through September 30, 2022, we have repurchased or retired a ~~corresponding decrease in~~total of approximately 74.1 million shares of common stock under the ~~ownership~~program at an average price of the KKR Group Partnerships by KKR Holdings and the other exchangeable security holders. In October 2017, an additional 1,688,292 common units were issued to one or more holders of other exchangeable securities in connection with the acquisition of Avoca.approximately $26.77 per share.


Issuer Purchases of Common Stock
(amounts in thousands, except share and per share amounts)

	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Month #1 (July 1, 2022 to July 31, 2022)	—	$	—	—	$	108,475
Month #2 (August 1, 2022 to August 31, 2022)	—	$	—	—	$	108,475
Month #3 (September 1, 2022 to September 30, 2022)	—	$	—	—	$	108,475
Total through September 30, 2022	—

(1) Amounts have been reduced by retirements of equity awards occurring after May 3, 2018. On May 6, 2020, KKR announced the increase to the total available amount under the repurchase program to $500 million. On December 27, 2021, KKR announced the increase to the total available amount under the repurchase program to $500 million. The repurchase program does not have an expiration date.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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ITEM 5. OTHER INFORMATION.

Not applicable.

On November 2, 2017, the conflicts committee of the board of directors of our Managing Partner consented to the allocation by KKR Holdings of 2,500,000 KKR Holdings units to each of our Co-Chief Executive Officers, Henry Kravis and George Roberts. The KKR Holdings units will vest in five equal annual installments, beginning on October 1, 2018, in each case, subject to continued service through each vesting date (including full continued vesting upon death or disability and an additional two years of vesting following retirement). KKR Holdings units are exchangeable for our common units on a one-for-one basis, subject to vesting and minimum retained ownership requirements.

The KKR Holdings units allocated to our Co-Chief Executive Officers are outstanding but previously unallocated units, and consequently these allocations will not increase the number of KKR Holdings units outstanding that can be converted into our common units or outstanding KKR common units on a fully-diluted basis. If and when vested, these KKR Holdings units would not dilute our ownership interests in the KKR Group Partnerships.

ITEM 6. EXHIBITS.

The following is a list of all exhibits filed or furnished as part of this ~~report:~~

report:



Exhibit No.						Description of Exhibit
~~31.1~~2.1						Agreement and Plan of Merger, dated as of May 31, 2022, among KKR & Co. Inc., KKR Aubergine Inc. and KKR Aubergine Merger Sub II LLC (incorporated by reference to Exhibit 2.1 to the KKR & Co. Inc. Current Report on Form 8-K12B filed on May 31, 2022).
2.2						Agreement and Plan of Merger, dated as of May 31, 2022, among KKR Holdings L.P., KKR Holdings GP Limited, KKR Aubergine Inc. and KKR Aubergine Merger Sub I LLC (incorporated by reference to Exhibit 2.2 to the KKR & Co. Inc. Current Report on Form 8-K12B filed on May 31, 2022).
3.1						Amended and Restated Certificate of Incorporation of KKR & Co. Inc. (formerly KKR Aubergine Inc.) (incorporated by reference to Exhibit 3.1 to the KKR & Co. Inc. Current Report on Form 8-K12B filed on May 31, 2022).
3.2						Amended and Restated Bylaws of KKR & Co. Inc. (formerly KKR Aubergine Inc.) (incorporated by reference to Exhibit 3.2 to the KKR & Co. Inc. Current Report on Form 8-K12B filed on May 31, 2022).
10.1						First Amendment and Lender Joinder Agreement, dated as of September 2, 2022, to Second Amended and Restated Credit Agreement, dated as of August 4, 2021, among Kohlberg Kravis Roberts & Co. L.P., KKR Group Partnership L.P., the Guarantors party thereto from time to time, the Lenders party thereto from time to time, and HSBC Bank USA, National Association, as Administrative Agent (with amended credit agreement annexed thereto).
10.2†						First Amendment, dated as of September 23, 2022, to Credit Agreement, dated as of August 4, 2021, among Global Atlantic Financial Limited, Global Atlantic (Fin) Company, the Guarantors party thereto from time to time, the Lenders from time to time party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and the other agents and arrangers party thereto (with amended credit agreement annexed thereto).
31.1						Certification of Co-Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
31.2						Certification of Co-Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101						Interactive data files pursuant to Rule 405 of Regulation ~~S-T:~~S-T, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Financial Condition as of September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2022 and September 30, ~~2016,~~2021, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2017~~2022 and September 30, ~~2016;~~2021; (iv) the Condensed Consolidated Statements of Changes in Equity for the three and nine months ended September 30, ~~2017~~2022 and September 30, ~~2016,~~2021, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2022 and September 30, ~~2016,~~2021, and (vi) the Notes to the Condensed Consolidated Financial Statements.
104						Cover page interactive data file, formatted in Inline XBRL and contained in Exhibit 101.

† Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant treats as private or confidential.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

200

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		KKR & CO. ~~L.P.~~INC.

		~~By: KKR Management LLC~~
		~~Its General Partner~~By:	/s/ ROBERT H. LEWIN
			Robert H. Lewin
		~~By:~~	~~/s/ William J. Janetschek~~
	~~William J. Janetschek~~
	Chief Financial Officer
			(principal financial and accounting ~~officer of KKR Management LLC and authorized signatory)~~officer)

DATE:	November ~~3, 2017~~8, 2022

~~147~~

201



Delaware						~~26-0426107~~88-1203639
(State or other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock	KKR	New York Stock Exchange
6.00% Series C Mandatory Convertible Preferred Stock	KKR PR C	New York Stock Exchange
4.625% Subordinated Notes due 2061 of KKR Group Finance Co. IX LLC	KKRS	New York Stock Exchange


				Page
		PART I — FINANCIAL INFORMATION

Item 1.		Financial Statements

				~~Page No.~~
	~~PART I—FINANCIAL INFORMATION~~

~~Item 1.~~	Unaudited Condensed Consolidated Financial Statements ~~(Unaudited)~~

		5Condensed Consolidated Statements of Financial Condition (Unaudited) as of September 30, 2022 and December 31, 2021		6

		Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021		10

		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021		12

		Condensed Consolidated Statements of Changes in Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021		13

		Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021		15

		Notes to Financial Statements (Unaudited)		18

Item 2.		~~Management’s~~ Management's Discussion and Analysis of Financial Condition and Results of Operations		63107

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		~~143~~197

Item 4.		Controls and Procedures		~~143~~197

		PART ~~II—~~II — OTHER INFORMATION

Item 1.		Legal Proceedings		~~144~~198

Item 1A.		Risk Factors		~~144~~198

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		~~145~~199

Item 3.		Defaults Upon Senior Securities		~~146~~199

Item 4.		Mine Safety Disclosures		~~146~~199

Item 5.		Other Information		~~146~~200

Item 6.		~~Exhibits~~	~~146~~Exhibits		200

SIGNATURES					~~147~~201


	September 30, 2022
	Consolidated CLOs		Consolidated Funds and Other Investment Vehicles		Other VIEs		Total
Assets
Asset Management
Cash and Cash Equivalents	$	732,922	$	2,324,606	$	—	$	3,057,528
Restricted Cash and Cash Equivalents	—		123,413		—		123,413
Investments	21,500,342		52,481,494		—		73,981,836

Other Assets	144,882		771,333		—		916,215
	22,378,146		55,700,846		—		78,078,992
Insurance
Cash and Cash Equivalents	—		—		1,161,874		1,161,874

Investments	—		—		24,215,391		24,215,391
Accrued Investment Income	—		—		230,324		230,324
Other Assets	—		—		2,164,350		2,164,350
	—		—		27,771,939		27,771,939

Total Assets	$	22,378,146	$	55,700,846	$	27,771,939	$	105,850,931

Liabilities
Asset Management
Debt Obligations	$	21,118,566	$	6,520,275	$	—	$	27,638,841
Accrued Expenses and Other Liabilities	554,661		601,416		—		1,156,077
	21,673,227		7,121,691		—		28,794,918
Insurance
Accrued Expenses and Other Liabilities	—		—		1,124,146		1,124,146


Total Liabilities	$	21,673,227	$	7,121,691	$	1,124,146	$	29,919,064



	September 30, 2017
	Consolidated CFEs		Consolidated KKR Funds and Other Entities		Total
Assets
Cash and Cash Equivalents Held at Consolidated Entities	$	930,268	$	399,467	$	1,329,735
Restricted Cash and Cash Equivalents	—		8,928		8,928
Investments	15,500,898		8,934,607		24,435,505
Due from Affiliates	—		5,118		5,118
Other Assets	203,987		202,798		406,785
Total Assets	$	16,635,153	$	9,550,918	$	26,186,071

Liabilities
Debt Obligations	$	15,083,900	$	817,069	$	15,900,969
Accounts Payable, Accrued Expenses and Other Liabilities	839,097		239,215		1,078,312
Total Liabilities	$	15,922,997	$	1,056,284	$	16,979,281


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.



