Q1 2021 KKR & Co Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to KKR is first quarter of 2021 earnings conference call.
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I'll now hand, the call over to Craig Larson head of Investor Relations for KKR Greg.
Greg. Please go ahead.
Thank you operator.
Good morning, everyone welcome to our first quarter 2021 earnings call.
I'm joined this morning by Scott Nuttall, our co President and co C O L.
And by Rob Lou and our CFO.
We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures and our press release, which is available on the Investor Center section and KKR Dot com.
This call will contain forward looking statements, which do not guarantee future events or performance.
Please refer to our press release, and our SEC filings for cautionary factors related to these statements.
Earlier. This morning, we posted our earnings release presentation, you'll likely have noticed a few changes.
First recognizing this is the first quarter post the closing of the global Atlantic acquisition, We're now reporting our results with two segments, our asset management segment.
In addition to a new insurance segment, which reflects our approximate 60 per cent interest and G as financial results.
In addition.
Given the changes we made to our compensation framework that we introduced last quarter.
And number of the line items on our segment income statements have changed when you ran through this on our Q4 call as well as at Investor Day.
Now to help with comparability, we posted a presentation on our website in early April with three years of recast financial information on a quarterly basis.
That presentation of course is still available on the Investor Center section of our website.
And it could be helpful for you to refer to that as you consider our results compared to prior periods.
And finally, we've changed the framework of the earnings release itself to make our results easier to digest, while improving our disclosure and transparency at the same time.
And we trust that you will find the new framework as well as the additional disclosure to be helpful.
Now I expect that many of you joined us at our Investor day, only three weeks ago for those of you that didn't have the opportunity. We would encourage you to watch a replay of the event and review of the accompanying presentation, both of which can be found on our website.
And we really feel that the event helped everyone gain a better understanding and where are we are now as a firm and importantly, all of the opportunities we have to continue to grow and scale from here.
And right on the heels of this event and we're pleased to be reporting and excellent quarter.
After tax distributable earnings came in at 75 cents per share.
Fee related earnings are 41 cents per share.
Management fees increased 31% year over year, driving the 36% increase and our FRE per share compared to the first quarter of 2020.
Our assets under management are now 367 billion.
This reflects the closing of a global Atlantic strong investment performance. In addition to continued fundraising momentum.
And our book value per share, which is mark to market and every quarter is now $25.84.
This is up over 50 per cent from the $16.52, we reported one year ago.
And is 12% ahead of the figure we reported just last quarter.
For continued growth and our book value was really a testament to the strong investment performance, we're seeing across the firm.
And finally, as we announced last quarter, we increased our dividends beginning with this quarter. So our annualized dividend per share is now 58 cents.
Okay.
And in terms of today's call I will kick things off with an overview of investment performance and fundraising before turning it over to Rob to walk through this quarters financials and at the end and Scott will provide a few closing remarks, and we'll head into Q&A.
So to begin we've continued to have very strong investment performance.
Beginning first with private equity portfolio as a whole appreciated 19% and the quarter and is up 56% over the last 12 months.
And performance and our flagship funds and it's been even stronger up 28 per cent for the quarter and up almost 80% over the last 12 months.
And our Investor day, one of the themes, we discussed was the importance of winning and attack and the significance of the investments we've made and tech.
Remember that 38% of our private equity deployment over 2018 to 2020 wasn't companies with tech and digital teams.
And you're seeing the impact for these investments without our performance figures Apple oven on mobile technology investment and our Americas 12 fun went public earlier this quarter and is currently trading at about 15 times our cost.
And dark trace and know before to cyber security businesses also both went public over the last couple of weeks and are trading well north of costs.
These were three of our six portfolio companies that went public in April.
And alongside of this IPO activity, we've seen strong performance and private tech oriented investments like Internet brands, one stream software might dance or be media focus on electric and collateral a software business that we exited earlier in Q2.
We've seen continued performance across our real asset strategies over the past 12 months, our opportunistic real estate funds, we stood all the market volatility appreciating, 13%, while and infrastructure the portfolio appreciated 18 per cent.
Turning to credit and our alternative credit composite appreciated, 7% and the quarter and 19% over the last 12 months.
We've seen differentiated investment performance within our dislocation strategy.
And performance in the quarter and LTM periods were strong with him lending partner three and special sits too.
And our leverage credit composite appreciated two per cent in the quarter and 25% over the last 12 months.
And looking at our performance here over a broader time frame.
