# KKR & Co. Inc. (KKR) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from KKR & Co. Inc.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1404912/000140491222000004/kkr-20211231.htm
Accession: 0001404912-22-000004
Filing date: 2022-02-28
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/KKR/
All MD&A years: /company/KKR/mda/
Next year: /company/KKR/mda/fy2022/ (FY 2022)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    The following discussion and analysis should be read in conjunction with the consolidated financial statements of KKR & Co. Inc., together with its consolidated subsidiaries, and the related notes included elsewhere in this report. The historical consolidated financial data discussed below reflects the historical results and financial position of KKR and does not reflect the Global Atlantic acquisition. In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under "Cautionary Note Regarding Forward-looking Statements" and "Risk Factors." Actual results may differ materially from those contained in any forward-looking statements.

Business Environment

Economic and Market Conditions

Impact of COVID-19. The outbreak of COVID-19 continues to impact the United States and other 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".

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 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, European Union, Japan, China, and other major economies are significant contributors to the global economy.

In 2021, the United States showed signs of economic improvement driven primarily by government fiscal and monetary support, consumer savings and vaccine rollouts. Inflation, however, is on the rise, driven by multiple factors, including supply chain disruptions, consumer demand, employment levels, and residential vacancy rates. In the United States, real GDP is estimated to have expanded by 5.6% for the year ended December 31, 2021, compared to a contraction of 3.4% in the prior year; the U.S. unemployment rate was 3.9% as of December 31, 2021, from 6.7% as of December 31, 2020; the U.S. core consumer price index rose 5.5% on a year-over-year basis as of December 31, 2021, up from 1.6% on a year-over-year basis as of December 31, 2020; and the effective federal funds rate set by the U.S. Federal Reserve was 0.1% as of December 31, 2021, flat from 0.1% as of December 31, 2020.

In January 2022, the U.S. Federal Reserve signaled its intention to be more aggressive at the start of the tightening cycle to dampen inflation running broadly through the U.S. economy, leading to significant market volatility. In February 2022, actions taken by Russia in the Ukraine have also led to uncertainty and volatility. As of February 24, 2022, the VIX ended at 30.3, compared to 17.2 as of December 31, 2021, an increase of 76.1%. The pan-European Stoxx 600 closed down more than 21% since the start of the year; and Brent crude oil prices topped $100 for the first time since 2014.

In 2021, the Euro Area rebounded into expansion as real GDP is estimated to have risen by 5.1% for the year ended December 31, 2021 compared to a contraction of 6.4% in the prior year; the Euro Area unemployment is estimated to have been 7.2% as of December 31, 2021, down from 8.1% as of December 31, 2020; Euro Area core inflation was 2.6% on a year-over-year basis as of December 31, 2021, up from 0.2% on a year-over-year basis as of December 31, 2020; and the short-term benchmark interest rate set by the European Central Bank was 0.0% as of December 31, 2021, unchanged from December 31, 2020.

In 2021, policymakers in China introduced a campaign for “common prosperity” focused on promoting a balance among growth, inclusion, and national security considerations, which could weigh on the outlook for economic growth over the medium term. Also, China’s zero COVID tolerance policies may further impact growth over the near term as outbreaks occur. Estimated real GDP in China grew by 8.0% for the year ended December 31, 2021, compared to growth of 2.2% reported for the year ended December 31, 2020. Estimated core inflation in China was 1.0% on a year-over-year basis as of December 31, 2021, down from 2.5% on a year-over-year basis as of December 31, 2020. In Japan, the economy has begun to embark on post-pandemic economic recovery. In Japan, real GDP growth for the year ended December 31, 2021 is estimated to be 1.8%, up from -4.6% for the year ended December 31, 2020. Core inflation on a year-over-year basis in Japan is estimated to have been -0.2% as of December 31, 2021, down from 0% on a year-over-year basis as of December 31, 2020. In Japan, the short-term benchmark interest rate set by the Bank of Japan was -0.1% as of December 31, 2021, unchanged from December 31, 2020.

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These and other key issues could have repercussions across regional and global financial markets, which could adversely affect the valuations of our investments. In particular, in response to persistent inflationary pressure, short- and medium-term interest rates may rise, which may adversely impact equity and credit markets and in turn both increase volatility in equity and debt markets and reduce economic growth. As noted above, the U.S. Federal Reserve has indicated that it is prepared to take action to manage inflation, including raising interests rates, tapering its asset purchases 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 Russian-Ukraine conflict, including the sanctions imposed in response to Russia's actions in February 2022, may exacerbate these issues and trends. Other key issues include (i) further developments regarding COVID-19, including the spread of variants such as Delta and Omicron, which may prolong the adverse economic impact of the 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 relations, (iii) political uncertainty caused by, among other things, economic nationalist sentiments, tensions surrounding socioeconomic inequality issues, and partisan sentiments in the United States, all of which have potentially global ramifications with regards to policy, (iv) regulatory changes regarding, for example, taxation, international trade, cross-border investments, immigration, stimulus programs and rising levels of debt, (v) increased volatility and/or downturn in equity or credit markets, (vi) unexpected shifts in central banks' monetary policies, and (vii) technological advancements and innovations that may disrupt marketplaces and businesses. For a further discussion of how market conditions may affect our businesses, see "Risk Factors—Risks Related to Our 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." In addition, the U.S. Congress is proposing (and after the date of this report may propose other) various significant changes in tax law, including significant changes in the way U.S. corporations like ourselves and many of our U.S. portfolio companies are taxed. If enacted, these changes could materially increase the amount of taxes 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.”

Equity and Credit Markets. Global equity and credit markets have a substantial effect on our financial condition and results of operations. 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 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 ongoing central bank quantitative easing campaigns and comparatively low interest rates relative to the United States could potentially experience further currency volatility and weakness relative to the U.S. dollar.

With respect to our insurance business, fluctuations in market interest rates can expose Global Atlantic to the risk of reduced income in respect of its investment portfolio, increases in the cost of acquiring or maintaining its insurance liabilities, increases in the cost of hedging, or other fluctuations in Global Atlantic's financial, capital and operating profile which materially and adversely affect the business. Higher interest rates, periods of changes in rates and lower rates each 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 asset management business, 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. For the year ended December 31, 2021, global equity markets were positive, with the S&P 500 up 29.5% and the MSCI World Index up 22.5% on a total return basis including dividends. Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index (VIX), a measure of volatility, ended at 17.2 as of December 31, 2021, decreasing from 22.8 as of December 31, 2020. See above for volatility that occurred after the year-end. For a discussion of our valuation methods, see “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” and see also “—Critical Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies.” 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.

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Many of our investments, particularly in asset management, are in non-investment grade credit instruments, and, particularly in insurance, in investment grade credit instruments. Our funds, 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.

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 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 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 should 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 year ended December 31, 2021, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) tightened by 5 basis points and U.S. high-yield corporate bond spreads (BofAML HY Master II Index) tightened by 77 basis points. In response to the U.S. Federal Reserve's change in tone and heightened geopolitical tensions in relation to Russia and Ukraine, these trends reversed in 2022 to date through February 24, with U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) widening by 34 basis points and the U.S. high-yield corporate bond spreads (BofAML HY Master II Index) widening by 83 basis points. The non-investment grade credit indices were up during the year ended December 31, 2021, with the S&P/LSTA Leveraged Loan Index up 5.2% and the BAML US High Yield Index up 5.4%. During the year ended December 31, 2021, 10-year government bond yields rose 60 basis points in the United States, rose 77 basis points in the United Kingdom, rose 39 basis points in Germany, fell 37 basis points in China, and rose 5 basis points in Japan. For a further discussion of how market conditions may affect our businesses, see “Risk Factors—Risks Related to Our 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” 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.”

For further discussion of the impact of global credit markets on our financial condition and results of operations, see "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 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, 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, liquidity, results of operations, cash flows and prospects." For a further discussion of our valuation methods, see "—Critical Accounting Policies—Fair Value Measurements—Level III Valuation 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 that deal in 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. 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 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

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denominated in such currencies, while the appreciation in such currencies would be expected to have the opposite effect. For the year ended December 31, 2021, the euro fell 6.9%, the British pound fell 1.0%, the Japanese yen fell 10.3%, and the Chinese renminbi rose 2.7%, respectively, relative to the U.S. dollar. For additional information regarding our foreign exchange rate risk, see “Quantitative and Qualitative Disclosure About Market Risk—Exchange Rate Risk.”

Commodity Markets. Our Private Markets portfolio contains energy real asset investments, and certain of our other Private Markets and Public Markets strategies have investments in or related to the energy sector. The value of these investments is heavily influenced by the price of natural gas and oil. During the year ended December 31, 2021, the 3-year forward price of WTI crude oil increased approximately 37%, and the 3-year forward price of natural gas increased approximately 17%. The 3-year forward price of WTI crude oil increased from approximately $46 per barrel to $63 per barrel, and the 3-year forward price of natural gas increased from approximately $2.47 per mcf to $3.13 per mcf as of December 31, 2020 and December 31, 2021, respectively.

As noted above, the actions taken by Russia in the Ukraine in February 2022 have also caused volatility in the commodities markets. As of February 24, 2022, the 3-year forward price of WTI crude oil increased approximately 16%, to $73 per barrel, and the 3-year forward price of natural gas increased approximately 11% to $3.47 per mcf. Additionally, the front month contract for WTI crude oil settled at $92 per barrel, also a level not seen since 2014.

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, 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, to the extent energy real asset investments are directly held by our balance sheet, price movements can have an amplified impact on our financial results, as we would directly bear the full extent of such gains or losses, subject to hedging. However, as of December 31, 2021, 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 Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies—Real Asset Investments" and see also "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."

Business Conditions

Our operating revenues consist of fees, performance income and investment 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 industry generally, and in certain cases our re-insurance vehicles, as attractive means for capital appreciation or income. Since 2010, we have expanded into strategies such as real assets, credit, core, impact and, through hedge fund partnerships, hedge funds, and insurance. In several of our asset management strategies, our first time funds have begun raising successor funds, and we expect the cost of raising such successor funds to be lower. We have also reached out to new fund investors, including retail and high net worth investors. However, fundraising continues to be competitive. While our 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 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."

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 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

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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 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 lower fees for our capital markets business line, which may earn fees in the syndication of 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 “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 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.”

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 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. 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 KKR Group Partnership and its consolidated entities, which include the accounts of our investment advisers, broker-dealers, Global Atlantic’s insurance companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds and certain other entities including collateralized financing entities ("CFEs").

When an entity is consolidated, we reflect the accounts of the consolidated entity, including its assets, liabilities, revenues, expenses, investment income, cash flows and other amounts, on a gross basis. While the consolidation of an investment fund or entity does not have an effect on the amounts of Net Income Attributable to KKR or KKR's 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 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 year ended December 31, 2021 are from February 1, 2021 (the closing date of the acquisition) through December 31, 2021.

All the intercompany transactions have been eliminated.

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For a further discussion of our consolidation policies, see Note 2 "Summary of Significant Accounting Policies" in our financial statements. 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.

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 December 31, 2021.

Revenues

Fees and Other

Fees and other consist primarily of (i) management and incentive fees from providing investment management services to unconsolidated funds, CLOs, other vehicles, and separately managed 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; (iv) expense reimbursements from certain investment funds and portfolio companies; (v) revenue earned by oil and gas entities that are consolidated; and (vi) consulting 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.

Capital Allocation-Based Income (Loss)

Capital allocation-based income (loss) is earned from those arrangements whereby KKR serves as general partner and includes income or loss from KKR's capital interest as well as "carried interest" which entitles KKR to a disproportionate allocation of investment income or loss from an investment fund's limited partners.

For a further discussion of our revenue policies, see Note 2 "Summary of Significant Accounting Policies" in our financial statements included elsewhere in this report.

Expenses

Compensation and Benefits

Compensation and Benefits expense includes (i) base cash compensation consisting of salaries and wages, (ii) benefits, (iii) carry pool allocations, (iv) equity-based compensation, and (v) discretionary cash bonuses.

To supplement base cash compensation, benefits, carry pool allocations, and equity-based compensation, we typically pay discretionary cash bonuses, which are included in Compensation and Benefits expense in the consolidated statements of operations, based principally on the level of (i) management fees and other 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, if any, are at our sole discretion and vary from individual to individual and from period to period, including having no cash bonus. We accrue discretionary cash bonuses when payment becomes probable and reasonably estimable which is generally in the period when we make the decision to pay discretionary cash bonuses and is based upon a number of factors, including the recognition of fee revenues, realized carried interest, realized investment income and other factors determined during the year.

Beginning in 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 annual basis, we expect to use approximately: (i) 20‐25% of fee related revenues, (ii) 60‐70% of realized carried interest and 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 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

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occurrence of the realization event. There is no contractual or other binding obligation that requires us to pay a discretionary cash bonus 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 the funds that allocate 40% and 43% to the carry pool and (ii) 15% of the unrealized net gains in our Principal Activities business line (in each case at the mid-point of the ranges above), KKR & Co. Inc. Stockholders’ Equity – Series I and II Preferred, Common Stock as of December 31, 2021 would have been reduced by approximately $2.66 per share, compared to our reported $27.64 per share on such date, and our book value as of December 31, 2021 would have been reduced by approximately $2.58 per adjusted share, compared to our reported book value of $28.77 per adjusted share on such date.

Carry Pool Allocation

With respect to our funds that provide for carried interest, we allocate a 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 employees and certain other carry pool participants are eligible to receive a carried interest allocation. The allocation is determined based upon a fixed arrangement between KKR Associates Holdings and us, and we do not exercise discretion on whether to make an allocation to the carry pool upon a realization event. These amounts are accounted for as compensatory profit sharing arrangements in Accrued Expenses and Other Liabilities within the accompanying consolidated statements of financial condition in conjunction with the related carried interest income and are recorded as compensation expense. Upon a reversal of 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 to 65% for (i) current investment funds for which no or de minimis amounts of carried interest was accrued as of December 31, 2020 and (ii) all future funds. For all other funds, the percentage of carried interest remains 40% or 43%, as applicable. The percentage of carried interest 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 applicable, to supplement the carry pool and to pay amounts as discretionary cash bonus compensation as described above to our asset management employees. The amounts paid as discretionary cash bonuses, if any, are at our discretion and vary from individual to individual and from period to period, including having no cash bonus at all for 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."

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 some of which are also subject to the achievement of market-based conditions. Certain of these awards are subject to post-vesting transfer restrictions and 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, expenses incurred by oil and gas entities, CLOs and investment funds that are consolidated, costs incurred in connection with pursuing potential investments that do not result in completed transactions ("broken-deal expenses"), expense reimbursements, placement fees and other general operating expenses. A portion of 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 as well as income earned from 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 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 - 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 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 cash generated from operations from portfolio investments or real assets investments, and (iii) other significant refinancings undertaken by portfolio 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 and other investments.

Interest Expense

Interest expense is incurred from (i) debt issued by KKR, including debt issued by 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 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."

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 December 31, 2021.

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

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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, 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, or 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 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 on 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.

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, or "TPA," policy servicing fees, administrative and professional services, and other operating expenses.

Other Key Financial Measures Under GAAP

Income Taxes

KKR & Co. Inc. is 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 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 KKR, including certain Global Atlantic subsidiaries, are domestic corporations for U.S. federal income tax purposes and are subject to U.S. federal, state, and local income taxes.

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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 2 "Summary of Significant Accounting Policies" and 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 consolidated in the financial statements as well as the ownership interests in KKR Group Partnership that are held by KKR Holdings (and holders of other 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 KKR Group 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 Note 22 "Equity" in the financial statements.

Key Segment and Non-GAAP Performance Measures

The following key segment and non-GAAP performance measures are used by management in making operational and resource deployment decisions as well as assessing the performance of KKR's 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. Inc. and KKR Holdings L.P. (and holders of other exchangeable securities) and as such represent the entire KKR business in total. In addition, these performance measures are presented without giving effect to the consolidation of the investment funds and collateralized financing entities (“CFEs”) that KKR manages.

We believe that providing these segment and non-GAAP performance measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall performance of KKR's business. These non-GAAP measures should not be considered as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable are included under "—Reconciliations to GAAP Measures."

After-tax Distributable Earnings

After-tax distributable earnings is a non-GAAP performance measure of KKR’s earnings, which is derived from KKR’s reported segment results. After-tax distributable earnings 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, Series A and B Preferred Stock dividends (which have been redeemed), Net Income Attributable to Noncontrolling Interests and Income Taxes Paid. Series C Mandatory Convertible Preferred Stock dividends have been 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. Income Taxes Paid represents the implied 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 units in KKR Holdings L.P. and other exchangeable securities were exchanged for common stock of KKR & Co. Inc. Income Taxes Paid includes amounts paid pursuant to the tax receivable agreement and 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 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 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 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

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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 dividends under KKR’s dividend policy, which is a fixed amount per period, and After-tax Distributable Earnings should not be viewed as a measure of KKR’s liquidity.

Book Value

Book Value is a non‐GAAP performance measure of the net assets of 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 KKR Holdings L.P., 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 the investors of KKR funds and other noncontrolling interest holders and to the holders of preferred stock. KKR's book value includes (x) the net impact of KKR's tax assets and liabilities as prepared under GAAP and (y) the implied amount of (1) tax assets and liabilities attributable to KKR Holdings L.P. as if it was subject to corporate income taxes and (2) the recognition of deferred tax liabilities relating to certain assets of KKR Group Partnership L.P. that is expected to occur upon the completion of the mergers contemplated by the Reorganization Agreement. 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. 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 income tax.

In the second quarter of 2021, the definition of book value was amended to include the implied amount of tax assets and liabilities attributable to KKR Holdings L.P. as if it was subject to corporate income taxes. This change is useful to management and investors in assessing book value because the definition now includes the anticipated impacts that the payment of tax liabilities by KKR would have on book value. Prior periods have not been adjusted for this change, although it is expected to have had the effect of reducing book value reported for prior periods.

Starting in the third quarter of 2021, the definition of book value was amended to include the anticipated recognition of deferred tax liabilities relating to certain assets of KKR Group Partnership L.P. that is expected to occur upon the completion of the mergers contemplated by the Reorganization Agreement. This change is useful to management and investors in assessing book value because the definition now includes the anticipated impacts that the mergers contemplated by the Reorganization Agreement, which are expected to be completed in 2022, would have on book value.

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 is presented prior to giving effect to the allocation of income (loss) among KKR & Co. Inc., KKR Holdings L.P. and other exchangeable securities, and the consolidation of the investment funds, vehicles and accounts that KKR advises, manages or sponsors (including collateralized financing entities). 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 performance income compensation. Management fees earned by KKR as the adviser, manager or sponsor for its investment funds,

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vehicles and accounts, including management fees paid to KKR by Global Atlantic's insurance companies and management fees paid to Global Atlantic by reinsurance investment vehicles, 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.

