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DERIVATIVES
 12 Months Ended
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
Asset Management
KKR and certain of its consolidated funds have entered into derivative transactions as part of their overall risk management for the asset management business and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include forward, swap and option contracts related to foreign currencies and interest rates to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized in Other Assets or Accrued Expenses and Other Liabilities and are presented on a gross basis in the consolidated statements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. KKR's derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. KKR attempts to reduce this risk by limiting its counterparties to major financial institutions with strong credit ratings.
Insurance
Global Atlantic holds derivative instruments that are primarily used in its hedge program. Global Atlantic has established a hedge program that seeks to mitigate economic impacts primarily from interest rate and equity price movements, while taking into consideration accounting and capital impacts.
Global Atlantic hedges interest rate and equity market risks associated with its insurance liabilities including fixed-indexed annuities, indexed universal life policies, variable annuity policies and variable universal life policies, among others. For fixed-indexed annuities and indexed universal life policies, Global Atlantic generally seeks to use static hedges to offset the exposure primarily created by changes in its embedded derivative balances. Global Atlantic generally purchases options which replicate the crediting rate strategies, often in the form of call spreads. Call spreads are the purchase of a call option matched by the sale of a different call option. For variable annuities and variable universal life policies, Global Atlantic generally seeks to dynamically hedge its exposure to changes in the value of the guarantee it provides to policyholders. Doing so requires the active trading of several financial instruments to respond to changes in market conditions. In addition, Global Atlantic enters into inflation swaps to manage inflation risk associated with inflation-indexed preneed policies.
In the context of specific reinsurance transactions in the institutional channel or acquisitions, Global Atlantic may also enter into hedges which are designed to limit short-term market risks to the economic value of the target assets. From time to time, Global Atlantic also enters into hedges designed to mitigate interest rate and credit risk in investment income, interest expense, and fair value of assets and liabilities. In addition, Global Atlantic enters into currency swaps and forwards to manage any foreign exchange rate risks that may arise from investments denominated in foreign currencies.
Global Atlantic attempts to mitigate the risk of loss due to ineffectiveness under these derivative investments through a regular monitoring process which evaluates the program’s effectiveness. Global Atlantic monitors its derivative activities by reviewing portfolio activities and risk levels. Global Atlantic also oversees all derivative transactions to ensure that the types of transactions entered into and the results obtained from those transactions are consistent with both Global Atlantic's risk management strategy and its policies and procedures.
The restricted cash which was held in connection with open derivative transactions with exchange brokers was $133.0 million and $278.7 million as of December 31, 2023 and 2022, respectively.
Global Atlantic also has embedded derivatives related to reinsurance contracts that are accounted for on a modified coinsurance and funds withheld basis. An embedded derivative exists because the arrangement exposes the reinsurer to third-party credit risk. These embedded derivatives are included in funds withheld receivable and payable at interest in the consolidated statements of financial condition.
Credit Risk
Global Atlantic may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of Global Atlantic’s derivatives is limited to the positive fair value of derivatives less any collateral received from the counterparty.
Global Atlantic manages the credit risk on its derivatives by entering into derivative transactions with highly rated financial institutions and other creditworthy counterparties and, where feasible, by trading through central clearing counterparties. Global Atlantic further manages its credit risk on derivatives via the use of master netting agreements, which require the daily posting of collateral by the party in a liability position. Counterparty credit exposure and collateral values are monitored regularly and
measured against counterparty exposure limits. The provisions of derivative transactions may allow for the termination and settlement of a transaction if there is a downgrade to Global Atlantic’s financial strength ratings below a specified level.
The fair value and notional value of the derivative assets and liabilities were as follows:
As of December 31, 2023Notional
Value		Derivative
Assets		Derivative
Liabilities
Asset Management
Foreign Exchange Contracts and Options$15,771,463 $264,621 $441,608 
Other Derivatives374,604 4,792 2,382 
Total Asset Management$16,146,067 $269,413 $443,990 
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$7,320,500 $— $372,212 
Foreign currency contracts2,302,335 24,278 73,478 
Total derivatives designated as hedge accounting instruments$9,622,835 $24,278 $445,690 
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$22,259,423 $284,067 $306,244 
Equity market contracts35,203,206 1,480,875 248,127 
Foreign currency contracts1,331,345 65,803 56,616 
Credit risk contracts60,000 — 600 
Total derivatives not designated as hedge accounting instruments$58,853,974 $1,830,745 $611,587 
Impact of netting(2)
— (1,809,329)(911,080)
Total Insurance(1)
$68,476,809 $45,694 $146,197 
Fair value included within total assets and liabilities$84,622,876 $315,107 $590,187 
(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $88.7 million and the fair value of these embedded derivatives related to liabilities was $1.6 billion as of December 31, 2023.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.