And our Standalone high yield and bank loan track records continue to rank as top quartile over 135, and seven year time for it.
And reflecting the strong investment performance across strategies, our balance sheet investment portfolio appreciated, 12% and the quarter.
And is up 52% on a trailing 12 month basis.
Now on the heels of strong investment performance, we're seeing continued momentum and fund raising with $15 billion of new capital raised in Q1, and 51 billion over the trailing 12 months.
Notably in the first quarter, we held a final close on our Asia for Fundraise at 15 billion.
Building on our differentiated investment track record Asia for is the largest private equity fund dedicated to investing in the Asia Pacific region.
And Asia for really continues the momentum across our Asia Pacific platform given the final closings held just last quarter for her inaugural Asia infrastructure and real estate funds.
Fundraising activity in the quarter also included new capital raise and our health care and T J growth strategy co.
For infrastructure.
And our opportunistic America's real estate strategy. We also raised our first back and were active and the CLO markets, raising new CLO and the quarter both in the U S as well as Europe.
And our fundraising was not only strong for the quarter itself, but also diversified across many strategies, we have a lot of conviction and our fundraising momentum going forward as we remain focused on our over 20 strategies that we expect to come to market.
And with that let me turn it over to Rob.
Thanks, a lot Craig.
I'm going to begin this morning by reviewing our segment financial results for the quarter.
Our fee revenue totaled $586 million and Q1.
A particular note here our management fees continue their robust growth and came in at 440 million, which is 31% ahead of last year.
And adding to our strong management fee quarter, our capital markets business generated $112 million and transaction fees, which are nice contributions across the board.
We remain very encouraged by the forward pipeline and and our capital markets business as well as opportunities for continued growth.
Fee related compensation came in at $132 million or 22.5% of fee related revenues.
And the midpoint about 20% to 25% annual range, we introduced last quarter.
And our other operating expenses totaled $90 million.
Putting those pieces together our fee related earnings for 364 million or 41 cents per share and our FRE margin was 62 per cent for the quarter.
We continue to be very confident that our FRE will comfortably exceed $2 per share next year.
Our fundraising momentum is as good as it has ever been and the asset base of global Atlantic continues to grow.
And we have very good line of sight for larger pools of capital entering their investment periods.
Moving to our realized performance income.
We generated $170 million of revenue for the quarter and our realized investment income was $460 million, which is a high point for us as a firm.
For some of these revenue line items is approximately $630 million for the quarter.
Our only cost associated with our realized performance and realized investment income is compensation, which came in right at the midpoint of their respective annual range as we indicated earlier this year.
So in total our asset management operating earnings came in at $817 million for the quarter.
On top of that our share of global Atlantis earnings added an incremental $63 million for the months of February and March bringing total distributable operating earnings to $880 million, which is up 68% year on year.
And finally, our after tax distributable earnings came in at $660 million for 75 cents per share.
One additional note here.
Our tax rate and the quarter was a bit elevated.
The driver of this was a large accident that was structure and a way that resulted and the recognition of 100 per cent of our tax liabilities.
While only realizing approximately 50 per cent of the investment income.
Absent this our after tax day, he would have been 81 cents for the quarter versus the 75, we reported this morning.
Looking forward, we do expect we'll benefit from the reverse of this is that investment is monetized and those gains become realized without the burden of the tax expense.
Turning to deployment coming.
Coming off a record year in 2000 and 'twenty. Our total capital invested came in at <unk> 7 billion and for the quarter and 31 billion over the last 12 months.
Which is up over 30% from the prior period.
Importantly, when you dig a layer deeper our private markets deployment, which is generally longer dated and has higher profit potential.
Up 77% versus the prior LTM period.
That figure is really the best representation for how we leaned and as an organization over the last 12 months.
And with much of that capital haven't been deployed or committed during the market downturn earlier in 2020.
We do think our activity levels here are relatively distinguished across our many peers, where deployment across private market strategies tended to be flat to down year over year.
At the same time, we've never deployed more capital and our 45 year history.
We are very confident that this elevated level of deployment will serve us well for years to come as those investments mature.
And finally, turning to our balance sheet, our book value per share. It is currently $25.84, which is up 12% from last quarter and up more than 50% versus March of 2020.
Even if you compare this performance to pre pandemic levels. Our book value per share is up almost 35 per cent and a little bit over a year.
And is another tangible example of our business model's ability to compound capital.
Moving away from the specifics of the quarter as I look at our overall performance I think there are really for things worth noting.
