Q1 2024 KKR & Co Inc Earnings Call

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Ladies and gentlemen, thank you for standing by welcome to Kkr's first quarter 2024 earnings Conference call.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to KKR's first quarter 2024 earnings conference call. During today's presentation, all parties will be in listen-only mode. Following management's prepared remarks, the conference will be open to questions. If anyone should require operator assistance during the conference, please press door zero on your telephone. As a reminder, this conference is being recorded. I would now like to hand the call over to Craig Larson, Partner and Head of Investor Relations for KKR. Thank you.

During todays presentation, all parties will be in a listen only mode. Following management's prepared remarks, the comments will be open for questions. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

I would now like to hand, the call over to crank Larson partner and head of Investor Relations for KKR. Thank you you may begin.

Craig Larson: Thank you operator.

Craig Larson: Thank you, operator. Good morning, everyone.

Craig Larson: Good morning, everyone welcome to our first quarter 'twenty 'twenty four earnings call. This morning, as usual I'm joined by Rob Lewin, Our Chief Financial Officer.

Craig Larson: Welcome to our first quarter 2024 earnings call. This morning, as usual, I'm joined by Rob Lewin, our Chief Financial Officer, and Scott Nuttall, our Co-Chief Executive Officer. We would like to remind everyone that we'll refer to non-GAAP measures on the call which are reconciled to GAAP figures in our press release, which is available in the Investor Center section at KKR.com. And as a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements which do not guarantee future events or performance.

Craig Larson: Scott Nuttall, our co Chief Executive Officer.

Craig Larson: We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at KKR Dot com.

Craig Larson: And as a reminder, we report our segment numbers on an adjusted share basis.

Craig Larson: This call will contain forward looking statements, which do not guarantee future events or performance. Please refer to our earnings release and our SEC filings for cautionary factors about these statements.

Craig Larson: Please refer to our earnings release and our SEC filings for cautionary factors about these. We know many of you joined us for our 2024 Investor Day just three weeks ago. Thank you for spending the day with us.

Craig Larson: We know many of you joined US for our 2024 Investor Day, just three weeks ago. Thank you for spending the day with us and for those of you who were unable to participate or are newer to KKR.

Craig Larson: And for those of you who are unable to participate or are newer to KKR... We would encourage you to watch a replay of the webcast or review the Investor Day presentation and transcripts that are on the Investor Relations section of our website. There is a wealth of information, of course, across all of those materials. And as a reminder, before getting to the numbers themselves, starting with this quarter, our financial reporting reflects the previously announced segment and financial metric changes.

Craig Larson: We would encourage you to watch a replay of the webcast I'll review the Investor day presentation in transcripts that are on the Investor Relations section of our website.

Craig Larson: There's a wealth of information of course across all of those materials.

Craig Larson: And as a reminder, before getting to the numbers themselves starting with this quarter our financial reporting reflects the previously announced segment and financial metric changes of particular note for.

Craig Larson: Of particular note... First, we closed on the remaining interest in Global Atlantic on January 2nd, and we now own 100% of GA. Second, we're now reporting a new segment, Strategic Holding. Third, we've introduced a new financial metric, Total Operating Earnings, which consists of fee-related earnings. Plus the insurance segment and strategic holdings operating, Total Operating Earnings represents the more recurring and stable portion of our earnings and is a measure we look at to evaluate our performance, as it reflects how our business model and how our financial profile have evolved.

Craig Larson: First we closed on the remaining interest in global Atlantic on January 2nd and we now own 100% of GAA.

Craig Larson: Second we're now reporting a new segment strategic holdings.

Craig Larson: Third we've introduced a new financial metric total operating earnings which consists of fee related earnings.

Craig Larson: Plus insurance segment and strategic holdings operating earnings.

Craig Larson: Total operating earnings represents the more recurring and stable portion of our earnings and is a measure we look at to evaluate our performance.

Craig Larson: As it reflects how our business model and how our financial profile has evolved.

Craig Larson: Our expectation is that total operating earnings should approximate 70% of pre tax earnings overtime.

Craig Larson: And finally, our Q1 financials reflect a revised compensation ratios, which deliver more FRE to our shareholders.

Craig Larson: And drive even more alignment between our compensation model and the outcomes of our clients.

Craig Larson: And as a reminder for additional detail we posted recast financials in late March.

Craig Larson: So now turning to Q1, and our headline financial metrics fee.

Craig Larson: Our expectation is that total operating earnings should approximate 70% of pre-tax earnings over. And finally, our Q1 financials reflect our revised compensation ratios, which deliver more FRE to our shareholders and drive even more alignment between our compensation model and the outcomes of our. As a reminder, for additional detail, we posted recast financials in late May. So now turning to Q1 and our headline financial metric. Fee-related earnings per share for the quarter came in at $0.75, that's up 22% compared to Q1'23. Total operating earnings were $1.08 per share in the quarter.

Craig Larson: Fee related earnings per share for the quarter came in at 75.

Craig Larson: That's up 22% compared to Q1 'twenty three.

Craig Larson: Total operating earnings were $1 <unk> per share in the quarter.

Craig Larson: And adjusted net income per share, which is after tax was <unk> 97, and thats up 20% year over year.

Craig Larson: An adjusted net income per share, which is after tax, was $0.97, and that's up 20% year-over-year. Let's look at our financials in a little further detail. Management fees in Q1 were $815 million, which is up 4% sequentially from last quarter. Net transaction and monitoring fees were $152 million, 116 of which were generated from our capital markets business. Our fee-related compensation ratio was 17.5%, which is right at the midpoint of our target range. Other operating expenses were $145 million.

Craig Larson: Looking at our financials in a little further detail.

Craig Larson: Management fees in Q1 were $815 million, that's up 4% sequentially from last quarter.

Craig Larson: That transaction and monitoring fees were $152 million 116 of which were generated from our capital markets business.

Craig Larson: Our fee related compensation ratio was 17, 5%, which is right at the midpoint of our target range.

Craig Larson: Other operating expenses were $145 million Youre seeing a continued focus on expense management. This number is down 4% compared to Q1 of 2023.

Craig Larson: You're seeing a continued focus on expense management. This number is down 4% compared to Q1 of 2023. But we expect this line item to increase modestly over the balance of the year driven by continued investments in operations across KKR, alongside an increase in placement fees given our active fundraising pipeline. So, in total, for the quarter, fee-related earnings were $669 million, or the $0.75 per share I mentioned a moment ago. And our FRE margin came in at 68%.

Craig Larson: But we expect this line item to increase modestly over the balance of the year driven by continued investments in operations across KKR.

Craig Larson: Lung side, an increase in placement fees, given our active fundraising pipeline.

Craig Larson: So in total for the quarter.

Craig Larson: The related earnings were $669 million or the 75 per share I mentioned a moment ago.

Craig Larson: And our FRE margin came in at 68%.

Craig Larson: That margin figure is up 700 basis points compared to Q1 'twenty three.

Craig Larson: That margin figure is up 700 basis points compared to Q1'23. And that's driven both by the change in our compensation framework, as well as the strong expense management in the quarter. Insurance operating earnings were $273 million. There are really two things to point out here.

Craig Larson: And Thats driven both by the change in our compensation framework as well as the strong expense management in the quarter.

Craig Larson: Yeah.

Craig Larson: Insurance operating earnings were $273 million.

Craig Larson: There are really two things to point out here.

Craig Larson: First, portfolio yields this quarter reflect elevated cash and more liquid assets at GA, and that's largely due to two sizable recent transactions, with a MetLife and Manulife block closing in Q4-23 and Q1-24 respectively. So the full cost of those liabilities comes onto the GA balance sheet at close, but it does take some time to redeploy those assets into our target portfolio. And that delay or that ramp-up is expected, of course, and it's built into our pricing for each of these deals.

Craig Larson: First portfolio yields this quarter reflects elevated cash and more liquid assets in ziyang and thats largely due to two sizable recent transactions with Metlife and Manulife blocks closing in Q4 23 in Q1 dollars 24, respectively.

Craig Larson: So the full cost of those liabilities come onto the balance sheet at close but it does take some time to redeploy those assets into our target portfolios and that delay or that ramp is expected of course, and it's built into our pricing for each of these deals.

Craig Larson: And secondly, we're seeing attractive investment opportunities in asset classes like core plus real estate and infrastructure.

Craig Larson: And secondly, we're seeing attractive investment opportunities in asset classes like core plus real estate and infrastructure, as our origination capabilities are presenting GA with attractive risk-adjusted returns. However, while these opportunities come with attractive long-term ROEs, near-term yields tend to be more modest.

Craig Larson: As our origination capabilities are presenting GAA with attractive risk adjusted return opportunities.

Craig Larson: However, while these opportunities come with attractive long tomorrow.

Craig Larson: <unk> term yields tend to be more modest.

Craig Larson: And moving to our new segment strategic Holdings and page 18 of the earnings release.

Craig Larson: And moving to our new segment, Strategic Holdings, and page 18 of the earnings release. Remember, the segment today consists of our direct interest in our core private equity portfolio, which is a long-duration investment strategy with an expected hold period of 10 to 15 plus years. So 19 businesses that are well diversified and generally have durable, defensive financial profiles alongside growing earnings. And looking at KKR's share of these businesses, 2023 revenues were approximately $3.6 billion, with EBITDA of $900,000,000.

Craig Larson: Remember the segment today consists of our direct interest in our core private equity portfolio.

Craig Larson: Which is a long duration investment strategy with an expected hold period of 10 to 15 plus years.

Craig Larson: So 19 businesses that are well diversified and generally have durable defensive financial profiles alongside growing earnings.

Craig Larson: And looking at kicking our share of these businesses 2023 revenues were approximately $3 6 billion.

Craig Larson: With EBITDA of 900, some odd million.

Craig Larson: And given the maturing of the portfolio, as well as the stability of operating performance, we anticipate these investments to be more regular dividend payers. Therefore, operating earnings in the quarter were $21 million, driven by dividend activity. As we've stated previously, we expect strategic holdings operating earnings to be more modest in 2024. However, we expect that we'll change in a pretty significant way looking beyond 24, with operating earnings of $300 million or more by 2026. 600 plus by 2028, and 1 plus Billion by 2030.

