10-K: KKR Reports Strong AUM Growth Amid Strategic Expansion

KKR & Co. Inc. reported significant growth in assets under management and fee-related earnings for the fiscal year ended December 31, 2025, driven by strategic acquisitions and capital raising, despite a decrease in GAAP net income attributable to common stockholders.

Summary

• Total Assets Under Management (AUM) increased by $106.3 billion to $743.9 billion as of December 31, 2025, up from $637.6 billion in 2024.
• Fee Paying Assets Under Management (FPAUM) grew by $92.2 billion to $604.1 billion in 2025, compared to $512.0 billion in 2024.
• Total Operating Earnings increased to $4.99 billion in 2025 from $4.36 billion in 2024, reflecting strong performance across segments.
• Adjusted Net Income (ANI) rose to $4.38 billion in 2025 from $4.20 billion in 2024.
• Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders decreased to $2.25 billion in 2025 from $3.08 billion in 2024.
• Total Revenues decreased to $19.46 billion in 2025 from $21.88 billion in 2024, primarily due to lower net premiums in the insurance segment.
• Realized Performance Income increased to $1.88 billion in 2025 from $1.82 billion in 2024, but was reduced by a $344 million repayment of the Asian Fund II clawback obligation.
• KKR acquired HealthCare Royalty Management, LLC on July 30, 2025, adding to its Private Equity business line.
• An agreement to acquire Arctos Partners, an investment firm specializing in sports franchises, was announced on February 4, 2026, for initial consideration of $1.4 billion.
• The company issued 51,750,000 shares of 6.25% Series D Mandatory Convertible Preferred Stock in March 2025, with an aggregate liquidation preference of $2.59 billion.
• KKR issued $590 million of 6.875% Subordinated Notes due 2065 and $900 million of 5.100% Senior Notes due 2035 in May and August 2025, respectively.
• Global Atlantic entered into a new $3.00 billion unsecured revolving credit facility on January 16, 2026, with an option to increase to $3.50 billion.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive filing. While key operational metrics like AUM and segment earnings show strong growth and strategic initiatives are progressing, the decline in GAAP net income attributable to common stockholders and ongoing legal/regulatory challenges temper the overall sentiment.

Positives

• Assets Under Management (AUM) increased by $106.3 billion to $743.9 billion, demonstrating strong capital raising and investment performance.
• Fee Paying Assets Under Management (FPAUM) grew by $92.2 billion to $604.1 billion, indicating a larger base for recurring management fees.
• Fee Related Earnings (FRE) increased by $446.5 million to $3.71 billion, reflecting robust fee-generating activities.
• Insurance Operating Earnings rose by $94.8 million to $1.11 billion, driven by increased average assets under management and higher portfolio yields.
• Strategic Holdings Operating Earnings more than doubled to $162.1 million from $76.2 million, primarily due to higher dividend income.
• Total Operating Earnings increased by $627.3 million to $4.99 billion, highlighting growth in recurring earnings streams.
• Adjusted Net Income (ANI) increased by $175.2 million to $4.38 billion, indicating overall improved profitability on a non-GAAP basis.
• Successful strategic acquisitions, including HealthCare Royalty Management, LLC, and the announced acquisition of Arctos Partners, expand KKR's investment capabilities and AUM.
• Growth in K-Series vehicles AUM to $34 billion, demonstrating success in attracting individual investors.
• The company's investment portfolio appreciated significantly, with traditional private equity up 14%, growth equity up 13%, and core private equity up 7% in 2025.

Negatives

• Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders decreased by $824.4 million to $2.25 billion in 2025, compared to $3.08 billion in 2024.
• Total Revenues decreased by $2.41 billion to $19.46 billion, primarily due to a $4.50 billion decrease in net premiums in the insurance segment.
• Capital Markets transaction fees, net, decreased by $73.3 million to $1.09 billion, reflecting a decrease in the size of capital markets transactions.
• Total Investing Earnings decreased by $246.4 million to $904.5 million, partly due to a lower level of net realized investment income and the Asian Fund II clawback.
• A $344.2 million repayment of the Asian Fund II clawback obligation reduced realized performance income in the Private Equity business line.
• Interest Expense, Net and Other increased by $86.4 million, primarily due to dividends paid on the newly issued Series D Mandatory Convertible Preferred Stock.