First we had a really strong quarter, we reported 41 cents of FRE per share and 75 cents of after tax de per share and as you know from our guidance, we expect an acceleration and both of these fingers.
The second relates to the strong investment performance, we've continued to deliver on behalf of our limited partners.
Great revenue through the performance statistics for the quarter.
And as well as the last 12 months, which really do stand out.
But I think even mortality.
And differentiating our platform versus others is our investment performance over a multiyear period of time.
As just one example, our current flagship Americas, Europe, and Asia P. Funds had gross returns of 49% 26 per cent and 44 per cent from inception.
This has directly led to the high levels of fundraising momentum that we are currently benefiting from.
And this framework is not limited to private equity.
At our Investor day, we detailed the strength of our investment performance across our core growth and real asset and credit platforms.
As a firm we have a 45 year history of investment excellence and we're continuing to build on this long track record of success.
Third point is the significant amount of late and earnings inside of the firm that we expect to flow through our operating earnings over the next number of years.
At our Investor Day, one of the statistics, we discussed was the $9 1 billion of total unrealized gains on our balance sheet at the end of 2020.
Those are embedded gains from our investments as well as gross unrealized carry.
And at $9 1 billion increased to $12 3 billion either for the end of March.
That number can obviously move around a bit and will in part be driven by the overall tone and the markets.
However, the three plus billion dollars moving only three months and on a quarter with a heavy level of realized activity I think really illustrates the strength of the underlying investments and also what it means for our ability to generate realized profitability over the next number of years.
And finally, we're off to a really great start with GE and we've really just begun to see the impact of how global Atlantic and flow through our financial results.
There's a lot more for us to do here and we'll keep you abreast of our progress and the quarters ahead.
All of this really does support while we expect significant acceleration of after tax day each of the four to $5 range by the 2023 2024 timeframe.
Remember this earnings power is largely already and our firm today.
We have a lot of conviction that we'll be able to execute on our strategy.
And continue to deliver really meaningful results for our Lps shareholders employees and all of the communities that we operate in.
And with that let me hand, it off to Scott for some closing thoughts.
Thank you Rob and thank you everyone for joining our call today, given the recent Investor day, I'm going to be very brief.
As a firm we have never had a stronger team.
Connectivity.
Stronger investment results higher.
Higher unrealized gains and carry.
More business and scaling and reaching their inflection points.
And more funds in and coming to market.
As a result.
We have never had more ways to grow more.
More visibility on that growth.
And more confidence and our future.
And all of that is before global Atlantic.
Which gives us even more perpetual capital, even more visibility even more ways to grow and a fantastic management team that will make us even stronger and faster.
We are hopeful all of that came through during the Investor day.
And we are looking forward to keeping you updated on our progress.
With that we're happy to take your questions.
Thank you.
At this time, we'll be conducting a question and answer session.
And the interest of time and to allow as many as possible to ask questions. Please limit yourself to one question you may return to the queue for additional questions as time allows.
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One moment, please while we poll for questions.
Okay.
Thank you and our first question will be coming from the line of Glenn Schorr with Evercore ISI. Please proceed with your question.
Hi, Chris.
And the call question.
I guess I was just like maybe a little follow up on a few things that we didn't fully covered during investor day on today and just maybe if you are still and pursuing long dated partnerships like 10% of value and and maybe just comment on so.
And what's around.
Where are you at and build and the secondaries platform. Thanks a lot.
Hey, Glenn it's Scott Thanks for the questions first with respect to the long dated partnerships are.
We are still pursuing those so these for everybody's benefit or the.
Oftentimes multi decade recycling strategic partnerships that will.
Create with institutional investors largely largely they are invested across asset classes and.
And have some component of recycling to them and so we continue to pursue those.
Take a long time to structure.
But we continue to have an active pipeline. So don't take any message from the Investor day lack of commentary just continues to be something that we're focused on pursuing and we'll have updates for you over time, because there's a couple that are getting close on.
On the secondary side you.
You know as we've mentioned in the past we continue to look at the space, we're analyzing whether we want to build or whether there's something that might make sense to buy a really hard to have the by work from a cultural fit standpoint at times, but we are looking and we'll have more to share with you over time, but nothing.
And nothing more to share today, except that we continue to pursue it.
Thank you.
Our next question will be coming from the line of Alex Blaustein with Goldman Sachs. Please proceed with your question.
Great and good morning, everybody. Thanks for taking the question on so clearly it looks like momentum and the business is very strong lots of LP demand and you guys. Just performance continues to be really good.