	September 30, 2017		December 31, 2016
Assets
Cash and Cash Equivalents	$	2,436,566	$	2,508,902
Cash and Cash Equivalents Held at Consolidated Entities	1,329,735		1,624,758
Restricted Cash and Cash Equivalents	44,175		212,155
Investments	37,251,837		31,409,765
Due from Affiliates	484,004		250,452
Other Assets	2,759,322		2,996,865
Total Assets	$	44,305,639	$	39,002,897

Liabilities and Equity
Debt Obligations	$	20,290,714	$	18,544,075
Due to Affiliates	379,809		359,479
Accounts Payable, Accrued Expenses and Other Liabilities	3,769,682		2,981,260
Total Liabilities	24,440,205		21,884,814

Commitments and Contingencies

Redeemable Noncontrolling Interests	570,134		632,348

Equity
Series A Preferred Units (13,800,000 units issued and outstanding as of September 30, 2017 and December 31, 2016)	332,988		332,988
Series B Preferred Units (6,200,000 units issued and outstanding as of September 30, 2017 and December 31, 2016)	149,566		149,566
KKR & Co. L.P. Capital - Common Unitholders (473,134,387 and 452,380,335 common units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively)	6,380,654		5,457,279
Total KKR & Co. L.P. Partners' Capital	6,863,208		5,939,833
Noncontrolling Interests	12,432,092		10,545,902
Total Equity	19,295,300		16,485,735
Total Liabilities and Equity	$	44,305,639	$	39,002,897


	September 30, 2022		December 31, 2021

Commitments and Contingencies (See Note 24)



Redeemable Noncontrolling Interests	$	82,133	$	82,491

Stockholders' Equity

Series C Mandatory Convertible Preferred Stock, $0.01 par value. 22,999,974 and 23,000,000 shares, issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.	$	1,115,792	$	1,115,792
Series I Preferred Stock, $0.01 par value. 1 share authorized, 1 share issued and outstanding as of September 30, 2022 and December 31, 2021.	—		—
Series II Preferred Stock, $0.01 par value. 499,999,999 shares authorized, 258,726,163 shares issued and outstanding as of December 31, 2021. (See Note 1)	—		2,587
Common Stock, $0.01 par value. 3,500,000,000 shares authorized, 859,833,444 and 595,663,618 shares, issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.	8,598		5,957
Additional Paid-In Capital	16,015,645		8,997,435
Retained Earnings	6,365,963		7,670,182
Accumulated Other Comprehensive Income (Loss) ("AOCI")	(6,054,953)		(209,789)
Total KKR & Co. Inc. Stockholders' Equity	17,451,045		17,582,164
Noncontrolling Interests (See Note 22)	34,449,617		40,474,565
Total Equity	51,900,662		58,056,729
Total Liabilities and Equity	$	266,248,640	$	264,285,440



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues
Fees and Other	$	692,877		$	687,056		$	2,340,617		$	1,426,618

Expenses
Compensation and Benefits	368,513			358,161			1,234,317			780,062
Occupancy and Related Charges	15,267			16,405			44,150			49,159
General, Administrative and Other	146,467			136,551			421,522			413,437
Total Expenses	530,247			511,117			1,699,989			1,242,658

Investment Income (Loss)
Net Gains (Losses) from Investment Activities	108,779			735,144			1,085,655			9,089
Dividend Income	20,774			73,105			100,144			167,987
Interest Income	317,134			256,505			893,832			753,194
Interest Expense	(211,959		)	(255,105		)	(597,403		)	(607,812		)
Total Investment Income (Loss)	234,728			809,649			1,482,228			322,458

Income (Loss) Before Taxes	397,358			985,588			2,122,856			506,418

Income Tax / (Benefit)	18,420			10,826			77,500			18,761

Net Income (Loss)	378,938			974,762			2,045,356			487,657
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests	20,876			3,121			64,196			4,616
Net Income (Loss) Attributable to Noncontrolling Interests	196,158			611,288			1,137,585			353,044
Net Income (Loss) Attributable to KKR & Co. L.P.	161,904			360,353			843,575			129,997

Net Income Attributable to Series A Preferred Unitholders	5,822			5,822			17,466			11,515
Net Income Attributable to Series B Preferred Unitholders	2,519			2,379			7,557			2,379

Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders	$	153,563		$	352,152		$	818,552		$	116,103

Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic	$	0.33		$	0.79		$	1.76		$	0.26
Diluted	$	0.30		$	0.73		$	1.63		$	0.24
Weighted Average Common Units Outstanding
Basic	471,758,886			445,989,300			463,941,084			448,149,747
Diluted	506,873,177			479,975,675			501,615,635			483,134,985


KKR & CO. INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (Amounts in Thousands, Except Share and Per Share Data)

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
	Amounts		Shares	Amounts		Shares





Series C Mandatory Convertible Preferred Stock
Beginning of Period	$	1,115,792	22,999,974	$	1,115,792	23,000,000
Conversion of Series C Mandatory Convertible Preferred Stock	—		—	—		(26)
End of Period	1,115,792		22,999,974	1,115,792		22,999,974
Series I Preferred Stock
Beginning of Period	—		1	—		1
End of Period	—		1	—		1
Series II Preferred Stock
Beginning of Period	—		—	2,587		258,726,163
Cancellation of Series II Preferred Stock - Holdings Merger (See Note 1)	—		—	(2,582)		(258,259,143)
Cancellation of Series II Preferred Stock	—		—	(5)		(467,020)
End of Period	—		—	—		—
Common Stock
Beginning of Period	8,598		859,833,444	5,957		595,663,618