Other Terms and Capital Metrics

Adjusted Shares

Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include shares issuable upon exchange of all units of KKR Holdings L.P. and other exchangeable securities and the number of shares of common stock assumed to be issuable upon conversion of the Series C Mandatory Convertible Preferred Stock. 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.

Assets Under Management ("AUM")

    Assets under management represent the assets 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 stockholders as it provides additional insight into the capital raising activities of KKR and its hedge fund and other managers and the overall activity in their investment funds and other managed or sponsored 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 and the Global Atlantic insurance companies; (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 fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs; (v) KKR's pro rata

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portion of the AUM of hedge fund and other managers in which KKR holds an ownership interest; (vi) all AUM of KKR's strategic BDC partnership; and (vii) the fair 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's insurance companies, (ii) KKR's Principal Activities business line as a co-investment, if any, alongside KKR’s investment funds, and (iii) KKR's Principal Activities business line in connection with a syndication transaction conducted by KKR's Capital Markets 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 stockholders as it provides a measure of capital deployment across KKR’s business lines. Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable. Capital invested excludes (i) investments in certain leveraged credit strategies, (ii) capital invested by KKR’s Principal Activities business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by KKR’s Principal Activities business line that is not invested in connection with a syndication transaction by KKR’s Capital Markets business line. Capital syndicated by KKR's Capital Markets business line to third parties other than KKR’s investment funds or Principal Activities business line is not included in capital invested.

Fee Paying AUM ("FPAUM")

    Fee paying AUM represents only the AUM from which KKR is entitled to receive management fees. We believe this measure is useful to 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 hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments from which KKR is not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which it is entitled to receive only performance income or is otherwise not currently 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

    Uncalled commitments is the aggregate amount 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. We believe this measure is useful to 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 or investments we have committed to make but remain unfunded at the reporting date.

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Consolidated Results of Operations (GAAP Basis)

The following is a discussion of our consolidated results of operations for the years ended December 31, 2021 and 2020. 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.

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2021","","December 31, 2020","","Change"],["","($ in thousands)"],["Revenues"],["Asset Management"],["Fees and Other","$","2,850,154","","","$","2,006,791","","","$","843,363"],["Capital Allocation-Based Income (Loss)","6,842,414","","","2,224,100","","","4,618,314"],["","9,692,568","","","4,230,891","","","5,461,677"],["Insurance"],["Net Premiums","2,226,078","","","\u2014","","","2,226,078"],["Policy Fees","1,147,913","","","\u2014","","","1,147,913"],["Net Investment Income","2,845,623","","","\u2014","","","2,845,623"],["Net Investment-Related Gains","203,753","","","\u2014","","","203,753"],["Other Income","120,213","","","\u2014","","","120,213"],["","6,543,580","","","\u2014","","","6,543,580"],["Total Revenues","16,236,148","","","4,230,891","","","12,005,257"],["Expenses"],["Asset Management"],["Compensation and Benefits","4,428,743","","","2,152,490","","","2,276,253"],["Occupancy and Related Charges","69,084","","","72,100","","","(3,016)"],["General, Administrative and Other","959,077","","","708,542","","","250,535"],["","5,456,904","","","2,933,132","","","2,523,772"],["Insurance"],["Policy Benefits and Claims","5,055,709","","","\u2014","","","5,055,709"],["Amortization of Policy Acquisition Costs","(65,949)","","","\u2014","","","(65,949)"],["Interest Expense","61,661","","","\u2014","","","61,661"],["Insurance Expenses","358,878","","","\u2014","","","358,878"],["General, Administrative and Other","555,321","","","\u2014","","","555,321"],["","5,965,620","","","\u2014","","","5,965,620"],["Total Expenses","11,422,524","","","2,933,132","","","8,489,392"],["Investment Income (Loss) - Asset Management"],["Net Gains (Losses) from Investment Activities","7,720,923","","","3,642,804","","","4,078,119"],["Dividend Income","698,800","","","352,563","","","346,237"],["Interest Income","1,485,470","","","1,403,440","","","82,030"],["Interest Expense","(1,070,368)","","","(969,871)","","","(100,497)"],["Total Investment Income (Loss)","8,834,825","","","4,428,936","","","4,405,889"],["Income (Loss) Before Taxes","13,648,449","","","5,726,695","","","7,921,754"],["Income Tax Expense (Benefit)","1,353,270","","","609,097","","","744,173"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2021","","December 31, 2020","","Change"],["","($ in thousands)"],["Net Income (Loss)","12,295,179","","","5,117,598","","","7,177,581"],["Net Income (Loss) Attributable to Redeemable Noncontrolling Interests","4,060","","","\u2014","","","4,060"],["Net Income (Loss) Attributable to Noncontrolling Interests","7,624,643","","","3,115,089","","","4,509,554"],["Net Income (Loss) Attributable to KKR & Co. Inc.","4,666,476","","","2,002,509","","","2,663,967"],["Series A Preferred Stock Dividends","23,656","","","23,288","","","368"],["Series B Preferred Stock Dividends","12,991","","","10,076","","","2,915"],["Series C Mandatory Convertible Preferred Stock Dividends","69,000","","","23,191","","","45,809"],["Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders","$","4,560,829","","","$","1,945,954","","","$","2,614,875"]]
[[/GREPCENT_TABLE]]

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Consolidated Results of Operations (GAAP Basis) - Asset Management

Revenues

For the years ended December 31, 2021 and 2020, revenues consisted of the following:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Management Fees","","$","1,301,975","","","$","965,664","","","$","336,311"],["Fee Credits","","(464,594)","","","(299,415)","","","(165,179)"],["Transaction Fees","","1,552,621","","","950,205","","","602,416"],["Monitoring Fees","","134,472","","","127,907","","","6,565"],["Incentive Fees","","55,701","","","10,404","","","45,297"],["Expense Reimbursements","","178,572","","","149,522","","","29,050"],["Oil and Gas Revenue","","\u2014","","","21,054","","","(21,054)"],["Consulting Fees","","91,407","","","81,450","","","9,957"],["Total Fees and Other","","2,850,154","","","2,006,791","","","843,363"],["Carried Interest","","5,388,354","","","1,719,527","","","3,668,827"],["General Partner Capital Interest","","1,454,060","","","504,573","","","949,487"],["Total Capital Allocation-Based Income (Loss)","","6,842,414","","","2,224,100","","","4,618,314"],["Total Revenues - Asset Management","","$","9,692,568","","","$","4,230,891","","","$","5,461,677"]]
[[/GREPCENT_TABLE]]

Fees and Other

Total Fees and Other for the year ended December 31, 2021 increased compared to the year ended December 31, 2020 primarily as a result of the increase in transaction fees and management fees.

For a more detailed discussion of the factors that affected our transaction fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."

The increase in management fees was primarily attributable to management fees earned from (i) North America Fund XIII, Global Infrastructure Investors IV, and Health Care Strategic Growth Fund II, all of which entered their investment periods in 2021 and (ii) Asian Fund IV, which entered its investment period in the third quarter of 2020. These increases were partially offset by a decrease in management fees earned from Asian Fund III, Americas Fund XII, and Global Infrastructure Investors III as a result of entering their post-investment periods in the third quarter of 2020, second quarter of 2021 and second quarter of 2021, respectively, with all three investment funds now earning fees based on capital invested rather than capital committed and at a lower fee rate for Asian Fund III and Americas Fund XII.

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 Markets and Public Markets 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

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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.

Capital Allocation-Based Income (Loss)

The increase in carried interest and general partner capital interest during the year ended December 31, 2021 compared to the prior period was due primarily to a higher level of net appreciation in the value of our investment portfolio as compared to the year ended December 31, 2020. Capital Allocation-Based Income (Loss) for the year ended December 31, 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. Capital Allocation-Based Income (Loss) for the year ended December 31, 2020 was positive 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

Net Gains (Losses) from Investment Activities for the year ended December 31, 2021

The net gains from investment activities for the year ended December 31, 2021 were comprised of net realized gains of $2,382.2 million and net unrealized gains of $5,338.7 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. For a discussion and analysis of the investment gains or losses relating to the investments in our unconsolidated funds, see "—Analysis of Asset Management Segment Operating Results."

Realized Gains and Losses from Investment Activities

For the year ended December 31, 2021, net realized gains related primarily to the sales of our investments held by KKR and certain consolidated funds, the most significant of which were in FanDuel Inc. (technology sector), Mr. Cooper Group Inc. (NASDAQ: COOP), and Darktrace Limited (LSE: DARK). Partially offsetting these realized gains were realized losses, the most significant of which were realized losses from certain investments held in our consolidated credit funds and realized losses on certain hedging instruments.

Unrealized Gains and Losses from Investment Activities

For the year ended December 31, 2021, net unrealized gains related primarily to mark-to-market gains from our investments held by KKR and certain consolidated funds, the most significant of which were PetVet Care Centers, LLC (health care sector), Heartland Dental LLC (health care sector) and OutSystems Holdings S.A. (technology sector). Partially offsetting these unrealized gains were unrealized losses, the most significant of which are (i) the reversal of previously recognized unrealized gains relating to the realization activity described above and (ii) an unrealized loss on BridgeBio Pharma, Inc. (NASDAQ: BBIO).

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results" and Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

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Net Gains (Losses) from Investment Activities for the year ended December 31, 2020

The net losses from investment activities for the year ended December 31, 2020 were comprised of net realized gains of $162.9 million and net unrealized gains of $3,479.9 million.

Realized Gains and Losses from Investment Activities

For the year ended December 31, 2020, net realized gains related primarily to (i) the sale of our investment in The Hut Group Limited (LSE: THG), (ii) partial sales of our investment in Fiserv, Inc. (NASDAQ: FISV), and (iii) the sale of our investment in Ivalua SAS (technology sector). Partially offsetting these realized gains were realized losses primarily relating to (i) an $88.3 million impairment charge taken on one of our investments that is accounted for under the equity method of accounting, (ii) a realized loss on the partial sale of our investment in LCI Helicopters Limited (financial services sector) and (iii) realization of losses on certain investments held through consolidated CLOs and alternative credit funds.

Unrealized Gains and Losses from Investment Activities

For the year ended December 31, 2020, net unrealized gains were driven primarily by (i) mark-to-market gains in our growth equity and core investments held by KKR and certain consolidated entities, the most significant of which were BridgeBio Pharma, Inc., FanDuel Inc., and PetVet Care Centers, LLC. Partially offsetting these unrealized gains were unrealized losses relating to (i) the reversal of previously recognized unrealized gains relating to the realization activity described above, (ii) mark-to-market losses on our investment in Fiserv, Inc., which is held both in our funds and as a co-investment by KKR, and (iii) mark-to-market losses on certain investments held through consolidated alternative credit and real estate funds.

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results" in our report and Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Dividend Income

During the year ended December 31, 2021, the most significant dividends received included (i) $215.5 million from our consolidated real estate funds, (ii) $138.7 million from our investment in Viridor Limited (infrastructure), and (iii) $70.9 million from our investment in Arnott's Biscuits Limited (consumer products sector). During the year ended December 31, 2020, the most significant dividends received included $152.4 million from our consolidated real estate funds, $62.5 million from our investment in Fiserv, Inc. part of which is held as a co-investment by KKR, and $48.9 million from our investment in Epicor Software Corporation (technology sector).

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 "—Analysis of Asset Management Segment Operating Results."

Interest Income

The increase in interest income during the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to (i) a higher level of interest income from certain of our consolidated credit funds, primarily related to an increase in the amount of capital deployed, and (ii) the impact of closing additional CLOs that are consolidated subsequent to December 31, 2020. Partially offsetting these increases was a lower level of reported interest income from investments at KREF as a result of the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Interest Expense

The increase in interest expense during the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to (i) the impact of issuances of our senior notes, (ii) an increase in the amount of borrowings outstanding from the financing arrangements of consolidated investment funds and other vehicles, and (iii) impact of closing additional CLOs that are consolidated subsequent to December 31, 2020. Partially offsetting these increases was a lower level of reported interest expense on debt obligations at KREF as a result of the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."

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Expenses - Asset Management

Compensation and Benefits Expenses

The increase in compensation and benefits expenses during the year ended December 31, 2021 compared to the prior period was primarily due to (i) a higher level of accrued carried interest compensation resulting from a higher level of carried interest from the appreciation in the value of our investment portfolio in the current period, (ii) a higher level of accrued discretionary compensation and benefits resulting from a higher level of fee revenue, realized performance income and realized investment income in the current period, and (iii) a higher level of equity-based compensation.

The number of equity-based compensation awards granted in 2021 is higher than in 2020, which combined with a higher stock price than the prior period will result in a higher equity-based compensation expense in the coming years. Based on equity awards made through December 31, 2021, and assuming no additional grants and no forfeitures, equity-based compensation for the year ended December 31, 2022 would be comprised of $211.9 million of expense associated with time-based vesting awards and $237.5 million of expense associated with performance-based vesting awards. Additional grants made in 2022 or forfeitures of existing grants during 2022 would increase and decrease these numbers, respectively.

General, Administrative and Other

The increase in general, administrative and other expenses during the year ended December 31, 2021 compared to the prior period was primarily due to (i) a higher level of expenses at our consolidated CLOs, investment funds and other vehicles, (ii) a higher level of broken-deal expenses, (iii) a higher level of expenses reimbursable by our investment funds, and (iv) placement fees incurred related to capital raising activities.

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 may increase accordingly. Similarly, our General, Administrative and Other may increase as a result 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 year-ended December 31, 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 December 31, 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:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021"],["","","($ in thousands)"],["Impacts of assumption review, by statement of income line item:"],["Policy fees","","$","182"],["Policy benefits and claims","","20,904"],["Amortization of policy acquisition costs","","(2,119)"],["Income tax impact","","(3,983)"],["Total assumption review impact on net income","","$","14,984"],["Assumption review impact on adjustments to derive insurance segment adjusted operating earnings","","(97)"],["Total assumption review impact on insurance segment adjusted operating earnings","","$","14,887"]]
[[/GREPCENT_TABLE]]

For the year ended December 31, 2021, the net favorable unlocking impact on net income and insurance segment adjusted operating earnings was primarily due to favorable mortality experience.

Revenues

For the year ended December 31, 2021, revenues consisted of the following:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021"],["","","($ in thousands)"],["Net Premiums","","$","2,226,078"],["Policy Fees","","1,147,913"],["Net Investment Income","","2,845,623"],["Net Investment-Related Gains","","203,753"],["Other Income","","120,213"],["Total Insurance Revenues","","$","6,543,580"]]
[[/GREPCENT_TABLE]]

Net Premiums

Net premiums were primarily driven by initial premiums related to new reinsurance transactions with life contingencies assumed during the year ended December 31, 2021. These initial premiums are wholly offset by a comparable increase in policy reserves reported within policy benefits and claims (as discussed below).

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Policy fees

Policy fees were primarily driven by cost of insurance, administrative, and rider fees during the year ended December 31, 2021.

Net investment income

Net investment income was primarily driven by insurance segment investments and the effective book yield (as determined, in part, by the allocated fair value of the investment portfolio as determined as of the GA Acquisition Date). Average insurance segment investments were primarily driven by net inflows of assets from the individual markets and institutional channels. In addition to the impact of higher asset balances, net investment income was also positively impacted by income from bond call and loan prepayment activity.

Net investment-related gains

The components of net investment-related gains were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021"],["","","($ in thousands)"],["Equity index options","","$","549,987"],["Funds withheld payable embedded derivatives","","49,491"],["Funds withheld receivable embedded derivatives","","31,740"],["Equity future contracts","","(263,637)"],["Interest rate contracts","","(146,920)"],["Foreign currency forwards","","2,484"],["Credit risk contracts","","(400)"],["Net gains on derivative instruments","","222,745"],["Net other investment losses","","(18,992)"],["Net investment-related gains","","$","203,753"]]
[[/GREPCENT_TABLE]]

Net gains on derivative instruments

The increase in the fair value of equity index options were 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 for which is accounted for in policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 index, which increased during the year ended December 31, 2021.

The decrease in the fair value of equity futures and interest rate contracts were driven primarily by the performance of equity markets and interest rates. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which increased during the year ended December 31, 2021, resulting in a loss on equity futures contracts. Market interest rates increased during the year ended December 31, 2021, resulting in a loss on interest rate contracts.

The increase in the fair value of embedded derivatives on funds withheld at interest payable and receivable were primarily driven by the change in fair value of the underlying investments in the respective funds withheld payable and receivable portfolios.

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Net other investment losses

The components of net other investment losses were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021"],["","","($ in thousands)"],["Realized gains (losses) on investments not supporting asset-liability matching strategies","","$","527,788"],["Realized gains (losses) on available-for-sale fixed maturity debt securities","","(201,411)"],["Credit loss allowances","","(249,338)"],["Unrealized gains (losses) on fixed maturity securities classified as trading","","(118,714)"],["Unrealized gains (losses) on investments classified as trading or accounted under a fair-value option","","75,176"],["Realized gains (losses) on funds withheld at interest payable portfolio","","(30,015)"],["Realized gains (losses) on funds withheld at interest receivable portfolio","","12,418"],["Other","","(34,896)"],["Net investment-related gains","","$","(18,992)"]]
[[/GREPCENT_TABLE]]

Net other investment losses for the year ended December 31, 2021 were primarily due to (i) the recognition of a credit loan loss allowances as a result of the application of the current expected credit loss accounting standard adopted concurrent with the GA Acquisition, (ii) losses on the sale of available-for-sale ("AFS") securities as a result of portfolio rotation strategies, and (iii) net unrealized losses on trading fixed maturity securities underlying a portion of the funds withheld payable at interest portfolio due to an increase in market interest rates. These losses were almost wholly offset by realized gains (losses) on investments not supporting asset-liability matching strategies, including in particular a gain from the disposition of Origis USA, LLC, a utility-scale renewable energy developer.

Other income

Other income is mainly driven by expense allowances on ceded reinsurance, administration, management fees and distribution fees.

Expenses

Policy benefits and claims

Policy benefits and claims were primarily driven by (i) initial reserves related to new reinsurance transactions with life contingencies during the year ended December 31, 2021, (ii) an increase in the value of embedded derivatives in Global Atlantic's indexed universal life and fixed indexed annuity products, as a result of higher equity market returns (as discussed above under "Revenues—Total Insurance Revenues—Net gains on derivative instruments," 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 policy benefits and claims), and (iii) an increase in net flows in the institutional and individual channels, all offset by a decrease in variable annuity reserves primarily due to higher equity market returns and market interest rates.