Craig Larson: And given the maturing of the portfolio as well as the stability of operating performance. We anticipate these investments to be more regular dividend payers over time.

Craig Larson: So operating earnings in the quarter were $21 million driven by dividend activity.

Craig Larson: As we stated previously we expect strategic holdings operating earnings to be more modest in 2024. However.

Craig Larson: We expect that will change in a pretty significant way looking beyond 'twenty four with operating earnings of 300 plus million by 2026.

Craig Larson: 600, plus by 2028.

Craig Larson: And one plus $1 billion by 2030.

Craig Larson: Our visibility and the opportunities we see here are highly differentiated looking across our space.

Craig Larson: Our visibility and the opportunities we see here are highly differentiated looking across, So putting all of that together, total operating earnings were $1.08 per share. Moving to investing earnings, realized performance income was $272 million, and realized investment income was $135 million. This is primarily driven by secondary sales, strategic exit, and realized carry from the core private equity portfolio. So, all together.

Craig Larson: So putting all that together total operating earnings were $1 <unk> per share.

Craig Larson: Moving to investing earnings.

Craig Larson: Realized performance income was $272 million and realized investment income was $135 million.

Craig Larson: This was primarily driven by secondary sales strategic exits and realized carry from the core private equity portfolio. So altogether <unk>.

Craig Larson: Adjusted Net Income totaled $864 million, or $0.97 per share. Turning to investment performance, you can see this on page 10 of the earnings release. The private equity portfolio was up 5 in the quarter and up 19% in the last 12 months. Opportunistic Real Estate was up 1 in the quarter as well as up 1 in the LTM. The infrastructure portfolio was up 5% in the quarter and is up 16% over the trailing 12 months.

Craig Larson: Adjusted net income totaled $864 million or <unk> 97 per share.

Craig Larson: Turning to investment performance you can see this on page 10 of the earnings release, the private equity portfolio was up 5% in the quarter and up 19% in the last 12 months.

Craig Larson: Opportunistic real estate was up one in the quarter as well as up one in the LTM.

Craig Larson: The infrastructure portfolio was up 5% in the quarter and is up 16% over the trailing 12 months.

Craig Larson: In credit in Q1, the leveraged credit composite was up 3% and alternative credit composite was up 4% and over the last 12 months performance was plus 14, and plus 13% respectively.

Craig Larson: In credit in Q1, the leveraged credit composite was up 3%, and the alternative credit composite was up 4%, and over the last 12 months, performance was plus 14 and plus 13%, respectively. And given our performance in Q1, our gross unrealized carried interest balance increased to $6.9 billion at $3.31. That's up 16% from the end of 2023 and over 50% from Q1. And finally, consistent with historical practice, and as we announced last quarter, we increased our dividend to $0.70 per share on an annualized basis, or $0.175 per share per quarter, beginning with Q1.

Craig Larson: And given performance in Q1, our gross unrealized carried interest balance increased to $6 9 billion to $3 31.

Craig Larson: That's up 16% from the end of 2023 and over 50% from Q1 of 'twenty three.

Craig Larson: And finally, consistent with historical practice and as we announced last quarter.

Craig Larson: We increased our dividend to <unk> 70 per share on an annualized basis or $17.05 per share per quarter, beginning with Q1.

Craig Larson: This is now the fifth consecutive year we've increased our dividends since we changed our corporate structure, increasing our annualized dividend from $0.50 per share to $0.70 over this period of time. And with that, I'm pleased to turn the call over to Rob. Thanks.

Craig Larson: This is now the fifth consecutive year, we've increased our dividends as we change our corporate structure, increasing our annualized dividend from <unk> 50 per share to <unk> 70 cents over this period of time.

Craig Larson: And with that I'm pleased to turn the call over to Rob.

Robert H. Lewin: Thanks a lot, Craig, and thank you all for joining our call this morning and for the many of you that spent time with us at our Investor Day a few weeks ago. I thought I would start this morning by going through some of our key operating metrics. During the quarter, we raised $31 billion of capital. That's almost $90 billion over the last 12 months. In just this quarter alone, we had attractive outcomes across each of our businesses.

Robert H. Lewin: Thanks, a lot Greg and thank you all for joining our call. This morning.

Robert H. Lewin: And for the many of you that spent time with us at our Investor Day, a few weeks back.

Robert H. Lewin: I thought I would start this morning by going through some of our key operating metrics.

Robert H. Lewin: During the quarter, we raised $31 billion of capital.

Craig Larson: That's almost $90 billion over the last 12 months.

Craig Larson: And just this quarter alone we had attractive outcomes across each of our businesses.

Robert H. Lewin: Our private equity and real asset businesses together raised $9 billion of capital across a number of strategies, and that's before any meaningful closes from our upcoming flagship raises. And our momentum and credit have really continued.

Craig Larson: Our private equity and real asset businesses, together raise $9 billion of capital across a number of strategies.

Craig Larson: And thats before any meaningful closes from our upcoming flagship races.

Craig Larson: And our momentum in credit has really continued with new capital raise totaling $21 billion with most of the capital coming from our direct lending asset based finance and leverage credit strategies.

Robert H. Lewin: With new capital raised totaling $21 billion, most of the capital coming from our direct lending, asset-based finance, and leveraged credit strategy. And looking more specifically at our K-series vehicles, we raised almost $3 billion year-to-date through April 1, primarily in private equity and infrastructure. We also launched our private BDC in the quarter and are starting to see some real inflows here as well. Turning to Capital Invested. We deployed $14 billion in the quarter.

Craig Larson: And looking more specifically at our K series vehicles, we've raised almost $3 billion year to date through April one.

Craig Larson: Primarily in private equity and infrastructure.

Craig Larson: We also launched a private BDC in the quarter and are starting to see some real inflows here as well.

Craig Larson: Turning to capital invested we deployed 14 billion in the quarter.

Robert H. Lewin: Deployment within private markets was largely driven by infrastructure as well as real estate acquisition. And over half of the capital invested in the quarter came from credit, primarily across asset-based finance and direct lending. We are seeing a significant ramp in credit deployment, reflecting the overall growth of our credit platform. Now, looking forward to Q2.

Craig Larson: Appointment within private markets was largely driven by infrastructure as well as real estate equity.

Craig Larson: And over half of the capital invested in the quarter came from credit primarily across asset based finance and direct lending.

Craig Larson: We are seeing a significant ramp in credit deployment, reflecting the overall growth of our credit platform.

Craig Larson: Now looking forward to Q2, we expect there to be a healthy pipeline of new deployment given the activities, we are seeing broadly across the firm.

Robert H. Lewin: We expect there to be a healthy pipeline of new deployments, given the activities we are seeing broadly across the firm. And over the course of the year, we do expect deployments to pick up meaning. Before wrapping up this morning, I did want to spend a couple of minutes summarizing the key takeaways from our investor day a few weeks ago. Scott and Joe ended our Investor Day with a very simple message. While we have experienced a lot of growth, it feels like we are just getting started. In terms of the key takeaways from the day,

Craig Larson: And over the course of the year, we do expect deployment to pick up meaningfully.

Speaker Change: Before wrapping up this morning, I did want to spend a couple of minutes summarizing the key takeaways from our Investor day, a few weeks back.

Craig Larson: Scott and Joe, let all of our Investor day, with a very simple message.

Craig Larson: While we have experienced a lot of growth.

Craig Larson: Feels like we're just getting started.

Craig Larson: In terms of the key takeaways from the day.

Robert H. Lewin: First, we provided medium-term guidance. Over the next 12-18 months, we expect to be raising capital for over 30 strategies, including a number of our flagships. We expect to raise 300 plus billion dollars of capital over the course of 2024 through 2026. In terms of our financial metrics, by 2026, we expect... $4.50 per share of FRE, implying a KKR of approximately 20%. 7 plus dollars of total operating earnings per share and $7 to $8 per share of adjusted net income, implying a Kager of roughly 30%.

Craig Larson: First we provided medium term guidance.

Craig Larson: Over the next 12 to 18 months, we expect to be raising capital for over 30 strategies, including a number of our flagships.

Craig Larson: We expect to raise 300 plus billion dollars of capital over the course of 2024 through 2026.

Craig Larson: In terms of our financial metrics by 2026, we expect $4 50, plus cents per share of FRE, implying a CAGR of approximately 20%.

Craig Larson: Seven plus dollars of total operating earnings per share.

Craig Larson: And seven to $8 per share of adjusted net income, implying a CAGR of roughly 30%.

Craig Larson: Second looking ahead, we feel quite confident in our longer term trajectory.

Robert H. Lewin: Second, looking ahead, we feel quite confident in our longer-term trajectory. We expect $15-plus of adjusted net income per share in the next 10 years or less, with approximately 70% of these earnings to be more recurring in nature. Over the next five years, we also expect $25 billion of cash generation. We anticipate that this cache will get deployed across four key areas.

Craig Larson: We expect 15 plus dollars of adjusted net income per share in the next 10 years or less with approximately 70% of these earnings to be more recurring in nature.

Craig Larson: Over the next five years, we also expect 25 plus billion dollars of cash generation.

Craig Larson: We anticipate that this cash will get deployed across four key areas.

Robert H. Lewin: Core Private Equity, Shared Buyback, Strategic M&A, and Insurance. Our model really gives us the confidence across all of these avenues of deployment. In each case, we have a strong track record of being able to deploy capital against high ROE opportunities, that also generate recurring and growth-oriented earnings per share. And number three, looking at our key themes, we made sure to highlight our diversified and purpose built business model. Asset management, plus insurance, plus strategic holdings.

Craig Larson: Private equity share buyback strategic M&A and insurance.

Craig Larson: Our model really gives us the confidence across all of these avenues of deployment.

Craig Larson: In each case, we have a strong track record of being able to deploy capital against high Roe opportunities.