Exchange of KKR Holdings Units	—		—	5		467,020
Holdings Merger (See Note 1)	—		—	2,667		266,759,143
Net Delivery of Common Stock	—		—	21		2,134,807
Conversion of Series C Mandatory Convertible Preferred Stock	—		—	—		30
Repurchases of Common Stock	—		—	(52)		(5,191,174)
End of Period	8,598		859,833,444	8,598		859,833,444
Additional Paid-In Capital
Beginning of Period	15,948,026			8,997,435

Exchange of KKR Holdings Units	—			14,811
Holdings Merger (See Note 1)	—			8,131,679
Tax Effects - Holdings Merger and Other (See Note 1)	1,180			(1,064,790)
Net Delivery of Common Stock	—			(34,895)
Repurchases of Common Stock	—			(346,599)
Equity-Based Compensation	66,439			166,167
Change in KKR & Co. Inc.'s Ownership Interest	—			151,837
End of Period	16,015,645			16,015,645
Retained Earnings
Beginning of Period	6,590,883			7,670,182
Net Income (Loss) Attributable to KKR & Co. Inc.	(74,396)			(941,600)




Series C Mandatory Convertible Preferred Stock Dividends ($0.75 and $2.25 per share for the three and nine months ended September 30, 2022, respectively)	(17,250)			(51,750)
Common Stock Dividends ($0.155 and $0.455 per share for the three and nine months ended September 30, 2022, respectively)	(133,274)			(310,869)
End of Period	6,365,963			6,365,963
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period	(4,590,616)			(209,789)
Other Comprehensive Income (Loss)	(1,464,337)			(4,674,223)

Exchange of KKR Holdings Units	—			(1,946)
Holdings Merger (See Note 1)	—			(1,172,442)
Change in KKR & Co. Inc.'s Ownership Interest	—			3,447
End of Period	(6,054,953)			(6,054,953)
Total KKR & Co. Inc. Stockholders' Equity	17,451,045			17,451,045
Noncontrolling Interests (See Note 22)	34,449,617			34,449,617
Total Equity	$	51,900,662		$	51,900,662

Redeemable Noncontrolling Interests (See Note 23)	$	82,133		$	82,133



	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
	Amounts		Shares	Amounts		Shares
Series A and B Preferred Stock
Beginning of Period	$	149,566	6,200,000	$	482,554	20,000,000
Redemption of Series A Preferred Stock	—		—	(332,988)		(13,800,000)
Redemption of Series B Preferred Stock	(149,566)		(6,200,000)	(149,566)		(6,200,000)
End of Period	—		—	—		—
Series C Mandatory Convertible Preferred Stock
Beginning of Period	1,115,792		23,000,000	1,115,792		23,000,000
End of Period	1,115,792		23,000,000	1,115,792		23,000,000
Series I Preferred Stock
Beginning of Period	—		1	—		1
End of Period	—		1	—		1
Series II Preferred Stock
Beginning of Period	2,710		271,027,751	2,756		275,626,493
Cancellation of Series II Preferred Stock	—		—	(46)		(4,598,742)
End of Period	2,710		271,027,751	2,710		271,027,751
Common Stock
Beginning of Period	5,830		583,030,973	5,729		572,893,738
Private Placement Share Issuance	—		—	9		964,871
Exchange of KKR Holdings Units	—		—	46		4,598,742
Net Delivery of Common Stock	—		—	73		7,249,400
Clawback of Transfer Restricted Shares	—		(4,294)	—		(12,077)
Repurchases of Common Stock	—		—	(27)		(2,667,995)

End of Period	5,830		583,026,679	5,830		583,026,679
Additional Paid-In Capital
Beginning of Period	8,700,224			8,687,817
Private Placement Share Issuance	—			38,454
Exchange of KKR Holdings Units	—			125,188
Tax Effects - Exchange of KKR Holdings Units and Other	(6,038)			(1,623)
Net Delivery of Common Stock	—			(106,987)
Repurchases of Common Stock	—			(135,903)
Equity-Based Compensation	41,491			128,731


End of Period	8,735,677			8,735,677
Retained Earnings
Beginning of Period	6,200,585			3,440,782
Net Income (Loss) Attributable to KKR & Co. Inc.	1,156,557			4,141,668
Series A Preferred Stock Dividends ($0.00 and $0.843750 per share for the three and nine months ended September 30, 2021, respectively)	—			(11,644)
Redemption of Series A Preferred Stock	—			(12,012)
Series B Preferred Stock Dividends ($0.406250 and $1.218750 per share for the three and nine months ended September 30, 2021, respectively)	(2,519)			(7,557)
Redemption of Series B Preferred Stock	(5,434)			(5,434)
Series C Mandatory Convertible Preferred Stock Dividends ($0.75 and $2.25 per share for the three and nine months ended September 30, 2021, respectively)	(17,250)			(51,750)
Common Stock Dividends ($0.145 and $0.425 per share for the three and nine months ended September 30, 2021, respectively)	(84,539)			(246,653)
End of Period	7,247,400			7,247,400
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period	(106,348)			(18,612)

