KKR Q1 profit tops estimates
KKR & Co. reported firstquarter profit that beat Wall Street estimates after the alternative asset manager changed how it relays financial results to emphasize recurring earnings over lumpier private equity asset sales.
Adjusted net income rose 20% to $863.7 million, or 97 cents a share, the company said Wednesday in a statement. That beat the 95 cent average estimate of analysts surveyed by Bloomberg.
KKR created a new reporting metric—total operating earnings—that includes fee-related earnings at its asset management unit, earnings from longterm private equity holdings and profit from its Global Atlantic insurance arm. This was the first quarter the firm 100% ownership of the insurer. New York-based KKR reported $962.3 million in total operating earnings for the quarter, including $20.7 million from strategic holdings.
Fee-related earnings rose 22% to $669 million in the quarter. A 33% gain in insurance operating earnings to $272.8 million was driven by higher yields and growth in the investment portfolio.
Assets under management rose 13% during the quarter, to $578 billion. KKR laid out a plan at its investor day earlier this month to reach at least $1 trillion of assets under management in five years. Taking a cue from Berkshire Hathaway Inc.’s business model, the firm recently created the strategic holdings unit to manage longterm private equity bets that generate dividends.
KKR, founded in 1976 by Henry Kravis, Jerome Kohlberg and George Roberts, has grown beyond its private equity roots into an alternativeasset management giant with strategies including buyouts, credit, infrastructure, real estate and insurance.
The firm highlighted retirees and individuals as being key to its growth strategy to reach $1 trillion of assets.