Amortization of policy acquisition costs

Amortization of policy acquisition costs during the year ended December 31, 2021 was primarily driven by the amortization of insurance intangibles recognized as part of purchase accounting of the Global Atlantic acquisition. Amortization is negative (that is, a reduction to expense) as a result of the net negative value-of-business-acquired insurance intangible recognized as part of the aforementioned purchase accounting.

Interest expense

Interest expense for the year ended December 31, 2021 reflects a net increase in debt outstanding due to the issuance of new senior and subordinated notes partially offset by the pay-down of other debt, offset in part by the favorable impact to interest expense as a result of the lower average coupon due on new debt added at lower interest rates.

Insurance expenses

Insurance expenses were primarily driven by (i) commission expense related to sales, and (ii) reinsurance ceding expense allowances paid for policy administration services during the year ended December 31, 2021.

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General, administrative and other

General, administrative and other expenses were driven primarily by (i) employee compensation and benefits related expenses, (ii) third-party administrator ("TPA") policy servicing fees, (iii) technology hardware and software related charges, and (iv) professional fees during the year ended December 31, 2021.

Other Consolidated Results of Operations (GAAP Basis)

Income Tax Expense (Benefit)

For the year ended December 31, 2021, income tax expense was $1,353.3 million compared to $609.1 million in the prior period. The increase in the income tax expense was primarily due to (i) a higher level of fees, capital allocation-based income and investment income as described above earned from asset management operations and (ii) the inclusion of income taxes relating to Global Atlantic's insurance operations. Our effective tax rate under GAAP for the year ended December 31, 2021 was 9.9%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" in our financial statements. The amount of U.S. corporate income taxes we pay in future periods may be materially increased if adverse tax laws become enacted. See also “—Business Environment—Economic and Market Conditions” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net Income (Loss) attributable to noncontrolling interests for the year ended December 31, 2021 relates primarily to net income (loss) attributable to (i) interests of KKR Holdings and other exchangeable securities representing ownership interests in KKR Group Partnership, (ii) third-party limited partner interests in consolidated investment funds and (iii) interests that co-investors and rollover investors hold in Global Atlantic. Net income (loss) attributable to noncontrolling interests for the year ended December 31, 2021 increased compared to the prior period primarily due to a higher level of net income generated during the year ended December 31, 2021, allocable to the holders of the noncontrolling interests.

Net Income (Loss) Attributable to KKR & Co. Inc.

    Net Income (loss) attributable to KKR & Co. Inc. for the year ended December 31, 2021 increased compared to the prior period primarily due to (i) a higher level of net gains from investment activities, capital allocation-based income, and fees earned from the asset management operations during the year ended December 31, 2021 as described above and (ii) the acquisition of Global Atlantic, which was completed in February 2021. These increases were partially offset by accrued carried interest compensation and income tax expense, each as described above.

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Consolidated Results of Operations (GAAP Basis)

The following is a discussion of our consolidated results of operations for the years ended December 31, 2020 and 2019. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. See also "—Business Environment" for more information about factors that may affect our business, financial performance, operating results and valuations.

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2020","","December 31, 2019","","Change"],["","($ in thousands)"],["Revenues"],["Asset Management"],["Fees and Other","$","2,006,791","","","$","1,790,475","","","$","216,316"],["Capital Allocation-Based Income (Loss)","2,224,100","","","2,430,425","","","(206,325)"],["","4,230,891","","","4,220,900","","","9,991"],["Insurance"],["Net Premiums","\u2014","","","\u2014","","","\u2014"],["Policy Fees","\u2014","","","\u2014","","","\u2014"],["Net Investment Income","\u2014","","","\u2014","","","\u2014"],["Net Investment-Related Gains (Losses)","\u2014","","","\u2014","","","\u2014"],["Other Income","\u2014","","","\u2014","","","\u2014"],["","\u2014","","","\u2014","","","\u2014"],["Total Revenues","4,230,891","","","4,220,900","","","9,991"],["Expenses"],["Asset Management"],["Compensation and Benefits","2,152,490","","","2,116,890","","","35,600"],["Occupancy and Related Charges","72,100","","","62,728","","","9,372"],["General, Administrative and Other","708,542","","","728,813","","","(20,271)"],["","2,933,132","","","2,908,431","","","24,701"],["Insurance"],["Policy Benefits and Claims","\u2014","","","\u2014","","","\u2014"],["Amortization of Policy Acquisition Costs","\u2014","","","\u2014","","","\u2014"],["Interest Expense","\u2014","","","\u2014","","","\u2014"],["Insurance Expenses","\u2014","","","\u2014","","","\u2014"],["General, Administrative and Other","\u2014","","","\u2014","","","\u2014"],["","\u2014","","","\u2014","","","\u2014"],["Total Expenses","2,933,132","","","2,908,431","","","24,701"],["Investment Income (Loss) - Asset Management"],["Net Gains (Losses) from Investment Activities","3,642,804","","","3,161,884","","","480,920"],["Dividend Income","352,563","","","318,972","","","33,591"],["Interest Income","1,403,440","","","1,418,516","","","(15,076)"],["Interest Expense","(969,871)","","","(1,043,551)","","","73,680"],["Total Investment Income (Loss)","4,428,936","","","3,855,821","","","573,115"],["Income (Loss) Before Taxes","5,726,695","","","5,168,290","","","558,405"],["Income Tax Expense (Benefit)","609,097","","","528,750","","","80,347"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2020","","December 31, 2019","","Change"],["","($ in thousands)"],["Net Income (Loss)","5,117,598","","","4,639,540","","","478,058"],["Net Income (Loss) Attributable to Redeemable Noncontrolling Interests","\u2014","","","\u2014","","","\u2014"],["Net Income (Loss) Attributable to Noncontrolling Interests","3,115,089","","","2,634,491","","","480,598"],["Net Income (Loss) Attributable to KKR & Co. Inc.","2,002,509","","","2,005,049","","","(2,540)"],["Series A Preferred Stock Dividends","23,288","","","23,288","","","\u2014"],["Series B Preferred Stock Dividends","10,076","","","10,076","","","\u2014"],["Series C Mandatory Convertible Preferred Stock Dividends","23,191","","","\u2014","","","23,191"],["Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders","$","1,945,954","","","$","1,971,685","","","$","(25,731)"]]
[[/GREPCENT_TABLE]]

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Consolidated Results of Operations (GAAP Basis) - Asset Management

Revenues

For the years ended December 31, 2020 and 2019, revenues consisted of the following:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Management Fees","","$","965,664","","","$","824,903","","","$","140,761"],["Fee Credits","","(299,415)","","","(340,900)","","","41,485"],["Transaction Fees","","950,205","","","914,329","","","35,876"],["Monitoring Fees","","127,907","","","106,289","","","21,618"],["Incentive Fees","","10,404","","","\u2014","","","10,404"],["Expense Reimbursements","","149,522","","","169,415","","","(19,893)"],["Oil and Gas Revenue","","21,054","","","47,153","","","(26,099)"],["Consulting Fees","","81,450","","","69,286","","","12,164"],["Total Fees and Other","","2,006,791","","","1,790,475","","","216,316"],["Carried Interest","","1,719,527","","","2,041,847","","","(322,320)"],["General Partner Capital Interest","","504,573","","","388,578","","","115,995"],["Total Capital Allocation-Based Income (Loss)","","2,224,100","","","2,430,425","","","(206,325)"],["Total Revenues - Asset Management","","$","4,230,891","","","$","4,220,900","","","$","9,991"]]
[[/GREPCENT_TABLE]]

Fees and Other

Total Fees and Other for the year ended December 31, 2020 increased compared to the year ended December 31, 2019 primarily as a result of (i) an increase in management fees, (ii) a reduction in fee credits and (iii) an increase in transaction fees.

The increase in management fees was primarily due to management fees earned from Asian Fund IV, Next Generation Technology Growth Fund II, and Asia Pacific Infrastructure Investors which entered their investment periods subsequent to December 31, 2019. These increases were partially offset by (i) a decrease in management fees earned from Asian Fund III as it entered its post investment period in the third quarter of 2020, in which it pays fees based on capital invested rather than capital committed and pays fees at a lower rate and (ii) a decrease in management fees earned from European Fund IV as it entered its post investment period in the second quarter of 2019, in which it pays fees based on capital invested rather than remaining commitments and capital invested during the investment period.

Transaction fees increased overall primarily from a higher level of transaction fees earned in our Capital Markets business line. Partially offsetting this increase was a decrease in transaction fees earned in our Private Markets business line, and to a lesser extent, our Public Markets business line. For a more detailed discussion of the factors that affected our transaction fees during the period, 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 Markets and

Public Markets business lines.

Fee credits owed to consolidated investment funds are eliminated upon consolidation under GAAP. Transaction 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 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 year ended December 31, 2020 decreased compared to the year ended December 31, 2019 primarily due to lower carried interest allocations from 2006 Fund and Asia Fund II. These decreases were partially offset by an increase in carried interest allocations from Americas Fund XII and Global Infrastructure Investors II.

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. 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

Net Gains (Losses) from Investment Activities for the year ended December 31, 2020

The net gains from investment activities for the year ended December 31, 2020 were comprised of net realized gains of $162.9 million and net unrealized gains of $3,479.9 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. For a discussion and analysis of the primary investment gains or losses relating to individual investments in our unconsolidated funds, see "— Analysis of Non-GAAP Performance Measures."

Realized Gains and Losses from Investment Activities

For the year ended December 31, 2020, net realized gains related primarily to (i) the sale of our investment in The Hut Group Limited, (ii) partial sales of our investment in Fiserv, Inc., and (iii) the sale of our investment in Ivalua SAS. Partially offsetting these realized gains were realized losses primarily relating to (i) an $88.3 million impairment charge taken on one of our investments that is accounted for under the equity method of accounting, (ii) a realized loss on the partial sale of our investment in LCI Helicopters Limited and (iii) realization of losses on certain investments held through consolidated CLOs and alternative credit funds.

Unrealized Gains and Losses from Investment Activities

For the year ended December 31, 2020, net unrealized gains were driven primarily by (i) mark-to-market gains in our growth equity and core investments held by KKR and certain consolidated entities, the most significant of which were BridgeBio Pharma, Inc., FanDuel Inc., and PetVet Care Centers, LLC. Partially offsetting these unrealized gains were unrealized losses relating to (i) the reversal of previously recognized unrealized gains relating to the realization activity described above (ii) mark-to-market losses on our investment in Fiserv, Inc., which is held both in our funds and as a co-investment by KKR, and (iii) mark-to-market losses on certain investments held through consolidated alternative credit and real estate funds.

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results" and Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Net Gains (Losses) from Investment Activities for the year ended December 31, 2019

The net gains from investment activities for the year ended December 31, 2019 were comprised of net realized gains of $497.3 million and net unrealized gains of $2,664.5 million.

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Realized Gains and Losses from Investment Activities

For the year ended December 31, 2019, net realized gains related primarily to realized gains on (i) the sale of our investment in Trainline PLC (LSE: TRN), (ii) the sales of assets in our consolidated real estate funds, (iii) the sale of our investment in Sedgwick Claims Management Services, Inc. (financial services sector) and (iv) the sales of assets in our consolidated special situations funds. Partially offsetting these realized gains were realized losses, the most significant of which related to the sale of investments held by our consolidated CLOs and the sale of our investment in DoubleDutch, Inc. (technology sector).

Unrealized Gains and Losses from Investment Activities

For the year ended December 31, 2019, net unrealized gains were driven primarily by (i) mark-to-market gains on the growth equity investments held by KKR and certain consolidated entities, the most significant of which was BridgeBio Pharma, Inc., (ii) mark-to-market gains in portfolio companies in our core investment strategy, the most significant of which were PetVet Care Centers, LLC, Heartland Dental, LLC, and USI, Inc. (financial services sector) and (iii) mark-to-market gains on our investment in Fiserv, Inc., which is held both in our funds and as a balance sheet co-investment by KKR. Partially offsetting the unrealized gains above were unrealized losses relating to (i) mark-to-market losses in our energy investments held through certain consolidated entities, (ii) mark-to-market losses on investments held at our consolidated special situations funds, (iii) mark-to-market losses on investments held at our India debt financing company and (iv) the reversal of previously recognized unrealized gains relating to the realization activity described above.

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results" and Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Dividend Income

During the year ended December 31, 2020, the most significant dividends received included $152.4 million from our consolidated real estate funds, $62.5 million from our investment in Fiserv, Inc. part of which is held as a co-investment by KKR and $48.9 million from our investment in Epicor Software Corporation. During the year ended December 31, 2019, the most significant dividends received included $195.3 million from our investment in Fiserv, Inc., $36.0 million from our consolidated real estate funds, $29.1 million from our consolidated special situations funds, $14.1 million from infrastructure investments held by KKR and $12.7 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 "—Analysis of Asset Management Segment Operating Results."

Interest Income

The decrease in interest income during the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to a lower level of interest earned from (i) investments held at our consolidated special situations funds and (ii) loans held by KREF, a listed REIT. These decreases were partially offset by (i) the impact of closing additional consolidated CLOs subsequent to December 31, 2019 and (ii) an increase in interest income from certain of our consolidated direct lending funds, primarily related to an increase in the amount of capital deployed. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Non-GAAP Performance Measures."

Interest Expense

The decrease in interest expense during the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to a lower level of interest expense on debt obligations of the consolidated CLOs and KREF due to a decrease in interest rates subsequent to December 31, 2019 and (ii) the redemption of our $500 million aggregate principal amount of 6.375% Senior Notes due 2020 in the third quarter of 2019. These decreases were partially offset by the impact of multiple issuances of senior notes subsequent to December 31, 2019, which included: (i) $500 million aggregate principal amount of 3.625% Senior Notes due 2050, (ii) $250 million aggregate principal amount of $3.750% Senior Notes due 2029 and (iii) $750 million aggregate principal amount of 3.500% Senior Notes due 2050. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."

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Expenses - Asset Management

Compensation and Benefits Expenses

The increase in compensation and benefits expenses during the year ended December 31, 2020 compared to the prior period was primarily due to (i) a higher level of cash compensation resulting from a higher level of fees earned and (ii) a higher level of equity-based compensation resulting from certain equity awards that were granted in the fourth quarter of 2020, of which a portion vested immediately. These increases were partially offset by a decrease in carried interest compensation resulting from a lower level of carried interest generated in the year ended December 31, 2020 compared to the prior period.

General, Administrative and Other

The decrease in general, administrative and other expenses during the year ended December 31, 2020 compared to the prior period was primarily due to (i) a decrease in capital raising costs and (ii) a decrease in corporate travel-related expenses as a result of the COVID-19 pandemic. Partially offsetting these decreases were corporate transaction-related charges incurred in connection with the acquisition of Global Atlantic.

Other Unaudited Consolidated Results of Operations (GAAP Basis)

Income Tax Expense (Benefit)

For the year ended December 31, 2020, income tax expense was $609.1 million compared to $528.8 million for the prior period. Our effective tax rate under GAAP for the year ended December 31, 2020 was 10.6%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" in our financial statements. See also “—Business Environment” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net Income (Loss) attributable to noncontrolling interests for the year ended December 31, 2020 related primarily to net income attributable to KKR Holdings representing its ownership interests in KKR Group Partnership as well as third-party limited partner interests in those investment funds that we consolidate. The increase from the prior period is due primarily to an increase in the number of consolidated funds, partially offset by a decrease in net income attributable to KKR Holdings.

Net Income (Loss) Attributable to KKR & Co. Inc.

    For the year ended December 31, 2020, Net Income (Loss) attributable to KKR & Co. Inc. was $25.7 million lower compared to the year ended December 31, 2019 primarily due to (i) a lower level of accrued carried interest and (ii) Series C Mandatory Convertible Preferred Stock dividends in each case in 2020. These decreases were partially offset by (i) lower accrued carried interest compensation, (ii) lower level of General, Administrative and Other expenses and (iii) an increase in management fees, in each case in 2020 and as described above.

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Condensed Consolidated Statements of Financial Condition (GAAP Basis)

    The following table provides the Condensed Consolidated Statements of Financial Condition on a GAAP basis as of December 31, 2021 and December 31, 2020.

[[GREPCENT_TABLE]]
[["(Amounts in thousands, except per share amounts)"],["","","As of","","As of"],["","","December 31, 2021","","December 31, 2020"],["Assets"],["Asset Management"],["Cash and Cash Equivalents","","$","6,699,668","","","$","6,507,874"],["Investments","","88,775,514","","","69,274,715"],["Other Assets","","4,244,894","","","4,023,913"],["","","99,720,076","","","79,806,502"],["Insurance"],["Cash and Cash Equivalents","","3,391,934","","","\u2014"],["Investments","","123,763,675","","","\u2014"],["Other Assets","","37,409,755","","","\u2014"],["","","164,565,364","","","\u2014"],["Total Assets","","$","264,285,440","","$","79,806,502"],["Liabilities and Equity"],["Asset Management"],["Debt Obligations","","$","36,669,755","","","$","33,423,596"],["Other Liabilities","","8,359,619","","","5,582,990"],["","","45,029,374","","","39,006,586"],["Insurance"],["Debt Obligations","","1,908,006","","","\u2014"],["Other Liabilities","","159,208,840","","","\u2014"],["","","161,116,846","","","\u2014"],["Total Liabilities","","$","206,146,220","","","$","39,006,586"],["Redeemable Noncontrolling Interests","","82,491","","","\u2014"],["Stockholders' Equity"],["KKR & Co. Inc. Stockholders' Equity - Series A and B Preferred Stock","","\u2014","","","482,554"],["KKR & Co. Inc. Stockholders' Equity - Series C Mandatory Convertible Preferred Stock","","1,115,792","","","1,115,792"],["KKR & Co. Inc. Stockholders' Equity - Series I and II Preferred Stock, Common Stock","","16,466,372","","","12,118,472"],["Noncontrolling Interests","","40,474,565","","","27,083,098"],["Total Equity","","58,056,729","","","40,799,916"],["Total Liabilities and Equity","","$","264,285,440","","","$","79,806,502"],["KKR & Co. Inc. Stockholders' Equity - Common Stock Per Outstanding Share of Common Stock","","$","27.64","","","$","21.15"]]
[[/GREPCENT_TABLE]]

KKR & Co. Inc. Stockholders’ Equity - Common Stock per Outstanding Share of Common Stock was $27.64 as of December 31, 2021, up from $21.15 as of December 31, 2020. The increase was primarily due to the net income attributable to KKR & Co. Inc. common stockholders during the year ended 2021, partially offset by (i) dividends to common stockholders and (ii) repurchases of common stock.