Other Comprehensive Income (Loss)	(68,091)			(152,704)
Exchange of KKR Holdings Units	—			(3,123)
End of Period	(174,439)			(174,439)
Total KKR & Co. Inc. Stockholders' Equity	16,932,970			16,932,970
Noncontrolling Interests (See Note 22)	40,031,244			40,031,244
Total Equity	$	56,964,214		$	56,964,214

Redeemable Noncontrolling Interests (See Note 23)	$	93,339		$	93,339



	KKR & Co. L.P.
	Common Units		Capital - Common Unitholders			Accumulated Other Comprehensive Income (Loss)			Total Capital - Common Units			Capital - Series A Preferred Units			Capital - Series B Preferred Units			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance at January 1, 2016	457,834,875		$	5,575,981		$	(28,799	)	$	5,547,182		$	—		$	—		$	43,731,774		$	49,278,956		$	188,629
Net Income (Loss)			116,103						116,103			11,515			2,379			353,044			483,041			4,616
Other Comprehensive Income (Loss)- Foreign Currency Translation (Net of Tax)						2,176			2,176									(1,497		)	679
Deconsolidation of Funds									—									(34,240,240		)	(34,240,240		)
Exchange of KKR Holdings L.P. Units and Other Securities to KKR & Co. L.P. Common Units	4,655,059		54,674			(480		)	54,194									(54,194		)	—
Tax Effects Resulting from Exchange of KKR Holdings L.P. Units and delivery of KKR & Co. L.P. Common Units and Other			(158		)	(89		)	(247		)										(247		)
Net Delivery of Common Units - Equity Incentive Plan	5,098,522		(28,234		)				(28,234		)										(28,234		)
Equity Based Compensation			148,257						148,257									37,775			186,032
Unit Repurchases	(21,387,836	)	(291,903		)				(291,903		)										(291,903		)
Equity Issued in connection with Preferred Unit Offering									—			332,988			149,566						482,554
Capital Contributions									—									1,948,552			1,948,552			223,739
Capital Distributions			(213,483		)				(213,483		)	(11,515		)	(2,379		)	(1,164,758		)	(1,392,135		)	(21,774		)
Balance at September 30, 2016	446,200,620		$	5,361,237		$	(27,192	)	$	5,334,045		$	332,988		$	149,566		$	10,610,456		$	16,427,055		$	395,210



	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016
	Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Total			Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Total
Private Equity ⁽¹⁾	$	74,483		$	77,299		$	151,782		$	172,390		$	37,465		$	209,855
Credit and Other ⁽¹⁾	(46,946		)	35,882			(11,064		)	(262,826		)	256,137			(6,689		)
Investments of Consolidated CFEs ⁽¹⁾	(83,797		)	43,905			(39,892		)	(18,697		)	40,049			21,352
Real Assets ⁽¹⁾	24,479			56,217			80,696			28,803			70,700			99,503
Foreign Exchange Forward Contracts and Options ⁽²⁾	(26,043		)	(69,046		)	(95,089		)	41,254			(63,997		)	(22,743		)
Securities Sold Short ⁽²⁾	(7,785		)	14,369			6,584			232,448			29,545			261,993
Other Derivatives ⁽²⁾	(148		)	(5,049		)	(5,197		)	(17,224		)	14,472			(2,752		)
Debt Obligations and Other ⁽³⁾	18,343			2,616			20,959			112,469			62,156			174,625
Net Gains (Losses) From Investment Activities	$	(47,414	)	$	156,193		$	108,779		$	288,617		$	446,527		$	735,144

	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Total			Net Realized Gains (Losses)			Net Unrealized Gains (Losses)			Total
Private Equity ⁽¹⁾	$	202,549		$	372,335		$	574,884		$	370,266		$	(412,303	)	$	(42,037	)
Credit and Other ⁽¹⁾	(633,145		)	740,499			107,354			(284,992		)	(104,028		)	(389,020		)
Investments of Consolidated CFEs ⁽¹⁾	(88,677		)	71,952			(16,725		)	(239,502		)	547,099			307,597
Real Assets ⁽¹⁾	(34,208		)	233,608			199,400			41,158			66,927			108,085
Foreign Exchange Forward Contracts and Options ⁽²⁾	(7,975		)	(311,427		)	(319,402		)	41,829			(75,398		)	(33,569		)
Securities Sold Short ⁽²⁾	497,926			66,037			563,963			231,474			(10,343		)	221,131
Other Derivatives ⁽²⁾	(6,027		)	(10,602		)	(16,629		)	(35,613		)	40,081			4,468
Debt Obligations and Other ⁽³⁾	66,895			(74,085		)	(7,190		)	229,485			(397,051		)	(167,566		)
Net Gains (Losses) From Investment Activities	$	(2,662	)	$	1,088,317		$	1,085,655		$	354,105		$	(345,016	)	$	9,089


