KKR buys out minority Global Atlantic shareholders in $2.7B deal

KKR resolved lingering liabilities with Global Atlantic Financial Group minority shareholders by purchasing the remaining 37% of the insurer for $2.7 billion.

According to a recent Yahoo Finance report, KKR has an "obligation" to pay Goldman Sachs clients who still own shares of Global Atlantic under terms of the 2021 sale agreement. KKR bought 63% of Global Atlantic for $4.7 billion, with the agreement giving minority shareholders the right to force KKR to list their shares "in a few years, or find another way to buy them out," Yahoo reported.

In the short time KKR controlled Global Atlantic, the insurer has become an integral part of its investment strategy.

KKR has served as Global Atlantic’s asset manager since 2021, offering access to its global investment and origination capabilities, KKR said in a news release. Global Atlantic’s assets under management have grown significantly, up from $72 billion in 2020 to $158 billion today.

Global Atlantic recently posted a strong third quarter, with earnings up 24% to $210 million, helping parent KKR to beat analysts' expectations.

“The strategic partnership we envisioned three years ago has exceeded our expectations," said Joe Bae and Scott Nuttall, co-CEOs of KKR, in a joint statement. "It has been transformative for both businesses and a great cultural fit that has enabled us to contribute to Global Atlantic’s continued strong performance and success, while also being a key driver of growth for KKR. We expect the new ownership structure will foster even closer collaboration, allowing us to fully leverage our complementary strengths and grow faster together.”

During the second quarter, based on the most recently available statistics, Global Atlantic ranked 14th in total annuity sales by LIMRA. The company sold more than $4.4 billion in Q2.

'Important source of capital'

The strategic partnership has "proven to be both an important source of capital" for Global Atlantic and a driver for international growth, with Global Atlantic leveraging KKR’s global reach to establish new business relationships in Hong Kong, Singapore and Japan, the release said.

At the same time, 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.

“We are taking this step because we have demonstrated, over the last three years, that we are stronger together. Being part of KKR has strengthened our position as a leading insurance company and enhanced our ability to deliver compelling solutions for our clients. Moving from a diverse group of shareholders to a single one with KKR clarifies our objectives and allows us to think―and invest―longer term,” said Allan Levine, CEO of Global Atlantic. “Although we hope to unlock further value by taking this step in our capital structure, neither our client-first approach nor our investment and risk management framework will change, and the day-to-day experience of our clients and colleagues will feel very much the same as it does today.”

Global Atlantic has been busy on other fronts recently.

A $19.2 billion reinsurance agreement with MetLife is expected to close during the fourth quarter, executives have said. Global Atlantic also sold its 33% holding in a 2.2-GW operating solar and storage portfolio to Dutch pension provider APG.

After closing, expected to take place in the first quarter 2024, Global Atlantic will continue to be led by its management team and operate under the Global Atlantic brand, the release said.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.