Alternative fund manager KKR reported a 58% jump in adjusted net income for the third quarter of 2024, driven by record-high fee-related income. The New York-based firm said on Thursday that after-tax distributable earnings (ANI) rose to $1.2 billion in the July-September quarter, or $1.38 per adjusted share, ahead of the average analyst estimate of $1.21, according to LSEG data. ANI includes management, transaction, performance fees, and profits from the firm’s insurance business. During the quarter, KKR saw returns on its long-term private equity holdings rise by 14%, and its insurance unit, Global Atlantic, posted a 20% increase in profit.
The firm’s asset management division accounted for the bulk of the fee-related earnings, with a gain of $522 million. This was helped by an asset price rebound in private equity, real estate, and other asset classes and strong investment performance across the firm’s global platform. In the insurance segment, Global Atlantic profited from investments and earnings from its annuities business.
KKR also saw strong demand from investors, raising $32 billion during the quarter, its second-busiest fundraising period ever. This boosted its Assets Under Management to over $600 billion and led to significant capital deployment of $23 billion, up from $10 billion one year ago.
While the third quarter was a solid one for KKR, it still faced headwinds from the volatile stock market and higher borrowing costs. Despite these challenges, the firm expects to deliver continued progress in its strategic initiatives and financial results, with fee-related earnings, total operating earnings, and capital deployed all on track for further growth in 2024.
The company forecasts that after-tax distributable earnings will grow significantly over time, and it believes it is the most meaningful measure of KKR’s performance to stockholders. After-tax distributable earnings exclude mark-to-market gains and losses, interest expense, Series A and B preferred dividends, and noncontrolling interests, as well as certain items that can vary from period to period. Management uses these measures to assess the company’s net realization performance and determine employee compensation.
Investors should carefully consider the company’s use of these measures in conjunction with those prepared by accounting principles generally accepted in the United States, including consolidated operating earnings, core interest expense, book value and debt levels, liquidity, and capital structure. These measures should not be considered in isolation or as a substitute for, or superior to, operating income or any other performance measure calculated and presented by GAAP. These statements are based on current beliefs, assumptions, and expectations and can change due to many possible events or factors, not all known to KKR or within its control.