Craig Larson: That also generate recurring and growth oriented earnings per share.

Craig Larson: And number three looking at our key themes, we made sure to highlight our diversified and purpose built business model.

Craig Larson: Asset management, plus insurance, plus strategic holdings, all working synergistically together to generate sustainable and significant P&L outcomes.

Robert H. Lewin: All working synergistically together to generate sustainable and significant P&L outcomes. And we have a lot of confidence in each of our three growth engines. In asset management, we have multiple paths to surpass a trillion dollars of AUM over the next five years. In insurance, we have a strong conviction that we could double Global Atlantic from here. And finally, Strategic Holding, which is really an unconstrained market opportunity for us and where we have a real right to live.

Craig Larson: And we have a lot of confidence in each of our three growth engines.

Craig Larson: In asset management, we have multiple paths to surpass a trillion of AUM over the next five years.

Craig Larson: In insurance, we have strong conviction that we could double our global Atlantic from here.

Craig Larson: And finally strategic holdings, which is really an unconstrained market opportunity for us and where we have a real right to win.

Robert H. Lewin: We expect to have a billion plus annual operating earnings by 2030. Our business model is built to drive compounding earnings over a very long period of time, and the opportunity in front of us is a massive one. We do believe that we can achieve our outlined targets without having to build anything new. And we have a team culture, as you would have heard from over 15 of our business leaders on April 10th, that both facilitates and accelerates.

Craig Larson: We expect to have a 1 billion plus of annual operating earnings by 2030.

Craig Larson: Our business model is built to drive compounding earnings over a very long period of time.

Craig Larson: And while the opportunity in front of us as a massive one.

Craig Larson: We do believe that we can achieve our outlined targets without having to build anything yet.

Craig Larson: And we have a team and culture as you would have heard from over 15 of our business leaders on April 10th.

Craig Larson: That both facilitates and accelerates our ability to achieve our strategic ambitions.

Robert H. Lewin: Our ability to achieve our strategic ambition. So when you combine our business model... together with our team and our culture, this is what distinctly differentiates KKR. And with that, Scott, Craig, and I are happy to take any questions.

Craig Larson: So when you combine our business model.

Craig Larson: Together with our team and our culture.

Craig Larson: This is what distinctly differentiates KKR.

Speaker Change: And with that Scott, Craig and I are happy to take any questions.

Speaker Change: Thank you.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. We ask that analysts ask one question and get back into the queue if a follow-up is necessary. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2.

Speaker Change: At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Ask that analyst ask one question and get back into the queue, if a follow up as necessary.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we pull for questions. Our first question comes from Craig Siegenthaler with Bank of America. Please proceed with your question.

Speaker Change: Our first question comes from Craig Siegenthaler with Bank of America. Please proceed with your question.

Craig William Siegenthaler: Good morning, Scott, Rob Hope everyone's doing well.

Craig William Siegenthaler: Good morning, Scott, and Rob. I hope everyone's doing well.

Craig William Siegenthaler: Our question is on investing after Rob healthy deployment commentary, but we wanted to focus specifically on private equity I think theres a lot more visibility in direct lending in ABF, where youre seeing strength in private equity we are watching some building your deployment pipelines I think <unk> is probably the biggest upcoming transaction.

Craig William Siegenthaler: And now the CLO markets and syndicated loan markets are back online with the recent rise in the 10 year probably wasn't that helpful. So can.

Craig William Siegenthaler: Our question is on investing after Rob's healthy deployment commentary, but we wanted to focus specifically on private equity, as I think there's a lot more visibility in direct lending and ABF, where you're seeing strength. But in private equity, we are watching some buildup in your deployment pipelines. I think KVTD is probably the biggest upcoming transaction. And now the CLO markets and syndicated loan markets are back online. But the recent rise in the year probably wasn't that helpful. So can you provide us some comments on the expected levels of investing activity levels in just your private equity business over the coming quarters?

Craig William Siegenthaler: Can you provide us some comments on the expected investing activity levels in <unk>.

Craig William Siegenthaler: Just your private equity business over the coming quarters.

Craig Larson: Hey Craig, it's Craig. Thanks for the question. Why don't I start?

Craig William Siegenthaler: Hey, Craig it's Craig Thanks for the question why don't I start I'm sure Scott will have a couple of thoughts also.

Craig Larson: I'm sure Scott will have a couple of thoughts also. First, and thanks for beginning in the way that you did, I think, as Rob noted in our prepared remarks, the 1.1 billion of deployment you saw this quarter is not representative as we look at our activity. We've got a really healthy backlog of announced transactions, and if anything, it was just a dynamic where a pretty modest amount of that activity closed in the 90 days and on March 31st.

Craig: First and thanks for beginning in the way that you did I think as Rob noted in our prepared remarks that $1 1 billion of deployment you saw this quarter.

Craig: Is not representative as we look at our activity, we've got a really healthy backlog of announced transactions and if anything it was just a dynamic where I'm pretty modest amount of that activity closed in the 90 days ended March 31.

Craig Larson: I think in terms of where we've been deploying capital, we could start with some of the themes we talked about at Investor Day. For example, we talked about Asia as a region that we expect to drive meaningful opportunities for KKR for years to come. We talked about Japan specifically. I think it's interesting that when you look at private equity in our real assets business, the largest deployment we had this quarter was outside of Japan. In that instance, it was out of our Japanese REIT business. [inaudible] really move the needle.

Craig: I think in terms of where we've been deploying capital.

Craig: We could start probably with some of the themes, we talked about at Investor Day, We talked about Asia as a region that we expect to drive meaningful opportunity for KKR for years to come we talked about Japan, specifically I think it's interesting when you look at private equity and our real assets business, our largest deployment we had there.

Craig: This quarter was out of Japan.

Craig: That is since it was out of our Japanese REIT business as they closed on the acquisition of 30, some odd logistics warehouses that again, we had touched on.

Craig: I think as you also look at some of the activity we have in corporate carve outs. Some private equity, we love those opportunities, where our operational resources and focus can really move the needle. So two of our larger pending investments our corporate carve out transactions.

Craig Larson: So, two of our larger pending investments are corporate carve-out transactions. That's one in Europe as well as one in the U.S. Those are, again, both traditional private equity. And then I think the other point, just to highlight, in terms of broad deployment, which we talked about at Investor Day again, is infrastructure. And that's just an area where we bring deep expertise and a global footprint. Our second largest investment in the quarter was to take private a U.K.-listed smart metering business.

Craig: One in Europe as well as one in the U S. Those are again both.

Craig William Siegenthaler: Traditional private equity and then I think the other point just to highlight in terms of broad deployment, we talked about at Investor day again as infrastructure and Thats, just an area, where we bring deep expertise and our global footprint.

Craig William Siegenthaler: Our second largest investment in the quarter was a take private of.

Craig Larson: I'm sure some of you will remember that being a theme that we've invested in and had success in historically. And again, as we look at our pipeline of announced but not yet closed activity, INFRA continues to be particularly active.

Craig William Siegenthaler: U K listed smart metering business I'm sure. Some of you will remember that being a theme that we've invested behind and have had success historically and again as we look at our pipeline of announced but not yet closed activity in front continues to be particularly active with themes and digital renewables et cetera, and again activity here is global.

Craig William Siegenthaler: Well beyond the U S.

Craig William Siegenthaler: I think some of the pending investments. We have include companies based in Italy, Germany, Portugal et cetera.

Craig William Siegenthaler: So again I think the main takeaway is.

Craig William Siegenthaler: Is is.

Craig William Siegenthaler: A very healthy pipeline.

Craig William Siegenthaler: And we're continuing to find opportunities to deploy capital.

Scott C. Nuttall: Yeah, the only thing I'd add, Craig, is that, to your point, the leveraged credit market opened up in January. We are starting to see this impact all of our businesses, to Craig's comments, but I'd say, in particular, the private equity pipeline, which is up significantly. There's a lot of activity.

Speaker Change: The only thing I'd add Greg is.

Speaker Change: We do think the M&A market is coming back in the queue.

Speaker Change: Point the leverage credit market is opened up in January.

Speaker Change: We are starting to see this impact all of our businesses the Craig's comments, but I'd say in particular private equity pipeline.

Speaker Change: Which is up significantly there is a lot of activity.

Scott C. Nuttall: What we announced in Q1 is obviously backward-looking, given it takes some time for these deals to close. The Cotivity deal that you mentioned actually closes today. So I think you're going to see more of the announced deals get closed, and you're going to see more deals get announced. As this pipeline turns into a real deployment, I think you're also going to see this on the monetization side. If the M&A market is picking up and the IPO markets are open, you're going to see us selling more assets as well, refinancing more assets, and taking more companies public. So I think you're going to see more activity overall across private equity.

Speaker Change: We announced in Q1 is obviously backward looking given it takes some time for these deals to close the <unk> deal that you mentioned actually closes today. So I think youre going to see more of the announced deals get closed and youre going to see more deals get announced.

Speaker Change: This pipeline turns into.

Speaker Change: The real deal pipe pipeline and that turns into real deployment I think youre also going to see this on the monetization side.

Speaker Change: If the M&A market is picking up in the ICU markets are open you're going to see us selling more assets as well refinancing more assets and taking more companies public.

Speaker Change: Thank you to see more activity overall across private equity.

Speaker Change: Thanks Scott.

Craig Larson: Thanks, Scott.

Speaker Change: Our next question is from Alex Blaustein with.

Operator: Our next question is from Alex Blosin with Goldman Sachs. Please proceed with your question.

Alex Blaustein: With Goldman Sachs. Please proceed with your question.

Alexander Blostein: Good morning everyone. Thanks for the question as well. I wanted to go back to some of the targets you laid out at Investor Day and really speak to the $25 billion of cash flow you expect to generate over the next five years. Rob, I know you mentioned several buckets which are not that different. They're fairly consistent with kind of how you allocated capital historically. But I was wondering if you could comment on the mix specifically and sort of your priorities within those four buckets that you mentioned earlier.

