KKR & Co. Inc. (KKR)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial

statements of KKR & Co. Inc., together with its consolidated subsidiaries, and the related notes included elsewhere in this

report and our Annual Report, including the audited consolidated financial statements and the related notes and

"Management's Discussion and Analysis of Financial Condition and Results of Operations" and “Business” section contained

therein. 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 “Business

Environment” in this report and our Annual Report and “Risk Factors” in our Annual Report, and our other filings with the SEC.

Actual results may differ materially from those contained in any forward-looking statements.

The unaudited condensed consolidated financial statements and the related notes included elsewhere in this report are

hereafter referred to as the “financial statements.” Additionally, the condensed consolidated statements of financial condition

are referred to herein as the “consolidated statements of financial condition”; the condensed consolidated statements of

operations are referred to herein as the “consolidated statements of operations”; the condensed consolidated statements of

comprehensive income (loss) are referred to herein as the “consolidated statements of comprehensive income (loss)”; the

condensed consolidated statements of changes in equity are referred to herein as the “consolidated statements of changes in

equity”; and the condensed consolidated statements of cash flows are referred to herein as the “consolidated statements of

cash flows.”

Overview

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance

solutions. We aim to generate attractive investment returns by following a patient and disciplined investment approach,

employing world-class people, and supporting growth in our portfolio companies and communities.

Founded in 1976, KKR pioneered the leveraged buyout strategy and has been a leader of the private equity industry for

five decades. Since the inception of our firm, we have expanded our investment strategies and product offerings from

traditional private equity to other alternative asset classes such as leveraged credit, alternative credit, infrastructure, real

estate, energy, growth equity, and core private equity. Over the same period, we scaled from being a U.S.-focused firm to a

global operation with 36 offices around the world as of June 30, 2026. Our business further expanded with the acquisition of

Global Atlantic in 2021, which today conducts our insurance business providing retirement and life insurance solutions. As of

June 30, 2026, we managed $796 billion of assets under management, of which $220 billion comes from Global Atlantic.

Our three reporting segments align with the KKR business model:

Our business model of (i) Asset Management, (ii) Insurance, and (iii) Strategic Holdings corresponds to our three reporting

segments. We have purposely created a business model that we believe enables us to grow long-term, durable, recurring

earnings with a focus on large addressable markets where we can be an industry leader. Importantly, these pieces were built

to leverage our core strengths as a firm: investing acumen, capital allocation expertise and our collaborative culture.

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Business Segments

Asset Management

In Asset Management, we have five business lines: (i) Private Equity, (ii) Real Assets, (iii) Credit and Liquid Strategies, (iv)

Capital Markets, and (v) Principal Activities.

Our Assets Under Management have grown and diversified in the last 15 years across Private Equity, Real Assets, and

Credit and Liquid Strategies as illustrated on the following chart. KKR has evolved from a relatively US-centric and traditional

private equity firm to a global alternative asset manager. As of December 31, 2010, our traditional Private Equity strategy

represented over 70% of our total AUM. As of June 30, 2026, traditional Private Equity was less than 25% of our total AUM.

Assets Under Management ($ in billions):

Liquid Strategies

Alternative Credit

Credit and Liquid

Strategies(1)(3)

$331

+18%

CAGR

Leveraged Credit

Real Estate

Real Assets(2)(3)

$211

Infrastructure &

Energy

Growth Equity

Core Private Equity

Private Equity(3)

$255

Traditional Private

Equity

(1)As of June 30, 2026, Alternative Credit AUM includes $91 billion of asset-based finance, $48 billion of corporate private credit (including $39 billion of

direct lending) and $11 billion of strategic investments.

(2)Real estate credit lends across the risk return spectrum of investments secured by or relating to real property, including senior mortgage loans, mezzanine

loans and mortgage-backed securities in North America and Europe. As of June 30, 2026, real estate credit AUM totals $43 billion. Real estate equity seeks

core, core+ and opportunistic real estate investment opportunities by geography: North America, Europe and Asia Pacific. As of June 30, 2026, real estate

equity AUM totals $41 billion. This includes $12 billion from the management of two publicly listed Japanese REITs through our subsidiary, KJRM.