	Cost or amortized cost		Allowance for Credit Losses (2)(3)		Gross unrealized				Fair value
As of September 30, 2022					gains		losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies	$	366,638	$	—	$	—	$	(71,841)	$	294,797
U.S. state, municipal and political subdivisions	5,298,283		—		138		(1,271,381)		4,027,040
Corporate	41,326,728		(791)		18,021		(8,538,465)		32,805,493
Residential mortgage-backed securities ("RMBS")	7,478,505		(86,208)		17,823		(676,064)		6,734,056
Commercial mortgage-backed securities ("CMBS")	7,352,398		(10,809)		245		(740,518)		6,601,316
Collateralized bond obligations ("CBOs")	3,060,155		(35)		—		(223,969)		2,836,151
Collateralized loan obligations ("CLOs")	2,771,874		(4,366)		25		(209,329)		2,558,204
All other structured securities(1)	2,884,368		(4,537)		6,005		(195,042)		2,690,794
Total AFS fixed maturity securities	$	70,538,949	$	(106,746)	$	42,257	$	(11,926,609)	$	58,547,851


As of September 30, 2022	Cost or amortized cost (net of allowance)		Fair value
Due in one year or less	$	551,784	$	544,880
Due after one year through five years	9,386,813		8,791,184
Due after five years through ten years	9,487,091		8,504,053
Due after ten years	27,565,170		19,287,213
Subtotal	46,990,858		37,127,330
RMBS	7,392,297		6,734,056
CMBS	7,341,589		6,601,316
CBOs	3,060,120		2,836,151
CLOs	2,767,508		2,558,204
All other structured securities	2,879,831		2,690,794
Total AFS fixed maturity securities	$	70,432,203	$	58,547,851


	Less than 12 months				12 months or more				Total
As of September 30, 2022	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies	$	190,438	$	(53,005)	$	104,360	$	(18,836)	$	294,798	$	(71,841)
U.S. state, municipal and political subdivisions	3,326,504		(1,051,622)		682,195		(219,759)		4,008,699		(1,271,381)
Corporate	21,318,062		(5,654,193)		9,481,979		(2,884,272)		30,800,041		(8,538,465)
RMBS	4,664,201		(426,928)		1,511,761		(249,136)		6,175,962		(676,064)
CBOs	1,887,915		(145,811)		948,236		(78,158)		2,836,151		(223,969)
CMBS	5,407,270		(529,159)		1,162,325		(211,359)		6,569,595		(740,518)
CLOs	2,357,254		(185,863)		190,452		(23,466)		2,547,706		(209,329)
All other structured securities	1,891,789		(118,688)		539,752		(76,354)		2,431,541		(195,042)
Total AFS fixed maturity securities in a continuous loss position	$	41,043,433	$	(8,165,269)	$	14,621,060	$	(3,761,340)	$	55,664,493	$	(11,926,609)


	September 30, 2022		December 31, 2021
Commercial mortgage loans(1)	$	18,479,742	$	13,824,772
Residential mortgage loans(1)	10,955,269		8,724,904
Consumer loans	5,445,370		5,617,925
Other loan receivables(2)(3)	963,039		1,083,235
Total mortgage and other loan receivables	35,843,420		29,250,836
Allowance for credit losses(4)	(423,326)		(374,077)
Total mortgage and other loan receivables, net of allowance for loan losses	$	35,420,094	$	28,876,759


Years	Residential		Commercial		Total mortgage loans
Remainder of 2022	$	115,605	$	399,377	$	514,982
2023	126,160		1,441,199		1,567,359
2024	533,435		2,277,465		2,810,900
2025	17,027		3,390,721		3,407,748
2026	890,254		3,259,760		4,150,014
2027	955,188		2,843,765		3,798,953
2028 and thereafter	8,317,600		4,867,455		13,185,055
Total	$	10,955,269	$	18,479,742	$	29,435,011


Mortgage loans - carrying value by geographic region	September 30, 2022		December 31, 2021
Pacific	$	7,252,784	$	6,675,064
West South Central	3,594,519		2,675,890
South Atlantic	8,002,247		4,996,043
Middle Atlantic	3,708,296		3,142,973
East North Central	1,262,908		590,911
Mountain	3,151,942		1,957,099
New England	1,298,758		1,099,157
East South Central	740,228		1,035,764
West North Central	363,474		350,546
Other regions	59,855		26,229
Total by geographic region	$	29,435,011	$	22,549,676