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Consolidated Statements of Cash Flows (GAAP Basis)

The following is a discussion of our consolidated cash flows for the years ended December 31, 2021 and 2020. 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 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 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 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 $(7.2) billion and $(6.0) billion during the years ended December 31, 2021 and 2020, respectively. These amounts primarily included: (i) investments purchased (asset management), net of proceeds from investments (asset management) of $(10.6) billion and $(5.9) billion during the years ended December 31, 2021 and 2020, respectively, (ii) net realized gains (losses) on asset management investments of $2,382.2 million and $162.9 million during the years ended December 31, 2021 and 2020, respectively, (iii) change in unrealized gains (losses) on asset management investments of $5.3 billion and $3.5 billion during the years ended December 31, 2021 and 2020, respectively, (iv) capital allocation-based income (loss) of $6.8 billion and $2.2 billion during the years ended December 31, 2021 and 2020, respectively and (v) net realized gains (losses) on insurance operations of $(860.2) million during the year ended December 31, 2021. Investment funds are 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 $(9.6) billion and $(0.2) billion during the years ended December 31, 2021 and 2020, respectively. Our investing activities included: (i) investments purchased (insurance), net of proceeds from investments (insurance) of $(9.1) billion during the year ended December 31, 2021, (ii) acquisitions, net of cash acquired of $(473.8) million during the year ended December 31, 2021, (iii) the purchase of fixed assets of $(102.0) million and $(142.3) million during the years ended December 31, 2021 and 2020, respectively and (iv) development of oil and natural gas properties of $(11.1) million for the year ended December 31, 2020.

Net Cash Provided (Used) by Financing Activities

Our net cash provided (used) by financing activities was $20.4 billion and $9.8 billion during the years ended December 31, 2021 and 2020, respectively. Our financing activities primarily included: (i) contributions by, net of distributions to, our noncontrolling and redeemable noncontrolling interests of $6.4 billion and $4.1 billion during the years ended December 31, 2021 and 2020, respectively, (ii) proceeds received net of repayment of debt obligations of $8.9 billion and $5.3 billion during the years ended December 31, 2021 and 2020, respectively, (iii) additions to, net of withdrawals from contractholder deposit funds of $5.9 billion during the year ended December 31, 2021, (iv) common stock dividends of $(331.4) million and $(297.3) million during the years ended December 31, 2021 and 2020, respectively; (v) net delivery of common stock of $(166.8) million and $(78.3) million during the years ended December 31, 2021 and 2020, respectively; (vi) repurchases of common stock of $(269.7) million and $(246.2) million during the years ended December 31, 2021 and 2020, respectively; (vii) Series A and B Preferred Stock dividends of $(19.2) million and $(33.4) million during the years ended December 31, 2021 and 2020, respectively; (viii) Series C Mandatory Convertible Preferred Stock dividends of $(69.0) million and $(23.2) million during the years ended December 31, 2021 and 2020; (ix) private placement share issuance of $38.5 million during the year ended December 31, 2021 and (x) redemption of Series A and B Preferred Stock of $(500.0) million during the year ended December 31, 2021.

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Analysis of Segment Operating Results

The following is a discussion of the results of our business on a segment basis for the years ended December 31, 2021, 2020, and 2019. You should read this discussion in conjunction with the information included under "—Key Segment and Non-GAAP Performance Measures and Other Terms and Operating Metric" and the 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.

In connection with our acquisition of Global Atlantic on February 1, 2021, management reevaluated the manner in which we manage and assess the performance of our business and allocate resources. As a result, we introduced a new Insurance segment in 2021 and report segment results for two operating and reportable segments: Asset Management and Insurance. See Note 21 “Segment Reporting” in our financial statements.

Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's Asset Management segment operating results and certain key capital metrics as of and for the years ended December 31, 2021 and 2020.

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Management Fees","","$","2,071,440","","","$","1,441,578","","","$","629,862"],["Transaction and Monitoring Fees, Net","","1,004,241","","","632,433","","","371,808"],["Fee Related Performance Revenues","","45,852","","","39,555","","","6,297"],["Fee Related Compensation","","(702,387)","","","(486,481)","","","(215,906)"],["Other Operating Expenses","","(449,155)","","","(346,558)","","","(102,597)"],["Fee Related Earnings","","1,969,991","","","1,280,527","","","689,464"],["Realized Performance Income","","2,141,596","","","1,165,699","","","975,897"],["Realized Performance Income Compensation","","(1,239,177)","","","(697,071)","","","(542,106)"],["Realized Investment Income","","1,613,244","","","644,659","","","968,585"],["Realized Investment Income Compensation","","(241,994)","","","(106,830)","","","(135,164)"],["Asset Management Segment Operating Earnings","","$","4,243,660","","","$","2,286,984","","","$","1,956,676"]]
[[/GREPCENT_TABLE]]

Management Fees

The following table presents management fees by business line for the years ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Management Fees"],["Private Markets","","$","1,404,140","","","$","976,607","","","$","427,533"],["Public Markets","","667,300","","","464,971","","","202,329"],["Total Management Fees","","$","2,071,440","","","$","1,441,578","","","$","629,862"]]
[[/GREPCENT_TABLE]]

The increase in Private Markets management fees was primarily attributable to management fees earned from (i) North America Fund XIII, Global Infrastructure Investors IV, and Health Care Strategic Growth Fund II, all of which entered their investment periods in 2021 and (ii) Asian Fund IV, which entered its investment period in the third quarter of 2020. These increases were partially offset by a decrease in management fees earned from Asian Fund III, Americas Fund XII and Global Infrastructure Investors III as a result of entering their post-investment periods in the third quarter of 2020, second quarter of 2021, and second quarter of 2021, respectively, with all three investment funds now earning fees based on capital invested rather than capital committed and at a lower fee rate for Asian Fund III and Americas Fund XII.

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The increase in Public Markets management fees was primarily attributable to (i) management fees earned from Global Atlantic during the period February 1, 2021 through December 31, 2021, (ii) the issuance of new CLOs subsequent to December 31, 2020, (iii) higher overall FPAUM at our hedge fund partnerships from investment appreciation and, to a lesser extent, net capital inflows and (iv) net capital inflows in certain leveraged credit strategy accounts.

Transaction and Monitoring Fees, Net

The following table presents transaction and monitoring fees, net by business line for the years ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Transaction and Monitoring Fees, Net"],["Private Markets","","$","143,165","","","$","148,407","","","$","(5,242)"],["Public Markets","","14,181","","","3,543","","","10,638"],["Capital Markets","","846,895","","","480,483","","","366,412"],["Total Transaction and Monitoring Fees, Net","","$","1,004,241","","","$","632,433","","","$","371,808"]]
[[/GREPCENT_TABLE]]

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The increase in transaction fees was primarily due to an increase in the number of capital markets transactions for the year ended December 31, 2021, compared to the year ended December 31, 2020. Overall, we completed 358 capital markets transactions for the year ended December 31, 2021, of which 60 represented equity offerings and 298 represented debt offerings, as compared to 193 transactions for the year ended December 31, 2020, of which 36 represented equity offerings and 157 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 fees are generated in connection with our Private Markets and Public Markets business lines as well as from third-party companies. For the year ended December 31, 2021, approximately 23% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 18% for the year ended December 31, 2020. Our transaction fees are comprised of fees earned from North America, Europe, and the Asia-Pacific region. For the year ended December 31, 2021, approximately 38% of our transaction fees were generated outside of North America as compared to approximately 58% for the year ended December 31, 2020. Our 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 business line does not generate monitoring fees.

Our Private Markets and Public Markets 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.

The decrease in Private Markets transaction and monitoring fees, net was primarily attributable to the write-off of outstanding monitoring fee receivables for two portfolio companies, partially offset by an increase in net transaction fees. During the year ended December 31, 2021, there were 99 transaction fee-generating investments that paid an average fee of $5.9 million compared to 76 transaction fee-generating investments that paid an average fee of $5.2 million during the year ended December 31, 2020. For the year ended December 31, 2021, approximately 55% of these transaction fees were paid by companies in North America, 25% were paid from companies in Europe, and 20% 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 particular agreements as to the amount of the fees, the complexity of the transaction, and KKR's role in the transaction. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

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Fee Related Performance Revenues

The following table presents fee related performance revenues by business line for the year ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Fee Related Performance Revenues"],["Private Markets","","$","9,068","","","$","4,797","","","$","4,271"],["Public Markets","","36,784","","","34,758","","","2,026"],["Total Fee Related Performance Revenues","","$","45,852","","","$","39,555","","","$","6,297"]]
[[/GREPCENT_TABLE]]

Fee related performance revenues earned in our Private Markets and Public Markets business lines represent realized incentive fees that are (i) measured and received on a recurring basis, and (ii) not dependent on realization events from the underlying investments. These incentive fees are primarily earned from our business development company, FS KKR Capital Corp. ("FSK") in our Public Markets business line and our real estate credit investment trust, KKR Real Estate Finance Trust Inc. ("KREF") in our Private Markets business line. The increase was primarily due to a higher level of investment income at these entities during the year ended December 31, 2021 as compared to the prior period.

Fee Related Compensation

The increase in fee related compensation for the year ended December 31, 2021 compared to the prior period is primarily due to a higher level of 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 year ended December 31, 2021 compared to the prior period is primarily due to a higher level of (i) professional fees and other administrative costs in connection with the overall growth of the firm and (ii) placement fees related to capital raising activities.

Fee Related Earnings

The increase in fee related earnings for the year ended December 31, 2021 compared to the prior period is primarily due to a higher level of management fees in our Private Markets and Public Markets business lines and transaction fees from our Capital Markets business line, partially offset by a higher level of fee related compensation and other operating expenses, as described above.

Realized Performance Income

The following table presents realized performance income by business line for the year ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Realized Performance Income"],["Private Markets","","$","1,776,065","","","$","1,015,865","","","$","760,200"],["Public Markets","","365,531","","","149,834","","","215,697"],["Total Realized Performance Income","","$","2,141,596","","","$","1,165,699","","","$","975,897"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Private Markets"],["North America Fund XI","","$","433,708","","","$","203,606","","","$","230,102"],["Asian Fund III","","387,863","","","46,347","","","341,516"],["2006 Fund","","219,737","","","181,899","","","37,838"],["Americas Fund XII","","207,559","","","\u2014","","","207,559"],["European Fund IV","","186,476","","","139,948","","","46,528"],["Co-Investment Vehicles and Other","","93,588","","","93,650","","","(62)"],["Core Investment Vehicles","","80,937","","","57,484","","","23,453"],["Global Infrastructure Investors II","","72,862","","","148,882","","","(76,020)"],["Next Generation Technology Growth Fund","","32,544","","","13,964","","","18,580"],["Real Estate Partners Europe","","18,200","","","\u2014","","","18,200"],["Global Infrastructure Investors","","2,967","","","54,729","","","(51,762)"],["European Fund III","","353","","","\u2014","","","353"],["Asian Fund II","","\u2014","","","60,647","","","(60,647)"],["Real Estate Partners Americas","","\u2014","","","4,977","","","(4,977)"],["Asian Fund","","\u2014","","","431","","","(431)"],["Total Realized Carried Interest (1)","","1,736,794","","","1,006,564","","","730,230"],["Incentive Fees","","39,271","","","9,301","","","29,970"],["Total Realized Performance Income","","$","1,776,065","","","$","1,015,865","","","$","760,200"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Public Markets"],["Other Alternative Credit Vehicles","","$","15,336","","","$","25,740","","","$","(10,404)"],["Mezzanine Partners","","\u2014","","","9,900","","","(9,900)"],["Total Realized Carried Interest (1)","","15,336","","","35,640","","","(20,304)"],["Incentive Fees","","350,195","","","114,194","","","236,001"],["Total Realized Performance Income","","$","365,531","","","$","149,834","","","$","215,697"]]
[[/GREPCENT_TABLE]]

(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 Markets business line for the year ended December 31, 2021 consisted primarily of realized proceeds from the sales of our investments in The Bountiful Company (consumer products sector), Ingersoll Rand Inc. (NYSE: IR), Academy Sports & Outdoors Inc. (NASDAQ: ASO), Kokusai Electric Corporation (manufacturing sector) and Endeavor Group Holdings, Inc. (NASDAQ: EDR).

Realized carried interest in our Private Markets business line for the year ended December 31, 2020 consisted primarily of realized proceeds from the sales of our investments in Deutsche Glasfaser (telecom sector), Privilege Underwriters, Inc. (financial services sector), LGC Science Group Limited (health care sector), Epicor Software Corporation, The Hut Group Limited and Fiserv, Inc.

Realized carried interest in our Public Markets business line decreased for the year ended December 31, 2021 compared to the prior period as a result of a lower level of realization activity at certain alternative credit investment funds, from which we are eligible to take cash carry.

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Incentive fees earned in our Private Markets business line consist primarily of incentive fees earned from assets we manage under a sub-advisory agreement with a U.K. investment fund. The increase in incentive fees for year ended December 31, 2021 compared to the prior period was primarily attributable to a higher level of investment appreciation.

Incentive fees earned in our Public Markets business line consist primarily of incentive fees earned from our hedge fund partnerships and certain incentive fee eligible leveraged credit accounts. The increase in incentive fees for the year ended December 31, 2021 compared to the prior period was primarily attributable to a higher level of incentive fees earned from Marshall Wace.

Realized Performance Income Compensation

The increase in realized performance income compensation for the year ended December 31, 2021 compared to the prior period is 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 from our Principal Activities business line for the years ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Realized Investment Income"],["Net Realized Gains (Losses)","","$","1,199,414","","","$","284,521","","","$","914,893"],["Interest Income and Dividends","","413,830","","","360,138","","","53,692"],["Total Realized Investment Income","","$","1,613,244","","","$","644,659","","","$","968,585"]]
[[/GREPCENT_TABLE]]

The increase in realized investment income is due to a higher level of net realized gains and, to a lesser extent, a higher level of interest income and dividends. The amount of realized investment income depends on the transaction activity of our funds and our subsidiaries, which can vary from period to period.

    For the year ended December 31, 2021, net realized gains were comprised of realized gains primarily from the sale of our investments in FanDuel Inc., Mr. Cooper Group Inc., Fiserv, Inc., The Bountiful Company, and BridgeBio Pharma Inc. Partially offsetting these realized gains were realized losses, the most significant of which were realized losses on certain hedging instruments.

    For the year ended December 31, 2020, net realized gains were comprised of realized gains primarily from the sale of our investments in The Hut Group Limited, Deutsche Glasfaser, Ivalua SAS, Fiserv, Inc. and BridgeBio Pharma, Inc. Partially offsetting these realized gains were realized losses, the most significant of which were realized losses on our investment in LCI Helicopters Limited, Yorktown Center (real estate) and various alternative credit strategy investments.

    For the year ended December 31, 2021, interest income and dividends were comprised of (i) $261.3 million of dividend income primarily from our real estate investments, including our investment in KREF, as well as our investments in Viridor Limited ($42.2 million), Kokusai Electric Corporation ($25.4 million), and Arnott's Biscuits Limited ($19.0 million) and (ii) $152.5 million of interest income primarily from our investments in CLOs and, to a lesser extent, our other credit investments.

    For the year ended December 31, 2020, interest income and dividends were comprised of (i) $225.4 million of dividend income from our investments in Fiserv, Inc. ($62.5 million), Epicor Software Corporation ($27.3 million) and our real assets investments, including our investment in KREF and (ii) $134.7 million of interest income from our investments in CLOs, other credit investments and, to a lesser extent, our cash balances. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

    Prior to the acquisition of KKR Capstone on January 1, 2020, (i) KKR Capstone's financial results were consolidated in 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 segment and non-GAAP financial measures, because KKR presented its segment and non-GAAP financial measures prior to

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giving 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 year ended December 31, 2021, total fees attributable to KKR Capstone were $91.4 million, total expenses attributable to KKR Capstone were $94.6 million, and income taxes and other income attributable to Capstone were $(2.4) 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".

We expect realized performance income and realized investment income to be greater than $700 million in the first quarter of 2022 relating to realized carried interest and realized investment income from completed, or signed and expected to be completed sales, partial sales or secondary sales subsequent to December 31, 2021 with respect to certain private equity portfolio companies and other investments. Some of these 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.

Realized Investment Income Compensation

The increase in realized investment income compensation for the year ended December 31, 2021 compared to the prior period is primarily due to a higher level of compensation recorded in connection with the higher level of realized investment income.

Other Operating and Capital Measures

The following table presents certain key operating and capital metrics as of December 31, 2021 and December 31, 2020:

[[GREPCENT_TABLE]]
[["","","As of"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in millions)"],["Assets Under Management","","$","470,555","","","$","251,679","","","$","218,876"],["Fee Paying Assets Under Management","","$","357,389","","","$","186,217","","","$","171,172"],["Uncalled Commitments","","$","111,822","","","$","66,960","","","$","44,862"]]
[[/GREPCENT_TABLE]]

The following table presents one of our key capital metrics for the year ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in millions)"],["Capital Invested","","$","73,318","","","$","29,517","","","$","43,801"]]
[[/GREPCENT_TABLE]]

Assets Under Management

Private Markets

The following table reflects the changes in our Private Markets AUM from December 31, 2020 to December 31, 2021:

[[GREPCENT_TABLE]]
[["","($ in millions)"],["December 31, 2020","$","148,689"],["New Capital Raised","83,859"],["Acquisition of Global Atlantic (1)","12,012"],["Distributions and Other","(23,889)"],["Change in Value","36,377"],["December 31, 2021","$","257,048"]]
[[/GREPCENT_TABLE]]

(1)Reflects the AUM of Global Atlantic at February 1, 2021.

AUM for the Private Markets business line was $257.0 billion at December 31, 2021, an increase of $108.3 billion, compared to $148.7 billion at December 31, 2020.

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The increase was primarily attributable to (i) new capital raised from North America Fund XIII, Global Infrastructure Investors IV, our core investment strategy, and our European private equity strategy, (ii) an increase in investment value from Americas Fund XII, Asian Fund III and our core investment strategy, and (iii) assets we now manage under our investment management agreements with Global Atlantic's insurance companies. Partially offsetting these increases were distributions to our fund investors, primarily as a result of realized proceeds, most notably from Americas Fund XII, North America Fund XI, and Asian Fund III.