(3)The K-Series suite of vehicles are offered through various distribution channels to investors in the U.S. and other jurisdictions around the world. We have

K-Series vehicles that operate or invest in private equity companies, infrastructure assets, credit investments, and real estate. As of June 30, 2026, total K-

Series AUM was $42 billion, which has grown significantly over the past three years.

As an asset management firm, we earn recurring management fees and fee-related performance revenues for providing

investment management services and expertise to our institutional and individual investors who entrust us with their capital.

The amount of fees we charge for managing these assets depends on the underlying investment strategy, liquidity profile, and

ultimately our ability to generate attractive investment returns for our clients.

We earn transaction fees for providing capital markets services as a broker-dealer, and we also earn transaction and

monitoring fees as part of the management of our portfolio companies.

Carried interest that we receive from our investment vehicles entitles us to a specified percentage of investment gains

that are generated on third-party capital that is invested. We earn investment income by investing our own capital alongside

investors in our funds and other investment vehicles and from other assets we own on our balance sheet.

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Operating expenses, which include occupancy expenses and other typical operating expenses, are shared across a single

expense pool given the collaborative nature of our five business lines within Asset Management.

Insurance

Our insurance business operates under the Global Atlantic brand. Global Atlantic is a leading retirement and life

insurance company, with an over 20-year track record of providing a broad suite of protection, legacy, and savings products to

customers and reinsurance solutions to clients across individual and institutional markets.

Global Atlantic primarily generates income by earning a spread between the investment income generated from

originated assets and the required cost of benefits payable to policyholders. Global Atlantic also earns fees paid by

policyholders on certain types of insurance contracts and fees paid by third-party investors, which are reported in our asset

management segment. As of June 30, 2026, Global Atlantic serves over 3.5 million policyholders.

The following table represents Global Atlantic’s new business volumes by business and product for the three and six

months ended June 30, 2026 and 2025.

(1)New business volumes in individual markets are referred to as sales. In Global Atlantic's individual market channel, sales of annuities include all money

paid into new and existing contracts. Individual market channel sales for preneed life are based on the face amount of insurance and do not include the

recurring premiums that policyholders may pay over time.

(2)Block reinsurance transactions may be episodic and volumes may fluctuate. Similarly, funding agreements issued in the FABN program are subject to

capital markets conditions and volumes may fluctuate. Flow and pension risk transfer new business volumes typically occur throughout the year. See “—

Risks Related to Our Business—Parts of our earnings and cash flow are highly variable due to the nature of our business” in our Annual Report.

(3)New business volumes from Global Atlantic’s institutional market channel are based on the assets assumed, net of any ceding commission, and are gross

of any retrocessions to investment vehicles that participate in qualifying reinsurance transactions sourced by Global Atlantic and to other third party

reinsurers.

Strategic Holdings

Our Strategic Holdings segment, which we started reporting in the first quarter of 2024, acquires and manages interests

in operating companies that are owned by the firm. Today, those companies primarily consist of our participation in our core

private equity strategy. We have acquired, and in the future we expect to continue to acquire, other long-term assets outside

of, and in addition to, our participation in our core private equity strategy. Strategic Holdings is not limited to acquiring

companies in specific industries. We intend to hold the companies in our Strategic Holdings segment over a longer period of

time, and we believe most of these companies generally have a lower risk profile than would be typical for an investment

through our traditional private equity strategy. We currently expect our Strategic Holdings segment primarily to generate

income from the receipt of dividends from our ownership stakes in these businesses and, upon the sale of any ownership

stake, realized investment income from such sale. As of June 30, 2026, our Strategic Holdings segment consisted of our

ownership stakes in 19 companies.

The fees and carried interest paid by the third party investors in our core private equity funds continue to be reported in

our Asset Management segment and are not reported in our Strategic Holdings segment. Our Asset Management segment

charges a quarterly management fee in our Strategic Holdings segment. Additionally, our Asset Management segment charges

a performance fee from the sale of our interests in the companies included in our Strategic Holdings segment. The

management and performance fees are charged in order to represent the cost of providing advisory services by our Asset

Management segment rather than determining the allocable costs borne by our Asset Management segment to support our

Strategic Holdings segment.