Alex Blaustein: Good morning, everyone. Thanks for the question as well I wanted to go back to some of the some of the targets you've laid out at the Investor day, and really speaking to the $25 billion of cash flow you expect to generate over the next five years.

Speaker Change: Rob I know you mentioned several buckets, which are not that different they're fairly consistent with kind of how you allocated capital historically, but I was wondering if you could comment on the mix, specifically and sort of your priorities within those four buckets that you mentioned earlier and I guess as part of that and when you think about growth in strategic holdings, and <unk> and incremental capital that you will deploy there how much.

Alexander Blostein: And I guess as part of that, when you think about growth and strategic holdings and the incremental capital that you'll deploy there, how much of that is likely to be driven to some sort of allocation to existing portfolio companies versus new investments?

Speaker Change: Of that is likely to be driven to sort of allocation to existing portfolio companies versus new investments.

Robert H. Lewin: Great, and thanks a lot for the question, Alec. So, you did mention this, I think the most important thing as it relates to capital allocation is to have a consistent framework and we've had a really consistent framework for some time with one overriding objective and that's to use our excess free cash flow to drive durable and recurring and growth-oriented earnings per share and to do so by leveraging our platform at really high ROEs and I think the only thing that's really changed is at our investor day we outlined, you know, the opportunity to generate 25 plus billion dollars of cash generation over the course of the next five years and it's just a huge opportunity for us.

Robert H. Lewin: Alright, Thanks, a lot for the question Alex.

Robert H. Lewin: So you did mentioned this I think the most important thing as it relates to capital allocation is to have a consistent framework and we've had really consistent framework for some time with one overriding objective and that is to use our excess free cash flow to drive durable and recurring and growth oriented earnings per share and to do so by leveraging our platform it really high Roe.

Speaker Change: And I think the only thing that's really changed is at our Investor day, we outlined the opportunity to generate 25 plus billion dollars of cash generation over the course of the next five years and that's just a huge opportunity for us in terms of marketing across the four main areas of deployment core private equity share buyback.

Robert H. Lewin: In terms of bucketing across the four main areas of deployment, core private equity, share buybacks, insurance, and strategic M&A, we don't have a fixed percentage by design, and it's really about being able to allocate that capital base nimbly to the opportunities that drive the highest return and the highest amount of earnings per share over a long period of time. That's our focus. That's what we think we're really good at. As it relates to your question on strategic holdings, you know, we outlined a path to a billion plus dollars of strategic holdings operating earnings by 2030.

Speaker Change: <unk> insurance in strategic M&A, we don't have a fixed percentage by design and it's really about being able to allocate that capital base, namely to.

Speaker Change: To the opportunities that drive the highest return and the highest amount of earnings per share over a long period of time, that's our focus.

Speaker Change: What we think we're really good at as it relates to your question on strategic Holdings, we outlined a path to 1 billion plus dollars a strategic holdings operating earnings by 2030, it's something that we're confident and we've got real visibility on where that's going to come from I do think there is the opportunity if we see.

Robert H. Lewin: It's something that we're confident in. We've got real visibility into where that's going to come from. I do think there's the opportunity, if we see investments for us to be able to make in strategic holdings, to drive that number north of that over time as we allocate capital. But again, no fixed percentage is how we're thinking about it. And I think that's a good thing, frankly, because I think it allows us to go after the highest returning and most ROE-friendly and earnings per share-friendly opportunities that exist.

Speaker Change: Investments for us to be able to make in strategic holdings to drive that number north of that over time, as we allocate capital, but again no fix percentage of how we're thinking about it and I think that's a good thing.

Speaker Change: Because I think it allows us to go after the highest returning and most.

Speaker Change: ROE friendly and earnings per share friendly opportunities that exist.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Bill Katz with TD Cowen. Please proceed with your question. Okay. Thank you very much obviously, a noticeable step up in your gross sales generally speaking and if you just run rate. This number already north of your $300 billion number so not that a few weeks changes your argument.

Operator: Our next question comes from Bill Katz with T.D. Cowan. Please proceed with your question. Okay, thank you.

William Raymond Katz: Okay. Thank you very much.

William Raymond Katz: But just sort of wondering if you could speak to the sequential change, particularly in the credit portfolio, where you're seeing really good momentum and maybe tie in the insurance opportunity with that.

Craig Larson: Obviously, a noticeable step up in your gross sales, generally speaking. And if you just run this number, you're already north of your $300 billion number, so not that a few weeks changes the argument. But, hey, I'm just sort of wondering if you could speak to the sequential change, particularly in the credit portfolio, where you're seeing really good momentum, maybe tying the insurance opportunity with that. And I'll leave it there. Thank you.

Speaker Change: And I'll leave it there thank you.

Speaker Change: Yeah.

Speaker Change: Hey, Bill it's Craig why don't I start so I think there are a couple of things here first.

Craig Larson: Hey Bill, it's Craig. Why don't I start?

Craig Larson: So I think there are a couple of things here. First, uh... probably worth highlighting investor interest in private credit continues to feel very good. I think in direct lending, spreads have come in certainly, but if you look at a new direct lending deal, given where base rates are in three months so far, that's still a 10% plus piece of paper. And in ABF, there are just a number of really positive macro tailwinds, as Chris Sheldon again walked through a handful of weeks ago.

Craig: Probably worth highlighting investor interest in private credit as that continues to feel very good.

Craig: So I think indirect lending spreads have come in certainly, but if you look at our new direct lending deal given where base rates are in three months. So far that's still up at 10% plus piece of paper and in ABS and Theres just a number of really positive macro tailwind as Christian will then again walk through a handful of weeks ago and we.

Craig Larson: And within that part, we're active in both ABF, in investment grade ABF, in addition to opportunities. And so private credit for KKR, March 31, was $93 billion of AUM. These are big businesses for us. A year ago, we were at 76, so we've seen a 22% increase, you over a year so I think that's the first part and then the second part which ties into your question is fundraising in our activities because you're right we are seeing growth and fundraising in a number of different ways for us and it's broad which is great to see it's institutional it's private wealth it's insurance, It's across multiple forms of capital, traditional funds, SMAs, evergreen vehicles, other perpetual forms of capital, and it's in the U.S. and it's outside the U.S. And I think that breadth of activity is really what you've seen in our activity this quarter.

Craig: Within that part we're active in both ABF investment great ABF in addition to opportunistic.

Craig: And so private credit for KKR at March 31 was 93 billion of AUM. These are big businesses for US a year ago. We were at 76, So we've seen 22% increase year over year. So I think thats. The first part and then the second part which ties into your question its fund raising in our activities because you're right we are seeing growth.

Craig: And fundraising and a number of different ways for us and its broad which is great to see its institutional it's private wealth insurance, it's across multiple forms of capital traditional funds sma's evergreen vehicles other perpetual forms of capital and it's in the U S and it's outside the U S and I think.

Craig: That breadth of activity is really what you're seeing.

Craig: In our activity this quarter.

Craig Larson: Direct lending, we raised evergreen capital both in the U.S. and Europe. Opportunistic asset-based finance, capital raised In Asia private credit, we raised capital. Again, this is another area where we're constructive on the opportunity and how we're positioned given the strength of our Asian franchise. And in our K-series suite of products, we've just launched our private BDC strategy, so I think you could think of that almost as an upside from where we are here. So it does feel like we have a healthy amount of momentum, and it's broad-based across the board. Hey Bill, it's Scott. The only thing I'd add is, um...

Craig: Direct lending, we raised evergreen capital both in the U S and Europe opportunistic asset based finance capital raised Asia private credit we raised capital again. This is another area, where we're constructive on the opportunity and how we are positioned given the strength of our Asian franchise and in our case series suite of products. We've just law.

Craig: <unk>, our private BDC strategy. So I think you could think of that almost as as upside from where we are here. So it does feel like we have a healthy amount of momentum and it's broad based across the firm Hey.

Scott C. Nuttall: Hey Bill and Scott, the only thing I'd add is in addition to the organic fundraising that Craig ran through from third parties, we mentioned at the investor day the symbiotic relationship between Global Atlantic and our credit business in particular. We're definitely seeing that show up in the numbers as well, and it's also allowing us to scale our third party business. Insurance AUM as well, at the same time. So it really does feed credit, and it has historically. What I think you're going to see over time, though, and Craig mentioned this, is that we're going to see GA also starting to do more across asset classes like real estate and infrastructure.

Craig: Hey, Bill it's Scott the only thing I'd add is in addition to the organic fundraising.

Scott C. Nuttall: Greg ran through from third parties, we mentioned in the Investor day, the symbiotic relationship between global Atlantic in our credit business in particular, we're definitely seeing that show up in the numbers as well and it's also allowing us to scale our third party.

Scott C. Nuttall: Insurance AUM as well at the same time so.

Scott C. Nuttall: It really does.

Scott C. Nuttall: Seed credit than it has historically.

Scott C. Nuttall: What I think youre going to see over time, though Craig mentioned this is that we're going to see gea also starting to do more across asset classes like real estate and infrastructure.

Craig: Especially on the core side and as we mentioned last November when we announced that we're going to have 100% ownership of global Atlantic. That's one of the opportunities that we saw were just getting after that now so I think youll see it not only show up in credit, but in some of the real assets lines as well.

Speaker Change: Thank you.

Craig: Thank you.

Craig: Our next question is from Brian Mckenna with citizens JMP. Please proceed with your question.

Operator: Thank you. Our next question is from Brian McKenna with Citizens JMP. I'm pleased to see you with your question. Thanks, good morning everyone.

Operator: Our next question is from Brian McKenna with Citizens JMP. We're pleased to receive your questions.

Brian J. McKenna: Good morning, everyone. So just a two parter here on core private equity. So first is the $20 million in net dividends in the first quarter a good quarterly baseline for the remainder of this year or should we expect some growth off of that.

Brian J. McKenna: And then bigger picture I am curious if interest is picking up at all from Lps around the strategy specifically as the portfolio continues to mature here, while dividends are also set to increase notably in the coming years.

Brian J. McKenna: Hey, Brian it's Rob I'll start off.

