KKR & Co. Inc. (KKR) Earnings Call Transcript & Summary

All right. Let's get started. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. But taking a photograph on the use of recording devices is not allowed. If you have any questions, please reach out to your Morgan Stanley sales representative. All right. With that out of the way, good morning. Thank you all for joining us here at Morgan Stanley's Financials Conference. I'm Mike Cyprys, equity analyst covering brokers, asset managers and exchanges from Morgan Stanley Research. And it's my pleasure to welcome Allan Levine, Chairman, CEO and Co-Founder of Global Atlantic founded in 2004, Global Atlantic or GA, as we call it, is one of the largest annuity providers in the U.S., serving more than 2 million policyholders through its retirement and life insurance products. Two years ago, KKR at the corporate level, acquired a majority 63% stake and has helped GA double in size since, a tremendous achievement. As you know, KKR is a global investment firm that offers alternative asset management, capital markets and insurance solutions and is over $500 billion of assets under management. With that, Allan, thank you for joining us.

Great. Thanks, Mike. It's great to be here with all of you.

And we're especially thrilled to have you because I understand this is, I think, your first conference appearance, you have done meetings with investors, but your...

I have. It's an honor to be here at the Morgan Stanley event to kick things off.

Welcome. Why don't we start big picture, given I think you are new to many folks here in the room. You founded GA nearly 20 years ago, I believe it was. So for those less familiar around the room, why don't we kick off with GA's origin story as I like to call it. What attracted you to the insurance industry at that time? What was your vision then? And how has that evolved since the founding of the company?

By the way, it's hard to believe how quickly time has gone by. What I'll try to do is hit the highlights in the next couple of minutes over the last 20 years to give you a little bit of sense. So look, the original idea, then you said back in 2004, 20 years ago, at Goldman Sachs at the time was, how do we continue to expand our business model, how do we grow? And what we realized early on was that this great business called insurance, and you have what we did at Goldman Sachs and the reality is that we can run completely separately. So the general thesis was around convergence. Could these 2 businesses over time, converge and make each other better? So our view is if we took the best of what we did at what the insurance industry did and the best of Goldman Sachs. I'll give you the 3 things we were focused on at Goldman at that time. One, if we can attract and retain incredible people around the culture. We were committed around risk and investment management and had competitive advantages there. And ultimately could develop deep client relationships. And by the way, we were patient in building an insurance business over the cycle, we could build a great business. And by the way, that theme over the last 20 years has been consistent. We originally started through both buying and building new businesses. It included getting into the life and annuity reinsurance business through acquisition and through building organic businesses. We also had -- I know we're going to cover a lot of this. We have a property and casualty business as well...

I don't have that on the list team, P&C.

Yes. No, I know, but we will end with it not being on the list either. But as part of our journey, we did also start a company after Katrina [indiscernible], built a Lloyd syndicate and eventually acquired a company in Bermuda. And by the way, things were going really well at Goldman Sachs. As you'll recall, in 2008, everyone will follow great financial crisis. It became clear there soon after by 2012, being an insurance company inside a bank didn't work from a capital perspective. It also did align with our strategic vision for the business where we're really looking to get into retail and get into individual markets distribution. Okay, that's Phase 1 at Goldman. Phase 2 independent company. We just celebrated our 10-year anniversary on May 1, 2013. On that date, we left Goldman Sachs and raised money from 1,200 independent shareholders. We were a true independent company, no majority shareholders at that time. This was a really interesting phase for our business because it gave us the opportunity to really -- what I like to say is realized our full potential as an organization, highly entrepreneurial. One of the most important things we did in the early days is we acquired a company called Forethought Financial, that was in the retail annuity business. They had recently taken over Hartford's distribution -- a leader in the annuity space. And from there, to be honest with you, we started scaling our life reinsurance business, and more importantly, our retail business. By 2015, we decided that we had so much growth opportunity in the life annuity space and that our property and casualty business was subscale and property cap oriented. So we decided to sell that and put 100% of those proceeds back into growing our business. By the way, the theme for our company is constantly redeploying capital and finding growth opportunities ultimately. Since 2015, we've been executing on a very similar strategy, U.S.-focused life and annuity based, let me just complete the history. From that period, we achieved top 5 status in the fixed annuity space. We continue to expand into new lines of institutional side. We raised third-party capital through our IV structure, and we plan to go public, which we were talking about earlier. And I feel really fortunate that we decided not to go public, and I feel incredibly fortunate that we were able to find a partner like KKR, which as we talk about our results on the forward has really been the right partner -- right long-term partner, and there's a lot of upside from this partnership going forward.

