Accounting Standards Update and Change in Accounting Principle |
The following table summarizes the balance of, and changes in, the liability for future policy benefits as of February 1, 2021 due to the adoption of LDTI. | | | | | | | | | | | | | | | | | | Liability for future policy benefits | Payout annuities | | Other | | Total | Balance, as of February 1, 2021 | $ | 12,785,557 | | | $ | 592,242 | | | $ | 13,377,799 | | Change in discount rate assumptions | 151,651 | | | 20,930 | | | 172,581 | | Adjusted balance, as of February 1, 2021 | $ | 12,937,208 | | | $ | 613,172 | | | $ | 13,550,380 | |
The following table summarizes the balance of, and changes in, the net liability position of market risk benefits (previously recorded as product guarantees included within policy liabilities in the consolidated statement of financial condition) as of February 1, 2021 due to the adoption of LDTI. | | | | | | | | | | | | | | | | | | Market risk benefits | Fixed-indexed annuities | | Variable- and other annuities | | Total | Balance, as of February 1, 2021(1) | $ | 895,114 | | | $ | 325,311 | | | $ | 1,220,425 | | Adjustment for the difference between prior carrying amount and market risk benefit value | 282,354 | | | 87,733 | | | 370,087 | | Adjusted balance, as of February 1, 2021 | $ | 1,177,468 | | | $ | 413,044 | | | $ | 1,590,512 | |
(1)The $1,220.4 million balance associated with market risk benefits prior to transition was previously recorded as product guarantees either as an embedded derivative in contractholder deposits of $236.0 million, or as an additional liability for insurance benefits of $984.4 million under policy liabilities extinguished at transition, and remeasured as market risk benefits. The following table summarizes the balance of, and changes in, reinsurance recoverable as of February 1, 2021 due to the adoption of LDTI. | | | | | | | | | | | | | | | | | | | | | | | | Reinsurance recoverable | Fixed indexed annuities | | Payout annuities | | Other | | Total | Balance, as of February 1, 2021 | $ | 4,487,850 | | | $ | 7,100,198 | | | $ | 4,164,982 | | | $ | 15,753,030 | | Change in discount rate assumptions | — | | | 75,708 | | | — | | | 75,708 | | Adjusted balance, as of February 1, 2021, net of reinsurance | $ | 4,487,850 | | | $ | 7,175,906 | | | $ | 4,164,982 | | | $ | 15,828,738 | |
The following table summarizes the balance of, and changes in, value of business acquired, net as of February 1, 2021 due to the adoption of LDTI. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | VOBA | Fixed indexed annuities | | Fixed-rate annuities | | Payout annuities | | Interest-sensitive life | | Variable annuities | | Other | | Total | Balance, as of February 1, 2021 | $ | 474,165 | | | $ | 56,563 | | | $ | — | | | $ | 307,216 | | | $ | 186,576 | | | $ | — | | | $ | 1,024,520 | | Adjustment to reflect transition impact to balance established as part of purchase accounting upon the 2021 GA Acquisition | 282,354 | | | — | | | 101,338 | | | 692 | | | 108,411 | | | — | | | 492,795 | | Adjusted balance, as of February 1, 2021 | $ | 756,519 | | | $ | 56,563 | | | $ | 101,338 | | | $ | 307,908 | | | $ | 294,987 | | | $ | — | | | $ | 1,517,315 | |
The following table summarizes the balance of, and changes in, negative value of business acquired, net as of February 1, 2021 due to the adoption of LDTI. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Negative VOBA | Fixed indexed annuities | | Fixed-rate annuities | | Payout annuities | | Interest-sensitive life | | Variable annuities | | Other | | Total | Balance, as of February 1, 2021 | $ | 222,135 | | | $ | 180,769 | | | $ | — | | | $ | 549,983 | | | $ | 119,122 | | | $ | 201,405 | | | $ | 1,273,414 | | Adjustment to reflect transition impact to balance established as part of purchase accounting upon the 2021 GA Acquisition | — | | | — | | | 25,395 | | | 755 | | | — | | | (315) | | | 25,835 | | Adjusted balance, as of February 1, 2021 | $ | 222,135 | | | $ | 180,769 | | | $ | 25,395 | | | $ | 550,738 | | | $ | 119,122 | | | $ | 201,090 | | | $ | 1,299,249 | |
The following table presents the effect of transition adjustments on the value of business acquired assets and liabilities due to the adoption of LDTI. | | | | | | | | | | | | | February 1, 2021 | | VOBA | | Negative VOBA | Reinsurance recoverable | $ | (75,708) | | | $ | — | | Liability for future policy benefits | 198,416 | | | (25,835) | | Market risk benefits | 370,087 | | | — | | Total transition adjustments | $ | 492,795 | | | $ | (25,835) | |
As a result of the retrospective application of the LDTI adoption, KKR adjusted certain previously reported amounts in its consolidated statements of financial condition, consolidated statements of operations, consolidated statements of comprehensive income, and consolidated statements of cash flows, as follows: | | | | | | | | | | | | | | | | | | Consolidated statement of financial condition as of December 31, 2022 | As previously reported | | Adjustment | | As revised | Reinsurance recoverable | $ | 27,919,591 | | | $ | (1,897,510) | | | $ | 26,022,081 | | Insurance intangible assets | 1,722,681 | | | 608,813 | | | 2,331,494 | | Other assets | 6,483,187 | | | (441,858) | | | 6,041,329 | | Total assets | 277,077,191 | | | (1,730,555) | | | 275,346,636 | | Policy liabilities | 141,223,287 | | | (3,442,358) | | | 137,780,929 | | Accrued expenses and other liabilities | 4,600,377 | | | (2) | | | 4,600,375 | | Total liabilities | 223,418,306 | | | (3,442,360) | | | 219,975,946 | | Additional paid-in capital | 16,190,407 | | | 93,650 | | | 16,284,057 | | Retained earnings | 6,315,711 | | | 385,396 | | | 6,701,107 | | Accumulated other comprehensive income (loss) | (5,901,701) | | | 599,901 | | | (5,301,800) | | Noncontrolling interests | 35,778,000 | | | 632,858 | | | 36,410,858 | | Total equity | 53,506,820 | | | 1,711,805 | | | 55,218,625 | |