Robert H. Lewin: Hey Brian, it's Rob. I'll start off, plus or minus 20 million dollars strategic holdings operating earnings pretty good level to model for the remainder of the year you know as we move forward and get closer to 300 plus million by 2026 I think you'll see a little bit more stability in that line item quarter quarter might bump around a little bit in 2024 but plus or minus 20 million is about right as it relates to to our core private equity strategy listen we are the largest core private equity manager today globally by a good margin we think we've built because of our investment teams our geographic reach our industry depth our collaborative culture we've really built a best-in-class franchise and it's something that you know I think we certainly be excited about continuing to partner with our clients on overtime I think for the second question, Brian...

Robert H. Lewin: Yeah plus.

Robert H. Lewin: Plus or minus $20 million strategic holdings operating earnings pretty good level to model for the remainder of the year.

Robert H. Lewin: As we move forward and get closer to 300 plus million by 2026, I think youll see a little bit more stability in that line item quarter to quarter might bump around a little bit in 2024, but plus or minus $20 million is about right and as it relates to our core private equity strategy listen we are the largest core private equity manager.

Robert H. Lewin: Today globally by a good margin, we think we felt because of our investment teams our geographic reach our industry Gap's, our collaborative culture, we've really built a best in class franchise, and it's something that I think we certainly would be excited about continuing to partner with our clients on overtime.

Robert H. Lewin: Yeah, I think to the second question, Brian, we haven't been out actively marketing core private equity. We've got plenty of dry powder in the pools that we managed today. The next thing we'll be talking about with our investors on the PE side is going to be America's private equity.

Speaker Change: Yes, I think the second question, Brian we haven't been out actively marketing core private equity, we've got plenty of dry powder in the pools that we manage today.

Speaker Change: Next thing, we'll be talking about it with our investors on the <unk> side is going to be Americas private equity. So we'll give you an update as those conversations demand.

Robert H. Lewin: So we'll give you an update as those conversations commence. Thank you. Thanks, Fred. Our next question is from Glenn Schorr with Evercore ISI. Please proceed with your question.

Speaker Change: Helpful. Thank you guys. Thank you thanks, Brian.

Speaker Change: Our next question is from Glenn Schorr with Evercore ISI. Please proceed with your question.

Glenn Paul Schorr: Hi, Thanks very much.

Glenn Paul Schorr: Hi, thanks very much. So you have had a lot of growth and a lot of success.

Glenn Paul Schorr: So you have a lot of growth in a lot of places you mentioned no need to build anything new but I'll ask the question anyway secondaries is just about the only area.

Glenn Paul Schorr: Where youre not either scale or well on their way to being scaled.

Glenn Paul Schorr: Just curious if there is a plan how important is it to Lps and for you.

Glenn Paul Schorr: Or is that just a nice to have overtime area. Thanks, Glenn It's Rob I'll start I think you hit on it in your last remarks there.

Robert H. Lewin: Glenn, it's Rob. I'll start, and I think you hit on it in your last remarks there. It is not a need to have for us. And so we want to be in businesses where there are large addressable markets and we've got conviction that we can be a top three player. Of course, over time, we've looked at the secondary space. You could assume that most every M&A transaction that's happened in the secondary space has come across our desk here, and either we determined it wasn't the right partner to be a top three player, or we determined that we just weren't willing to pay the price that was prevailing in the market. And so we're perfectly comfortable focusing on the aspects of our business that we're already in today. With that focus, we think we can be uniquely great at the things that we've already started.

Robert H. Lewin: There's not a need to have for us and so we want to be in businesses, where there are large addressable markets and we got conviction, we can be a top three player of course over time, we've looked at the secondary space you can assume that most every M&A transaction that's happened in the secondary space.

Robert H. Lewin: Come across our desk here and either re determine it wasn't the right partner to be a top three player or we determine that we just weren't willing to pay the price that was at prevailing prices in the market and so we're perfectly comfortable focusing on the aspects of our business that we're already in today.

Robert H. Lewin: With that focus we think we can be uniquely great at the things that we've already started and that provides more than enough running room for growth going forward.

Robert H. Lewin: Okay.

Speaker Change: Thanks, Rob Thanks, a lot.

Speaker Change: Our next question is from Patrick Davitt with Autonomous Research. Please proceed with your question.

Operator: Our next question is from Patrick Davitt with Autonomous Research. Please proceed with your question.

Patrick Davitt: Hey, good morning, everyone.

Patrick Davitt: Hey, good morning, everyone. Could you give a little bit more specificity or color on the gross and net flows at GA and 1Q and, within the gross side, the mix of channels? And then more broadly, it looks like all of the bigger PRT or pensioners transfer deals this year have gone to more traditional insurance players. So I want to get your thoughts on to what extent the lawsuits and regulatory focus on that issue are stifling the opportunity for the more alternatively backed insurers. Thank you. Yeah, sure. Thanks for the question, Patrick.

Patrick Davitt: Could you give a little bit more specificity or color on the gross and net flows.

Patrick Davitt: And <unk>.

Within the growth side, the mix of channels and then more broadly it looks like all of the bigger PRT or pension risk transfer deals. This year have gone to more traditional insurance players. So I wanted to get your thoughts on to what extent the lawsuits and regulatory focus on that issue are stifling the opportunity for more all smacks insurers. Thank you.

Robert H. Lewin: So, I'd say that if you look at the flows at GA this quarter, probably about 75% of them are from the institutional side of our business, give or take. Again, that's inclusive of the big block transaction that we did in the quarter with Manulife. We've had really good momentum on the individual side of our business as well, with very strong sales both in Q4 of 23 and again in Q1 of 2024. And then on the PRT side, the pension risk transfer side, you know, we've talked about this as being a medium to long-term opportunity at GA. We really, coming into this year, did not have very much exposure here at all, but we have a team assembled against the opportunity Our next question...

Speaker Change: Yes sure. Thanks for the question Pat.

Robert H. Lewin: Yeah, sure. Thanks for the question, Patrick.

Speaker Change: Patrick so.

Speaker Change: I would say that if you look at the flows at GAA.

Robert H. Lewin: This quarter, probably about 75% from the institutional side of our business give or take again thats inclusive of the big block transaction that we did in the quarter with Manulife. We've had really good momentum on the individual side of our business as well.

Robert H. Lewin: With very strong sales both in Q4 of 'twenty, three and again in Q1 of 2024.

Speaker Change: And then on the PRT side pension risk transfer side, we've talked about this as being a medium to long term opportunity.

Speaker Change: We really coming into this year did not have very much exposure here at all but we have a team assembled against the opportunity and we continue to believe that it's a really big opportunity given the capability of our institutional reinsurance platform for us to be able to take some share again, starting off of a very low base.

Robert H. Lewin: Our next question is from Dan Fannon with Jefferies. Please proceed with your question.

Operator: Our next question is from Dan Fannin with Jefferies. Please proceed with your question.

Dan Fannin: Thanks, Good morning, I guess just to follow up on the on the GAA business. It seems like the cash and the block transactions kind of reduced returns a little bit in the quarter could you talk about the current operating environment for those returns based upon the business Youre seeing today.

Dan Fannin: Sure Dan.

Robert H. Lewin: Again, it's Rob. I'll start.

Robert H. Lewin: It's Rob I'll start.

Robert H. Lewin: So, you know, what we're seeing in the GA business is really strong performance, really strong operating performance, and really an even stronger outlook for the future. What happened in Q1, or what transpired from a P&L perspective in Q1, was very much by design. You know, when you complete two very large block deals north of $20 billion in assets, you're going to take on the cost of those liabilities day one, but we really have a 12 to 18 month period where we've modelled the redeployment of the assets into higher yielding investments, and we're operating at higher levels of cash balance. So that was point one. Point two is a really interesting one; Scott started to touch on it a little bit earlier.

Robert H. Lewin: So what we're seeing in the GI business is really strong.

Robert H. Lewin: Performance really strong operating performance and really and even stronger outlook for the future.

Robert H. Lewin: What happened in Q1, or what transpire from a P&L perspective in Q1 very much by design. When you complete two very large block deals north of $20 billion of assets Youre going to take on the cost of those liabilities day, one, but we really have a 12 to 18 month period, where we've modeled redeployment of assets into higher yielding investment.

Robert H. Lewin: And we're operating at higher levels of cash balances that was 0.1 0.2 is a really interesting one Scott started to touch on it a little bit earlier.

Robert H. Lewin: You know, we're seeing a really interesting opportunity in core and core plus real estate right now. There is just almost no core and core plus real estate capital out there, and we're able to, by leaning into that asset class. And one of the downsides of leaning into that asset class is a near-term downside in that the running yields on those investments tend to be in the four, four and a half percent range.

Robert H. Lewin: We're seeing a really interesting opportunity in core and core plus real estate right now there.

Robert H. Lewin: There is just almost no core and core plus real estate capital out there and we're able to create really attractive unlevered returns.

Robert H. Lewin: But we think those investments will certainly more than pay off in terms of the longer-term ROEs that they could generate. So much like how you'd hear us talking about investing in the near term for the benefits of the long term across everything we do, that'd be a really good example where you could see some dilution to ROEs in the near term. But we think that is more than going to benefit Global Atlantic, its policyholders, and ultimately our shareholders in the long term given the attractive risk-adjusted returns we're seeing Yeah, the only thing I'd add, Dan, is that none of this.

Robert H. Lewin: Leaning into that asset class and bought.

Robert H. Lewin: One of the downsides of leaning into that asset classes are near term downside and that the running yields on those investments tend to be in the 445% range, but we think those investments will certainly more than pay off in terms of the longer term ROE is that they could generate so much like how you would hear us talking about investing in the near term.

Robert H. Lewin: Benefits of long term across everything we do that would be a really good example, where you could see some dilution to ROE in the near term, but we think that are more than going to benefit global Atlantic its policyholders ultimately our shareholders in the long term given the attractive risk adjusted returns we're seeing there.