For the year ended December 31, 2021, the value of our traditional private equity investment portfolio increased by 46%. This was comprised of a 71% increase in share prices of various publicly held or publicly indexed investments and a 37% increase in value of our privately held investments. 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 value of our publicly held investments across our Private Markets business line were increases in AppLovin Corporation (NASDAQ: APP), Max Healthcare Institute Limited (NSE: MAXHEALTH), and J.B. Chemicals and Pharmaceuticals Limited (NSE: JBCP). These increases were partially offset by decreases in share prices of various publicly held investments, the most significant of which was BridgeBio Pharma, Inc., PHC Holdings Corporation (TYO: 6523) and Fiserv, Inc. Generally speaking, the prices of publicly held investments have experienced volatility and downward pressure subsequent to December 31, 2021.

The most significant increases in value of our privately held investments across our Private Markets business line were increases in Internet Brands, Inc. (technology sector), Kokusai Electric Corporation, and PetVet Care Centers, LLC. These increases in value on our privately held investments were partially offset by decreases in value relating primarily to Magneti Marelli (industrial sector), Envision Healthcare Corporation (health care sector), and Upfield (consumer products 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, and (iii) 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.

For the year ended December 31, 2020, the value of our traditional private equity investment portfolio increased 17%. This was comprised of a 21% increase in value of our privately held investments and a 6% increase in share prices of various publicly held or publicly indexed investments. 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 value of our privately held investments across our Private Markets businesses line were increases in AppLovin Corporation, Kokusai Electric Corporation, and Internet Brands, Inc. These increases in value on our privately held investments were partially offset by decreases in value relating primarily to Envision Healthcare Corporation, Magneti Marelli, and Emerald Media (media 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, (ii) individual company performance, and (iii) with respect to Kokusai Electric Corporation, an increase in valuation reflecting an agreement to exit the investment. 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.

The most significant increases in value of our publicly held investments across our Private Markets business line were increases in Academy Sports & Outdoor Inc., Hensoldt AG (FRA: HAG), and Max Healthcare Institute Limited. These increases were partially offset by decreases in share prices of various publicly held investments, the most significant of which were Fiserv, Inc., Laureate Education, Inc. (NASDAQ: LAUR) and BrightView Holdings Inc. (NYSE: BV). The prices of publicly held investments may experience volatile changes following the reporting period.

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Public Markets

The following table reflects the changes in our Public Markets AUM from December 31, 2020 to December 31, 2021: 

[[GREPCENT_TABLE]]
[["","($ in millions)"],["December 31, 2020","$","102,990"],["New Capital Raised","36,706"],["Acquisition of Global Atlantic (1)","85,491"],["Distributions and Other","(11,271)"],["Redemptions","(8,196)"],["Change in Value","7,788"],["December 31, 2021","$","213,507"]]
[[/GREPCENT_TABLE]]

(1)Reflects the AUM of Global Atlantic at February 1, 2021.

AUM in our Public Markets business line totaled $213.5 billion at December 31, 2021, an increase of $110.5 billion compared to AUM of $103.0 billion at December 31, 2020.

The increase was primarily attributable to (i) assets we now manage under our investment management agreements with Global Atlantic's insurance companies, (ii) new capital raised from Global Atlantic since February 1, 2021, CLO issuances, and our hedge fund partnerships and (iii) to a lesser extent, an increase in investment value across our leveraged and alternative credit portfolios and at our hedge fund partnerships. Partially offsetting these increases were (i) payments made to Global Atlantic to satisfy its obligations to policyholders, (ii) redemptions at our hedge fund partnerships and leveraged credit separately managed accounts and (iii) distributions to fund investors as a result of realized proceeds at certain leveraged and alternative credit funds.

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 Markets

The following table reflects the changes in our Private Markets FPAUM from December 31, 2020 to December 31, 2021:

[[GREPCENT_TABLE]]
[["","($ in millions)"],["December 31, 2020","$","94,196"],["New Capital Raised","65,264"],["Acquisition of Global Atlantic (1)","12,012"],["Distributions and Other","(11,692)"],["Net Changes in Fee Base of Certain Funds","(5,398)"],["Change in Value","473"],["December 31, 2021","$","154,855"]]
[[/GREPCENT_TABLE]]

(1)Reflects the FPAUM of Global Atlantic at February 1, 2021.

FPAUM in our Private Markets business line was $154.9 billion at December 31, 2021, an increase of $60.7 billion, compared to $94.2 billion at December 31, 2020.

The increase was primarily attributable to (i) new capital raised from North America Fund XIII, Global Infrastructure Investors IV, and Global Atlantic since February 1, 2021 and (ii) assets we now manage under our investment management agreements with Global Atlantic. Partially offsetting these increases were (i) distributions to fund investors, primarily as a result of realized proceeds, most notably from 2006 Fund, Global Infrastructure Investors II and North America Fund XI and (ii) net changes in the fee base for Global Infrastructure Investors III, Americas Fund XII and Health Care Strategic Growth Fund I as a result of these funds entering their post-investment periods, during which we earn fees on invested capital rather than committed capital.

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Public Markets

The following table reflects the changes in our Public Markets FPAUM from December 31, 2020 to December 31, 2021: 

[[GREPCENT_TABLE]]
[["","($ in millions)"],["December 31, 2020","$","92,021"],["New Capital Raised","38,644"],["Acquisition of Global Atlantic (1)","85,491"],["Distributions and Other","(12,989)"],["Redemptions","(6,590)"],["Change in Value","5,957"],["December 31, 2021","$","202,534"]]
[[/GREPCENT_TABLE]]

(1)Reflects the FPAUM of Global Atlantic at February 1, 2021.

FPAUM in our Public Markets business line was $202.5 billion at December 31, 2021, an increase of $110.5 billion compared to $92.0 billion at December 31, 2020.

The increase was primarily attributable to (i) assets we now manage under our investment management agreements with Global Atlantic's insurance companies, (ii) new capital raised from Global Atlantic since February 1, 2021, CLO issuances, and our alternative credit funds and (iii) to a lesser extent, an increase in investment value at our hedge fund partnerships and from leveraged credit investments we manage under our investment management agreements with Global Atlantic's insurance companies. Partially offsetting these increases were (i) payments made to Global Atlantic policyholders, (ii) redemptions at our hedge fund partnerships and leveraged credit separately managed accounts and (iii) distributions to fund investors as a result of realized proceeds at certain leveraged and alternative credit funds.

See "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Uncalled Commitments

Private Markets

As of December 31, 2021, our Private Markets business line had $101.5 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $56.6 billion as of December 31, 2020. 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.

Public Markets

As of December 31, 2021 and 2020, our Public Markets business line had $10.3 billion of remaining uncalled capital commitments that could be called for investments in new transactions. Uncalled commitments remained flat against the comparable period as new capital commitments from fund investors were offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Markets

    For the year ended December 31, 2021, $38.9 billion of capital was invested by our Private Markets business line, as compared to $19.2 billion for the year ended December 31, 2020. The increase was driven primarily by a $16.6 billion increase in capital invested in our real assets strategies, and a $1.9 billion increase in capital invested in our core investment and private equity strategies. During the year ended December 31, 2021, 57% of capital deployed in private equity, growth equity (including impact) and core investments was in transactions in North America, 23% was in Europe, and 20% was in the Asia-Pacific region. Generally, the portfolio companies acquired through our private equity and core 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 and core 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.

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Public Markets

    For the year ended December 31, 2021, $34.4 billion of capital was invested by our Public Markets business line, as compared to $10.3 billion for the year ended December 31, 2020. The increase was primarily due to (i) capital deployed under our investment management agreements with Global Atlantic's insurance companies and (ii) a higher level of capital deployed across our direct lending and SIG strategies. During the year ended December 31, 2021, 90% of capital deployed was in transactions in North America, 9% was in Europe and 1% was in the Asia-Pacific region.

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. Accordingly, prior periods have been excluded for Insurance segment results. For the year-ended December 31, 2021, the results of our Insurance segment is from the acquisition date, February 1, 2021, through December 31, 2021.

The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the year ended December 31, 2021:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021"],["($ in thousands)"],["Net Investment Income","","$","3,329,570"],["Net Cost of Insurance","","(1,566,681)"],["General, Administrative and Other","","(500,410)"],["Pre-tax Insurance Operating Earnings","","1,262,479"],["Income Taxes","","(199,095)"],["Net Income Attributable to Noncontrolling Interests","","(410,833)"],["Insurance Segment Operating Earnings","","$","652,551"]]
[[/GREPCENT_TABLE]]

Insurance segment operating earnings

Insurance segment operating earnings were primarily driven by net investment income and stable net cost of insurance.

Net investment income

Net investment income was primarily driven by (i) insurance segment investments and the effective book yield (as determined, in part, by the allocated fair value of the investment portfolio as of the closing date of the Global Atlantic), and (ii) variable investment income from net realized gains from the sale of investments not related to asset/liability matching strategies, including in particular the disposition of Origis USA, LLC, a utility-scale renewable energy developer. Average insurance segment investments were primarily driven by net inflows of assets from the individual markets and institutional channels. In addition to the impact of higher asset balances, net investment income was also impacted by income from bond call and loan prepayment activity.

Net cost of insurance

Net cost of insurance was driven primarily by stable liability performance across in-force and new business, including favorable adjustments to reserves and policy acquisition costs resulting from higher reserves and insurance intangibles established as part of the purchase accounting for the GA Acquisition and the impact of assumption review (as described in “ –Consolidated Results of Operations (GAAP Basis) – Insurance (Unaudited)” above).

General, administrative and other expenses

General and administrative expenses were driven by (i) employee compensation and benefits related expenses, (ii) policy servicing fees, (iii) technology-related charges and (iv) consulting and professional fees.

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Income taxes

Insurance segment income tax expense reflects the effective tax rate for the insurance segment on an operating basis, including the benefit of investment tax credits.

Net Income attributable to non-controlling interests

Income attributable to non-controlling interests represent the portion of the insurance segment adjusted operating earnings attributable to rollover and co-investors in Global Atlantic.

Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the years ended December 31, 2021 and 2020:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2021","","December 31, 2020","","Change"],["","","($ in thousands)"],["Asset Management Segment Operating Earnings","","$","4,243,660","","","$","2,286,984","","","$","1,956,676"],["Insurance Segment Operating Earnings","","652,551","","","\u2014","","","652,551"],["Distributable Operating Earnings","","4,896,211","","","2,286,984","","","2,609,227"],["Interest Expense","","(250,183)","","","(211,037)","","","(39,146)"],["Preferred Dividends","","(19,201)","","","(33,364)","","","14,163"],["Net Income Attributable to Noncontrolling Interests","","(23,664)","","","(7,842)","","","(15,822)"],["Income Taxes Paid","","(687,572)","","","(265,950)","","","(421,622)"],["After-tax Distributable Earnings","","$","3,915,591","","","$","1,768,791","","","$","2,146,800"]]
[[/GREPCENT_TABLE]]

As discussed in the Analysis of Segment Operating Results, following the acquisition of Global Atlantic, we re-evaluated our operating structure and the manner by which we manage and assess the performance of our businesses and allocates our resources. In the first quarter of 2021 we changed the presentation of our non-GAAP performance measures principally to reflect how we evaluate our business following the Global Atlantic acquisition. We also believe that this revised presentation improves the comparability of our non-GAAP financial information with that provided by other publicly traded companies in the alternative asset management industry.

Distributable Operating Earnings

The increase in distributable operating earnings for the year ended December 31, 2021 compared to the prior period is primarily due to a higher level of Asset Management segment operating earnings and the addition of our Insurance segment operating earnings in connection with the Global Atlantic acquisition. 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

    For the year ended December 31, 2021 and 2020, interest expense relates primarily to the interest expense from our senior notes outstanding for KKR and KFN.

The increase in interest expense for the year ended December 31, 2021 compared to the prior period is primarily attributable to new note issuances.

Preferred Dividends

    The decrease in preferred dividends for the year ended December 31, 2021 compared to the prior period was attributable to the redemption of all of our Series A and B preferred stock outstanding during the year ended December 31, 2021.

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Income Taxes Paid

    The increase in income taxes paid for the year ended December 31, 2021 compared to the prior period was primarily due to a higher level of distributable operating earnings.

After-tax Distributable Earnings

The increase in after-tax distributable earnings for the year ended December 31, 2021 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 years ended December 31, 2021 and 2020, the amount of the tax benefit from equity-based compensation included in income taxes paid was $123.1 million and $59.1 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 3% for the years ended December 31, 2021 and 2020.

Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's Asset Management segment operating results for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Management Fees","","$","1,441,578","","","$","1,248,517","","","$","193,061"],["Transaction and Monitoring Fees, Net","","632,433","","","564,259","","","68,174"],["Fee Related Performance Revenues","","39,555","","","53,024","","","(13,469)"],["Fee Related Compensation","","(486,481)","","","(431,973)","","","(54,508)"],["Other Operating Expenses","","(346,558)","","","(353,565)","","","7,007"],["Fee Related Earnings","","1,280,527","","","1,080,262","","","200,265"],["Realized Performance Income","","1,165,699","","","1,083,020","","","82,679"],["Realized Performance Income Compensation","","(697,071)","","","(698,145)","","","1,074"],["Realized Investment Income","","644,659","","","685,773","","","(41,114)"],["Realized Investment Income Compensation","","(106,830)","","","(108,385)","","","1,555"],["Asset Management Segment Operating Earnings","","$","2,286,984","","","$","2,042,525","","","$","244,459"]]
[[/GREPCENT_TABLE]]

Management Fees

The following table presents management fees by business line for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Management Fees"],["Private Markets","","$","976,607","","","$","800,068","","","$","176,539"],["Public Markets","","464,971","","","448,449","","","16,522"],["Total Management Fees","","$","1,441,578","","","$","1,248,517","","","$","193,061"]]
[[/GREPCENT_TABLE]]

The increase in Private Markets management fees was primarily attributable to management fees earned from Asian Fund IV, Next Generation Technology Growth Fund II, and Asia Pacific Infrastructure Investors which entered their investment periods subsequent to December 31, 2019. These increases were partially offset by (i) a decrease in management fees earned from Asian Fund III as it entered its post-investment period in the third quarter of 2020, in which it pays fees based on capital invested rather than capital committed and pays fees at a lower rate, and (ii) a decrease in management fees earned from

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European Fund IV as it entered its post investment period in the second quarter of 2019, in which it pays fees based on capital invested rather than remaining commitments and capital invested during the investment period.

The increase in Public Markets management fees was primarily attributable to management fees earned from new capital raised within the leveraged credit strategy, the issuance of new CLOs and greater overall FPAUM at our direct lending and asset-based finance strategies, partially offset by a lower level of management fees earned in certain alternative credit strategies, most notably special situations.

Transaction and Monitoring Fees, Net

The following table presents transaction and monitoring fees, net by business line for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Transaction and Monitoring Fees, Net"],["Private Markets","","$","148,407","","","$","150,103","","","$","(1,696)"],["Public Markets","","3,543","","","4,101","","","(558)"],["Capital Markets","","480,483","","","410,055","","","70,428"],["Total Transaction and Monitoring Fees, Net","","$","632,433","","","$","564,259","","","$","68,174"]]
[[/GREPCENT_TABLE]]

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The increase in transaction fees was primarily due to an increase in the size of capital markets transactions for the year ended December 31, 2020, compared to the year ended December 31, 2019. Overall, we completed 193 capital markets transactions for the year ended December 31, 2020, of which 36 represented equity offerings and 157 represented debt offerings, as compared to 192 transactions for the year ended December 31, 2019, of which 28 represented equity offerings and 164 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 fees are generated in connection with our Private Markets and Public Markets business lines as well as from third-party companies. For the year ended December 31, 2020, approximately 18% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 23% for the year ended December 31, 2019. Our transaction fees are comprised of fees earned from North America, Europe, and the Asia-Pacific region. For the year ended December 31, 2020, approximately 58% of our transaction fees were generated outside of North America as compared to approximately 61% for the year ended December 31, 2019. Our 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 business line does not generate monitoring fees.

Our Private Markets and Public Markets 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.

The decrease in Private Markets transaction and monitoring fees, net was primarily attributable to a decrease in net transaction fees. During the year ended December 31, 2020, there were 76 transaction fee-generating investments that paid an average fee of $5.2 million compared to 59 transaction fee-generating investments that paid an average fee of $7.1 million during the year ended December 31, 2019. For the year ended December 31, 2020, approximately 36% of these transaction fees were paid by companies in North America, 34% were paid from companies in Europe, and 30% of these transaction fees 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 particular agreements as to the amount of the fees, the complexity of the transaction, and KKR's role in the transaction. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

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Partially offsetting the decrease in net transaction fees was an increase in net monitoring fees. The increase in net monitoring fees was primarily due to an increase in recurring monitoring fees compared to the prior period, as well as higher termination payments. Recurring monitoring fees increased $10.5 million, which was primarily the result of an increase in the number of portfolio companies paying monitoring fees. For the year ended December 31, 2020, we had 66 portfolio companies that were paying an average monitoring fee of $1.7 million compared with 59 portfolio companies that were paying an average monitoring fee of $1.7 million for the year ended December 31, 2019. For the year ended December 31, 2020, we received termination payments of $13.2 million in connection with the IPOs of Academy Sports & Outdoors, Inc. (NASDAQ: ASO) and Calisen PLC (LSE: CLSN LN) compared to $2.1 million of termination payments received in the year ended December 31, 2019 relating to the IPO of Trainline PLC. 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.

Fee Related Performance Revenues

The following table presents fee related performance revenues by business line for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Fee Related Performance Revenues"],["Private Markets","","$","4,797","","","$","2,316","","","$","2,481"],["Public Markets","","34,758","","","50,708","","","(15,950)"],["Total Fee Related Performance Revenues","","$","39,555","","","$","53,024","","","$","(13,469)"]]
[[/GREPCENT_TABLE]]

Fee related performance revenues earned in our Private Markets and Public Markets business lines represent realized incentive fees that are (i) measured and received on a recurring basis, and (ii) not dependent on realization events from the underlying investments. These incentive fees are primarily earned from our business development companies in our Public Markets business line and our real estate credit investment trust, KKR Real Estate Finance Trust Inc. ("KREF") in our Private Markets business line. The decrease was primarily due to a lower level of investment income at our business development companies during the year ended December 31, 2020 as compared to the prior period.

Fee Related Compensation

The increase in fee related compensation for the year ended December 31, 2020 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of revenues included within fee related earnings.

Other Operating Expenses

The decrease in other operating expenses for the year ended December 31, 2020 compared to the prior period was primarily due to a decrease in travel related expenses as a result of the COVID-19 pandemic. These decreases were partially offset by a higher level of professional fees and other administrative costs in connection with the growth of the firm.

