Total AUM increased by $21.5 billion (3.2%) to $685.8 billion at June 30, 2025, from $664.3 billion at March 31, 2025, with growth across all segments. FPAUM also rose by $30.2 billion (5.7%) to $556.2 billion from $526.0 billion, primarily driven by new capital raised and investment value appreciation in Private Equity, Real Assets, and Credit & Liquid Strategies.

Subsequent to the quarter end, KKR acquired a majority ownership stake in HealthCare Royalty Partners, a middle-market biopharma royalty acquisition company, which manages approximately $3 billion of assets. This acquisition expands KKR's investment strategies and product offerings, particularly in the healthcare sector.

For the three months ended June 30, 2025, Private Equity capital invested increased by $2.3 billion to $4.9 billion YoY, driven by core, traditional, and growth equity strategies. However, Real Assets capital invested decreased by $3.9 billion to $4.3 billion, and Credit & Liquid Strategies capital invested decreased by $3.4 billion to $8.5 billion, reflecting varied deployment across business lines.

For the three months ended June 30, 2025, Asset Management Segment Earnings increased by 13.1% to $1.13 billion, and Insurance Operating Earnings grew by 9.8% to $277.93 million. This performance was largely driven by higher fee-related earnings and increased net investment income, indicating effective management in core asset management and insurance operations.

Strategic Holdings Segment Earnings for the three months ended June 30, 2025, decreased by 28.7% to $29.12 million from $40.85 million in the prior year. This decline was primarily due to a lower level of dividends received from companies owned by KKR through its core private equity strategy, suggesting variability in this segment's income stream.

KKR's share repurchase program remains active, with 36,411 shares of common stock repurchased in Q2 2025. The program automatically adds $500 million when the remaining available amount falls below $50 million, with $459 million remaining as of July 25, 2025, signaling management's confidence in the company's valuation and future cash flow generation.

KKR faces ongoing and escalating legal proceedings, including multiple lawsuits in Kentucky alleging breach of fiduciary duties and contract, with settlement attempts failing and motions to dismiss being denied. Additionally, the DOJ filed a civil antitrust complaint on January 14, 2025, alleging HSR Act violations, creating significant legal and financial uncertainty.

The report highlights 'elevated levels of market volatility and uncertainty driven principally by geopolitical and global trade concerns,' including new tariffs imposed by the United States since April 2025. These factors could materially and adversely impact investment valuations, capital market transactions, and fundraising activities, as noted in the 'Business Environment' section.

Global Atlantic reported gross unrealized losses of $383.5 million on below investment grade AFS fixed maturity securities as of June 30, 2025. Additionally, $322.0 million of mortgage loans were 90 days or more past due or in foreclosure, indicating potential credit-related losses within the insurance segment's investment portfolio.

KKR operates a leading global investment firm with diversified business lines including Private Equity, Real Assets, Credit & Liquid Strategies, Capital Markets, and a significant Insurance segment (Global Atlantic). This broad suite of offerings allows KKR to serve a wide array of clients and capitalize on diverse market opportunities, supporting its competitive standing.

KKR's Credit and Liquid Strategies business line, particularly the Multi-Asset Credit Composite (7.18% gross return vs. 5.86% benchmark) and Opportunistic Credit (10.50% gross return vs. 6.03% benchmark), has shown strong performance from inception to June 30, 2025. This outperformance highlights KKR's expertise and competitive advantage in credit markets.

The Capital Markets business line experienced a significant increase in transaction fees, up by $121.09 million for the six months ended June 30, 2025, driven by 204 capital markets transactions (up from 184 YoY). Notably, 57% of these fees were generated outside North America (up from 34% YoY), indicating successful international expansion and market penetration.

Insurance expenses for the three months ended June 30, 2025, decreased by 35.3% to $158.46 million from $244.95 million in the prior year. This reduction was primarily due to a decrease in commission expenses, which management attributes to lower new business volumes in the institutional markets channel, indicating cost control in certain areas.