| | | | | | | | | | | | | | | | | | Consolidated statement of operations for the year ended December 31, 2022 | As previously reported | | Adjustment | | As revised | Policy fees | $ | 1,278,736 | | | $ | (17,015) | | | $ | 1,261,721 | | Net policy benefits and claims(1) | 3,184,427 | | | (826,189) | | | 2,358,238 | | Amortization of policy acquisition costs | 10,990 | | | 44,359 | | | 55,349 | | Insurance expenses | 565,304 | | | (2,719) | | | 562,585 | | General, administrative and other | 718,422 | | | 555 | | | 718,977 | | Income tax expense (benefit) | (35,672) | | | 161,065 | | | 125,393 | | Net Income (Loss) | (1,023,528) | | | 605,914 | | | (417,614) | | Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders | (910,130) | | | 319,466 | | | (590,664) | | Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Basic | (1.21) | | | 0.42 | | | (0.79) | | Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Diluted | (1.21) | | | 0.42 | | | (0.79) | |
_________________ (1)Includes adjustment for market risk benefit gain for the year ended December 31, 2022 of $(673.4) million. | | | | | | | | | | | | | | | | | | Consolidated statement of operations for the year ended December 31, 2021 | As previously reported | | Adjustment | | As revised | Policy fees | $ | 1,147,913 | | | $ | (10,108) | | | $ | 1,137,805 | | Net policy benefits and claims(1) | 5,055,709 | | | (238,830) | | | 4,816,879 | | Amortization of policy acquisition costs | (65,949) | | | 30,572 | | | (35,377) | | | | | | | | | | | | | | Income tax expense (benefit) | 1,353,270 | | | 41,612 | | | 1,394,882 | | Net Income (Loss) | 12,295,179 | | | 156,538 | | | 12,451,717 | | Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders | 4,560,829 | | | 65,930 | | | 4,626,759 | | Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Basic | 7.83 | | | 0.12 | | | 7.95 | | Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Diluted | 7.31 | | | 0.11 | | | 7.42 | |
_________________ (1)Includes adjustment for market risk benefit gain for the year ended December 31, 2021 of $(152.4) million. | | | | | | | | | | | | | | | | | | Consolidated statement of comprehensive loss for the year ended December 31, 2022 | As previously reported | | Adjustment | | As revised | Unrealized Gains (Losses) on Available-For-Sale Securities and Other | $ | (8,777,181) | | | $ | (458,534) | | | $ | (9,235,715) | | Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities | — | | | 1,383,193 | | | 1,383,193 | | Comprehensive Income (Loss) | (9,803,382) | | | 1,530,573 | | | (8,272,809) | | Comprehensive Income (Loss) Attributable to KKR & Co. Inc. | (5,191,511) | | | 734,459 | | | (4,457,052) | |
| | | | | | | | | | | | | | | | | | Consolidated statement of comprehensive income for the year ended December 31, 2021 | As previously reported | | Adjustment | | As revised | Unrealized Gains (Losses) on Available-For-Sale Securities and Other | $ | (387,338) | | | $ | (63,293) | | | $ | (450,631) | | Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities | — | | | 88,759 | | | 88,759 | | Comprehensive Income (Loss) | 11,868,320 | | | 182,004 | | | 12,050,324 | | Comprehensive Income (Loss) Attributable to KKR & Co. Inc. | 4,483,018 | | | 76,271 | | | 4,559,289 | |
| | | | | | | | | | | | | | | | | | Consolidated statement of cash flow for the year ended December 31, 2022 | As previously reported | | Adjustment | | As revised | Net realized (gains) losses on insurance operations | $ | 1,035,879 | | | $ | (673,399) | | | $ | 362,480 | | Other non-cash amounts | 77,780 | | | 48,154 | | | 125,934 | | Change in policy liabilities and accruals, net | (160,765) | | | (139,567) | | | (300,332) | | Change in other assets | 874,463 | | | 161,066 | | | 1,035,529 | | Change in accrued expenses and other liabilities | (3,122,805) | | | (2,168) | | | (3,124,973) | |
| | | | | | | | | | | | | | | | | | Consolidated statement of cash flow for the year ended December 31, 2021 | As previously reported | | Adjustment | | As revised | Net realized (gains) losses on insurance operations | $ | 860,165 | | | $ | (153,985) | | | $ | 706,180 | | Other non-cash amounts | (102,871) | | | 42,553 | | | (60,318) | | Change in Premiums, Notes Receivable and Reinsurance Recoverable, Net of Reinsurance Premiums Payable - Insurance | 685,802 | | | (5) | | | 685,797 | | Change in Deferred Policy Acquisition Costs - Insurance | (412,671) | | | 1,608 | | | (411,063) | | Change in policy liabilities and accruals, net | (1,166,726) | | | (86,824) | | | (1,253,550) | | Change in other assets | 465,288 | | | 41,743 | | | 507,031 | | Change in accrued expenses and other liabilities | 2,143,039 | | | (1,628) | | | 2,141,411 | |
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