Which leads to my next question on the KKR aspects. So you came to -- extend that relationship with KKR about 2 years ago, right? They took the controlling interest in GA, how did this relationship come about? Maybe tell us a little bit about that -- what attracted you to KKR? And as you kind of reflect on the past couple of years with that combination, how is it going? What are some of the advantages?

Yes. Like I said, our path, if you had spoken to me in 2019 was to go public, and we have done a lot of work in that regard. I was introduced to Scott Nuttall, who at that time was co-president at KKR now -- co-CEO through one of our independent board members, and this would have been -- just because the timing matters here a little bit. It's interesting. This would have been January of 2020, we don't kind of think back where the world was like that. And it became clear from early meetings with Scott and other senior people at KKR that culture values strongly aligned and more importantly or equally important, vision for the business and strategy also aligned. And in many ways, it felt very natural, even more natural considering we had not that much connectivity between our firms leading up to that. So that was -- it became clear that like 1 plus 1 could equal a lot more than that if we did this right, my last dinner in New York City on May 12, 2020, was with Scott and Joe, current Co-CEO. And then obviously, we went dark and we went into the COVID phase. And what was really interesting during that period of time from a diligence perspective, is everything was done on Zoom. And if you think about one of the hallmarks of our business, as I mentioned, like the cornerstone of our business is all round risk and investment management. We're an insurance business that we make promises we need to keep, no better way to assess risk and investment management during that COVID phase and KKR got a firsthand look at how we risk manage, how we think about liabilities, how we think about assets. And then we announced our deal July 4, almost 3 years ago. How has it gone since then? Really well. There's lots of lenses to give you on our performance. I'll give you the obvious one, and I'll give you some less obvious ones, like the obvious ones you mentioned it earlier. We have been able to double assets since the time we announced the deal from $70 billion at the time, we announced it to, I think, $142 billion as over the last quarter and with our forward loan, on our way to $150 billion, given the MetLife transaction we recently announced. And we've been able to produce really strong returns. What we were looking for from KKR were the following: institutional asset management that we can scale to become a competitive advantage, deep access to capital and then alignment. And we've gotten all of those things in this partnership. Under investment capabilities. It's not just about scaling assets about how we've done them. We were originating about $10 billion in assets before the KKR deal. Now it's consistently north of $30 billion. On the fundraising side, since the time we announced the transaction, we put an additional $750 million of primary. We're also announced our IV 2 fund raise. That's our third-party capital vehicle, where we had targeted raising between $1.5 billion and $2 billion to support our block and institutional business. That's not closed yet, but we expect to be above the high end of that range. And I think the closing is as of June 30 of this year, so more to follow as well. So -- and then on alignment, and I'll talk about this a little bit later as well, it's given us the opportunity to do a lot of other things. So when you ask me how it's going. There's the obvious stuff, but let me just share a couple of other things that I wanted to highlight. One, because of the way we're structured, we work together on a lot of other things that co-benefit our businesses. Some of them include expanding internationally. We talked earlier, we've announced deals in Singapore, Hong Kong and most recently, Japan last week, couldn't do that without KKR global footprint and our teams working together. I think there's a bunch of really interesting things. From a product development and distribution perspective, we've got a big retail network, KKR is working on that as well. And the last thing I'd just say is there's the intangible benefit that isn't obvious. We've got 10 offices around the country, plus or minus. We cohabitate in New York over Hudson Yards. We get the opportunity every day to learn everything there is about their business and how it's operated. They get to learn about ours, and we get to make each other better through that learning experience. So it's gone really well, and we're thrilled with the partnership so far.