This backdrop change the capacity for some of the flagship funds on the Euro currently and the market with and if the demand sort of exceeds the capacity appetite that you have and those flash of vehicles any other ways Youre thinking you could sort of monetize on that demand.
Oh, Thanks for the question, Alex as you and you know what it's really been.
Great fundraising environment, probably the best we've seen and a long time.
And we're seeing increased engagement from investors across the board across different asset classes, and we do find ourselves and some situations and the happy circumstance, where a fund might be a capacity constraint and constrained and we're able to talk to them about different things that we're doing so for example, as you know we raised our private.
Equity flagship funds and a bit of a different way than others, we have three regional funds.
As opposed to one global fund and we've just closed Asia, where and the market right now with Americas Europe will come relatively quickly on the back of the Americas fundraise.
And there's core there's growth.
And there's a lot of different ways, we can talk to investors across just private equity in and of itself for.
You get to real assets and credit and so that incremental potential demand that we oftentimes will see especially lately, we're able to pivot some of that unmet demand and to some of these other asset classes and strategies that are adjacent and that's really the focus right now.
Thank you for.
Next question, becoming for the line of Craig Siegenthaler with Credit Suisse. Please proceed with your question.
Thank you and good morning, everyone. My question is on global Atlantic.
And I noticed on slide we're actually page 17 of the press release at $12 billion of Global Atlantic say U M sits and private markets, while the rest is and public markets.
What strategies or assets does the 12 billion and private markets invest and and are these KKR strategies today, whereas here and opportunity to rotate to say you and indicate KKR strategies and the future.
Hey, Greg it's Rob.
Good question and so a couple of things and as we thought about our IMA and how to apportion that across our strategies and we really looked at where the underlying investments our net global Atlantic and most of those are credit oriented and will sit on our public markets business, but there are a number that are and the real estate space, principally and real estate credit and so it goes across our real estate.
That business as it relates to.
Rotating the global Atlantic balance sheet and to KKR products, we are and the very early innings of that we think there's a lot of opportunity both for the global Atlanta balance sheet as well as our asset management businesses being able to get that rotation done, but we're just a couple of months in here and that's going to take some time to.
Make sure that we get ramped up and we'll provide additional updates over time, but you know we're not really seeing the benefit of that either a global Atlantic yet nor to KKR.
Thank you.
Next question is from the line of Devin Ryan with JMP Securities. Please proceed with your question.
Great Good morning, everyone.
Question, just on the outlook for monetizing some of the embedded gains on the balance sheet, just given recent performance and I guess I'd want on maybe tied into proposals around capital gains rates potentially changing and and if that might accelerate potentially the thought around.
Some of the balance sheet gains and just bigger picture kind of any views around potential tax changes on.
The portfolio I appreciate we don't have too much detail, yet, but any color would be helpful. Thanks.
Yeah. Thanks, Thanks, a lot Devin I'll answer the second part of your question first.
The potential of pending tax legislation on with no impact on on how we monetize our portfolio. It is really about.
And making sure that we're fiduciary for our clients and exited and yet at the appropriate time in terms of outlook for monetizing the portfolio. As you noted there was a very significant amount of debt embedded gains you know our expectation is here and here is that we've got a number of assets, particularly on the core side that for a number of years and compound.
And and capital, but we also add on.
Fairly mature portfolio that we think and I get realized over the coming quarters and years.
I don't want other questions that we get a lot on and.
And this for them until answered as part of this overall question is what are for visibility looks like and.
In terms of monetizing.
Our revenue from an investment perspective, and a performance perspective as it relates to Q2, specifically, we already have visibility and a very substantial amount of revenue GAAP as of now that line of sight is 700 plus million dollars of performance and investment income and so is there a.
Reminder, this is from deals that are already closed or have been signed up and that we expect to close and Q2.
In terms of split as I know that's important now, especially as how were articulating compensation I'd say, it's probably 60% two thirds carried interest and and the remainder and investment income.
Next question and it's coming from the line of Mike Carrier with Bank of America. Please proceed with your question.
And good morning, Thanks for taking the question.
You guys nice and just being very active and deploying capital and last year, which is this and you will and we're seeing it and the performance.
And just maybe how are you thinking about deployment at this point, given one and you've got right and valuations yet the outlook for economic growth is fairly robust and just an update there.
Sure.
And Mike, It's Craig why don't I start there.
