KKR to Buy Final 37% of Annuity Provider Global Atlantic for $2.7B

KKR & Co. Inc. announced Wednesday it will become the full owner of insurance company Global Atlantic Financial Group LLC by buying the remaining 37% of the firm it does not already own for $2.7 billion from minority shareholders.

KKR, which took a majority stake in the company in 2021, noted that the all-cash transaction has been in progress for the past three years as the investment firm leverages insurance products along with its asset management division. Global Atlantic, based in New York, is the country’s 10th largest retail annuity provider as of the first quarter of 2023, according to insurance trade group LIMRA. The Goldman Sachs Group Inc., which spun off Global Atlantic into a private company in 2004, and Goldman Sachs’ Private Wealth Management clients have been investors in Global Atlantic since 2013, most recently alongside KKR clients who invested at the time of the 2021 transaction.

Global Atlantic’s assets under management have grown from $72 billion in 2020 to $158 billion in 2023, with expectations of continued growth in part from the booming market for annuities, CEO Allan Levine said on a KKR strategic update call made after the announcement.

“Our product is fixed annuities, and the market for fixed annuities has doubled in the past three years,” Levine said on the call, noting the close relationship the provider has with advisers at firms such as Wells Fargo and Morgan Stanley.

The retirement industry has long considered leveraging annuities to provide a pension-like benefit in defined contribution retirement plans. But stumbling blocks ranging from lack of employer demand to concerns about portability between retirement plans have been headwinds slowing progress, according to a report released by LIMRA Tuesday.

“Annuities play an important and growing role in retirement strategies for many people,” Craig Lee, KKR’s head of insurance and strategic finance, said in an emailed response. “As the country’s demographics continue to evolve and as private retirement savings continues to grow, we see that role and its importance increasing even further. We’re bullish on the partnership with Global Atlantic for many reasons–long-term opportunities in the retirement industry and our ability to drive value for policyholders are certainly two of them.”

KKR has been Global Atlantic’s asset manager since 2021, providing access to investment and origination capabilities for Global Atlantic policyholders, the firms noted in the announcement.

“Global Atlantic has been a source of financial success for KKR and a key element of KKR’s growing real estate credit and asset-based financing businesses, both of which manage assets that are particularly well suited for insurance company balance sheets,” the firms wrote.

KKR will fund the deal from its balance sheet, which has $23 billion in cash and investments as of September 30.

After the deal is closed, expected in the first quarter of 2024, Global Atlantic will continue to be led by its current management team and operate under the Global Atlantic brand.