As of December 31, 2022
Notional
Value		Derivative
Assets		Derivative
Liabilities
Asset Management
Foreign Exchange Contracts and Options$16,144,795 $668,716 $406,746 
Other Derivatives125,000 7,519 11,018 
Total Asset Management$16,269,795 $676,235 $417,764 
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$6,999,000 $— $695,296 
Foreign currency contracts2,021,061 42,557 44,238 
Total derivatives designated as hedge accounting instruments$9,020,061 $42,557 $739,534 
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$8,700,253 $182,734 $267,033 
Equity market contracts34,889,122 626,391 91,344 
Foreign currency contracts675,390 84,883 47,442 
Credit risk contracts60,000 — 929 
Total derivatives not designated as hedge accounting instruments$44,324,765 $894,008 $406,748 
Impact of netting(2)
— (212,175)(212,175)
Total Insurance(1)
$53,344,826 $724,390 $934,107 
Fair value included within total assets and liabilities$69,614,621 $1,400,625 $1,351,871 
(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $12.8 million and the fair value of these embedded derivatives related to liabilities was $(1.3) billion as of December 31, 2022.
(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

Derivatives designated as accounting hedges
Where Global Atlantic has derivative instruments that are designated and qualify as accounting hedges, these derivative instruments receive hedge accounting.
Global Atlantic has designated foreign exchange ("FX") derivative contracts, including forwards and swaps, to hedge the foreign currency risk associated with foreign currency-denominated bonds in fair value hedges. These foreign currency-denominated bonds are accounted for as AFS fixed maturity securities. Changes in the fair value of the hedged AFS fixed maturity securities due to changes in spot exchange rates are reclassified from AOCI to earnings, which offsets the earnings impact of the spot changes of the FX derivative contracts, both of which are recognized within investment-related (losses) gains. The effectiveness of these hedges is assessed using the spot method. Changes in the fair value of the FX derivative contracts related to changes in the spot-forward difference are excluded from the assessment of hedge effectiveness and are deferred in AOCI and recognized in earnings using a systematic and rational method over the life of the FX derivative contracts.
Global Atlantic has designated interest rate swaps to hedge the interest rate risk associated with certain debt and policy liabilities. These fair value hedges qualify for the shortcut method of assessing hedge effectiveness.
The following table presents the financial statement classification, carrying amount and cumulative fair value hedging adjustments for qualifying hedged assets and liabilities:
As of December 31, 2023As of December 31, 2022
Carrying amount of hedged assets/(liabilities)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)(1)        
Carrying amount of hedged assets/(liabilities)
Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)(1)        
AFS fixed maturity securities(2)
$2,324,364 $80,210 $2,010,748 $(61,785)
Debt(1,608,294)(165,817)(945,873)(201,603)
Policy liabilities(4,380,048)(255,308)(5,670,884)(435,494)
(1)Includes $27.8 million and $53.1 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively.
(2)Carrying amount is the amortized cost for AFS debt securities.

Global Atlantic has designated bond forwards to hedge the interest rate risk associated with the planned purchase of AFS debt securities in cash flow hedges. These arrangements are hedging purchases from January 2024 through December 2027 and are expected to affect earnings until 2053. Regression analysis is used to assess the effectiveness of these hedges.
As of December 31, 2023 and 2022, there was a cumulative loss of $(126.9) million and $(169.8) million, respectively, on the currently designated bond forwards recorded in accumulated other comprehensive loss. Amounts deferred in accumulated other comprehensive loss are reclassified to net investment income following the qualifying purchases of AFS securities, as an adjustment to the yield earned over the life of the purchased securities, using the effective interest method.
Global Atlantic estimates that the amount of gains/losses in accumulated other comprehensive loss to be reclassified into earnings in the next 12 months will not be material.