Fee Related Earnings

The increase in fee related earnings for the year ended December 31, 2020 compared to the prior period was primarily due to a higher level of management fees and transaction fees from our Capital Markets business line, partially offset by a higher level of fee related compensation and a lower level of fee related performance revenues, as described above.

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Realized Performance Income

The following table presents realized performance income by business line for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Realized Performance Income"],["Private Markets","","$","1,015,865","","","$","1,046,038","","","$","(30,173)"],["Public Markets","","149,834","","","36,982","","","112,852"],["Total Realized Performance Income","","$","1,165,699","","","$","1,083,020","","","$","82,679"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Private Markets"],["North America Fund XI","","$","203,606","","","$","341,602","","","$","(137,996)"],["2006 Fund","","181,899","","","143,692","","","38,207"],["Global Infrastructure Investors II","","148,882","","","\u2014","","","148,882"],["European Fund IV","","139,948","","","221,222","","","(81,274)"],["Co-Investment Vehicles and Other","","93,650","","","70,179","","","23,471"],["Asian Fund II","","60,647","","","126,039","","","(65,392)"],["Core Investment Vehicles","","57,484","","","14,449","","","43,035"],["Global Infrastructure Investors","","54,729","","","\u2014","","","54,729"],["Asian Fund III","","46,347","","","36,707","","","9,640"],["Next Generation Technology Growth Fund","","13,964","","","\u2014","","","13,964"],["Real Estate Partners Americas","","4,977","","","7,439","","","(2,462)"],["Asian Fund","","431","","","10,913","","","(10,482)"],["European Fund III","","\u2014","","","65,700","","","(65,700)"],["European Fund II","","\u2014","","","5,058","","","(5,058)"],["China Growth Fund","","\u2014","","","3,038","","","(3,038)"],["Total Realized Carried Interest (1)","","1,006,564","","","1,046,038","","","(39,474)"],["Incentive Fees","","9,301","","","\u2014","","","9,301"],["Total Realized Performance Income","","$","1,015,865","","","$","1,046,038","","","$","(30,173)"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Public Markets"],["Other Alternative Credit Vehicles","","$","25,740","","","$","14,850","","","$","10,890"],["Mezzanine Partners","","9,900","","","9,900","","","\u2014"],["Total Realized Carried Interest (1)","","35,640","","","24,750","","","10,890"],["Incentive Fees","","114,194","","","12,232","","","101,962"],["Total Realized Performance Income","","$","149,834","","","$","36,982","","","$","112,852"]]
[[/GREPCENT_TABLE]]

(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.

Realized performance income included (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.

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Realized carried interest in our Private Markets business line for the year ended December 31, 2020 consisted primarily of realized proceeds from the sales of our investments in Deutsche Glasfaser, Privilege Underwriters, Inc., LGC Science Group Limited, Epicor Software Corporation, The Hut Group Limited, and Fiserv, Inc.

Realized carried interest in our Private Markets business line for the year ended December 31, 2019 consisted primarily of realized proceeds from the sales of our investments in Sedgwick Claims Management Services, Inc. and Trainline PLC and dividends received from our investment in Fiserv, Inc.

Realized carried interest in our Public Markets business line increased for the year ended December 31, 2020 compared to the prior period as a result of a higher level of realization activity at certain alternative credit investment funds, which we are eligible to take cash carry.

Incentive fees earned in our Public Markets business line consisted primarily of incentive fees earned from our hedge fund partnerships and certain incentive fee eligible leveraged credit accounts. The increase in incentive fees for the year ended December 31, 2020 compared to the prior period was primarily attributable to a higher level of incentive fees earned from our hedge fund partnership, Marshall Wace.

Realized Performance Income Compensation

The decrease in realized performance income compensation for the year ended December 31, 2020 compared to the prior period was primarily due to a lower level of compensation recorded in connection with the higher level of realized performance income.

Realized Investment Income

The following table presents realized investment income from our Principal Activities business line for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Realized Investment Income"],["Net Realized Gains (Losses)","","$","284,521","","","$","189,858","","","$","94,663"],["Interest Income and Dividends","","360,138","","","495,915","","","(135,777)"],["Total Realized Investment Income","","$","644,659","","","$","685,773","","","$","(41,114)"]]
[[/GREPCENT_TABLE]]

The decrease in realized investment income was due to a lower level of interest income and dividends, partially offset by a higher level of net realized gains. The amount of realized investment income depends on the transaction activity of our funds and our subsidiaries, which can vary from period to period.

For the year ended December 31, 2020, interest income and dividends were comprised of (i) $225.4 million of dividend income from our investment in Fiserv, Inc. ($62.5 million), Epicor Software Corporation ($27.3 million) and our real assets investments, including our real estate investment in KREF and (ii) $134.7 million of interest income from our investments in CLOs, other credit investments, and to a lesser extent our cash balances.

    For the year ended December 31, 2019, interest income and dividends were comprised of (i) $336.7 million of dividend income from our investment in Fiserv, Inc. and our real assets investments, including our real estate investment in KREF and (ii) $159.2 million of interest income which consists primarily of interest from our investments in CLOs, other credit investments, and our cash balances. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

    For the year ended December 31, 2020, net realized gains were comprised of realized gains primarily from the sale of our investments in The Hut Group Limited, Deutsche Glasfaser, Ivalua SAS, Fiserv, Inc. and BridgeBio Pharma, Inc. Partially offsetting these realized gains were realized losses, the most significant of which were realized losses on our investment in LCI Helicopters Limited, Yorktown Center and various alternative credit strategy investments.

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    For the year ended December 31, 2019, net realized gains were comprised of realized gains primarily from the sale of our investments in Trainline PLC, GEG German Estate Group AG (financial services sector), and Sedgwick Claims Management Services, Inc., and the sale of certain investments in our special situations funds. Partially offsetting these realized gains were realized losses, the most significant of which was a realized loss on the sale of our investment in DoubleDutch, Inc. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

    Prior to the acquisition of KKR Capstone on January 1, 2020, (i) KKR Capstone's financial results were consolidated in 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 segment and non-GAAP financial measures, because KKR presented its segment and non-GAAP financial measures prior to giving 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 year ended December 31, 2020, total fees attributable to KKR Capstone were $81.5 million, total expenses attributable to KKR Capstone were $65.7 million, and income taxes and other income attributable to Capstone were $(1.5) 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 year ended December 31, 2020 compared to the prior period was primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.

Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the years ended December 31, 2020 and 2019:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2020","","December 31, 2019","","Change"],["","","($ in thousands)"],["Asset Management Segment Operating Earnings","","$","2,286,984","","","$","2,042,525","","","$","244,459"],["Insurance Segment Operating Earnings","","\u2014","","","\u2014","","","\u2014"],["Distributable Operating Earnings","","2,286,984","","","2,042,525","","","244,459"],["Interest Expense","","(211,037)","","","(183,682)","","","(27,355)"],["Preferred Dividends","","(33,364)","","","(33,364)","","","\u2014"],["Net Income Attributable to Noncontrolling Interests","","(7,842)","","","(4,907)","","","(2,935)"],["Income Taxes Paid","","(265,950)","","","(207,479)","","","(58,471)"],["After-tax Distributable Earnings","","$","1,768,791","","","$","1,613,093","","","$","155,698"]]
[[/GREPCENT_TABLE]]

Distributable Operating Earnings

The increase in distributable operating earnings for the year ended December 31, 2020 compared to the prior period was primarily due to a higher level of fee related earnings and realized performance income, partially offset by a lower level of realized investment income. For a discussion of the Asset Management, see "—Analysis of Asset Management Segment Operating Results."

Interest Expense

    For the year ended December 31, 2020 and 2019, interest expense related primarily to the interest expense from our senior notes outstanding for KKR and KFN.

The increase in interest expense for the year ended December 31, 2020 compared to the prior period was primarily attributable to new note issuances.

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Income Taxes Paid

    The increase in income taxes paid for the year ended December 31, 2020 compared to the prior period was primarily due to a higher level of distributable operating earnings.

After-tax Distributable Earnings 

The increase in after-tax distributable earnings for the year ended December 31, 2020 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.

Non-GAAP Balance Sheet Measures

Book Value

The following table presents our calculation of book value as of December 31, 2021 and December 31, 2020:

[[GREPCENT_TABLE]]
[["","","","As of"],["","","","December 31, 2021","","December 31, 2020"],["","","","($ in thousands)"],["(+)","Cash and Short-term Investments","","$","4,869,203","","","$","5,961,083"],["(+)","Investments","","17,763,542","","","14,991,914"],["(+)","Net Unrealized Carried Interest (1)","","4,967,401","","","2,625,935"],["(+)","Other Assets (2)","","4,706,108","","","4,198,641"],["(+)","Global Atlantic Book Value","","3,372,498","","","\u2014"],["(-)","Debt Obligations - KKR (excluding KFN and Global Atlantic)","","5,836,267","","","4,688,460"],["(-)","Debt Obligations - KFN","","948,517","","","948,517"],["(-)","Tax Liabilities, Net","","2,697,317","","","485,966"],["(-)","Other Liabilities","","774,711","","","857,764"],["(-)","Noncontrolling Interests","","33,058","","","29,510"],["(-)","Preferred Stock","","\u2014","","","500,000"],["","Book Value","","$","25,388,882","","","$","20,267,356"],["","Book Value Per Adjusted Share","","$","28.77","","","$","23.09"],["","Adjusted Shares","","882,589,036","","","877,613,164"]]
[[/GREPCENT_TABLE]]

(1)The following table provides net unrealized carried interest by business line:

[[GREPCENT_TABLE]]
[["","","As of"],["","","December 31, 2021","","December 31, 2020"],["","","($ in thousands)"],["Private Markets Business Line","","$","4,856,843","","","$","2,560,101"],["Public Markets Business Line","","110,558","","","65,834"],["Total","","$","4,967,401","","","$","2,625,935"]]
[[/GREPCENT_TABLE]]

(2)Other Assets include KKR's ownership interest in FS/KKR Advisor and minority ownership interests in hedge fund partnerships.

Book value per adjusted share increased 25% from December 31, 2020. The increase was primarily attributable to (i) the net appreciation in the value of our investment portfolio, including investment income from investments held by KKR as well as carried interest from investments held through investment funds, especially KKR's private equity, real assets and alternative credit funds, where KKR is entitled to earn carried interest, and (ii) after-tax distributable earnings during the period. Partially offsetting this increase was (i) the payment of dividends and the repurchases of our common stock during the period and (ii) an adjustment to book value to reflect the implied amount of (1) tax assets and liabilities attributable to KKR Holdings L.P. as if it was subject to corporate income taxes (although this adjustment was not applied to prior periods, had this adjustment been made as of December 31, 2020, book value would have been reduced by $459 million as of such date) and (2) the recognition of deferred tax liabilities relating to certain assets of KKR Group Partnership L.P. that is expected to occur upon the completion of the mergers contemplated by the Reorganization Agreement. The impact of this adjustment was a reduction to book value of $1,396 million as of December 31, 2021.

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With respect to book value relating to the Asset Management business, for the year ended December 31, 2021, the value of the Asset Management segment balance sheet portfolio increased 28% and KKR's traditional private equity portfolio increased by 46%. The increases in KKR's Asset Management segment balance sheet portfolio and net unrealized carried interest was primarily due to mark-to-market net investment gains. 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 private equity 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 Distributable Earnings" and for more information about the factors that may impact our business, financial performance, operating results and valuations, see "—Business Environment."

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The following table presents the holdings of our investments in the Asset Management segment by asset class as of December 31, 2021. To the extent investments are realized at values below their cost in future periods, 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.

[[GREPCENT_TABLE]]
[["","","As of December 31, 2021"],["","","($ in thousands)"],["Investments (1)","","Cost","","Fair Value","","Fair Value as a Percentage of Total Investments"],["Private Equity","","$","1,990,714","","","$","4,839,547","","","27.2","%"],["Core Private Equity","","2,521,080","","","5,207,969","","","29.3","%"],["Growth","","263,181","","","990,325","","","5.6","%"],["Private Equity, Core & Growth Total","","4,774,975","","","11,037,841","","","62.1","%"],["Energy","","814,317","","","677,019","","","3.8","%"],["Real Estate","","1,705,863","","","2,036,752","","","11.5","%"],["Infrastructure","","624,035","","","748,470","","","4.2","%"],["Real Assets Total","","3,144,215","","","3,462,241","","","19.5","%"],["Leveraged Credit","","995,956","","","1,007,327","","","5.7","%"],["Alternative Credit","","807,445","","","921,920","","","5.2","%"],["Credit Total","","1,803,401","","","1,929,247","","","10.9","%"],["Other","","1,357,922","","","1,334,213","","","7.5","%"],["Total Investments","","$","11,080,513","","","$","17,763,542","","","100.0","%"],["","","As of December 31, 2021"],["","","($ in thousands)"],["Significant Investments: (2)","","Cost","","Fair Value","","Fair Value as a Percentage of Total Investments"],["PetVet Care Centers, LLC","","$","243,211","","","$","1,216,055","","","6.8","%"],["USI, Inc.","","531,425","","","1,094,073","","","6.2","%"],["Fiserv, Inc. (NASDAQ: FISV)","","370,766","","","853,584","","","4.8","%"],["Heartland Dental, LLC","","320,656","","","833,705","","","4.7","%"],["Exact Holding B.V.","","213,362","","","459,828","","","2.6","%"],["Total Significant Investments","","1,679,420","","","4,457,245","","","25.1","%"],["Other Investments","","9,401,093","","","13,306,297","","","74.9","%"],["Total Investments","","$","11,080,513","","","$","17,763,542","","","100.0","%"]]
[[/GREPCENT_TABLE]]

(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 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.

(2)Significant Investments include the top five investments based on their fair values as of December 31, 2021. Significant Investments exclude (i) investments expected to be syndicated, (ii) investments expected to be transferred in connection with a new fundraising, and (iii) investments in funds and other entities that are owned by one or more third parties and established for the purpose of making investments. Accordingly, this list of Significant Investments should not be relied upon as a substitute for information about the asset class exposure of KKR's balance sheet. For information about the asset class exposure of 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.

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With respect to 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 Global Atlantic on a GAAP basis, excluding (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 December 31, 2021, KKR's pro rata interest in Global Atlantic's book value was $3.4 billion. For more information about the composition and credit quality of Global Atlantic's investments on a consolidated basis, please see "--Global Atlantic's Investment Portfolio" below.

Global Atlantic's Investment Portfolio

As of December 31, 2021, 97% and 87% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from the Securities Valuation Office of the National Association of Insurance Commissioners ("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 Global Atlantic's AFS fixed-maturity security portfolio as of December 31, 2021 were Corporate, RMBS and CMBS securities, comprising 34%, 6% and 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 AFS fixed maturity portfolio consisting of floating rate assets was 36% as of December 31, 2021.

Within the funds withheld receivable at interest portfolio, 96% of the fixed maturity securities were investment grade by NAIC designation as of December 31, 2021.

Global Atlantic also maintains a $13.8 billion fixed maturity securities portfolio classified as trading which underlie the funds withheld payable at interest obligation from certain reinsurance transactions. The investment performance from the fixed maturity securities in this trading portfolio is ceded to reinsurers under the terms of their 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, 97% as of December 31, 2021, was 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 3% as of December 31, 2021. Pursuant to Global Atlantic's investment guidelines, it 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 December 31, 2021, the non-rated AFS fixed-maturity securities include $118.8 million of private placement securities for which Global Atlantic has not sought individual ratings from the NRSROs.

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Corporate fixed maturity securities

Global Atlantic maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. As of December 31, 2021, 60% of the AFS fixed maturity securities portfolio was invested in corporate fixed maturity securities.

As of December 31, 2021, 95% of the total fair value of corporate fixed maturity securities is rated NAIC investment grade, and 95% is rated NRSROs investment grade.         

Residential mortgage-backed securities

As of December 31, 2021, 11% of the AFS fixed maturity securities portfolio was invested in RMBS. 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, we 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 December 31, 2021, 93% of RMBS securities that are below investment grade as rated by the NRSRO, carry an NAIC 1 ("highest quality") designation. 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 December 31, 2021, Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $80.3 million based on NRSRO rating and $13.5 million based on NAIC ratings.        

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 December 31, 2021, 23% 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 December 31, 2021, 96% of the commercial mortgage loan portfolio was rated investment grade based on NAIC designation. 100% of the commercial mortgage loan portfolio is in current status.

As of December 31, 2021, 96% of the residential mortgage loan portfolio is in current status, and approximately $202.7 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 83% of the commercial mortgage loans has a loan-to-value ratio of 70% or less and a 0.3% 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 68% as of December 31, 2021.

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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.

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 years ended December 31, 2021, 2020, and 2019:

Revenues

[[GREPCENT_TABLE]]
[["","","","Year Ended"],["","","","","","December 31, 2021","","December 31, 2020","","December 31, 2019"],["","","","","($ in thousands)"],["Total GAAP Revenues","","","","","$","16,236,148","","","$","4,230,891","","","$","4,220,900"],["Impact of Consolidation and Other","","","","","808,174","","","461,244","","","256,972"],["Asset Management Adjustments:"],["Capital Allocation-Based Income (GAAP)","","","","","(6,842,414)","","","(2,224,100)","","","(2,430,425)"],["Realized Carried Interest","","","","","1,752,130","","","1,042,204","","","1,070,788"],["Realized Investment Income","","","","","1,613,244","","","644,659","","","685,773"],["Capstone Fees","","","","","(91,407)","","","(81,452)","","","\u2014"],["Expense Reimbursements","","","","","(178,572)","","","(149,522)","","","(169,415)"],["Insurance Adjustments:"],["Premiums","","","","","(2,226,078)","","","\u2014","","","\u2014"],["Policy Fees","","","","","(1,147,913)","","","\u2014","","","\u2014"],["Other Income","","","","","(120,213)","","","\u2014","","","\u2014"],["Investment Gains and Losses","","","","","544,357","","","\u2014","","","\u2014"],["Derivative Gains and Losses","","","","","(141,513)","","","\u2014","","","\u2014"],["Total Segment Revenues (1)","","","","","$","10,205,943","","","$","3,923,924","","","$","3,634,593"]]
[[/GREPCENT_TABLE]]

(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.