Mortgage loans - carrying value by property type	September 30, 2022		December 31, 2021
Residential	$	10,955,269	$	8,724,904
Office building	4,654,349		4,185,146
Apartment	9,341,546		6,194,819
Industrial	2,938,321		1,981,713
Retail	650,903		780,071
Other property types	705,783		483,560
Warehouse	188,840		199,463
Total by property type	$	29,435,011	$	22,549,676


	Nine Months Ended September 30,
	2021
Purchase price of PCD loans acquired during the current period	$	4,231,426
Allowance for credit losses at acquisition	121,895
Discount (premium) attributable to other factors	(136,174)
Par value	$	4,217,147


	As of September 30, 2022
Performance status	2022		2021		2020		2019		2018		Prior		Total
Commercial mortgage loans
Current	$	5,539,353	$	6,763,595	$	929,246	$	1,533,917	$	1,294,281	$	2,419,350	$	18,479,742
30 to 59 days past due	—		—		—		—		—		—		—
60 to 89 days past due	—		—		—		—		—		—		—
Over 90 days past due	—		—		—		—		—		—		—
Total commercial mortgage loans	$	5,539,353	$	6,763,595	$	929,246	$	1,533,917	$	1,294,281	$	2,419,350	$	18,479,742
Residential mortgage loans
Current	$	1,897,046	$	5,002,374	$	1,884,802	$	278,805	$	15,119	$	1,530,375	$	10,608,521
30 to 59 days past due	9,608		33,064		4,334		1,305		645		77,467		126,423
60 to 89 days past due	1,233		10,727		3,646		752		—		24,391		40,749
Over 90 days past due	1,489		22,399		11,178		8,673		2,587		133,250		179,576
Total residential mortgage loans	$	1,909,376	$	5,068,564	$	1,903,960	$	289,535	$	18,351	$	1,765,483	$	10,955,269






Total mortgage loans	$	7,448,729	$	11,832,159	$	2,833,206	$	1,823,452	$	1,312,632	$	4,184,833	$	29,435,011


	As of December 31, 2021
Performance status	2021		2020		2019		2018		2017		Prior		Total
Commercial mortgage loans
Current	$	6,831,655	$	976,369	$	1,883,908	$	1,373,865	$	817,954	$	1,941,021	$	13,824,772
30 to 59 days past due	—		—		—		—		—		—		—
60 to 89 days past due	—		—		—		—		—		—		—
Over 90 days past due	—		—		—		—		—		—		—
Total commercial mortgage loans	$	6,831,655	$	976,369	$	1,883,908	$	1,373,865	$	817,954	$	1,941,021	$	13,824,772
Residential mortgage loans
Current	$	4,505,537	$	1,576,342	$	393,153	$	123,995	$	65,070	$	1,711,156	$	8,375,253
30 to 59 days past due	24,955		6,028		5,818		1,155		739		75,104		113,799
60 to 89 days past due	4,247		1,243		607		—		—		27,028		33,125
Over 90 days past due	5,305		14,272		21,985		2,686		—		158,479		202,727
Total residential mortgage loans	$	4,540,044	$	1,597,885	$	421,563	$	127,836	$	65,809	$	1,971,767	$	8,724,904
Total mortgage loans	$	11,371,699	$	2,574,254	$	2,305,471	$	1,501,701	$	883,763	$	3,912,788	$	22,549,676


Loan-to-value as of September 30, 2022, by year of origination	Carrying value loan-to-value 70% and less		Carrying value loan-to-value 71% - 90%		Carrying value loan-to-value over 90%		Total carrying value
2022	$	5,174,067	$	365,286	$	—	$	5,539,353
2021	4,744,972		2,018,623		—		6,763,595
2020	771,593		122,593		35,060		929,246
2019	1,360,360		173,557		—		1,533,917
2018	1,259,505		34,776		—		1,294,281
2017	722,333		44,548		—		766,881
Prior	1,652,469		—		—		1,652,469
Total commercial mortgage loans	$	15,685,299	$	2,759,383	$	35,060	$	18,479,742


Loan-to-value as of December 31, 2021, by year of origination	Carrying value loan-to-value 70% and less		Carrying value loan-to-value 71% - 90%		Carrying value loan-to-value over 90%		Total carrying value
2021	$	4,910,170	$	1,921,485	$	—	$	6,831,655
2020	819,406		121,997		34,966		976,369
2019	1,747,656		136,252		—		1,883,908
2018	1,324,807		49,058		—		1,373,865
2017	772,989		44,965		—		817,954
2016	425,926		2,440		—		428,366
Prior	1,497,503		15,152		—		1,512,655
Total commercial mortgage loans	$	11,498,457	$	2,291,349	$	34,966	$	13,824,772