You're right that the first part of the answer does relate to the overall market, where you're you're seeing tremendous activity and you really do see this and brought M&A stats. So you know global announced M&A volumes in Q1 were two ex and what they were last year and it's actually been and the most active start to the year.
In terms of broad M&A now and in terms of in terms of us and a market like this where you have a lot of activity and a lot of interested sellers given valuations and that activity discipline is critical and alongside of that we think that our strong thematic approach is also critical and so it is important to really pick your spa.
Bots are aware to lean in and you want to really need to have deep expertise. In addition to real conviction and so do you know you're right you've you've heard us talk about our focus for some time now for instance on some other tech and digital themes you know Joe ran through that at Investor day, almost 40% of our deployment and private markets.
Again were investments with tech and digital teams over the last three years and I think you know we're still very busy on opportunities that fit. This framework now I think the ones that were attracted to we're gonna be companies that need capital for primary growth and we do view that a little differently versus someone who is simply looking to monetize.
And as that or and X and if you will but again discipline is an important part of the equation. There's no question about it.
Our next question is coming from the line of Chris Harris with Wells Fargo. Please proceed with your question.
Great, Thanks, and Theres, a little bit of a moving parts for the P&L when he got G&A coming in for a partial quarter.
Beginning in the second quarter guidance, how should we be thinking about the weighted average blended fee rate.
For KKR and our organization.
Yeah, it's good.
Good question, obviously, you're right you've got two months.
G E.
As opposed to.
For three months I think on that basis, you would certainly be able to.
So look at it.
And a cleaner way on the quarter on of course, you know given.
Where our IMA has said and we talked for the last call either that's a maximum of 30 basis points, that's going to have downward pressure on overall.
The margin, but I think Q1 could be a good indication.
Probably with a little bit more downward pressure because you have the extra month offset by the fact that we've got a really good and healthy outlook up and.
Fundraising across a number of our private strategies and a higher fee rates associated with that and so you know a bit of a challenging question to fully answer grasp and Chris but hopefully that gives you a little bit of a flavor around where blended fee rates can go across the enterprise.
Thank you for.
Our next question will be coming from the line of Gerry O'hara with Jefferies. Please proceed with your question.
Great. Thanks, I was hoping we might be able to get a little bit more color as it relates to the performance fee revenue line item that.
I think is new this quarter, but.
Is there.
Any sort of seasonality to that line item anniversaries, perhaps of a of product and and what products and particular.
We might be tracking or looking looking at to get a sense of how that how the finite and micro and thank you.
Yeah. Thanks for that for your question Jerry.
And as new this quarter and really reflects that we try to rebound for our P&L to make it on a lot of ways.
Easier to understand and also more comparable with the number of our peers and so what you'd expect to see and outline item.
Really on our incentive fees more from a perpetual capital vehicles.
And where are the incentive fees that we generate are based on the underlying yield of the portfolio as opposed to mark to market. So things that are more stable and nature of the types of products that youre going to see and they're gonna be type one incentive fees across our PDC platform. You know some of the core vehicles that are raising across infrastructure and credit we've got a couple of estimates.
Comparable type of fee arrangements. So those are the types of fees, you're going to see we see a big opportunity over the next number of years to really scale that line item for the firm and we thought it made sense to break it out as distinct from incentive fees based off of mark to market requirements like a number of our peers and I've got on the past.
Thank you.
Mind, you if you like to ask a question and saying you May press star one from your telephone keypad and yes, yes, one question and ill back in queue for additional questions, who on as many as possible to ask questions.
The next question today will be coming from the line of Michael Cyprus with Morgan Stanley. Please proceed with your question.
Hey, good morning, Thanks for taking my question my question's, a little bit more of a follow up from Investor day, just on the origination platforms. I was hoping you could maybe elaborate around some of the origination platforms that you've been building out and partnership with a number of different specialty finance companies. I believe these are mostly partnerships or just how do you think about the trade offs of partnering.
Versus owning when it comes to these origination platforms and what situation do you think it might make sense to own and maybe you could just talk about some other capabilities that you think could make sense to add over the next couple of years.
Thanks for the very good question, Michael its Scott.
And as we mentioned at Investor Day, we have.
Created or been partnered with others on only about 16 or so origination platforms.
And they're getting to be quite substantial for thousand employees 100, plus billion of AUM or balance sheet across the entire group.
Just by way of background. These were largely created out of our private credit business and particular private credit opportunities vehicles.
And where we saw an opportunity and asset based finance on the back of banks pulling back from a number of different asset classes, and we thought the risk reward and it's really pretty interesting.