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Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders

[[GREPCENT_TABLE]]
[["","","","Year Ended"],["","","","","","December 31, 2021","","December 31, 2020","","December 31, 2019"],["","","","","($ in thousands)"],["Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders (GAAP)","","","","","$","4,560,829","","","$","1,945,954","","","$","1,971,685"],["Preferred Stock Dividends","","","","","105,647","","","56,555","","","33,364"],["Net Income (Loss) Attributable to Noncontrolling Interests","","","","","7,628,703","","","3,115,089","","","2,634,491"],["Income Tax Expense (Benefit)","","","","","1,353,270","","","609,097","","","528,750"],["Income (Loss) Before Tax (GAAP)","","","","","$","13,648,449","","","$","5,726,695","","","$","5,168,290"],["Impact of Consolidation and Other","","","","","(5,189,459)","","","(1,704,739)","","","(1,038,398)"],["Equity-based Compensation - KKR Holdings","","","","","161,283","","","80,739","","","91,296"],["Preferred Stock Dividends","","","","","(19,201)","","","(33,364)","","","(33,364)"],["Income Taxes Paid","","","","","(687,572)","","","(265,950)","","","(207,479)"],["Asset Management Adjustments:"],["Unrealized Carried Interest","","","","","(4,043,135)","","","(1,070,803)","","","(1,263,046)"],["Net Unrealized (Gains) Losses","","","","","(2,590,280)","","","(1,697,740)","","","(1,854,867)"],["Unrealized Carried Interest Compensation (Carry Pool)","","","","","1,751,912","","","467,485","","","520,033"],["Strategic Corporate Transaction-Related Charges","","","","","25,153","","","20,073","","","\u2014"],["Equity-based Compensation","","","","","183,100","","","236,199","","","201,095"],["Equity-based Compensation - Performance based","","","","","78,230","","","10,196","","","6,694"],["Non-recurring items (1)","","","","","\u2014","","","\u2014","","","22,839"],["Insurance Adjustments:"],["Net (Gains) Losses from Investments and Derivatives","","","","","658,975","","","\u2014","","","\u2014"],["Strategic Corporate Transaction-Related Charges","","","","","25,711","","","\u2014","","","\u2014"],["Equity-based and Other Compensation","","","","","95,344","","","\u2014","","","\u2014"],["Amortization of Acquired Intangibles","","","","","16,176","","","\u2014","","","\u2014"],["Income Taxes","","","","","(199,095)","","","\u2014","","","\u2014"],["After-tax Distributable Earnings","","","","","$","3,915,591","","","$","1,768,791","","","$","1,613,093"],["Interest Expense","","","","","250,183","","","211,037","","","183,682"],["Preferred Stock Dividends","","","","","19,201","","","33,364","","","33,364"],["Net Income Attributable to Noncontrolling Interests","","","","","23,664","","","7,842","","","4,907"],["Income Taxes Paid","","","","","687,572","","","265,950","","","207,479"],["Distributable Operating Earnings","","","","","$","4,896,211","","","$","2,286,984","","","$","2,042,525"],["Insurance Segment Operating Earnings","","","","","(652,551)","","","\u2014","","","\u2014"],["Realized Performance Income","","","","","(2,141,596)","","","(1,165,699)","","","(1,083,020)"],["Realized Performance Income Compensation","","","","","1,239,177","","","697,071","","","698,145"],["Realized Investment Income","","","","","(1,613,244)","","","(644,659)","","","(685,773)"],["Realized Investment Income Compensation","","","","","241,994","","","106,830","","","108,385"],["Fee Related Earnings","","","","","$","1,969,991","","","$","1,280,527","","","$","1,080,262"],["Insurance Segment Operating Earnings","","","","","652,551","","","\u2014","","","\u2014"],["Realized Performance Income","","","","","2,141,596","","","1,165,699","","","1,083,020"],["Realized Performance Income Compensation","","","","","(1,239,177)","","","(697,071)","","","(698,145)"],["Realized Investment Income","","","","","1,613,244","","","644,659","","","685,773"],["Realized Investment Income Compensation","","","","","(241,994)","","","(106,830)","","","(108,385)"],["Depreciation and Amortization","","","","","25,940","","","18,626","","","17,653"],["Adjusted EBITDA","","","","","$","4,922,151","","","$","2,305,610","","","$","2,060,178"]]
[[/GREPCENT_TABLE]]

(1) Represents a $22.8 million non-recurring make-whole premium associated with KKR's refinancing of its 6.375% Senior Notes due 2020 during the year ended December 31, 2019.

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KKR & Co. Inc. Stockholders' Equity - Common Stock

[[GREPCENT_TABLE]]
[["","As of"],["","December 31, 2021","","December 31, 2020"],["","($ in thousands)"],["KKR & Co. Inc. Stockholders' Equity - Series I and II Preferred Stock, Common Stock","$","16,466,372","","","$","12,118,472"],["Series C Mandatory Convertible Preferred Stock","1,115,792","","","1,115,792"],["Impact of Consolidation and Other (1)","(1,048,569)","","","520,710"],["KKR Holdings and Other Exchangeable Securities","8,595,510","","","6,512,382"],["Accumulated Other Comprehensive Income (AOCI) and Other (Insurance)","259,777","","","\u2014"],["Book Value","$","25,388,882","","","$","20,267,356"]]
[[/GREPCENT_TABLE]]

(1) Includes an adjustment to book value to reflect the implied amount of (1) tax assets and liabilities attributable to KKR Holdings L.P. as if it was subject to corporate income taxes and (2) the recognition of deferred tax liabilities relating to certain assets of KKR Group Partnership L.P. that is expected to occur upon the completion of the mergers contemplated by the Reorganization Agreement. The impact of this adjustment was a reduction to book value of $1,396 million as of December 31, 2021.

The following table provides reconciliations of KKR's GAAP Shares of Common Stock Outstanding to Adjusted Shares:

[[GREPCENT_TABLE]]
[["","As of"],["","December 31, 2021","","December 31, 2020"],["GAAP Shares of Common Stock Outstanding","595,663,618","","","572,893,738"],["Adjustments:"],["KKR Holdings Units","258,726,163","","","275,626,493"],["Other Exchangeable Securities (1)","1,376,655","","","\u2014"],["Common Stock - Series C Mandatory Convertible Preferred Stock (2)","26,822,600","","","29,092,933"],["Adjusted Shares (3)","882,589,036","","","877,613,164"],["Unvested Shares of Common Stock and Other Exchangeable Securities (4)","39,000,561","","","23,892,201"]]
[[/GREPCENT_TABLE]]

(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 to shares of KKR & Co. Inc. common stock on December 31, 2021 and December 31, 2020.

(3)Amounts exclude unvested equity awards granted under our Equity Incentive Plans.

(4)Represents equity awards granted under our Equity Incentive Plans. The issuance of common stock of KKR & Co. Inc. pursuant to equity awards under our Equity Incentive Plans dilutes KKR common stockholders and KKR Holdings pro rata in accordance with their respective ownership interests in the KKR business. Excludes market condition awards that did not meet their market-price based vesting conditions as of December 31, 2021 and December 31, 2020.

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, 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 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 stockholders and holders of our 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 Needs—Dividends."

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See "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

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 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 issuances of our 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, 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 December 31, 2021, 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 the 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 this report.

As of December 31, 2021, netting holes in excess of $50 million existed at one of our private equity funds, which was Asian Fund II of $415 million. 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.

For a discussion of our debt obligations, including our debt securities, revolving credit agreements and loans, see Note 16 "Debt Obligations" in our financial statements.

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Liquidity Needs

We expect that our primary liquidity needs will consist of cash required to:

•continue to support and grow our business lines, including funding our capital commitments made to existing and future funds, pay the costs related to fundraising and launching of new strategies, and otherwise supporting investment vehicles which we sponsor;

•seed or warehouse investments for the benefit of new strategies or funds, including CLOs, pending the contribution of committed capital by the investors in such funds, and advancing capital to 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, including funding requirements to levered investment vehicles or structured transactions;

•fund cash operating expenses and contingencies, including litigation 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; 

•pay cash dividends in accordance with our dividend policy for our common stock or the terms of our preferred stock;  

•underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets business, and fund any net capital or regulatory requirements of our capital markets companies;

•post or return collateral in respect of derivative contracts;

•support and acquire other assets for our Principal Activities business line, including other businesses, investments and assets, some of which may be required to satisfy risk retention requirements for CLOs (to the extent they may apply); and

•repurchase KKR's common stock or retire equity awards pursuant to the share repurchase program or repurchase or redeem other securities issued by KKR.

For a discussion of KKR's share repurchase program, see Note 22 "Equity" in our financial statements.

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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 generally range from 2% to 8% of a fund's total capital commitments at final closing, but may be greater for certain funds (i) where we are pursuing newer strategies, (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 December 31, 2021:

[[GREPCENT_TABLE]]
[["","Uncalled Commitments"],["Private Markets","($ in millions)"],["Core Investment Vehicles","$","4,202"],["North America Fund XIII","1,115"],["Asian Fund IV","818"],["Real Estate Partners Americas III","532"],["Global Infrastructure Investors IV","523"],["Real Estate Partners Europe II","268"],["Health Care Strategic Growth Fund II","262"],["Diversified Core Infrastructure Fund","250"],["Asia Real Estate Partners","209"],["Asia Pacific Infrastructure Investors","172"],["Asian Fund III","154"],["Global Infrastructure Investors III","136"],["Americas Fund XII","111"],["Energy Income and Growth Fund II","83"],["Next Generation Technology Growth II","76"],["European Fund V","67"],["Health Care Strategic Growth Fund","59"],["Global Impact Fund","34"],["Real Estate Credit Opportunity Partners II","27"],["Real Estate Partners Americas II","26"],["Other Private Markets Vehicles","1,706"],["Total Private Markets Commitments","10,830"],["Public Markets"],["Dislocation Opportunities Fund","140"],["Lending Partners Europe II","33"],["Special Situations Fund II","25"],["Lending Partners III","13"],["Private Credit Opportunities Partners II","12"],["Lending Partners Europe","9"],["Other Public Markets Vehicles","884"],["Total Public Markets Commitments","1,116"],["Total Uncalled Commitments","$","11,946"]]
[[/GREPCENT_TABLE]]

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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 underwriting transactions, debt financing, revolving credit facilities, and syndications in our capital markets business line. As of December 31, 2021, these commitments amounted to $1.2 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. Our capital markets business has arrangements with third parties, which reduce our risk under certain circumstances when underwriting certain debt transactions, and thus our unfunded commitments as of December 31, 2021 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 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. 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."

On January 14, 2020, KKR had committed to invest up to an additional $150 million in our India debt finance company to support its alternative credit business in India. No amounts were contributed by KKR, and on September 8, 2021, the commitment was terminated. During the third quarter of 2021, our India debt finance company entered into a transaction to merge with Incred Finance, the consummation of which is still pending.

Tax Receivable Agreement

We are required to acquire KKR Group Partnership Units from time to time pursuant to our exchange agreement with KKR Holdings, which is expected to result in an increase in our tax basis of the assets of KKR Group Partnership at the time of an exchange of KKR Group Partnership Units. We have entered into a tax receivable agreement with KKR Holdings, which requires us to pay to KKR Holdings, or to current and former limited partners who have exchanged KKR Holdings units for KKR's common stock as transferees of KKR Group Partnership Units, 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we realize as a result of the increase in tax basis described above, as well as 85% of the amount of any such savings we realize as a result of increases in tax basis that arise due to future payments under the tax receivable agreement. As of December 31, 2021, an undiscounted payable of $399.2 million has been recorded in due to affiliates in the financial statements representing management's best estimate of the amounts currently expected to be owed under the tax receivable agreement. As of December 31, 2021, approximately $50.2 million of cumulative cash payments have been made under the tax receivable agreement.

Following the closing of the merger transactions contemplated by the Reorganization Agreement, there will be no more exchanges of KKR Group Partnership Units held by KKR Holdings. Additionally, the tax receivable agreement will terminate upon the closing of the mergers contemplated by the Reorganization Agreement, except that the obligations of KKR to make payments under the tax receivable agreement will remain outstanding until paid in full for certain exchanges that took place prior to the termination of the tax receivable agreement. Although our employees who hold restricted holdings units under our 2019 Equity Plan (which includes limited partner interests in KKR Holdings II) will be entitled to exchange those interests for common stock pursuant to the exchange agreement, there will be no payments due for any of those exchanges under the tax receivable agreement.

Dividends

A dividend of $0.145 per share of our common stock has been declared for the quarter ended December 31, 2021, which will be paid on March 4, 2022 to holders of record of our common stock as of the close of business on February 18, 2022.

A dividend of $0.75 per share of Series C Mandatory Convertible Preferred Stock has been declared and set aside for payment on March 15, 2022 to holders of record of Series C Mandatory Convertible Preferred Stock as of the close of business on March 1, 2022.

When KKR & Co. Inc. receives distributions from KKR Group Partnership, other equityholders in KKR Group Partnership including KKR Holdings receive their pro rata share of 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 time. We announced on February 8, 2022 that our current dividend policy will be to pay dividends to holders of our common stock in an annual aggregate amount of $0.62 per share (or a quarterly dividend of $0.155 per share) beginning with the dividend to be announced with the results for the first quarter of 2022. The declaration of dividends is subject to the discretion of our board of directors based on a number of factors, including KKR’s

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future financial performance and other considerations that the board deems relevant, and compliance with the terms of KKR & Co. 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 extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. There can be no assurance that future dividends will be made as intended or at all or that any particular dividend policy for our common stock will be maintained. Furthermore, the declaration and payment of distributions by KKR Group 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 KKR Group Partnership.

Preferred Stock

For a discussion of KKR's equity, including our preferred stock, see Note 22 "Equity" in our financial statements.

Other Liquidity Needs

From time to time, we fund various underwriting, 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 we may draw all or substantially all of our availability for borrowings under our available credit facilities. We generally expect these borrowings by our capital markets business to be repaid promptly as these commitments 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."

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. Contractual arrangements include (1) commitments to fund the purchase of investments or other assets (including obligations to fund capital commitments as the general partner of our investment funds) or to fund collateral for derivative transactions or otherwise, (2) obligations arising under our senior notes, subordinated notes, and 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 third-party administrators for insurance policy administration, and (6) commitments to fund the business, operations or investments of our subsidiaries.

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The following table sets forth information relating to anticipated future cash payments as of December 31, 2021 excluding consolidated funds and CFEs with a reconciliation of such amounts to anticipated future cash payments by us (including Global Atlantic) and our consolidated funds and CFEs.

[[GREPCENT_TABLE]]
[["","","Payments due by Period"],["Types of Contractual Obligations","","1 Year","","1-3 Years","","3-5 Years","","5 Years","","Total"],["","","($ in millions)"],["Asset Management"],["Uncalled commitments to investment funds (1)","","$","11,946.0","","","$","\u2014","","","$","\u2014","","","$","\u2014","","","$","11,946.0"],["Debt payment obligations (2)","","\u2014","","","217.3","","","43.5","","","6,524.0","","","6,784.8"],["Interest obligations on debt payment obligations (3)","","309.6","","","513.6","","","512.8","","","4,177.6","","","5,513.6"],["Underwriting commitments (4)","","499.5","","","\u2014","","","\u2014","","","\u2014","","","499.5"],["Lending commitments (5)","","249.8","","","\u2014","","","\u2014","","","\u2014","","","249.8"],["Purchase commitments (6)","","449.7","","","\u2014","","","\u2014","","","\u2014","","","449.7"],["Lease obligations","","31.6","","","61.0","","","45.9","","","107.1","","","245.6"],["Insurance (7)"],["Policy liabilities (8)","","11,113.1","","","26,030.0","","","21,512.8","","","99,688.7","","","158,344.6"],["Debt payment obligations (9)","","\u2014","","","\u2014","","","\u2014","","","1,900.0","","","1,900.0"],["Interest obligations on debt payment obligations (10)","","80.0","","","160.0","","","160.0","","","1,106.0","","","1,506.0"],["Purchase and lease commitments (11)","","59.6","","","93.8","","","55.9","","","358.3","","","567.6"],["Total Contractual Obligations of KKR","","$","24,738.9","","","$","27,075.7","","","$","22,330.9","","","$","113,861.7","","","$","188,007.2"],["(+) Uncalled commitments of consolidated funds (12)","","22,539.8","","","\u2014","","","\u2014","","","\u2014","","","22,539.8"],["(+) Debt payment obligations of consolidated funds, CFEs and Other (13)","","4,390.8","","","718.9","","","348.9","","","24,671.0","","","30,129.6"],["(+) Corporate real estate borrowings (14)","","490.0","","","\u2014","","","\u2014","","","\u2014","","","490.0"],["(+) Interest obligations of consolidated funds, CFEs and Other (15)","","686.7","","","1,029.4","","","1,015.0","","","2,456.8","","","5,187.9"],["Total Consolidated Contractual Obligations","","$","52,846.2","","","$","28,824.0","","","$","23,694.8","","","$","140,989.5","","","$","246,354.5"]]
[[/GREPCENT_TABLE]]

(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 "—Revolving Credit Agreements, Senior Notes, KFN Debt Obligation, KFN Securities and Real Estate Financing—Liquidity Needs."

(2)Amounts include senior notes and subordinated notes issued by KKR and its subsidiaries. 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 term of the related debt obligation, which has been calculated assuming the debt outstanding at December 31, 2021 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of December 31, 2021, 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's asset management business line including KFN to fund the purchase of various investments.

(7)Global Atlantic has other obligations related to collateral payable held for derivative instruments ($1.1 billion) and outstanding commitments to make investments in commercial mortgage loans, other lending facilities and other investments ($2.0 billion) which have not been included in the above table as the exact timing of these payments cannot be estimated. Global Atlantic's debt obligations are non-recourse to KKR beyond the assets of Global Atlantic.

(8)Policy liabilities for insurance obligations consist of amounts required to meet future obligations for future policy benefits and policy account balances. Amounts presented in the table represent estimated cash payments under such contracts, including significant assumptions related to the receipt of future premiums, mortality, lapse, renewal, withdrawal, and annuitization comparable with actual experience. These assumptions also include market growth and policy crediting consistent with assumptions used in amortizing DAC. All estimated cash payments are not discounted to present value. Accordingly, the total of cash flows presented for all years of $158.3 billion significantly exceeds total policy liabilities of $126.5 billion recorded on the statements of financial condition as of December 31, 2021. Estimated cash payments are also presented gross of reinsurance. Due to the significance of the assumptions used, the amounts presented could differ materially from actual results.

(9)The payments due by period for debt obligations reflects the contractual maturities of principal.

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(10)Reflects estimated future interest payments. Future interest on variable rate debt (which includes borrowing under our revolving credit facility and the subordinated debentures) was computed using prevailing rates as of December 31, 2021 and, as such, does not consider the impact of future rate movements. Future interest on fixed rate debt was computed using the stated rate on the obligations.

(11)Reflects operational servicing agreements with third-party administrators for policy administration.