	September 30, 2022		December 31, 2021
Investments in real estate(1)	$	4,202,597	$	1,564,853
Investments in renewable energy(2)	3,420,210		3,573,811
Investments in transportation and other leased assets(3)	2,767,770		2,663,759
Other investment partnerships	257,905		234,301
FHLB common stock and other investments	182,261		171,842
Total other investments	$	10,830,743	$	8,208,566


	Investment in common stock				Funding agreements issued to FHLB member banks				Collateral
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
FHLB Indianapolis	$	80,512	$	80,640	$	1,610,025	$	1,619,765	$	2,362,537	$	2,577,698
FHLB Des Moines	31,120		34,600		532,467		620,006		838,297		1,004,530
FHLB Boston	17,520		22,520		322,922		326,639		436,645		553,384
Total	$	129,152	$	137,760	$	2,465,414	$	2,566,410	$	3,637,479	$	4,135,612


As of September 30, 2022	Overnight		<30 Days		30 - 90 Days		> 90 Days		Total
Corporate Securities	$	—	$	—	$	—	$	810,946	$	810,946
Total borrowing	$	—	$	—	$	—	$	810,946	$	810,946


Three Months Ended September 30, 2022	Derivatives		Hedged items		Net
2029 Senior Notes	$	(25,777)	$	25,777	$	—
2031 Senior Notes	(36,636)		36,636		—
FHLB funding agreement liabilities	(12,060)		12,060		—
FABN liabilities	(145,075)		145,075		—


	As of September 30, 2022				As of December 31, 2021
	Carrying value		Fair value of hedge adjustments		Carrying value		Fair value of hedge adjustments
2029 Senior Notes	$	403,044	$	(90,156)	$	473,890	$	(18,808)
2031 Senior Notes	534,886		(115,113)		644,439		(5,561)
FHLB funding agreement liabilities	1,174,359		(67,327)		1,070,770		(16,092)
FABN liabilities	4,608,996		(372,494)		—		—


As of September 30, 2022	Notional Value		Derivative Assets		Derivative Liabilities
Asset Management
Foreign Exchange Contracts and Options	$	15,020,028	$	1,016,135	$	242,117
Other Derivatives	1,247,992		39,887		20,249
Total Asset Management			$	1,056,022	$	262,366







Insurance
Equity market contracts	$	39,471,819	$	579,918	$	217,106
Interest rate contracts	11,139,171		170,402		935,385
Foreign currency contracts	3,279,137		373,757		95,233
Credit risk contracts	107,754		—		308
Impact of netting(1)			(273,803)		(273,803)
Fair value included within derivative assets and derivative liabilities			850,274		974,229
Embedded derivative – indexed universal life products			—		315,889
Embedded derivative – annuity products			—		1,472,814
Fair value included within policy liabilities			—		1,788,703
Embedded derivative – funds withheld at interest			(21,954)		(3,419,586)
Total Insurance			$	828,320	$	(656,654)

Fair value included within total assets and liabilities			$	1,884,342	$	(394,288)




Balance at December 31, 2016	$	2,384,177
Carried Interest Allocated as a result of Changes in Fund Fair Value	1,224,235
Cash Proceeds Received	(911,118		)
Balance at September 30, 2017	$	2,697,294


Derivative contracts not designated as hedges	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Asset Management
Net Gains (Losses) from Investment Activities:
Foreign Exchange Contracts and Options	$	593,766	$	321,139	817,531		$	252,303
Other Derivatives	4,782		(11,110)		30,488		(41,571)
Total included in Net Gains (Losses) from Investment Activities	$	598,548	$	310,029	$	848,019	$	210,732

Insurance
Net investment-related gains (losses):
Funds withheld receivable embedded derivatives	$	3,211	$	(10,001)	$	(64,130)	$	68,449
Funds withheld payable embedded derivatives	836,395		103,971		3,380,530		48,799
Equity index options	(156,561)		(25,854)		(884,786)		275,035
Equity future contracts	37,247		1,783		199,432		(171,982)
Interest rate contracts and other	(107,494)		(24,135)		(331,395)		(149,274)
Credit risk contracts	370		(196)		705		(254)

Total included in net investment-related gains (losses)	$	613,168	$	45,568	$	2,300,356	$	70,773


Derivative contracts designated as hedges	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Insurance
Revenues
Net investment-related gains (losses):
Foreign currency forwards	$	42,136	$	(4,776)	$	70,048	$	(675)
Total included in net investment-related gains (losses)	$	42,136	$	(4,776)	$	70,048	$	(675)
Expenses
Net policy benefits and claims:
Interest rate swaps	$	(171,447)	$	74	$	(426,794)	$	(6,552)
Total included in net policy benefits and claims	$	(171,447)	$	74	$	(426,794)	$	(6,552)
Interest expense:
Interest rate swaps	$	(62,413)	$	(7,923)	$	(180,087)	$	(14,307)
Total included in interest expense	$	(62,413)	$	(7,923)	$	(180,087)	$	(14,307)