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Based on information made available to management as of June 30, 2026, the following represents KKR’s pro-rata portion

of LTM Adjusted EBITDA(1) of operating companies in Strategic Holdings as of March 31, 2026:

Based on information made available to management as of June 30, 2026, the following

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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. 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

Our asset management, insurance, and strategic holdings segments are affected by the various market and economic

conditions of the various countries and regions in which we operate. Market and economic conditions are expected to

continue to have a substantial impact on our financial condition, results of operations, and our business in various ways that

we are unable to control, including our ability to make new investments, the valuations of the investments we manage, the

amount of investment proceeds we realize when we exit our investments, the timing for such realization activity, our ability to

fundraise or to sell our various investment and insurance products and services, and the level of our capital markets activities,

as discussed in the "Risk Factors" section of this report.

In 2025, the United States continued to experience economic growth while also continuing to experience inflation in

excess of the U.S. Federal Reserve Board’s 2.0% target rate. The U.S. Federal Reserve Board lowered the target range for the

federal funds rate three times in 2025, including two reductions in the fourth quarter, that brought the target range to

3.50-3.75%. The U.S. Federal Reserve Board in connection with its fourth quarter rate reductions noted that the reduction was

in response to the slowdown in the labor market; however, they maintained a cautious stance as inflation remained

somewhat elevated and above its long-run target.

Real gross domestic product (“GDP”) growth in the Eurozone in 2025 was moderately positive. The European Central

Bank lowered the deposit rate four times in the first half of 2025 to 2.00% as part of a broader easing cycle in response to

downward revisions to inflation expectations. The European Central Bank subsequently held the deposit rate unchanged for

the remainder of 2025 as Eurozone core inflation slowed compared to 2024 and remained close to the European Central

Bank’s 2% medium-term target.

In Asia, Japan’s economy reaccelerated in 2025, supported by resilient exports and consumer spending. The Bank of

Japan continued its gradual monetary policy normalization during 2025, including an increase in its policy rate from 0.25% to

0.75%. In China, the economy grew in 2025 but continued to face significant headwinds, including weak domestic demand,

ongoing contraction in the property sector, and uncertainty relating to ongoing trade tensions with the United States as

discussed further below.

Several key economic indicators in the United States and in other countries and regions in which we operate include:

•GDP. In the United States, real GDP expanded by 2.2% for the year ended December 31, 2025, compared to an

expansion of 2.8% for the year ended December 31, 2024. Eurozone real GDP is estimated to have expanded by 1.4%

for the year ended December 31, 2025, up from 0.9% expansion for the year ended December 31, 2024. In Japan,

real GDP expanded by 1.1% for the year ended December 31, 2025, up from a 0.2% contraction for the year ended

December 31, 2024. Real GDP in China expanded 5.0% for the year ended December 31, 2025, unchanged from 5.0%

growth reported for the year ended December 31, 2024

•Interest Rates. The target federal funds rate set by the U.S. Federal Reserve Board was 3.625% as of December 31,

2025, down from 4.375% as of December 31, 2024. The benchmark short-term interest rate set by the European

Central Bank was 2.0% as of December 31, 2025, down from 3.00% as of December 31, 2024. The benchmark short-

term interest rate set by the Bank of Japan was 0.75% as of December 31, 2025, up from 0.25% as of December 31,

2024. The benchmark interest rate set by The People’s Bank of China was 3.0% as of December 31, 2025, down from

3.10% as of December 31, 2024.

•Inflation. The U.S. core consumer price index rose 2.6% on a year-over-year basis as of December 31, 2025, down

from 3.2% on a year-over-year basis as of December 31, 2024. Eurozone core inflation was 2.3% as of December 31,

2025, down from 2.7% as of December 31, 2024. In Japan, core inflation rose 1.5% on a year-over-year basis as of

December 31, 2025, down from 1.6% on a year-over-year basis as of December 31, 2024. Core inflation in China was

1.2% on a year-over-year basis as of December 31, 2025, up from 0.4% as of December 31, 2024.

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•Unemployment. The U.S. unemployment rate was 4.4% as of December 31, 2025, up from 4.1% as of December 31,

2024. Eurozone unemployment was 6.3% as of December 31, 2025, unchanged from 6.3% as of December 31, 2024.

The unemployment rate in Japan was 2.6% as of December 31, 2025, up from 2.5% as of December 31, 2024. The

unemployment rate in China was 5.2% as of December 31, 2025, substantially unchanged from 5.1% as of December

31, 2024.