Scott C. Nuttall: Yeah, the only thing I'd add, Dan, is that none of this is a surprise, and we've closed on $23 billion worth of block transactions. And when we price these deals, we assume there's going to be a ramp period, so that's proceeding as we expected. I think the business overall is performing incredibly well. Both on the institutional side and the individual parts of GA, we're seeing a significant amount of growth and a significant amount of opportunity.

Speaker Change: The thing I would add Dan is that none of this is a surprise and we closed on $23 billion worth of block transactions and when we price. These deals we assume there is going to be a ramp period. So that's proceeding as we expected going into the business overall is performing incredibly well.

Scott C. Nuttall: On the institutional side in the individual parts of Georgia.

Scott C. Nuttall: Seeing a significant amount of growth and a significant amount of opportunity and I think to the crux of your question. So far the dollars that are getting deployed in the investment portfolio, we are hitting our target return levels.

Scott C. Nuttall: And I think to the crux of your question, so far, the dollars that are getting deployed in the investment portfolio are hitting our target return levels. So it's just a rotation, and it'll take a little bit of time to get this money to work, but we feel very good about the progress and the trajectory.

Speaker Change: Just a rotation and it will take a little bit of time to get this money to work, but we feel very good about the progress of the trajectory.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Operator: The next question comes from Ben Budish with Barclays. Please proceed with your question.

Speaker Change: Our next question comes from Ben <unk> with Barclays. Please proceed with your question.

Benjamin Elliot Budish: Hi, good morning, and thanks for taking the question. Just following up on the topic of GA and some, maybe, modeling tidbits. So it's very helpful commentary in terms of the time it takes to redeploy some of those assets. I'm wondering if you could talk a little bit about the pace of growth and the cost of insurance. It looks like quarter over quarter it goes up as kind of the book turns over a little bit.

Ben: Hi, good morning, and thanks for taking the question just following up on the topic of <unk> and some maybe modeling titbits. So that's very helpful commentary in terms of the time it takes to redeploy some of those assets I'm wondering if you could talk a little bit about the pace of growth in the cost of insurance it looks like quarter over quarter. It goes up as kind of the book turns over a little bit, but I guess, how should we think about that.

Benjamin Elliot Budish: But I guess how should we think about that just as we forecast longer term? And then, similarly, from a high-level perspective, I think in the past you kind of talked about guiding us to think about book value growth and target mid-teens ROE. I'm just trying to think about how we should be thinking about that given that you're now talking about the opportunity to, you know, accelerate longer-term growth.

Benjamin Elliot Budish: We forecast longer term and then similarly from a high level perspective, I think in the past you've kind of talked about guiding us to think about book value growth and your target mid teens Roe.

Ben: Trying to think about how we should.

Benjamin Elliot Budish: I know it's, you know, hasn't been that long since you've owned 100% of GA, but just wondering if that's still the right framework or any other considerations, and then that other piece on the cost of insurance side. Thank you.

Ben: Alright, good how we should be thinking about that given you are now talking about the opportunity to accelerate longer term growth I know it hasnt been that long since you've owned 100% of G. A but just wondering if that's still the right framework or any other considerations and then the other piece on the cost of insurance side. Thank you.

Robert H. Lewin: So starting on the cost of insurance, and I think you really hit on it, as you see the rotation in a higher interest rate environment, our crediting spreads have, of course, gone up, and so have the yields that we're able to generate on the investment side of the portfolio. So being able to generate that spread continues to really exist in the business. So you'll continue to see, I think, an upward trend on crediting spreads for a little bit, and then ultimately, it'd be a function of where interest rates shake out. In terms of our longer-term ROE numbers, I think the continued right range to be able to forecast the global Atlantic is really in that long-term 14 to 15% pre-tax ROE range. Nothing has changed there.

Rob: Yeah, great. So starting on the cost of insurance and I think you really hit on it as you see the reputation and a higher interest rate environment. Our credit spreads of course gone up so have the yields that we're able to generate on the investment side of the portfolio, so being able to generate that spread continue.

Robert H. Lewin: So starting on the cost of insurance...

Robert H. Lewin: <unk> continues to really exists in the business.

Robert H. Lewin: So youll continue to see I think an upward draft.

Robert H. Lewin: Crediting spreads out for a little bit and then ultimately it would be a function of where interest rates shakeout in terms of our longer term Roe.

Robert H. Lewin: The numbers I think that continued right range to be able to forecast global Atlantic is really in that long term, 14% to 15% pre tax ROE range. Nothing has changed there we feel really good about the liabilities that were able to source in the marketplace. We've talked about our management team really feel like they are best in class at being a.

Robert H. Lewin: We feel really good about the liabilities that we're able to source in the marketplace. We've talked about our management team really feeling like they're the best in class at being able to source simple, easy to understand, transparent liabilities at scale. I'll take our investment platforms up against anybody's globally in being able to put those liabilities to work.

Robert H. Lewin: But a source simple easy to understand transparent liabilities at scale I'll take our investment platforms up against anybody's globally, and being able to put those liabilities to work.

Speaker Change: Got it thank you very much.

Robert H. Lewin: <unk>.

Robert H. Lewin: Our next question is from Steven <unk> with Wolfe Research. Please proceed with your question.

Operator: Our next question is from Steven Chubak with Wolf Research. Please proceed with your question.

Steven Joseph Chubak: Hey, good morning, good morning.

Steven Joseph Chubak: This morning, So I wanted to ask about credit deployment and maybe just zoom in on the ABF opportunity. The U.S. banks have started to indicate greater appetite for or willingness to pursue synthetic risk transfers just in an effort to alleviate some of their capital pressures. No, it's an area where, historically, they've been much less active in the European Bank. And I was hoping you could just speak to the engagement levels with some of your US bank partners, how you see the ABF deployment opportunity unfolding, specifically within the SRT market, and maybe just more broadly

Steven Joseph Chubak: So wanted to ask on.

Steven Joseph Chubak: Credit deployment, and maybe just zooming in on the ABF opportunity. The U S banks have started to indicate greater.

Steven Joseph Chubak: Appetite or willingness to pursue synthetic risk transfers just in an effort to alleviate some of their capital pressures.

Steven Joseph Chubak: Scenario, where historically they've been much less active in the European banks.

Steven Joseph Chubak: And was hoping you could just speak to the engagement levels with some of your U S Bank partners, how you see the ABF deployment opportunity unfolding specifically within the SRT market, then maybe just more broadly across the ABF landscape.

Speaker Change: So why don't I start first I think as it relates to.

Craig Larson: Why don't I start first, I think, as it relates to... SRTs. It is a market we are active in. It fits, in our view, very well with our ABS strategy. We're knowledgeable across a host of assets, and we do like to partner with the bank. As you note, I think that activity has mainly been EU-focused. However, it does feel like we are starting to see more activity in the U.S. It also seems like the potential opportunity set could be expanding.

Craig Larson: SRT as it is a market we are active in it fits in our view very well with our ABS strategy.

Craig Larson: We're knowledgeable across a host of assets and we do like to partner with the banks as you note I think that activity has mainly been EU focused it does feel like we are starting to see more activity in the U S. It also seems like the potential opportunity set could be expanding or do you think the most.

Craig Larson: I do think the most common underlying assets for SRTs have been corporate loans, fund finance facilities, and consumer term loans. However, it does feel like banks are beginning to explore opportunities across other asset classes. And then I think the other point that you touched on, which is very important, is just this big macro tailwind we're seeing in that opportunity that it affords us and our team. Again, you look at the growth in our ABF platform as a whole, we're over 50 billion AUM at this point in time, that's both opportunistic, together with more investment grade focused ABS strategies.

Craig Larson: Common underlying assets for <unk> have been in corporate loans fund finance facilities consumer term loans does feel like.

Craig Larson: Or beginning to Splore beginning to explore excuse me opportunities across other asset classes and then I think the other point that you touched on which is very important. It's just this big macro tailwind, we're seeing and that opportunity that affords.

Craig Larson: Towards us and our team again, you look at the growth in our ABF platform as a whole we're over $50 billion of AUM at this point in time, that's both opportunistic together with more investment grade focused ABS strategies and in terms of total deployment in a quarter like this one.

Craig Larson: We've.

Craig Larson: Overall as a firm have deployed a little over.

Craig Larson: And in terms of total deployment in a quarter like this one, you know, we've, you know, overall as a firm, deployed a little over, you know, round numbers, three and a half billion of ABF activity in Q1, which is a pretty elevated pace for us. So activity does continue to feed

Craig Larson: Round numbers $3 5 billion of ABF activity in Q1, which is a pretty elevated pace for us. So activity does continue to feel like it's at a healthy level, yes part of the reason Stephen that we spent so much time on this part of the business at the Investor Day is we do think this is a really interesting and sizable opportunity.

Scott C. Nuttall: Yeah, part of the reason, Steven, that we spent so much time on this part of the business at Investor Day is that we do think it's a really interesting and sizable opportunity. Direct lending is really interesting as well in private credit, but asset-based finance is a much larger market, probably a $5 trillion market on its way to $7 to $8 trillion, and it encompasses a significant number of asset classes, and you really need to have scale to be able to do it well. And so we talked about our 19 or 20 platforms, and the better part of 7,000 people working on those platforms.

Scott C. Nuttall: Direct lending is really interesting as well in private credit, but asset based finance.

Scott C. Nuttall: A much larger market five trillion dollar market on its way to seven to eight trillion.

Scott C. Nuttall: And it encompasses a significant number of asset classes and you really need to have scale to be able to do it well and so we talked about our <unk> 19, or 20 platforms better part of 7000 people working at those platforms I think youre going to see that business to continue to scale in the attractive pace and pleasingly, we're also seeing institutional investor.

Scott C. Nuttall: I think you're going to see that business continue to scale at an attractive pace. And, pleasingly, we're also seeing institutional investors understand this part of credit much more than they did a few years ago. So we are seeing this trend spread from Europe to the U.S. on the risk transfer side. I think that just speaks to the fact that, you know, the deployment opportunity will continue to be robust. And banks are trying to free up capital, whether it's for M&A or to redeploy it into other areas that they find interesting. So we've got plenty of opportunity here.