Amortization of policy acquisition costs for the three months ended June 30, 2025, surged by 146.3% to $80.80 million from $32.81 million in the prior year. This increase is primarily due to the remeasurement of policy liabilities related to cost-of-reinsurance asset intangibles and higher deferred acquisition costs amortization from new business volumes in individual retirement annuities and preneed insurance.

Fee Related Earnings (FRE) for the three months ended June 30, 2025, increased by 17.4% to $886.75 million from $755.40 million in the prior year. This growth was driven by higher management fees across all asset management business lines and increased transaction fees, demonstrating KKR's ability to generate recurring earnings from its fee-generating activities.

KKR has consistently expanded its investment strategies beyond traditional private equity to include leveraged credit, alternative credit, infrastructure, energy, real estate, growth equity (including technology, health care, and impact strategies), and core private equity. This ongoing diversification allows KKR to capitalize on a broader range of opportunities and cater to evolving market demands.

Global Atlantic, KKR's insurance subsidiary, offers a broad suite of protection, legacy, and savings products, including fixed-rate annuities, fixed-indexed annuities, preneed life insurance, and customized reinsurance solutions (block, flow, and pension risk transfer). This comprehensive offering demonstrates a commitment to meeting diverse client needs and leveraging technological capabilities in product delivery.

KKR and Global Atlantic utilize derivative transactions extensively for risk management, including hedging foreign currency and interest rate risks in investment strategies and insurance liabilities. This sophisticated approach to managing market risk, while not explicit R&D, reflects an advanced application of financial technology and quantitative analysis to protect and enhance portfolio performance.

KKR & Co. Inc. issued 51,750,000 shares of Series D Mandatory Convertible Preferred Stock, valued at $2.59 billion, during the six months ended June 30, 2025. This issuance significantly increased total equity and provided substantial capital for general corporate purposes, including the repurchase and refinancing of existing indebtedness.

KKR repurchased 36,411 shares of common stock in Q2 2025, with $459 million remaining under the program as of July 25, 2025. The company also declared a common stock dividend of $0.185 per share, maintaining its annual dividend policy of $0.74 per share, demonstrating a commitment to returning capital to shareholders.

For the six months ended June 30, 2025, capital invested in Private Equity surged by $5.5 billion to $9.2 billion YoY, with 59% deployed in North America. In contrast, Real Assets and Credit & Liquid Strategies saw decreases of $3.9 billion and $1.8 billion in capital invested, respectively, indicating a strategic prioritization of private equity investments.

The Reorganization Agreement, to be completed by December 31, 2026, will eliminate KKR Management LLP's voting control and establish voting rights for all common stock on a one-vote-per-share basis. This structural change aims to enhance corporate governance by aligning voting power more directly with common stockholders.

KKR modified its compensation framework on November 29, 2023, to decrease the targeted percentage of compensation from fee-related revenues and increase it from realized carried interest and incentive fees. This adjustment aims to better align executive incentives with long-term investment performance and value creation for shareholders.

Global Atlantic holds investments in renewable energy projects, with contingent funding obligations of $414.4 million as of June 30, 2025, for development-stage projects. This indicates a commitment to environmental sustainability and leveraging investment capital for positive environmental impact within its insurance business.

For the three months ended June 30, 2025, major equity indices demonstrated robust growth, with the S&P 500 up 10.9%, MSCI Europe up 13.3%, and MSCI Asia up 12.5%. This strong performance occurred amidst persistent US inflation and geopolitical uncertainties, highlighting market resilience.

The U.S. experienced persistent inflation, with core CPI rising 2.9% YoY in Q2 2025, while the Federal Reserve maintained its target funds rate. The report also notes 'elevated levels of market volatility and uncertainty driven principally by geopolitical and global trade concerns,' including new tariffs, which could impact valuations and capital market activity.

While US GDP expanded by 3.0% in Q2 2025, Eurozone real GDP growth slowed to 0.1%, and the ECB implemented rate cuts. Japan saw positive GDP growth, but China continues to face 'divergent economic conditions and headwinds' in its property sector and potential trade war, presenting a complex and varied global operating environment for KKR.