(12)Represents uncalled commitments of our consolidated funds excluding KKR's portion of uncalled commitments as the general partner of the respective funds. 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 "—Revolving Credit Agreements, Senior Notes, KFN Debt Obligation, KFN Securities and Real Estate Financing—Liquidity Needs."

(13)Amounts include (i) financing arrangements entered into by our consolidated funds with the objective of providing liquidity to the funds of $6.9 billion, (ii) debt securities issued by our consolidated CLOs of $21.3 billion and (iii) borrowings collateralized by fund investments, fund co-investments and other assets held by levered investment vehicles of $1.9 billion. Debt securities issued by consolidated CLO entities are supported solely by the investments held at the CLO vehicles and are not collateralized by assets of any other KKR entity. Borrowings by levered investment vehicles are supported solely by the investments held at the investment 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.

(14)Represents a debt obligation in connection with the ownership of KKR office space.

(15)The interest obligations on debt of our CFEs and other borrowings represent estimated interest to be paid over the term of the related debt obligation, which has been calculated assuming the debt outstanding at December 31, 2021 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of December 31, 2021, 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. See "—Liquidity Needs—Tax Receivable Agreement" in this report and "Risk Factors—We will be required to pay our principals for most of the benefits relating to our use of tax attributes we receive from prior and future exchanges of our common stock for KKR Group Partnership Units and related transactions, and the timing and value of these tax attributes differ from those of our restricted stock units" in this report.

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, certain of our investment funds and KKR have provided certain indemnities relating to environmental and other matters and have provided non-recourse carve-out guarantees for violations of bankruptcy remoteness restrictions and for fraud, willful misconduct and other 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 we manage or sponsor. KKR has also (i) provided credit support regarding repayment and funding obligations to third-party lenders to certain of its employees, excluding its executive officers, in connection with their personal investments in KKR investment funds and a levered investment vehicle and (ii) provided credit support to one of our hedge fund partnerships. We have also indemnified employees and non-employees against potential liabilities in connection with their services, including as described under "Certain Relationships and Related Transactions, and Director Independence—Indemnification of Directors, Officers and Others" in this report. In addition, we have also provided credit support to certain of our subsidiaries' obligations in connection with certain investment vehicles or partnerships that we manage. For example, KKR has guaranteed the obligations of a general partner to post collateral on behalf of its investment vehicle in connection with such vehicle's derivative transactions. We expect to continue to guarantee the obligations of one or more of our subsidiaries’ funding obligations to one or more of our investment vehicles, from time to time. KKR has also agreed to cause various of its general partners to fund their capital commitments to their funds and to be liable for such general partners' compliance with certain covenants, including limitations on their incurrence of certain kinds of indebtedness. In addition, we have also agreed for certain of our investment vehicles to fund or otherwise be liable for a portion of certain investment losses, if any, (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).

The partnership documents governing our carry-paying funds 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. See Note 24 "Commitments and Contingencies—Contingent Repayment Guarantees" in our financial statements for further information on KKR's potential clawback obligations.

Off Balance Sheet Arrangements

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.

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Critical Accounting Policies

The preparation of our 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 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 discusses certain aspects of our critical accounting policies. For a full discussion of these and all critical accounting policies, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.

Critical Accounting Policies - Asset Management

Recognition of Investment Income

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.

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 consolidated statements of operations. 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. Inc. 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 consolidated statements of operations 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 capital allocation-based income (loss) in the consolidated statements of operations. Amounts earned pursuant to carried interest at consolidated funds are eliminated 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 and other 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.

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Before carried interest is distributed, KKR calculates whether a preferred return has been achieved based on an amount that includes (i) capital contributions for investments, (ii) net realized investment gains, and (iii) management fees and fund expenses paid by the limited partners. To the extent the fund has exceeded the preferred return at the time of a realization event, and subject to any other conditions that would preclude payment of carried interest to the general partner (e.g. 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 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. The amount ultimately distributed to the general partner as carried interest is calculated as net gains applicable to our limited partners, less all management fees and fund expenses paid to date, multiplied by the applicable carry rate. 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 and expenses paid.

Critical Accounting Policies - Insurance

Policy liabilities

Policy liabilities (collectively, "reserves,") are the portion of past premiums or assessments received that are set aside to meet future policy and contract obligations as they become due. Interest accrues on the reserves and on future premiums, which may also be available to pay for future obligations. Global Atlantic establishes reserves to pay future policy benefits, claims, and certain expenses for its life policies and annuity contracts.

Global Atlantic's reserves are estimated based on models that include many actuarial assumptions and projections. These assumptions and projections, which are inherently uncertain, involve significant judgment, including assumptions as to the levels and/or timing of premiums, benefits, claims, expenses, interest credits, investment results (including equity market returns), mortality, longevity, and persistency.

The assumptions on which reserves are based are intended to represent an estimation of experience for the period that policy benefits are payable. Global Atlantic reviews the adequacy of its reserves and the assumptions underlying those reserves at least annually. Global Atlantic cannot, however, determine with precision the amount or the timing of actual benefit payments. If actual experience is better than or equal to the assumptions, then reserves would be adequate to provide for future benefits and expenses. If experience is worse than the assumptions, additional reserves may be required to meet future policy and contract obligations. This would result in a charge to our net income during the period in which excess benefits are paid or an increase in reserves occurs.

For a majority of Global Atlantic's in-force policies, including its universal life policies and most annuity contracts, the base policy reserve is equal to the account value. For these products, the account value represents its obligation to repay to the policyholder the amounts held on deposit. However, there are several significant blocks of business where policy reserves, in addition to the account value, are explicitly calculated, including variable annuities, fixed-indexed annuities, universal life products with secondary guarantees, indexed universal life and preneed policies.

Guaranteed minimum death benefits ("GMDB")

Some of Global Atlantic's variable annuity and fixed-indexed annuity contracts contain a GMDB feature that provides a guarantee that the benefit received at death will be no less than a prescribed minimum amount, even if the account balance is reduced to zero. This amount is based on either the net deposits paid into the contract, the net deposits accumulated at a specified rate, the highest historical account value on a contract anniversary, or sometimes a combination of these values. If the GMDB is higher than the current account value at the time of death, Global Atlantic incurs a cost equal to the difference.

Guaranteed minimum withdrawal benefits ("GMWB")

Global Atlantic issues fixed-indexed annuity and variable annuity contracts with a guaranteed minimum withdrawal feature. GMWB are an optional benefit where the contract owner is entitled to withdraw a maximum amount of their benefit base each year.

Once exercised, living benefit features provide annuity policyholders with a minimum guaranteed stream of income for life. A policyholder’s annual income benefit is generally based on an annual withdrawal percentage multiplied by the benefit base. The benefit base is defined in the policy and is generally the initial premium, reduced by any partial withdrawals and increased by a defined percentage, formula or index credits. Any living benefit payments are first deducted from the account value. Global Atlantic is responsible for paying any excess guaranteed living benefits still owed after the account value has reached zero.

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The ultimate cost of these benefits will depend on the level of market returns and the level of contractual guarantees, as well as policyholder behavior, including surrenders, withdrawals, and benefit utilization. For fixed-indexed annuity products, costs also include certain non-guaranteed terms that impact the ultimate cost, such as caps on crediting rates that Global Atlantic can, in its discretion, reset annually.

GMDB and GMWB sensitivities

As of December 31, 2021, the GMDB and GMWB liability balance totaled $1.1 billion. As of December 31, 2021, the liability balances for GMDB were $26.7 million for fixed-indexed annuities and $21.6 million for variable annuities. As of December 31, 2021, the liability balances for GMWB were $1.0 billion for fixed-indexed annuities. The increase (decrease) to the GMDB and GMWB liability balance as a result of hypothetical changes in projected assessments, equity market prices, and annual equity growth is summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.

[[GREPCENT_TABLE]]
[["","","December 31, 2021"],["($ in thousands)"],["Balance","","$","1,059,108"],["Hypothetical change:"],["'+10% future assessments(1)","","(20,373)"],["'-10% future assessments(1)","","22,718"],["+10% equity market prices","","(17,752)"],["-10% equity market prices","","15,041"],["1% lower annual equity growth","","5,428"]]
[[/GREPCENT_TABLE]]
________________

Note: Hypothetical changes to the liability balance do not reflect the impact of related hedges.

(1)The assessments used to accrue liabilities are generally based on investment yields, realized gains and losses, rider charges, surrender charges, and asset-based fees, such as mortality and expense fees.

Embedded derivatives

Global Atlantic's fixed-indexed annuity, variable annuity and indexed universal life products contain equity-indexed features, which are considered embedded derivatives and are required to be measured at fair value.

The embedded derivative is calculated as the present value of future projected benefits in excess of the projected guaranteed benefits, using an option budget as the indexed account value growth rate. In addition, the fair value of the embedded derivative is reduced to reflect the risk of non-performance on Global Atlantic's obligations (i.e., own credit risk).

Changes in interest rates, future index credits, Global Atlantic's own credit risk, projected withdrawal and surrender activity, and mortality on fixed-indexed annuity and indexed universal life contracts can have a significant impact on the value of the embedded derivative.

Valuation of embedded derivatives – Fixed-indexed annuities

Fixed-indexed annuity contracts allow the policyholder to elect a fixed interest rate of return or a market indexed strategy where interest credited is based on the performance of an index, such as the S&P 500 Index, or other indexes. The market indexed strategy is an embedded derivative, similar to a call option. The fair value of the embedded derivative is computed as the present value of benefits attributable to the excess of the projected policy contract values over the projected minimum guaranteed contract values. The projections of policy contract values are based on assumptions for future policy growth, which include assumptions for expected index credits, future equity option costs, volatility, interest rates, and policyholder behavior. The projections of minimum guaranteed contract values include the same assumptions for policyholder behavior as are used to project policy contract values. The embedded derivative cash flows are discounted using a risk-free interest rate increased by a non-performance risk spread tied to Global Atlantic's own credit rating.

Valuation of embedded derivatives – Indexed universal life

Indexed universal life products allow a policyholder’s account value to grow based on the performance of certain equity indexes, which result in an embedded derivative similar to a call option. The embedded derivative related to the index is

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bifurcated from the host contract and measured at fair value. The valuation of the embedded derivative is the present value of future projected benefits in excess of the projected guaranteed benefits, using the option budget as the indexed account value growth rate and the guaranteed interest rate as the guaranteed account value growth rate. Present values are based on discount rate curves determined at the valuation or issue date as well as assumed lapse and mortality rates. The discount rate equals the forecast treasury rate plus a non-performance risk spread tied to Global Atlantic’s own credit rating. Changes in discount rates and other assumptions such as spreads and/or option budgets can have a substantial impact on the embedded derivative.

Valuation of embedded derivatives – Variable annuities

Variable annuity contracts offered and assumed by Global Atlantic provide the contractholder with GMDB and/or GMWB. The liabilities for these benefits are included in policy liabilities in the consolidated statement of financial condition. The change in the liabilities for these benefits is included in policy benefits and claims in the consolidated statements of operation.

Global Atlantic has issued variable annuity contracts with GMDB features. Global Atlantic elected the fair value option to measure the liability for certain of these variable annuity contracts, valued at $519.5 million as December 31, 2021. Fair value is calculated as the present value of the estimated death benefits less the present value of the GMDB fees, using 1,000 risk neutral scenarios. Global Atlantic discounts the cash flows using U.S. Treasury rates plus an adjustment for its own company credit risk.

Global Atlantic also issues variable annuity contracts with a GMWB. The GMWB feature represents an embedded derivative. The embedded derivative is required to be bifurcated and measured at fair value. This liability is calculated as the present value of the excess GMWB claims less the present value of GMWB fees, using 1,000 risk neutral scenarios. Global Atlantic discounts the cash flows using U.S. Treasury rates plus an adjustment for its own company credit risk.

As of December 31, 2021, the embedded derivative liability balance totaled $1,856.1 million for fixed-indexed annuities, $557.3 million for indexed universal life and $127.8 million for variable annuities. As of December 31, 2021, variable annuities accounted for using the fair value option was $519.5 million. The increase (decrease) to the embedded derivatives on fixed-indexed annuity, indexed universal life, and variable annuity products and the increase (decrease) in the reserves for variable annuities accounted for using the fair value option as a result of hypothetical changes in interest rates, non-performance risk premium, and equity market prices is summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.

[[GREPCENT_TABLE]]
[["","","December 31, 2021"],["","","FIA","","IUL","","VA","","VA (FVO)"],["($ in thousands)"],["Balance","","$","1,856,139","","","$","557,276","","","$","127,810","","","$","519,454"],["Hypothetical change:"],["+50 bps interest rates","","(43,529)","","","(6,460)","","","(68,075)","","","(34,122)"],["-50 bps interest rates","","46,062","","","6,788","","","78,527","","","37,211"],["'+50bps non-performance risk premium","","(43,529)","","","(6,460)","","","(31,583)","","","(23,038)"],["'-50bps non-performance risk premium","","46,062","","","6,788","","","38,304","","","24,666"],["+10% equity market prices","","387,062","","","48,486","","","(48,097)","","","(21,193)"],["-10% equity market prices","","(300,615)","","","(76,930)","","","64,420","","","25,869"]]
[[/GREPCENT_TABLE]]
________________

Note: Hypothetical changes to the liability balances do not reflect the impact of related hedges.

Valuation of embedded derivatives in modified coinsurance or funds withheld

Global Atlantic's reinsurance agreements include modified coinsurance and coinsurance with funds withheld arrangements that include terms that require payment by the ceding company of a principal amount plus a return that is based on a proportion of the ceding company’s return on a designated portfolio of assets. Because the return on the funds withheld receivable or payable is not clearly and closely related to the host insurance contract, these contracts are deemed to contain embedded derivatives, which are measured at fair value. Global Atlantic is exposed to both the market risk and the credit risk of the assets. Changes in discount rates and other assumptions can have a significant impact on this embedded derivative. The fair value of the embedded derivatives is included in the funds withheld receivable at interest and funds withheld payable at interest line

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items on the consolidated statement of financial condition. The change in the fair value of the embedded derivatives is recorded in net investment-related gains (losses) in the consolidated statement of operations.

As of December 31, 2021, the embedded derivative balance for modified coinsurance or funds withheld arrangements was a $81.3 million net asset ($42.2 million in funds withheld receivables at interest, and $(39.1) million in funds withheld payable at interest). The increase (decrease) to the balance as a result of hypothetical changes in credit spreads and interest rates is summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other factors that impact the embedded derivative balance for modified coinsurance or funds withheld arrangements.

[[GREPCENT_TABLE]]
[["","","December 31, 2021"],["","","Embedded derivative on funds withheld receivable at interest","","Embedded derivative on funds withheld payable at interest"],["($ in thousands)"],["Balance","","$","42,175","","","$","(39,056)"],["Hypothetical change:"],["+50 bps credit spreads","","(65,584)","","","(767,972)"],["-50 bps credit spreads","","65,584","","","843,494"],["+50 bps interest rates","","(31,776)","","","(807,582)"],["-50 bps interest rates","","41,578","","","883,104"]]
[[/GREPCENT_TABLE]]
________________

Note: Hypothetical changes to the funds withheld receivable and payable embedded derivative balances do not reflect the impact of related hedges or trading assets which back the funds withheld at interest.

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Critical Accounting Policies - Combined

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.

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Investments and other 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.

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.

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 valuation of our Level III investments at December 31, 2021 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.

 Level III Valuation Methodologies

Our investments and financial instruments 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 carried interest and investment income we realize. Additionally, a change in interest rates could have a significant impact on valuations.

Across the total Level III private equity investment portfolio (including core equity investments), and including investments in both consolidated and unconsolidated investment funds, approximately 50% 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 December 31, 2021, 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 37%, 50%, and 13%, respectively.

    There is inherent uncertainty involved in the valuation of Level III investments, and there is no assurance that, upon liquidation, KKR will realize the values reflected in our valuations. Our valuations may differ significantly from the values that would have been used had an active market for the investments existed, and it is reasonably possible that the difference could be material. See "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

Key unobservable inputs that have a significant impact on our Level III valuations as described above are included in Note 9 "Fair Value Measurements" in our financial statements.

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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. 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 valuations annually for all Level III investments in Private Markets and quarterly for investments other than certain investments, which have values less than preset value thresholds and which in the aggregate comprise less than 1% of the total value of KKR's Level III Private Markets investments. The valuations of certain real asset investments are determined solely by independent valuation firms without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firms rely on valuation information available to it as a broker or valuation firm. For credit investments in Public Markets, an independent valuation firm is generally engaged by KKR to assist with the valuations of most investments classified as Level III. The valuation firm either provides a value, provides a valuation range from which KKR's investment professionals select a point in the range to determine the valuation, or performs certain procedures in order to assess the reasonableness of KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted for review and approval by KKR's valuation committees. As of December 31, 2021, less than 5% of the total value of our Level III credit investments were not valued with the engagement of an independent valuation firm.

For Level III investments in Asset Management, KKR has a global valuation committee that 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. The global valuation committee is assisted by the asset class-specific valuation committees that exist for private equity (including core equity investments and certain impact investments), growth equity (including certain impact investments), real estate, energy, infrastructure and credit. The asset class-specific valuation committees are responsible for the review and approval of all preliminary Level III valuations in their respective asset classes on a quarterly basis. The members of these valuation 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. All Level III valuations for investments in Asset Management are also subject to approval by the global valuation 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 of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.

Level III investments held by Global Atlantic are valued on the basis of pricing services, reputable 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. For all the internally developed models, Global Atlantic seeks to verify the reasonableness of fair values by analyzing the inputs and other assumptions used. As of December 31, 2021, approximately 62% of these investments were priced via external sources, while approximately 38% were valued on the basis of internal models. 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 December 31, 2021, upon completion by, where applicable, independent valuation firms of certain limited procedures requested to be performed by them on certain Level III investments, the independent valuation 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.

There were no changes made to our Level III valuation process as a result of COVID-19.

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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 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 December 31, 2021, there were no investments which represented greater than 5% of total investments on a GAAP basis. On a non-GAAP basis, as of December 31, 2021, investments which represented greater than 5% of total non-GAAP investments consisted of PetVet Care Centers, LLC and USI, Inc. valued at $1,216.1 million and $1,094.1 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 Fiserv, Inc. and BridgeBio Pharma Inc. See "—Business Environment" for a discussion of factors that may impact the valuations of our investments, financial results, operating results and valuations, and "—Non-GAAP Balance Sheet Measures" for additional information regarding our largest holdings on a non-GAAP basis.

Recently Issued Accounting Pronouncements

For a full discussion of recently issued accounting pronouncements, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.

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