Scott C. Nuttall: Or is understand as part of <unk>.

Scott C. Nuttall: Credit much more than they did a few years ago.

Scott C. Nuttall: We are seeing this trend spread from Europe to the U S. On the risk transfer side I think that just speaks to the fact that deployment opportunity will continue to be robust and banks are trying to free up capital for M&A.

Scott C. Nuttall: Or to redeploy into other areas that they find interesting. So we've got plenty of opportunity here.

Speaker Change: That's great color. Thanks for taking my question.

Craig Keller: This is Craig Keller. Thanks for taking my question.

Craig Keller: Yes.

Craig Keller: Okay.

Operator: Our next question is from Brian Bedell with Deutsche Bank. Please proceed with your question.

Craig Keller: Our next question is from Brian Bedell with Deutsche Bank. Please proceed with your question.

Brian Bertram Bedell: Great. Thanks. Good morning, folks. Thanks for taking my question. Also, maybe switching gears to the capital markets business, I think you performed a little bit better than you had indicated at the conference, Rob, back in March. For 1Q, maybe if you could just talk about, I guess, the near-term trajectory in 2Q and what you're seeing so far and, more broadly, longer term, given the improvement in leveraged credit markets and M&A activity and, of course, the structural growth in your credit business And, you know, a timeline to get to, call it, a billion-plus annual level, provided, you know, markets are conducive to that.

Brian Bertram Bedell: Great. Thanks, Good morning folks thanks for taking my question.

Brian Bertram Bedell: Maybe switching gears to the capital markets business.

Brian Bertram Bedell: You performed a little bit better than you had.

Brian Bertram Bedell: The conference Rob I think back in March.

Brian Bertram Bedell: For <unk>, maybe if you could just talk about I guess, the near term trajectory in <unk> and what Youre seeing.

Brian Bertram Bedell: So far and more broadly longer term given the improvement in leverage credit markets in M&A activity and of course, the structural growth in your credit business, including in the asset base.

Brian Bertram Bedell: <unk> finance.

Brian Bertram Bedell: Area, maybe just your confidence on.

Brian Bertram Bedell: Getting back to say 800 million plus run rate level and even.

Brian Bertram Bedell: The timeline to get to call. It a billion plus annual level provided markets are conducive for that yes.

Robert H. Lewin: Yeah, Brian, a few thoughts, you know. One, if you look back at 2022 and 2023, really tough operating conditions for our capital markets business, and for much of that time, capital markets on the equity side and the leverage finance side were largely shut.

Brian Bertram Bedell: Brian a few thoughts I wonder if you look back at 2022, and 2023 really tough operating conditions for our capital markets business and for much of that time capital markets on the equity side on the leveraged finance side, we're largely shot and our business generated.

Robert H. Lewin: Ballpark $600 million of revenue in each of those two years and so we're really proud of the durability of the franchise that we created.

Robert H. Lewin: And our business generated, you know, ballpark $600 million of revenue in each of those two years. And so we're really proud of the durability of the franchise that we created. As I look at our pipelines today for the remainder of 2024, and we get updated pipelines weekly, you know, our pipelines are a lot better today than they were at this time last year. Now, there's a lot to go execute on between now and the end of the year.

Brian: As I look at our pipelines today for the remainder of 2024, and we get updated pipelines weekly.

Robert H. Lewin: Pipeline is a lot better today than they were at this time last year now there is a lot to go execute on between now and the end of the year, but the forward indicators for our capital markets business sitting here in early may are definitely better than they were in <unk>.

Robert H. Lewin: May of 2023, and then more to your question around the longer term. If you look back in 2021, our capital markets business generated a ballpark $850 million of revenue.

Robert H. Lewin: And clearly you had buoyant capital markets that helped in 2021, but you look at KKR today as a firm we do more today than we did in 2021.

Robert H. Lewin: I believe we have greater market share with our third party clients than we did in 2021, and we've talked about the real opportunity to scale what were doing in coordination with global Atlantic. So when you combine all of that we continue to be really optimistic about what we're going to be able to create over the next several years with our capital market.

Robert H. Lewin: Franchise that is truly a unique business relative to any of our competitors at that right now.

Robert H. Lewin: But the forward indicators for our capital markets business sitting here in early May are definitely better than they were, you know, in May of 2023. And then more to your question around the longer term, you know, if you look back in 2021, our capital markets business generated a ballpark $850 million in revenue. And clearly, you had buoyant capital markets that helped in 2021. But if you look at KKR today as a firm, you know, we do more today than we did in 2021.

Speaker Change: Yes, so Brian we've been in this business since 2006.

Robert H. Lewin: I believe, you know, we have greater market share with our third-party clients than we did in 2021, and we've talked about the real opportunity to scale what we're doing in coordination with Global Atlantic. So when you combine all that, we continue to be really optimistic about what we're going to be able to create over the next several years with our capital markets franchise, which is truly a unique business relative to any of our competitors out there right now.

Robert H. Lewin: And over that period of time, what you see is that the.

Robert H. Lewin: Revenue tends to be quite correlated with deployment and monetization.

Robert H. Lewin: Specially in private equity and infrastructure.

Scott C. Nuttall: So, Brian, we've been in this business since 2006. And over that period of time, what you see is that revenue tends to be quite correlated with deployment and monetization, especially in private equity and infrastructure. So if you go back to the prior discussion around the fact that our pipelines, https://www.kcm.com/less-dry-powder; we had less overall AUM. We had less firm activity. So as the markets open back up, our expectation is we'll do better than that. But it's going to be somewhat dependent on deployment and monetization across the board, but it looks pretty good as we sit here today.

Robert H. Lewin: So if you go back to the prior discussion around the fact that our pipelines.

Scott C. Nuttall: Picked up significantly, especially in those areas.

Scott C. Nuttall: And we're seeing more activity on the monetization side as well as the markets open up and strategic buyers come back I think that bodes well.

Scott C. Nuttall: 800 million plus of revenues.

Scott C. Nuttall: ACM at a period of time, where we had.

Scott C. Nuttall: Less dry powder, we had less overall AUM, we had less firm activity.

Scott C. Nuttall: So as the markets open back up our expectation is we'll do better than that but it's going to be somewhat dependent on deployment and monetization.

Scott C. Nuttall: Across the firm, but it looks pretty good as we sit here today.

Craig Heller: That's Craig Heller. Thank you.

Brian: That's great color. Thank you.

Craig Heller: Okay.

Craig Heller: Our next question is from Michael Cyprus with Morgan Stanley. Please proceed with your question.

Operator: Our next question is from Michael Cyprys with Morgan Stanley. Please proceed with your question.

Michael J. Cyprys: Great. Thank you I just wanted to ask on ABF.

Michael J. Cyprys: Great, thank you. Just wanted to ask on ABF if you guys have had any success. I heard the $50 billion ABF AUM figure, 19 platforms, $20 billion originations, I think, last year. Just hoping you could talk a little bit more about the steps and actions you guys are taking to drive the originations meaningfully higher. How much of that do you think would be coming from more resources that are adding to the existing platforms versus, or do you see a bigger needle mover from adding more platforms over time? And maybe you could talk about your vision around how you see this evolving over the next five years? Thank you.

Michael J. Cyprys: Just had a lot of success heard the $50 billion.

Michael J. Cyprys: Yes.

Michael J. Cyprys: Figure 19 platforms 20 billion originations I think last year I, just hoping you could talk a little bit more around the steps and actions you guys are taking to drive the originations meaningfully higher how much of that do you think would be coming from more resources that are adding to the existing platforms versus or do you see a bigger needle mover from adding more plot.

Michael J. Cyprys: <unk> over time, and maybe you could talk about your vision around how you see this evolving over the next five years. Thank you.

Michael J. Cyprys: Yeah.

Speaker Change: So why don't I start Mike I think you hit on a lot of the key points I think that the.

Craig Larson: So why don't I start, Mike? I think you hit on a lot of the key points. I think that the asset-based finance business for us as a whole has just changed really dramatically since the Global Atlantic acquisition, and this is a business where scale begets scale. So I think we've seen real advantages of partnering with GA, and partnering with additional third-party clients. And then an important part of that were all the platforms that Scott mentioned and that Chris Sheldon had run through over the course of our investor day.

Craig Larson: Asset based finance business for us as a whole has just changed really dramatically post the global Atlantic acquisition.

Craig Larson: And this is a business where scale begets scale and so I think we've seen real advantages in partnering with <unk> partnering with additional third party clients.

Craig Larson: And then an important part of that have been all the platforms that Scott had mentioned in the cross Sheldon had run through.

Craig Larson: Over the course of our Investor day, and I think specifically when you look at those 18 19 platforms. They are global as Scott mentioned 7000 people some odd people, helping us source and originate.

Craig Larson: And I think specifically when you look at those 18, 19 platforms, they're global. As Scott mentioned, 7,000 people, some odd people, helping us source and originate unique deal flow for the benefit of our clients as we look forward from here. Will we look to grow that universe of platforms? I'm sure the answer to that is yes. Is that a number that's gonna be 2X what it is today, two years from now? I wouldn't want you to think anything along those lines.

Craig Larson: Unique deal flow for the benefit of our clients as we look forward from here, where we look to grow that universe of platforms I'm sure. The answer to that is yes is that a number that's going to be to ask what it is today two years from now I wouldn't want you to think anything along those lines.

Craig Larson: But I think there's continued opportunity for us to continue to build and drive scale. And one of the other important points, again, as Scott mentioned a few minutes ago, it does feel like client knowledge of this opportunity is one that's been increasing dramatically. You know, it felt to us that, like infrastructure and direct lending and these other asset classes, there was a period of time where it took some real education on the part of our clients, and that education can come in baby steps. ABF is a unique asset class because it's been around for a long, long time, but it's really not been a distinct asset class as many of our clients have thought about their portfolios.

Craig Larson: I think there's continued opportunity for us to continue to build and drive scale and one of the other important points again as Scott mentioned, a few minutes ago. It does feel like client knowledge of this opportunity is one that's been increasing dramatically.