That's great. Why don't we turn to the macro backdrop, rising rates, higher yields have benefited insurance earnings as we've seen for KKR with an evolving rate backdrop, though, how are you thinking about the portfolio now? How is the business positioned here as we pivot and maybe think about potential for rate cuts?

Yes. Look, 20 years later, I don't ever remember a macro environment. None of us do like the one we're in. And you think about running an insurance business. It's pretty unique, rapidly rising rates, volatile equity markets, sustained inflation, by the way, our expectations rates will remain elevated probably longer. We always think about, we're an insurance business first and foremost. So how we think about the business is we think about risk management, we think about scenarios, we think about downside. So we are essentially always thinking about what could go wrong and how we think about running our business. As far as macro risk equities order rates, you asked me about rates, fundamentally and philosophically, we try not to take outright macro risk in our business. We don't think we need you to be successful. So that includes interest rates. I'll come back to that. One other thing about rates for an insurance business, certainly for our insurance business, it's a net positive from a business perspective. Why is that? If you look at our individual markets business, where we're providing retirement solutions already strong demand and need for those products, higher rates make us and give us the ability to provide even more value. And what we've seen is our fixed annuity market grow substantially. So to record levels last year and on our way to this year as well. Even on our institutional business, higher rates actually result in more opportunity for block transactions. And by the way, we have a very large flow reinsurance business where the same benefit that's happening on our retailer individual market side that we get direct through our platform, we're obviously getting also from our institutional business as well. So isn't that rate a positive. More specifically, you asked me about our business. And like I said, we attempted not take outright macro risk. So if you think about interest rates, in particular, strict ALM or cash flow matching. So from an impact perspective, at Global Atlantic, we'll see if rates go down, I guess we'll all learn this together. But from an impact perspective, rates from here, with the exception of our floating rate positions in our investment portfolio, we don't expect to see meaningful impact to our business for rate changes.

The other topic that comes up in conversations with investors is around recessions and surrenders, right, particularly since the onset of the banking challenges there. So similar question there just around how do you think about that with your business? What trends are you seeing at GA? And how does this compare versus prior cycles?

Look, I appreciate some of the work that you've published. I think that, obviously, post Silicon Valley Bank, there's been a lot of attention on insurance and insurance liabilities. And so for this audience, and I'm sure you're all well familiar with, there's a really meaningful difference between demand deposits and banks and retirement solutions that we provide and the type of products that we underwrite. And again, I think you've done a nice job of putting that in your research pieces as well. Demand deposits highly liquid, therefore expenses, easily transferable online. What do we sell? Retirement solutions. What are they for? Typically part of an asset allocation model. They're typically purchased for accumulation, but also for other benefits. For example, death benefits, income benefits for tax planning. So very, very different. And by the way, they come with surrender charges. So let's talk about our business and give you a little bit more information. So across our whole business, only around 18% of our annuity business is outside of the surrender charge period. And within that book of business, it's both seasoned and diversified that's why we feel really good about it. Season being, the majority of that has been on our -- it's been written for 10 years or longer. So a lot of data, a lot of experience. And diversified it is, we have a retail business that we write our own business. This business is made up primarily of our reinsurance business, where we've got underlying exposure from 15 different counterparties. We got a really broad-based look of the overall industry. But if you got to think about our business, either in surrender, seasoned and diversified. So again, feel good about our exposure. What have we seen? That's the question we get all the time. Look, across this very large book of business. We put together models, we have expectations. Those models say when rates go up, we expect surrenders to go up, what we've seen is our experience and our actuals across our board on average have been consistent with our models. So we feel good about that as well. Just one other thing, and I'm going to come back to this risk theme over and over again and running an insurance business. While models are what we analyze our business around, but actuals can deviate for models. So what you'll find in Global Atlantic is we actually run the business with specific amount of excess liquidity on top of that.

The other topic that comes up in conversations with investors is also around the portfolio, just around quality, how it's invested, particularly versus other insurance companies that are out there. So just curious if you could speak to some of the portfolio mix, where that stands, how that stacks up versus others? And maybe you can kind of give us a flavor of how much is in CRE versus structured credit and so forth?