Risks

• Difficult market and economic conditions, including interest rate fluctuations, inflation, and credit availability, can materially and adversely affect investment performance and fundraising.
• Geopolitical events, natural disasters, and public health crises can disrupt business operations and impact investment valuations.
• The loss of key personnel or misconduct by employees could jeopardize client relationships, reduce AUM, and harm the firm's reputation.
• Reliance on third parties for operational support exposes the company to disruptions, errors, and potential liabilities.
• Disruptions in technology infrastructure or operational errors could lead to financial loss, regulatory scrutiny, and reputational harm.
• Failure to effectively manage the balance sheet, particularly for the capital-intensive insurance business, could adversely affect financial condition and results.
• Inability to access adequate sources of liquidity could force asset sales at unfavorable terms or hinder growth initiatives.
• Capital markets activities expose the firm to significant underwriting losses and potential liabilities.
• Legal claims, litigations, investigations (e.g., DOJ antitrust, Kentucky matters), and negative publicity could result in significant sanctions, operational restrictions, and reputational damage.
• New business opportunities, strategic initiatives, or investment strategies may involve unique business, regulatory, legal, tax, or other complexities and risks, and expected benefits may not be realized.
• Operating in a highly competitive industry for asset management, capital markets, and insurance businesses may lead to reduced profitability or market share.
• Earnings and cash flow are highly variable due to investment valuations, realization timing, and carried interest payments.
• Clawback provisions in fund agreements may require the return of previously distributed carried interest, potentially impacting liquidity and financial results.
• Inability to raise capital from third-party investors for investment vehicles and the insurance business could adversely affect AUM and revenues.
• The sale of financial products to individual investors exposes the firm to heightened regulatory scrutiny, litigation, and reputational risks.
• Perpetual capital is not permanent and is subject to reduction through withdrawals, redemptions, and termination of investment advisory agreements.
• Actions of portfolio companies may subject KKR to potential liabilities and reputational harm.
• Changes in tax laws or adverse interpretations by tax authorities (e.g., Bermuda CIT, OECD Pillar Two) may increase tax expense and compliance costs.
• Artificial intelligence may increase competitive, operational, legal, and regulatory risks.
• Cybersecurity failures and data security breaches could have a material adverse impact on businesses.
• Increased focus on sustainability matters by stakeholders and regulators may constrain capital deployment opportunities and increase compliance costs.
• The Series I preferred stockholder's significant voting power limits common stockholders' influence until the Sunset Date (December 31, 2026).
• As a 'controlled company,' KKR qualifies for NYSE corporate governance exemptions, which will change after the Sunset Date.
• The exclusive forum provision in the charter may discourage certain lawsuits.
• The ability to pay periodic dividends is not guaranteed and is subject to various legal, contractual, and regulatory restrictions.
• Being deemed an investment company under the Investment Company Act could impose restrictive and costly regulatory requirements.
• Anti-takeover provisions in organizational documents may delay or prevent a change of control.

Future Outlook

KKR intends to increase its regular annualized dividend per share of common stock from $0.74 to $0.78, commencing with the dividend for the first quarter of 2026. The company expects to receive at least $900 million in realized performance income and realized investment income in the first half of 2026 from pending or recently closed transactions. Global Atlantic's strategic initiatives include investing more into non-yielding or lower-yield asset classes like private equity and real assets, expanding outside the United States, and raising more third-party co-investment insurance capital, aiming for higher and more durable long-term returns.

Management Comments

• Our current capital allocation framework focuses primarily on investing our excess earnings back into KKR with the goal of generating recurring and durable growth-oriented earnings per share.
• We believe that our allocation decisions are aligned with our common stockholders and that we are focused on where we can generate long-term shareholder value.
• We continue to believe that we will receive more stable recurring revenues in the future from the growth over time in dividend payments and earnings from companies included in our Strategic Holdings segment.
• We believe these changes in our insurance business will expand Global Atlantic's competitive advantage and enable the generation of higher and more durable returns over the long term.

Industry Context

StockSavvy.ai notes that KKR's evolution from a U.S.-centric private equity firm to a global multi-asset manager with significant insurance operations reflects a broader industry trend of alternative asset managers diversifying their product offerings and investor base. The increased competition in the life and annuities business from non-traditional firms, including those with strategic partnerships with alternative asset managers, highlights the dynamic nature of the financial services sector. KKR's emphasis on perpetual capital and private wealth aligns with a growing demand for long-duration, less liquid investment products among institutional and individual investors. The ongoing regulatory scrutiny, particularly regarding non-bank financial intermediation and sustainability, indicates a tightening regulatory environment across the global financial industry.

Comparison to Industry Standards

• KKR has made a strategic decision to maintain a larger balance sheet compared to most of its asset management competitors, which impacts its financial condition and results of operations more significantly.
• Some competitors may have lower costs of capital and access to funding sources not available to KKR, potentially creating competitive advantages.
• Competitors may offer more favorable terms on investment funds or products, or pay higher placement fees, which could force KKR to revise its terms to remain competitive.
• KKR's historical returns for its investment vehicles, such as net and gross IRRs and MOIC, are presented, but the filing cautions that these are not indicative of future results, a standard disclosure in the asset management industry.

