KKR to acquire full ownership of insurance giant Global Atlantic for $2.7bn

KKR & Co. Inc. (NYSE: KKR) and Global Atlantic Financial Group announced a landmark deal, signaling KKR’s acquisition of the remaining 37% stake in Global Atlantic, thereby increasing KKR’s ownership to 100%. This strategic move, estimated at approximately $2.7 billion, is set to redefine KKR’s presence in the insurance and asset management sectors.

Strengthening Partnership and Business Growth

Joe Bae and Scott Nuttall, Co-Chief Executive Officers of KKR, expressed their enthusiasm about the partnership’s success and its transformative impact on both companies. The acquisition is seen as a key driver of growth for KKR, fostering closer collaboration and leveraging complementary strengths for accelerated growth.

Significant Growth in Assets Under Management

Since KKR began managing Global Atlantic’s assets in 2021, there has been a substantial increase in assets under management, growing from $72 billion in 2020 to $158 billion today. This growth has benefited from KKR’s asset management expertise, meeting GA’s investment needs while focusing on risk management and delivering strong returns.

Impact on KKR’s Real Estate and Financing Businesses

Global Atlantic has been integral to KKR’s financial success, particularly in its real estate credit and asset-based financing businesses. These areas are well-suited for insurance company balance sheets, further highlighting the strategic importance of this acquisition.

Global Atlantic’s Enhanced Market Position

Allan Levine, CEO of Global Atlantic, highlighted the strengthened position as a leading insurance company through the partnership with KKR. He emphasized that the unified objectives and long-term investment approach would continue to prioritize client-first strategies and robust risk management frameworks.

Transaction Details and Funding

Under the terms of the agreement, KKR will pay an amount in cash equal to 1.0x Global Atlantic’s book value with certain adjustments, leading to a total cash purchase price of around $2.7 billion. KKR will fund the transaction from its balance sheet, which boasted $23 billion in cash and investments as of September 30, 2023.

Strategic Initiatives and Future Prospects

In addition to the acquisition, KKR announced several strategic initiatives, including creating a new business segment, Strategic Holdings, and modifying its compensation structure to be more success-based. These initiatives, combined with the Global Atlantic acquisition, are expected to enhance KKR’s earnings metrics and foster long-term sustained growth.

Vision for Continued Success

Bae and Nuttall reiterated KKR’s focus on performing through cycles for clients and policyholders, with a business model that compounds earnings and value for the long term while retaining its culture. The acquisition and strategic initiatives are aligned with KKR’s vision for sustained growth and optimism about the future.