Okay. I guess any way to start for our business on investment portfolio is to actually start with the liability side. So like if you think about how we do asset allocation, it starts with what policies we're writing across our individual institutional business. Why, is what we're going to own, our investment portfolio is going to be tied to the duration and liquidity and any other fundamental factors in the business that we're writing. That's a starting point, okay? What do we own? Look, our portfolio is going to be consistent with what other insurance companies own. So all of the major insurance company oriented asset classes. Let's start with, we're going to be super senior in the capital structure. The 95% of what we own, plus is going to be NAIC-1 or 2, for investment grade, again, we're an insurance business. Second thing is we're going to own a lot of corporate credit, commercial real estate, residential real estate, structured products. What's different about our portfolio because I want to respond is probably if you look in our portfolio versus other insurance companies, we're probably going to have more structured product-oriented investments. Why is that? Because we think between us and KKR, we've got great origination, credible underwriting. And by the way, we feel like in these products, in particular, we're getting paid excess spread, not to take excess credit risk. We feel really good about the credit profile, but actually to take the illiquidity risk. And we think as an insurance company, we're really well suited to do that. Okay. Let me tell you what is not in our portfolio. And what you won't find in our portfolio or emerging markets, hedge fund investments or private equity commitments that gives you at least a sense of like how we're focused in our business and our business model from an investing perspective. You got to remember. Okay, CRE. That was the question. Okay. So if you think about book of business today, around 13% or $16 billion is invested in commercial real estate lending. And then you asked me about the office exposure. The significant majority of our of office exposure exists in our commercial real estate lending book. That's about $4.4 billion plus or minus. Look, we feel really good about our exposure here because 97% is first lien, right? LTV of around 60%. We're in insurance business. We stay high in the capital structure. Significant majority CM1 or CM2. Again, highest type of risk that you can own. So again, from a positioning perspective we feel like not only are we at the senior level, but we've got a really well written and diversified book.

That's a great overview. Maybe just taking a step further, how is the performance and the quality of the book holding up in this backdrop relative to your expectations? Are there any sort of signs of stress? What are the KPIs that you look at to assess that? And what would be your expectation for a loss rate this cycle versus the past 5 or 10 years?

Yes. I mean the starting point on like estimating losses is around expectations and it starts with what we own. I'm going to go back to, again, we own 95% to 96% NAIC-1 or 2. We would expect our losses to be really low. And historically, if you look at our impairment levels over the last 5 years, I think we've averaged around 6 basis points versus the industry of around 14. So we have seen and we've got a track record of experiencing low losses. And by the way, as far as like spaces that were interested, you hit the nail on head, obviously, we're focused on things like commercial real estate office within our portfolio, which I commented on earlier. But again, where we are in the capital structure as an insurance business, we feel really good about the exposure that we've got. As far as losses on the forward -- what I'd say is, look, we recognize the fact we're in a different part of the credit cycle right now. We all do. So expectations off of our models would be -- well, losses would be higher than they have been, we expect them given what we own and what we underwrite to remain relatively low.

So higher than before than the prior cycle, but still low?

Higher than what we've seen in the last 5 years, but still low.

But still low. Okay. Great. And what about ROEs? What can we expect off of GA's book for return on equity? What are you sort of targeting for new business? And how does that compare versus the existing book?

So we have a 10-year track record of consistently producing low to mid-teens returns, which we feel good about. As far as guidance goes, Rob Lewin, CFO of KKR, I think in the fourth quarter earnings release -- provided guidance, I think that was 12% to 13% after tax. And then KKR since converted that to a pretax number. That's the right number to look at. And I guess your question for us in regards to in-force versus new businesses, look, we think what we underwrite is generally consistent with what we're experiencing in our in-force business right now.

Okay. Great. Now one of the trends we've seen in the asset management industry is more asset managers getting into insurance. So just curious of how you would sort of contrast the KKR GA relationship, how that differs from others? And what does it allow you to do different versus others across the industry?