Management Changes

Corporate Governance

Legal Proceedings

• Multiple lawsuits related to the 'Kentucky Matter' are ongoing, including the 2020 AG Action, 2024 AG Action, and Tier 3 Plaintiffs' actions, alleging breach of fiduciary duties and civil RICO violations. A settlement agreement for the 2020/2024 AG Actions was terminated due to court disapproval. KKR denies liability and is vigorously defending.
• A shareholder derivative complaint, amended on August 19, 2025, alleges Co-Founders and executives breached fiduciary duties and wasted corporate assets in connection with the Reorganization Agreement. KKR has filed a motion to dismiss.
• The DOJ filed a civil antitrust complaint on January 14, 2025, alleging HSR Act violations related to certain 2021 and 2022 transactions, seeking civil penalties and equitable relief. KKR filed a counter-complaint challenging the DOJ's interpretations and fine. DOJ investigations into past HSR filings are ongoing.
• The European Commission is investigating antitrust matters related to KKR's acquisition of certain infrastructure assets of Telecom Italia S.p.A. and FiberCop S.p.A.

Related Party Transactions

• The Tax Receivable Agreement with KKR Holdings was terminated on May 30, 2022, but obligations for exchanges prior to that date remain, with an undiscounted payable of $359.3 million as of December 31, 2025.
• KKR paid $5.8 million for the use of private aircraft owned by entities controlled by Messrs. Kravis, Roberts, and Nuttall for business purposes in 2025.
• Payments of $7.1 million were made to a real estate partnership, in which Messrs. Kravis and Roberts hold a minority interest, for the lease of KKR's Menlo Park office in 2025.
• Current and former employees and qualifying personnel invested $611.9 million of their own capital in KKR's funds and side-by-side investments in 2025, generally on a no-fee, no-carry basis.

Stakeholder Impact

• Shareholders: Potential for increased dividends in 2026, but diluted GAAP net income and ongoing legal/regulatory risks could impact share price and investor confidence. The 'controlled company' status and Series I preferred stockholder's voting power limit common shareholder influence until the Sunset Date.
• Employees: Compensation program aims to attract and retain talent through equity awards and carried interest allocations, with changes to the carry pool percentage to up to 80% for all funds. However, clawback provisions and potential changes in compensation framework could affect employee incentives.
• Investors in Funds/Vehicles: AUM and FPAUM growth indicate continued investor confidence and capital deployment opportunities. However, poor investment performance or inability to meet redemption requests in K-Series vehicles could lead to reputational harm.
• Customers/Policyholders (Global Atlantic): Growth in insurance business and focus on stable, predictable asset cash flows aim to meet policyholder obligations. However, volatile market conditions and differing assumptions could impact policy benefits and required capital.
• Regulatory Authorities: Ongoing investigations by the DOJ and European Commission, along with heightened scrutiny of individual investor products and insurance regulations, indicate increased compliance burdens and potential for sanctions or operational restrictions.
• Counterparties/Lenders: New debt issuances and credit facilities demonstrate continued access to capital markets, but compliance with debt covenants and potential cross-defaults remain important considerations.

Next Steps

• Completion of the remaining structural and governance changes under the Reorganization Agreement by the 'Sunset Date' (no later than December 31, 2026).
• Closing of the acquisition of Arctos Partners, subject to regulatory and sports league approvals.
• Continued focus on private wealth as a key addressable market, including additional offerings alongside Capital Group.
• Global Atlantic's strategic initiatives to invest more into non-yielding or lower-yield asset classes, expand outside the United States, and raise more third-party co-investment insurance capital.
• Expected realization of at least $900 million in performance and investment income in the first half of 2026 from pending or recently closed transactions.
• Increase in regular annualized common stock dividend to $0.78 per share, starting with the Q1 2026 dividend.

Key Dates

Recommendation

KKR demonstrates strong operational performance with significant growth in AUM, FPAUM, and key segment earnings, reflecting successful strategic expansion into insurance and new asset classes. The planned dividend increase and strategic acquisitions like Arctos Partners are positive indicators for future growth. However, the decline in GAAP net income attributable to common stockholders, the material Asian Fund II clawback, and the ongoing, significant legal and regulatory challenges (DOJ antitrust, Kentucky matters, shareholder derivative suit) introduce considerable uncertainty and potential financial liabilities. A seasoned investor would likely 'hold' to monitor the resolution of these legal and regulatory issues and assess the long-term accretion from strategic initiatives, as these factors could significantly influence future share price performance.

Keywords

Alternative Asset Management, Private Equity, Credit Strategies, Real Assets, Insurance Solutions, SEC Filing, 10-K, AUM Growth, Financial Performance, Strategic Acquisitions, Capital Markets, Global Atlantic, Subordinated Notes, Mandatory Convertible Preferred Stock, Risk Factors, Corporate Governance, Investment Income, Fee Related Earnings, Adjusted Net Income, Share Repurchase, Dividend Policy, Regulatory Compliance, Cybersecurity, Sustainability, Legal Proceedings, Delaware General Corporation Law, NYSE