Craig Larson: It felt to us like infrastructure in direct lending in these other asset classes and there was a period of time, where it took some real education on the part of our clients and that education can come in baby steps.

Craig Larson: <unk> is a unique asset class because it's been around for a long long time, but it's really not been a distinct asset classes. Many of our clients are thought about their portfolios. So at the same point in time that our strategic position is one that has increased dramatically and improved dramatically. It just feels like that knowledge level with our clients is coming up the curve at the same time and I think thats, what youre seeing in.

Craig Larson: So at the same point in time that our strategic position is one that's increased dramatically and improved dramatically, it just feels like that knowledge level with our clients is coming, and Michael Scott. I think we're going to add more.

Craig Larson: Our results, yes, Michael and Scott I think we're going to we'll add more platforms.

Scott C. Nuttall: I think we will add more platforms, probably not as many as we have now. We will also add resources to the existing platforms. But remember, these businesses are already out in the market sourcing investment opportunities. And so to some extent, you know, the way I think about it is we're capital constrained, not opportunity constrained. So to the extent we continue to scale our capital base here, we can do more with the existing origination of platforms we've already set up.

Scott C. Nuttall: Probably not as many as we have we will add resources to the existing platforms, but remember these.

Scott C. Nuttall: These businesses are already on the market sourcing investment opportunities.

Scott C. Nuttall: So to some extent.

Scott C. Nuttall: The way I think about it is we're capital constrained not opportunity constrained.

Scott C. Nuttall: So to the extent, we continue to scale our capital base here.

Scott C. Nuttall: Can do more with the existing existing originates nutrition origination platform, you've already setup and.

Scott C. Nuttall: And it's less about needing to add a lot of resources as opposed to just taking more advantage of the flow we're already seeing. And as Craig said, now that private credit has become a better understood part of what we do, as private credit allocations get created, more work's getting done in this part of the space. And so we're seeing allocations, direct landing, and ABF, as part of that, continue to pick up.

Scott C. Nuttall: It's less about needing to add a lot of resources as opposed to just taking more advantage of the flow we're already seeing.

Scott C. Nuttall: And as Greg said now that private credit has become a better understood part of what we do.

Scott C. Nuttall: As private credit allocations get created more work is getting done.

Scott C. Nuttall: This part of the space.

Scott C. Nuttall: So we're seeing allocations to direct lending and ABF as part of that continue to pick up and we've seen this across other asset classes. There is pattern recognition as those allocations get created and people look to get to the number that they pick.

Scott C. Nuttall: And we've seen this across other asset classes; there's pattern recognition as those allocations get created, and people look to get to the number that they pick. What we tend to see at the back of that is quite a bit of capital formation, so we feel like we're ready for that.

Scott C. Nuttall: But we tend to see in the back of that is quite a bit of capital formation. So we feel like we're ready for that.

Speaker Change: Great. Thank you. Thank you.

Operator: Our next question is from Patrick Davitt with Autonomous Research. Please proceed with your question.

Scott C. Nuttall: Our next question is from Patrick Davitt with Autonomous Research. Please proceed with your question.

Operator: Okay.

Patrick Davitt: Hey, thanks for the follow up. Could you give us the updated visible announced but not closed realization revenue number? And then more broadly, I guess we've got some conflicting messages out there about how good the realization environment really is, and the overall sense that you're still pretty constructive. So maybe just update us on what's driving your competence and maybe what you think is diverting why your tone is diverging from what we've heard from some other players out there. Thank you.

Patrick Davitt: Hey, thanks for the follow up.

Patrick Davitt: Could you give us the updated visible announced but not closed realization revenue number and then more broadly.

Patrick Davitt: I guess, we've got some conflicting messages out there about how good the realization environment really is overall sense that youre still pretty constructive.

Patrick Davitt: So maybe just update us on what your what's driving your confidence and maybe what you think is the bird.

Patrick Davitt: Your tone is diverging from what we've heard from some other players out there. Thank you.

Robert H. Lewin: Great, thanks for the follow, Patrick. So today we've got north of 400 million dollars of visible pipeline as relates to monetization. Call that roughly 60% carry, 40% investment income. You know, as you noted, our pipelines are pretty healthy. As we look at that 400 million, I should be clear, it's not certain all that's going to close in Q2. Some of that's got some regulatory approvals as part of that. But as we look at our pipelines, they are better on the monetization side than they've been at any point over the past 12 to 18 months. I can't really comment on what others are saying. I can just comment on what we're feeling across the firm, and I'm not sure it should be all that much of a surprise.

Speaker Change: Great. Thanks for the follow up Patrick So today, we've got north of $400 million of visible pipeline as it relates to monetization call that roughly 60% carry 40% investment income.

Robert H. Lewin: As you noted our pipelines are pretty healthy.

Robert H. Lewin: We look at that 400 million I should be clear, it's not starting all of that's going to close in Q2. Some of Thats got some regulatory approvals as part of that but as we look at our pipelines. They are better on the monetization side that they have been at any point over the past 12 to 18 months can't really comment on what others are saying I can just comment on what we're feeling across the firm.

Robert H. Lewin: And I'm not sure it would be all that much of a surprise, we're seeing the leveraged finance market come back you're starting to see CLO formation sit behind the leveraged finance market and that all creates additional dry powder in the system for deal activity.

Robert H. Lewin: We're seeing the leverage finance market come back, and you're starting to see CLO formation sit behind the leverage finance market. And that all creates additional dry powder in the system for deal activity, which is the fuel for greater monetization. And so we'll see. There's a lot to get done in order to monetize the pipeline, but at least for KKR, you know, we're feeling relatively constructive versus where we were maybe 12 months ago at this time.

Robert H. Lewin: Is the field greater monetization and so we will see theres a lot to get done in order to monetize the pipeline, but at least for KKR, we're feeling relatively constructive versus where we had been maybe 12 months ago at this time.

Scott C. Nuttall: Yeah, Patrick, I don't know why you're hearing a bit of a different tone. Maybe the markets themselves have a little bit of fragility, the geopolitical risk. There's a good amount of angst about the macro, and that could be part of it. Our comments are based on the kind of environment continuing as we see it right now. But if something happened, exogenous shocks, then sure, it could change the environment. But, you know, it could be that our portfolios may be more global than some, and may be more mature across aspects of what we're invested in than some. But we're seeing it. This isn't just speculation. We can see it and feel it in terms of the live discussions we're having, and only part Patrick I'd add to both of those.

Robert H. Lewin: Yes.

Scott C. Nuttall: I don't know why youre hearing a bit of a different tone, maybe the markets themselves have a little bit of fragility, there's geopolitical risk.

Scott C. Nuttall: Good amount of angst about the macro that could be part of it.

Scott C. Nuttall: Our comments are based on kind of the environment continuing like we see it right now.

Scott C. Nuttall: But if something happened exogenous shocks to ensure it could change the environment.

Scott C. Nuttall: It could be that our portfolio is maybe more global than some.

Scott C. Nuttall: Maybe a bit more mature across aspects of what we've invested in some.

Scott C. Nuttall: But we're seeing it this isn't a speculation we can see it and feel that in terms of the live discussions we're having.

Craig Larson: And only part Patrick I'd add to both of those comments really would relate to that investment performance aspect of this. If you look at our gross unrealized carry, that number is up 50% year-over-year. That's a pretty big increase, recognizing both the value creation we've seen, together with the fact that we've been in a more modest... Realization Environment. And I think when you look at some of the underlying statistics, as Scott said, we've got a healthy amount in the portfolio.

Scott C. Nuttall: And only part Patrick I'd add on to both of those comments really would relate to that investment performance aspect of this you look at our gross unrealized carry that number is up 50% year over year, that's a pretty big increase recognizing both the value creation, we've seen together with the fact that we've been in a more modest.

Craig Larson: Realization environment and I think when you look at some of the underlying statistics as Scott said, we've got a healthy amount of the portfolio, that's pretty seasoned so roughly 50% of that would be.

Craig Larson: It's pretty seasoned, so roughly 50% of that would be four years or greater as we look at the maturity of the private equity portfolio. But then you've got a layer of investment performance alongside of that. So almost 30% of that is marked at two times or greater, and somewhere between 55% and 60% is marked at one and a half times the cost or greater. So I think you have this combination of maturing portfolios together with strong investment performance that, as we look forward, gives us confidence in, again, ultimately seeing that flow through to our financials.

Craig Larson: Four years or greater as we as we as we look at the maturity of that private equity portfolio. But then you got to layer in investment performance alongside of that so almost 30% of that is marked at two times or greater and it's somewhere between 55% and 60% is marked at one five times cost and greater so I think you have this combination of mature.

Craig Larson: <unk> portfolio together with strong investment performance that as we look as we look forward it gives us confidence.

Craig Larson: And again, ultimately seeing that flow through to our financials.

Speaker Change: Helpful. Thanks.

Speaker Change: Thank you.

Craig Larson: We have reached the end of the question and answer session I would now like to turn the call back over to Craig Larson for closing comments.

Craig Larson: We've reached the end of the question and answer session. I would now like to turn the call back over to Craig Larson for closing.

Craig Larson: We'd just like to really thank everybody for the time that you've invested in KKR. When we think of the announcements we made in November, the investor day just a few weeks ago, and then together with our Q4 and Q1 earnings, we know we've been very active and occupying a lot of mindshare from everyone. So thanks for your investment in understanding KKR better, and please follow up with us directly with any follow-on questions. Thanks so much. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Craig Larson: We just like to really thank everybody for the time that you've invested in KKR. When we think of the announcements we made in November.

Craig Larson: At the Investor Day, just a few weeks ago, and then together with our Q4 and Q1 earnings. We know we've been we've been very active in taking a lot of mind share from everyone. So thanks for your investment in understanding kicking a matter and please follow up with us directly with any follow on questions. Thanks. So much.

Craig Larson: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.

Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation. Today's conference call has ended. Please disconnect your lines at this time. Thank you.

Operator: Today's conference call has ended please disconnect your lines at this time. Thank you.