KKR to Acquire Global Atlantic Financial Group

KKR & Co. Inc. and Global Atlantic Financial Group Limited announced the signing of a strategic transaction where KKR will acquire all of the outstanding shares of Global Atlantic, a leading retirement and life insurance company. After closing, Global Atlantic will continue to operate as a separate business with its existing brands and management team.

Global Atlantic serves more than two million policyholders through its retirement and life insurance products. It is one of the largest fixed rate and fixed indexed annuity providers in the United States, offering annuities for individuals through a network of banks, broker-dealers, and insurance agencies as well as life insurance for individuals and corporates. Global Atlantic is also a leader in the institutional channel, providing customized reinsurance solutions to its life and annuity company clients.

“We are thrilled to have a new, long-term partner in KKR,” said Allan Levine, Chairman and Chief Executive Officer of Global Atlantic. “With its global presence, investment acumen and long-term focus, we believe we will be even better positioned – financially and strategically – both to help Americans address the financial challenges they face today and to help our institutional channel clients achieve their strategic, risk, and capital management goals.”

“This is a transformative event for KKR,” said Henry Kravis and George Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Global Atlantic is a best-in-class business with a like-minded entrepreneurial management team. Our businesses are complementary and our partnership will benefit all of our collective stakeholders.”

Joseph Bae and Scott Nuttall, Co-Presidents and Co-Chief Operating Officers of KKR, added: “This transaction is highly strategic for KKR — it meaningfully expands our base of permanent capital, further diversifies and scales our business, and significantly grows our position within the insurance industry, which has been increasing its exposure to alternative investment strategies. Insurance providers play a critical role in supporting the financial security for millions of individuals. This transaction positions KKR to support Global Atlantic policyholders through our global network and asset management and origination capabilities.”

Strategic Rationale

• Best-in-class business with a strong management team. Global Atlantic’s business, focused on attractive, predictable and growing segments of insurance, has delivered industry leading financial results. Adjusted Operating Earnings and Book Value have compounded at annual growth rates of 17% and 16%, respectively, from 2016 to 2019¹.

• Global Atlantic policyholders to benefit from KKR’s asset management and origination capabilities. KKR also plans to serve as Global Atlantic’s investment manager subject to receipt of applicable regulatory approvals. Global Atlantic will gain access to KKR’s leading direct origination platforms and asset management capabilities while maintaining its current high-quality bias and investment grade focus.

• Significant expansion of strategically important growth vertical. The global insurance industry, with over $30 trillion of assets, is a key strategic focus for KKR. The acquisition of Global Atlantic represents a significant and natural extension of KKR’s existing insurance business, which includes managing $26 billion of assets on behalf of insurance companies across our strategies and products.

• Significantly increases permanency of assets under management (AUM). Pro forma for the transaction, as of March 31, 2020, KKR’s AUM would increase from $207 billion to $279 billion. Additionally, permanent capital as a percentage of KKR’s total AUM would increase from 9% to 33%, and permanent capital, together with our long-term strategic investor partnership capital, would represent 42% of KKR’s AUM.

• Enhances book value compounding opportunity. Global Atlantic’s strong track record and potential for continued book value growth will further KKR’s focus on building, growing and compounding its permanent capital base on behalf of its shareholders.

• A platform for continued growth. Global Atlantic has a history of innovation and growth, including expanding through mergers and acquisitions – a track record that will be increasingly valuable in the rapidly consolidating life and annuity industry.
• Accretive to KKR shareholders across key metrics. In the first year post closing, the transaction is expected to be accretive to KKR shareholders on an AUM, FPAUM, Book Value, Fee Related Earnings and After-tax Distributable Earnings per Adjusted share basis.

Key Transaction Terms

Under the terms of the agreement, KKR will pay Global Atlantic shareholders an amount equal to 1.0x Global Atlantic’s Book Value as of the date of closing, subject to an equity roll-over for certain existing shareholders. As of March 31, 2020, Global Atlantic’s Book Value was approximately $4.4 billion. KKR expects to fund the acquisition, net of equity roll-over participation, from a combination of cash on hand, proceeds from potential minority co-investors and the issuance of new debt and/or equity by KKR.

The investment in Global Atlantic will be held on KKR’s balance sheet and through a proprietary vehicle established for others to invest alongside KKR’s balance sheet, not in any client funds.

Upon close, Global Atlantic will continue to be run by its existing senior leadership team led by Allan Levine, Global Atlantic’s Chairman and Chief Executive Officer.

The transaction, which is expected to close in early 2021, is subject to required regulatory approvals and certain other customary closing conditions.