Well, as much as I'd love to spend a lot of time going through everyone else's business model. I'm going to focus on our own business model here. I mean you can tell -- I'm a big believer in the model that we put together with KKR. So I'm going to speak to ours and tell you why I like and believe in our model versus looking at others. 3 frames I'll give you for our model, alignment, continuity and the ability to think long term. Some of this would have come up when I talked about how things were going as well. Let's talk about alignment, it was really important to me and to our team to get alignment right with KKR when we structured this deal. And for me, the best way to articulate alignment is the fact they own 63% on balance sheet, not the fund, large investments. It matters. It means we're not just partners, but we all jointly act like owners together. Look, lots of different models are going to work a lot of different ways. I'll tell you in our model, that alignment is incredibly powerful. I think we invest better, I think we're able to raise capital efficiently. And I think there's all these other things we can do, expand internationally, think about product development, make each other's businesses better. I don't think you get that in other models or at least I don't know if you get that in other models, I know we get it in our model, but then I only know what our own experience has been. So I think that's worked really, really well. And I think there's a catalyst for opportunities in the future. As far as continuity goes, look, I think and I feel really fortunate to lead an organization of incredibly talented individuals. We've got a great leadership team. And the reality is about half of our leadership team has been together since the very early innings of building this business together. And the whole executive leadership team is exactly the same but for the KKR transaction as it is today. Continuity matters, the reality is we've also been given the opportunity with KKR despite the fact they're majority owned, really continue to excel and run our business in the way that we think makes sense, with great complementary value from KKR across the board. We are and have been running an insurance business for almost 2 decades now. Long track record, but the continuity matters, and I think that's different in our model. And the last thing is about long term. We're in a forever business ultimately. If you get to the core of what we do, we provide retirement solutions and life products to policyholders, and we made promises forever. So we need to be able to think long term, the nature of our partnership and our structure, in particular, gives us the ability to do that. So we can think long term from a strategic perspective, from a growth perspective, from a product perspective. And here's one that really matters from investing in our platform perspective. And insurance is a pretty complicated financial services business. So the ability to invest long term in operations and technology, I mean, all of that, I think, makes a big difference. So I know you asked me a question about other models. I'm a big believer in the model that we've gotten and all the benefits that come through.

One thing we see with some of the other models as they've been focused more on the annuity space, fixed index in particular, whereas your model is a little different. You're a little broader than that. I think about 20% of your book isn't life and other products. Maybe you could speak to why that is, how you get comfortable with the other risks? And what do you have to do differently to manage those risks?

So I guess this is the advantage of having on this for 20 years. I mean we've been underwriting life products now for 2 decades. So incredible and deep experience in understanding it. But I want to be narrower in the answer. We're really just focused on certain parts of the life business and the ones that we think we've got a competitive advantage in are in asset-intensive life products. Why is that? Capabilities to underwrite, stable liabilities, and we can really leverage the same thing we can do on our annuity side, leverage our investment expertise to provide incredible value to our clients and to our partners. And we think that makes a really big difference. I think it's a differentiator for us as well. I think we're able to -- and a diversifier. So differentiators, we were actually able to come to the table to our clients and offer a multifaceted and multiproduct solution. MetLife, the deal that we just announced a couple of weeks ago was one of those. It's unique in a lot of ways and what we can provide and also ultimately diversifies our business as well. So again, it's something we've been doing now for a long period of time. It's something we feel really good about the risk, and we think it diversifies and really positions us well competitively.

So I'm going to come back to the block in a minute. But just maybe first on the origination capabilities because I think that's a key differentiator for you as well. So just as the insurance business grows and scales, how have you been able to continue to grow the investment origination capabilities? How has that expanded? And where do you see white space opportunities to further expand that and broaden it out from here?

