Asset management giant KKR suffered its first quarterly loss since the fall of 2022 after a division sold investments at a loss.
Global Atlantic, a KKR-owned insurer, took a $1 billion loss from selling bonds in its $190 billion investment portfolio, more than half of which is constituted of corporate debt, commercial mortgages, and real estate investments. The investment loss was the reason KKR swung to a $186 million net loss last quarter from a $682 million gain in the year-earlier period.
KKR shares have fallen by 30% this year because investors worry that trade wars and volatile markets will dim profitability at the private-equity pioneer founded 49 years ago today. Chief Financial Officer Rob Lewin said on an earnings call this morning that 90% of the companies owned by KKR have “limited to no first order impact from the announced tariffs.”
Nonetheless, CFRA analyst Kenneth Leon expects it will be harder for KKR to reap big sums from selling off holdings and lowered his earnings forecast by 16% for this year and by 9% in 2026.
“We do not see a V-shaped recovery in private equity,” he wrote.
KKR officials noted that institutions continue to contribute large sums to the firm’s leveraged buy-out funds and other investment vehicles. The firm manages more than $660 billion in assets and holds nearly $120 billion in cash ready to be deployed.
“Times like this yield some very attractive investment opportunities,” co-CEO Scott Nuttall said on the call.
