KKR faces risks from fluctuating market conditions, impacting investment valuations, proceeds from exits, fundraising, and capital markets activity. Legal proceedings, including lawsuits and regulatory investigations, pose potential liabilities. Uncalled commitments may not be funded, and contingent repayment guarantees could require significant future payments. Changes in interest rates, credit spreads, and equity market prices directly affect valuations of Level III investments and insurance liabilities. Credit risk from counterparties in derivative transactions and reinsurance agreements is also a concern.
Financial Upside
KKR's asset management and insurance segments show potential for revenue growth from management fees, transaction fees, and investment income. Positive investment performance, including realized gains from investment sales, and dividend income from portfolio companies, could boost earnings. The acquisition of Global Atlantic and other businesses presents potential synergies and growth opportunities. Increased AUM and FPAUM, along with uncalled commitments, suggest future investment opportunities.