Got it. If I was up on stage in 2019, I have a totally different answer in a lot of white space is an aside. Here's one of the things we recognized. It wasn't that long ago, and we were trying to build our business, we're probably about $50 billion of assets, we had a reasonably small investment team. And while we would say -- and by the way, I think to be successful in insurance business, you have to be able to underwrite service, risk manage, originate, all assets has been insurance companies call securities, loans and income generating. That's the kind of the way we thought about it. I think Global Atlantic at the time, while we could do a lot of that, we couldn't do all of it. We didn't do it in an institutional way, and we didn't do it across the capital structure, did at KKR in 2019. KKR, while it had a broad-based businesses and asset-backed finance and indirect lending and commercial real estate. It also had the potential to scale and its white space was it didn't actually underwrite across the capital structure, may have been good at the equity level, but it didn't actually do the senior level. So fast forward, we do the deal, one of the rationales was the capabilities of combining our investment businesses, getting the scale being more meaningful from an origination perspective. Add that to the fact that we've had the growth that we've experienced over the last 2 years. And what I see today, at least in the U.S. is we've got a fully built out, scalable investment platform for an insurance business. I'm not going to speak to KKR more broadly. But for our business, gives us the opportunity that's critical. In volatile markets, in changing markets, we need to be able to asset allocate and have access to assets across the spectrum, securities, loans, income generating, critically important for us. We have that today in the U.S. with KKR. Okay. Where is their white space? Nothing is perfect, by the way. There's always opportunities for growth. A lot of that exists on the international side. I mean, I know for a global lending perspective, we do think there's opportunities there over time. We have an approach to building businesses. We do it quietly. We do it patiently, we are both in this regard. But I think as we envision the forward, there's definitely white space for Global Atlantic in Asia and in Europe. And certainly, I think KKR also has the opportunity to continue to scale in those markets as it makes sense over time.

Great. Why don't we come back to the block topic. Scott alluded to a favorable environment for blocks on the last earnings call and then you recently announced the block transaction with MetLife. So what are you seeing in terms of pipeline activity? What's your appetite for block transactions overall? How competitive is the space? Maybe you could just talk to the overall backdrop and maybe touch upon the MetLife transaction as well?

Okay. There's a lot of questions there. I'm going to try to break that down into the following pieces. Let me talk a little bit about the MetLife deal because I think it's illustrative of our block business. I'll talk about the competitive environment, a little bit of history, if you'll indulge me a bit on that. And then I'll talk about appetite and what the pipeline looks like. If that makes sense. So look, we recently announced a $19 billion deal with MetLife, $13 billion in general account assets. Look, this is a really good illustration of what -- the power of our partnership is capable of doing. We were able to provide a highly customized solution to a blue-chip client, so that helped them solve what they were looking to do. From our perspective, we're able to continue to scale access to $13 billion of general account assets, which is great, where we've got capabilities to be able to invest. And we also were able to get them with a liability set that we were able to deeply underwrite, have a lot of experience around and feel really good about. So like that deal, I think is -- and by the way, if you think about the size and the execution and capabilities to do something of that magnitude, not a lot of firms that have the capabilities to do that. So again, with the headline transaction for us, let's talk about the competitive environment. I know you're going to be meeting with a lot of firms. I appreciated the report you published last week. I think it was very timely. 20 years ago, we've kind of envisioned this business, I'll describe as the following. There were very few competitors. There were very few deals, and it was a novel idea to do a block reinsurance deal. And management teams were not thinking about doing this deals. I remember that vividly, by the way. Fast forward to today, 20 years later, okay? There are a lot of competitors. There are a lot of transactions being done. It's no longer novel if you're a mutual company, public company, private company, insurance space, you're considering block reinsurance transactions to reduce risk, free up capital to exit in our core lines of business. So it's remarkable looking back how this has really changed in a lot of ways. Look, when I think about the competitive dynamic, I only focus on Global Atlantic. And we are fortunate enough with the franchise we've built. By the way, we've done over 25 reinsurance deals plus with different clients. I feel really fortunate that we can be selective on the deals that we compete in, and we're pretty ruthless with our time on where we choose to compete. So we prefer to focus on either bilateral discussions where we're solving strategic issues for clients or limited processes. And that's where you'll find our business model. We also want to work with clients, and we want to work on transactions where the other attributes matter. Credit quality, credit ratings, investment guidelines, track record. So while there is a lot of competition, I do feel like in where we compete, there's a lot of opportunities for us to continue to win in the kind of transactions that we want. As far as the pipeline goes, even though we just completed the MetLife deal, the pipeline remains strong. We're definitely having dialogue with both new and existing clients right now. So we continue to be engaged in the market with our clients, trying to create important solutions for them.

