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By 
November 02, 2022 at 10:24 AM
What You Need to Know
- KKR owns Global Atlantic, which has reinsured annuities issued by AXA, Equitable, Great American and other companies.
- The private equity firm's chief financial officer says product design seems to be holding surrenders down.
- About 75% of the contracts have surrender charges or cannot be surrendered.
A top KKR & Co. executive said the company is happy with the performance of its Global Atlantic life insurance and annuity unit.
Robert Lewin, the New York-based private equity firm’s chief financial officer, told securities analysts Tuesday that he sees no signs of credit problems affecting the bonds in Global Atlantic’s investment portfolio, and no signs that rising interest rates are causing annuity holders to give up their contracts.
So far this year, “we’ve experienced lower surrenders than what we were expecting,” Lewin said.
That might be partly because about 75% of the contracts either have surrender charges or cannot be surrendered, Lewin added during a conference call KKR held to go over its earnings for the third quarter.
What It Means
Some analysts have wondered how today’s rising interest rates really are good for the life insurers supporting the guarantees inside your clients’ life insurance policies and annuity contracts.
KKR’s answer is that, at least so far, rising rates have been great for Global Atlantic.
The Earnings
The third quarter ended Sept. 30.
KKR is reporting a $92 million net loss for the third quarter on $1.9 billion in revenue, compared with $1.1 billion in net income on $4.5 billion in revenue for the third quarter of 2021.
After-tax distributable earnings, which exclude items such as unrealized gains and losses on investments, fell to $1.1 billion, from $1.2 billion.
KKR acquired Global Atlantic a year ago.
The insurance unit, which includes Global Atlantic, is reporting $127 million in operating earnings for the quarter on $2.2 billion in revenue, compared with $115 million in operating earnings on $1.8 billion in revenue for the year-earlier quarter.
