KKR & Co. Inc. and Global Atlantic Financial Group Limited (“Global Atlantic”) have announced the successful closure of their much-anticipated strategic transaction. The collaboration solidifies Global Atlantic’s standing as one of the largest fixed-rate and fixed-annuity providers in the United States.
Global Atlantic: A Financial Powerhouse
Global Atlantic caters to over two million policyholders in the U.S. through its extensive portfolio of retirement and life insurance products. The company stands out as a leader in the institutional channel, offering tailored reinsurance solutions to life and annuity companies. These solutions span block, flow, and pension risk transfer reinsurance, addressing the diverse needs of its clients.
Originally disclosed in July 2020, the transaction has proven to be a resounding success for Global Atlantic. As of December 31, 2020, preliminary financial results indicate that the estimated value of assets managed by KKR post-closure is approximately $90 billion. This represents a substantial 25% growth in assets since the announcement of the transaction, driven primarily by three reinsurance block transactions.
Joseph Bae and Scott Nuttall, Co-Presidents and Co-Chief Operating Officers of KKR expressed their satisfaction with the outcome, stating, “Since we announced this transaction, Global Atlantic’s success has been remarkable, and in many ways, we are well ahead of our initial expectations. We welcome Global Atlantic to the KKR family and look forward to supporting its policyholders and clients through our asset management and origination capabilities, as well as our global network.”
Allan Levine, Chief Executive Officer of Global Atlantic, emphasized the significance of the partnership, stating, “This is an exciting day for Global Atlantic. Being a part of KKR strengthens our position as a leading U.S. annuity and life insurance company, enhances our ability to deliver compelling solutions for our clients, and deepens our access to long-term strategic capital.”
The transaction valued Global Atlantic at approximately $4.7 billion, with KKR assuming a controlling interest of around 60%. Global Atlantic will operate as a consolidated subsidiary of KKR, maintaining autonomy as a separate entity. Notably, KKR led an equity co-investment process following the transaction’s announcement, securing significant investment from new and existing Global Atlantic investors, including its leadership team.
This co-investment process generated an additional $250 million of primary equity capital, fortifying Global Atlantic’s financial position for future growth initiatives and enhancing its overall flexibility.
Looking Ahead: Conference Call and Future Prospects
To provide more insights into the transaction, KKR is set to discuss additional details during its Fourth Quarter 2020 Earnings Call scheduled for February 9, 2021, at 10:00 a.m. ET. The call will touch upon various aspects, including the integration process and the expected benefits resulting from the collaboration.
In the post-transaction landscape, KKR will serve as the investment manager for Global Atlantic. This strategic role will enable Global Atlantic to tap into KKR’s renowned origination engine and asset management capabilities while adhering to a prudent risk-adjusted investment strategy.
Forward-Looking Statements and Future Challenges
While celebrating the successful closure of the transaction, both companies acknowledged the need to address forward-looking statements. These statements cover expectations, estimates, and future plans. KKR emphasized its commitment to updating these statements based on evolving circumstances.
The press release highlighted potential factors that could impact actual results, including the integration process, changes in business strategies, and the economic impact of the ongoing COVID-19 pandemic.
About KKR & Global Atlantic
KKR is a leading global investment firm managing various alternative asset classes, including private equity, credit, and real assets. The company focuses on generating attractive investment returns through disciplined investment approaches and fostering growth and value creation with its portfolio companies.
Global Atlantic Financial Group, founded at Goldman Sachs in 2004 and operating independently since 2013, offers a broad range of retirement, life, and reinsurance products. Its success is attributed to a unique combination of deep product and distribution knowledge, leading investment and risk management, and a robust financial foundation.
The collaboration between KKR and Global Atlantic marks a significant milestone, positioning the combined entity as a powerhouse in the U.S. annuity and life insurance sector, well-equipped to navigate future challenges and capitalize on emerging opportunities.