The other avenue for growth that we didn't get to talk to just yet is organic. And that's important piece of the growth engine for you guys. So maybe you could talk a little bit about how you think about how does GA generate organic growth? How are you expanding your sales and distribution capabilities to further accelerate that? And any sort of quantification of how much we can expect annually?

Okay. Let's take a step back on our retail business or in the individual market business. 20 years later, clearly, the best market we've ever seen. You think about our retirement product or annuities that we're selling, there is tremendous demand from a mass affluent from retirees, we've got a solution that really works, works even better in a higher rate environment, and it becomes more attractive in a volatile market. So you've seen our market expand. Just some fun facts because again, we're celebrating 10 years since we had separated from Goldman Sachs, the entire annuity business that year was about the same size as it was in the first quarter of this year. And between last year, or I guess '21 and '22, the market was up over 50%. So retirement solutions, annuities, big market opportunity. How are we positioned? We've got a national sales force. We sell today through 200-plus banks and broker-dealers, 90% to 95% of what we sell is through financial institutions, including the largest firms, including Morgan Stanley. We continue to see opportunities to grow by adding additional distribution partners and we're in active dialogue there. So while we're a consistent top 5 firm, we're not in every firm, add more firms, while we write the majority of the products in the retirement space, we don't write all, so we're continuing to look to add new products. And there's -- while we're 90% to 95% of the financial institution space, it's a whole another adjacent market called independent distribution that we have a very small share in today. As that industry consolidates and they look more like financial institutions, we think there's a really good opportunity for Global Atlantic as well. Just one last thing on growth. I want to make sure I hit, all of this on the individual market site, in particular, needs to be supported by a modern technology platform. This is about providing scale and a great client experience, and we've been on a journey. And we actually, over the course of this year, have unveiled a new platform there as well. So I think a lot of opportunities for us over time. You ask me about a number and how you can think about it. Last year, we had a record year, $10 billion in sales as and I think that's a good base for us to be able to grow off of on the forward.

Great. And we're just about up on time. So just curious, final thoughts here as we conclude. The business has doubled in the last 2 to 3 years. You've delivered mid-teens or so ROE. What keeps you positive on the growth outlook from here? What do you see as some of the major drivers and the biggest opportunities as you look forward?

Yes. Hopefully, over the course of my remarks, I will have highlighted some of those. When we think about managing our insurance business, I think about growth, not in isolation, I think about growth in the following way. Look, we have opportunities to grow, I'll comment on this because you've asked. We also have to think about because we're an insurance business, protecting our balance sheet, thinking about downsides, making sure we've got the right capital levels, right liquidity, continue to optimize our partnership with KKR. And then lastly, we've got to continue to invest in our platform, technology, operations, modern, efficient, scalable. So that all -- to grow all those other things really have to be in balance. So I spend a lot of time thinking about that for our organization. Specifically related to growth, look, we're highly methodical on how we think about it, how we thought, how we think about where we want to invest in opportunities. So number one, we've got great tailwinds in the businesses that we're in. In this market environment, great retirement services, annuity market that continues to grow, that's tailwinds for our individual institutional business. We think that, again, that also helps our block business as well. So a great environment for us. And then if we drill down, we like to describe growth and some of this, I would have hit on already, like, can we grow our franchise businesses. We strive to be top 3 or top 5 in every business. Good news is we are top 3 or top 5 in some, but not all, but the ones that we're in, we think we have the potential to grow into. That's why we're in them ultimately. So how do we -- and by the way, we do that by growing our footprint, adding clients, adding products. All of that, we feel like there's an opportunity set for us to grow. There's a bunch of newer things that we invested in a couple of years ago. One of them is like the pension risk transfer space, another that might be registered investment-linked product on the individual side. These are new things for us that over time, we think could be potentially growth opportunities as on the forward. And then there's a bunch of emerging opportunities that we've had. I would have touched on those over the course of my remarks as well that would include international over time, but patiently and methodically as the opportunity presents itself. And then, by the way, continuing to capitalize on the KKR partnership in ways that we haven't before. So I think there are a lot of exciting and interesting opportunities for us to be able to grow on the forward.

Great. I want to leave it there. Thank you very much, Allan.

Great. Thank you very much for the time, everyone. Much appreciated.

Thank you.

Thank you.