OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES |
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OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES | OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES Other Assets consist of the following:
(1)Represents amounts due from third parties for investments sold for which cash settlement has not occurred. (2)Represents amounts held at clearing brokers resulting from securities transactions. (3)Net of accumulated depreciation and amortization of $239.6 million and $188.8 million as of September 30, 2023 and December 31, 2022, respectively. Depreciation and amortization expense of $18.3 million and $14.2 million for the three months ended September 30, 2023 and 2022, respectively, and $50.7 million and $39.8 million for the nine months ended September 30, 2023 and 2022, respectively, are included in General, Administrative and Other in the accompanying consolidated statements of operations. Additionally, KKR’s fixed assets are predominantly located in the United States. (4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments. (5)As of September 30, 2023, the carrying value of goodwill is recorded and assessed for impairment at the reporting unit. As of September 30, 2023, there are approximately $(60.6) million of cumulative foreign currency translation adjustments included in AOCI related to the goodwill recorded as result of the acquisition of KJRM (see Note 3 "Acquisitions" in our financial statements). (6)As of September 30, 2023, there are approximately $(206.7) million of cumulative foreign currency translation adjustments included in AOCI related to the intangible assets recorded as result of the acquisition of KJRM (see Note 3 "Acquisitions" in our financial statements). (7)For Asset Management, non-cancelable operating leases consist of leases for office space in North America, Europe, Asia and Australia. KKR is the lessee under the terms of the operating leases. The operating lease cost was $17.6 million and $13.9 million for the three months ended September 30, 2023 and 2022, respectively, and $51.0 million and $39.3 million for the nine months ended September 30, 2023 and 2022, respectively. For Insurance, non-cancelable operating leases consist of leases for office space and land in the U.S. For the three months ended September 30, 2023 and 2022, the operating lease cost was $7.0 million and $6.4 million, respectively, and for the nine months ended September 30, 2023 and 2022, the operating lease cost was $20.6 million and $18.2 million, respectively. Insurance lease right-of-use assets are reported net of $21.7 million and $21.8 million in deferred rent and lease incentives as of September 30, 2023 and December 31, 2022, respectively. (8)The definite life intangible assets are amortized using the straight-line method over the useful life of the assets which is an average of 14 years. The indefinite life intangible assets are not subject to amortization. The amortization expense of definite life intangible assets was $4.4 million for both the three months ended September 30, 2023 and 2022, and $13.2 million for both the nine months ended September 30, 2023 and 2022. (9)The amounts include approximately $4.5 million of goodwill related to an immaterial acquisition of a residential mortgage platform, which Global Atlantic acquired in October 2021 for a purchase price consideration of $4.6 million. The insurance segment reported a negative equity carrying amount as of September 30, 2023 and December 31, 2022 primarily due to unrealized losses on available-for-sale fixed maturity investment portfolio. Global Atlantic expects that substantially all of these unrealized losses will not be realized as it intends to hold these investments until recovery of the losses, which may be at maturity, as part of its asset liability cash-flow matching strategy. KKR evaluated qualitative factors, including market and economic conditions, industry-specific events and company-specific financial results, and determined that it was not more likely than not that goodwill was impaired. Accrued Expenses and Other Liabilities consist of the following:
(1)Represents the amount of carried interest payable to current and former KKR employees arising from KKR's investment funds and co-investment vehicles that provide for carried interest. (2)Represents amounts owed to third parties for investment purchases for which cash settlement has not occurred. (3)Represents the obligations of KKR to deliver a specified security at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments. (4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments. (5)For Asset Management, operating leases for office space have remaining lease terms that range from approximately 1 year to 17 years, some of which include options to extend the leases from 5 years to 10 years. The weighted average remaining lease terms were 10.4 years and 10.4 years as of September 30, 2023 and December 31, 2022, respectively. The weighted average discount rates were 2.9% and 2.5% as of September 30, 2023 and December 31, 2022, respectively. For Insurance, operating leases for office space have remaining lease terms that range from approximately 1 year to 12 years, some of which include options to extend the leases for up to 10 years. The weighted average remaining lease terms were 7.6 years and 7.0 years as of September 30, 2023 and December 31, 2022, respectively. The weighted average discount rate was 4.3% and 3.6% as of September 30, 2023 and December 31, 2022, respectively. The weighted average remaining lease terms for land were 25.9 years and 26.9 years as of September 30, 2023 and December 31, 2022, respectively.
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