That effort was started clearly before the global Atlantic and transaction and.
So what we're doing right now is we're in the process of thinking about how do we wanted to pivot the strategy and how do we want to evolve what we're doing there.
In light of the significant demand that global Atlantic has for those underlying asset classes and that origination and.
So think of it this way we started really just funding entirely out of the funds and then we started to move it a little bit more of a hybrid approach. So we created and aircraft leasing business. As an example called Alta there that was created and it's almost like a joint venture between our infrastructure business, a private credit business and you know our balance sheet.
And so we've been moving and the direction of actually trying to think about the answer to your question. This one versus partner and I think what you'll find and will share our thinking with you going forward is that we are going to have some of these debt will be more transitory and we on for awhile and then.
Move on and sell.
And as fiduciaries for our funds and we may have some that over time moving to more of the all compare type approach, which is a bit of a hybrid but with the addition of global Atlantic It really broadens and how we can think about investing in that space and some other stuff that might make sense to make more permanent either on the acute care or balance sheet or the global Atlantic balance sheet or both.
Thank you.
Our next question will be coming from the line of Robert Lee <unk>. Please proceed with your question.
Great. Thanks, and good morning, Thanks for taking my questions.
And this.
This is coming out on Investor day, but I think it'd be helpful on pressure on global Atlantic, maybe and maybe a two parter if you could Uh huh.
Refresh us on.
Net of capital available.
And their growth right now and me and I know, you've injected and you bought it.
50 million interest.
As a sidecar vehicle I believe do but updating and maybe an update on their growth path.
For the.
They would be helpful. And then also maybe.
G I G a kind of Standalone what was it.
Organic growth and in the quarter.
On the separate from this.
And here is being added.
On the statement balance sheet.
Hey, Rob I'll take a first shot at that so that's a good question and obviously one of the big opportunities for US is to really be able to work with the G. A management to go get the scale, which they believe.
It's out there and the industry and Allen at our Investor Day as you noted it really.
Good job articulating to different 1 billion plus dollar growth opportunities that are available and so we've got a couple of different ways to be able to go after that and and you feel like we're well set up one we raised $250 million of primary capital at the time.
Closing a couple of months ago first primary capital raise debt the company has done on.
So that's very meaningful in terms of our ability to scale up the platform.
And number two.
And you noted the sidecar.
And we think there's a real opportunity from the sidecar finance perspective going forward.
To be able to go after these growth opportunities.
And the last thing I'd say, Rob as you know one of the big strategic attractions of this transaction I think both for the <unk> management team and also as we evaluated this deal.
It was our ability to help them access capital when really meaningful growth opportunities became available.
And so we're very focused on that and you know I.
I do think that there's a real opportunity here for us to be able to go and additional capital that's required for things that make a ton of sense from a growth perspective for you yet.
Thank you.
Our next question will be coming from the line of Chris Harris Wells Fargo. Please proceed with your question.
Thanks, Hey, Rob I know this is really tough to estimate but.
But how should we be thinking about like a quote unquote normalized tax rate for for KKR and now going forward and I know there was some noise and the first quarter and.
And then related to that I, just wanted to confirm that the insurance earnings are coming in to the P&L post tax.
Yeah. Thanks, Chris.
Good question so yes.
And our insurance segment, we thought the right way to illustrate that was on a post tax basis and and so that's a fully tax number that you're seeing.
Brian insurance segment as it relates to our blended on.
Tax rate and I.
I would say our guidance here really hasnt changed since we became a C Corp, and we benefit from a step up and basis.
We had at the time for the C Corp conversion on.
And that's why you see our tax rate after the time being that has trended below the statutory rate. Obviously this quarter on in particular, you had some noise on upward pressure that I mentioned.
I think a mid to high teens type tax rate, that's going up over time, and and landing and the low twenty's at the statutory rate over time as our step up.
It comes down over time is the right way to think about taxes at KKR.
And so not too dissimilar from what you've heard for us over the years other than the fact that the step up.
And we'll continue to come down over time, and our tax rate will slowly migrate up.
Thank you.
At this time and I'll turn the floor back to management for any additional comments.
Okay, great Rob. Thank you very much and thank you everybody for your continued interest and KKR, we know that with the Investor day, and our earnings the amount of time that you've spent focused on us and spend a considerable this quarter. We're of course available for any additional follow up questions and other.
Otherwise, we'll look forward to reviewing our Q2 results and three months. Thank you so much.
Thank you everyone and this will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.