In 2025, the United States equity markets appreciated on a year-over-year basis, with varying volatility throughout the

year, and the U.S. 10-year benchmark treasury yield also fluctuated throughout the year to end at a rate lower at year-end

than at the prior year-end of 2024. Short term interest rates fell as the Federal Reserve lowered benchmark interest rates.

European, Japanese and Chinese equity markets all appreciated on a year-over-year basis.

Several key financial market indicators in the United States and in other countries and regions in which we operate

include:

•Equity Markets. For the year ended December 31, 2025, the S&P 500 was up 17.9%, the MSCI Europe Index was up

36.3%, the MSCI Asia Pacific Index was up 28.7% and the MSCI World Index was up 21.6% in U.S. dollar terms, 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 15.0 as of December 31, 2025, decreasing from 17.4 as

of December 31, 2024.

•Credit Markets. During the year ended December 31, 2025, U.S. investment grade corporate bond spreads (BofA

Merrill Lynch US Corporate Index) tightened by 3 basis points. The non-investment grade credit indices were up

during the year ended December 31, 2025, with the S&P/LSTA Leveraged Loan Index up 5.9% and the BofAML HY

Master II Index up 8.5%. During the year ended December 31, 2025, the 10-year government bond yields fell 40 basis

points in the United States, rose 49 basis points in Germany, rose 97 basis points in Japan, fell 9 basis points in the

UK, and rose 18 basis points in China.

•Commodity Markets. During the year ended December 31, 2025, the 3-year forward price of WTI crude oil decreased

approximately 7.6%, and the 3-year forward price of natural gas decreased from approximately $4.62 per MMBtu as

of December 31, 2024 to $4.51 per MMBtu as of December 31, 2025. The Japan spot LNG import price decreased to

approximately $11.03 per MMBtu as of December 31, 2025, from approximately $13.82 per MMBtu as of December

31, 2024.

•Foreign Exchange Rates. For the year ended December 31, 2025, the euro rose 13.4%, the British pound rose 7.7%,

the Japanese yen rose 0.3%, and the Chinese renminbi rose 4.5%, respectively, relative to the U.S. dollar.

Beginning in March 2025 and continuing through the date of the filing of this report, the United States and countries

around the world have experienced elevated levels of market volatility and uncertainty driven by, among other things,

geopolitical and global trade concerns, including, the imposition of tariffs and threats of tariffs by the United States on certain

of its trading partners since April 2025. This volatility and uncertainty adds to the various risks and uncertainties in the

business environment in which we operate and may have various impacts, including on the valuations of certain of our and

our investment vehicles' investments, the pace and volume of our capital market transactions, deployments, and realizations,

and our fundraising activities.

Other Trends, Uncertainties and Risks Related to Our Business

Please refer to the "Risk Factors" section of this report for important additional detail regarding risks, uncertainties, and

other conditions that could have a material favorable or unfavorable impact on our businesses, including the impact of market

and economic conditions on valuations of investments and the impact of competition we face. These risks, uncertainties, and

other conditions should be read in conjunction with this Business Environment section and the entire Risk Factor section of

this report. In particular, see "Risk Factors—Risks Related to Our Business—Global, regional and local events outside of our

control, including geopolitical events and natural disasters, could materially and adversely impact KKR”, “Risk Factors—Risks

Related to Our Investment Activities—Various conditions and events outside of our control that are difficult to quantify or

predict may have a significant impact on the valuation of our investments”, and "Risk Factors—Risks Related to Our Business

—We operate in a highly competitive industry."

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Basis of Accounting and Key Financial Measures under GAAP

We manage our business using certain financial measures and key operating metrics since we believe these metrics

measure the productivity of our operating activities. We prepare our consolidated financial statements in accordance with

accounting principles generally accepted in the United States of America (“GAAP”). See Note 2 “ Summary of Significant

Accounting Policies” in our financial statements and “—Critical Accounting Policies and Estimates” contained in this section

below. Our key Segment and non-GAAP financial measures and operating metrics are discussed below.

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 business. 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 holders of 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 certain 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 "—Segment Balance Sheet Measures—Reconciliations to GAAP Measures."

Adjusted Net Income

Adjusted Net Income ("ANI") is a performance measure of KKR’s earnings, which is derived from KKR’s reported segment

results. ANI is used to assess the performance of KKR’s busine

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