Derivative results
The following table presents the financial statement classification and amount of gains (losses) recognized on derivative instruments and related hedged items, where applicable:
Year ended December 31, 2023
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $— $(53,870)$(20,410)$— 
Foreign currency contracts— (88,384)— — — 9,119 
Total gains (losses) on derivatives designated as hedge instruments$— $(88,384)$— $(53,870)$(20,410)$9,119 
Gains (losses) on hedged items:
Interest rate contracts$— $— $— $53,870 $20,410 $— 
Foreign currency contracts— 80,210 — — — — 
Total gains (losses) on hedged items$— $80,210 $— $53,870 $20,410 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$— $28,345 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness— 28,345 — — — — 
Total gains (losses) on fair value hedges, net of hedged items$— $20,171 $— $— $— $9,119 
Cash flow hedges
Interest rate contracts$— $— $(1,381)$— $— $33,446 
Total gains (losses) on cash flow hedges$— $— $(1,381)$— $— $33,446 
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$(156,624)$— $— $— $— $— 
Other Derivatives13,503 — — — — — 
Total included in Net Gains (Losses) from Investment Activities$(143,121)$— $— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$— $75,876 $— $— $— $— 
Embedded derivatives - funds withheld payable— (1,040,463)— — — — 
Equity index options— 482,121 — — — — 
Equity future contracts— (116,766)— — — — 
Interest rate and foreign exchange contracts— (101,376)— — — — 
Credit risk contracts— (280)— — — — 
Total gains (losses) on derivatives not designated as hedge accounting instruments from Insurance Activities$— $(700,888)$— $— $— $— 
Total$(143,121)$(680,717)$(1,381)$— $— $42,565 
Year ended December 31, 2022
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $— $(382,376)$(177,855)$— 
Foreign currency contracts— 64,945 — — — (6,784)
Total gains (losses) on derivatives designated as hedge instruments$— $64,945 $— $(382,376)$(177,855)$(6,784)
Gains (losses) on hedged items:
Interest rate contracts$— $— $— $382,376 $177,855 $— 
Foreign currency contracts— (61,785)— — — — 
Total gains (losses) on hedged items$— $(61,785)$— $382,376 $177,855 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$— $14,737 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness$— $14,737 $— $— $— $— 
Total gains (losses) on fair value hedges, net of hedged items$— $17,897 $— $— $— $(6,784)
Cash flow hedges
Interest rate contracts$— $1,032 $— $— $— $(169,785)
Total gains (losses) on cash flow hedges$— $1,032 $— $— $— $(169,785)
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$362,965 $— $— $— $— $— 
Other Derivatives6,790 — — — — — 
Total included in Net Gains (Losses) from Investment Activities$369,755 $— $— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$— $(29,390)$— $— $— $— 
Embedded derivatives - funds withheld payable— 3,448,710 — — — — 
Equity index options— (895,602)— — — — 
Equity future contracts— 167,924 — — — — 
Interest rate and foreign exchange contracts— (333,937)— — — — 
Credit risk contracts— (108)— — — — 
Other— (29,779)— — — — 
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$— $2,327,818 $— $— $— $— 
Total$369,755 $2,346,747 $— $— $— $(176,569)
Year ended December 31, 2021
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$— $— $— $(16,092)$(24,369)$— 
Foreign currency contracts— 21,490 — — — 2,275 
Total gains (losses) on derivatives designated as hedge instruments$— $21,490 $— $(16,092)$(24,369)$2,275 
Gains (losses) on hedged items:
Interest rate contracts$— $— $— $16,092 $24,369 $— 
Foreign currency contracts— (22,721)— — — — 
Total gains (losses) on hedged items$— $(22,721)$— $16,092 $24,369 $— 
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$— $2,971 $— $— $— $— 
Total amortization for gains (losses) excluded from assessment of effectiveness$— $2,971 $— $— $— $— 
Total gains (losses) on fair value hedges, net of hedged items$— $1,740 $— $— $— $2,275 
Cash flow hedges
Interest rate contracts$— $744 $— $— $— $4,843 
Total gains (losses) on cash flow hedges$— $744 $— $— $— $4,843 
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$545,238 $— $— $— $— $— 
Other Derivatives(77,034)— — — — — 
Total included in Net Gains (Losses) from Investment Activities$468,204 $— $— $— $— $— 
Insurance
Embedded derivatives - funds withheld receivable$— $31,740 $— $— $— $— 
Embedded derivatives - funds withheld payable— 49,491 — — — — 
Equity index options— 549,987 — — — — 
Equity future contracts— (263,637)— — — — 
Interest rate and foreign exchange contracts— (146,920)— — — — 
Credit risk contracts— (400)— — — — 
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$— $220,261 $— $— $— $— 
Total$468,204 $222,745 $— $— $— $7,118 
Collateral
The amount of Global Atlantic's net derivative assets and liabilities after consideration of collateral received or pledged were as follows:
As of December 31, 2023Gross amount recognized
Gross amounts offset in the statements of financial position(1)
Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$1,855,023 $(1,809,329)$45,694 $(45,095)$599 
Derivative liabilities (excluding embedded derivatives)$1,057,277 $(911,080)$146,197 $167,973 $(21,776)
(1)Represents netting of derivative exposures covered by qualifying master netting agreements.

As of December 31, 2022Gross amount recognized
Gross amounts offset in the statements of financial position(1)
Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$936,565 $(212,175)$724,390 $(466,371)$258,019 
Derivative liabilities (excluding embedded derivatives)$1,146,282 $(212,175)$934,107 $366,508 $567,599 
(1)Represents netting of derivative exposures covered by qualifying master netting agreements.