Athene’s Steady Growth and Diversification Strategies

Athene, a leading financial services company, has continued to demonstrate strong performance and growth in the first nine months of 2024. The company specializes in issuing, reinsuring and acquiring retirement savings products to meet the increasing demand for retirement planning solutions.

Solid Financial Performance Athene reported total assets of $355.0 billion as of September 30, 2024, up from $259.3 billion at the end of 2023. The company generated an annualized net investment spread of 1.76% for the nine months ended September 30, 2024.

Athene’s organic channels, including retail, flow reinsurance and institutional products, provided gross inflows of $56.8 billion in the first nine months of 2024, a 30% increase from the same period in 2023. This reflects the strength of the company’s multi-channel distribution platform and its ability to quickly adapt to changing market opportunities.

Retail sales, which include fixed annuities, were $27.8 billion in the first nine months of 2024, up from $21.9 billion in the same period of 2023. The increase was driven by strong demand for fixed indexed annuities (FIAs) and multi-year guaranteed annuities (MYGAs) across Athene’s bank, independent marketing organization (IMO) and broker-dealer channels.

In the flow reinsurance channel, Athene generated inflows of $4.5 billion in the first nine months of 2024, down from $7.7 billion in the same period of 2023, due to increased competition in the market. However, the company’s strong financial position and reputation as a solutions provider are expected to help it continue sourcing additional reinsurance partners.

Athene’s institutional channel, which includes funding agreements and pension group annuities, generated inflows of $24.5 billion in the first nine months of 2024, up from $14.0 billion in the same period of 2023. This was driven by record funding agreement issuances, partially offset by lower pension group annuity sales due to a competitive market environment.

Diversification and Growth Strategies To support its growth strategies, Athene has established two long-duration, on-demand capital vehicles, ACRA 1 and ACRA 2, which allow the company to deploy capital across multiple accretive avenues while maintaining a strong financial position. As of September 30, 2024, Athene estimates it had approximately $8.4 billion in capital available to deploy, consisting of excess equity capital, untapped leverage capacity, and available undrawn capital at ACRA.

Athene’s inorganic channel, which includes acquisitions and block reinsurance transactions, has also contributed significantly to the company’s growth. The company plans to continue growing and diversifying its business, both organically and inorganically, with a focus on international expansion, particularly in Asia.

Industry Trends and Competition Athene operates in a highly competitive market, facing a variety of large and small industry participants, including diversified financial institutions, insurance and reinsurance companies, and private equity firms. However, the company believes its leading presence in the retirement market, diverse range of capabilities, and broad distribution network uniquely position it to effectively serve the increasing demand for retirement solutions.

According to industry data, Athene was the largest provider of annuities and fixed annuities in the US market for the six months ended June 30, 2024, with market shares of 8.6% and 11.6%, respectively. The company also had a 12.8% market share in the fixed indexed annuity (FIA) market during the same period.

Key Operating and Non-GAAP Measures Athene uses several non-GAAP measures to evaluate its financial performance, including spread related earnings (SRE), net investment spread, and adjusted leverage ratio. These measures are designed to provide a better understanding of the company’s underlying profitability drivers and capital structure, excluding the impact of market volatility and certain non-operating expenses.

Spread related earnings (SRE), a pre-tax non-GAAP measure, increased by 1% to $2.4 billion in the first nine months of 2024 compared to the same period in 2023. This was primarily driven by higher net investment earnings and strategic capital management fees, partially offset by higher cost of funds.

Net investment spread, a key measure of profitability, decreased to 1.76% in the first nine months of 2024 from 1.98% in the same period of 2023. This was mainly due to higher cost of funds, partially offset by a higher net investment earned rate.

Athene’s adjusted leverage ratio, a non-GAAP measure that excludes the impact of market volatility, was 30% as of September 30, 2024, within the company’s target range.

Investment Portfolio and Risk Management Athene’s investment portfolio, which directly backs its net reserve liabilities and surplus assets, grew to $242.7 billion as of September 30, 2024, up from $217.4 billion at the end of 2023. The portfolio is managed by Apollo and consists primarily of high-quality fixed income securities, including corporate bonds, structured securities, and commercial and residential real estate loans.

Athene’s investment strategy focuses on disciplined asset-liability management, diversification, and earning incremental yield by taking measured liquidity and complexity risk rather than assuming incremental credit risk. The company maintains a diversified portfolio and sets limits on investments by asset class and credit risk.

As of September 30, 2024, 96.9% of Athene’s available-for-sale (AFS) securities portfolio, including related parties, was invested in assets considered investment grade based on the NAIC (National Association of Insurance Commissioners) designation. The company’s AFS securities had a fair value of $182.6 billion, which was 5.1% below amortized cost, primarily due to the significant increase in US Treasury rates.

Athene actively manages its interest rate risk through asset-liability management, the use of floating rate investments, and hedging activities. As of September 30, 2024, the company’s net invested asset portfolio included $49.8 billion of floating rate investments, or 21% of its net invested assets, and its net reserve liabilities included $35.0 billion of floating rate liabilities, or 15% of its net invested assets, resulting in a net floating rate asset position of $14.8 billion, or 6% of its net invested assets.

Outlook and Conclusion Athene’s strong financial performance, diversified growth strategies, and prudent risk management position the company well to continue capitalizing on the increasing demand for retirement solutions. The company’s leading market position, broad distribution network, and strategic partnerships with Apollo provide a solid foundation for future growth, both organically and through acquisitions and reinsurance transactions.

As the retirement-age population continues to grow and the need for retirement planning solutions increases, Athene’s tax-efficient savings products and focus on providing value-added services are expected to drive further expansion. The company’s ability to quickly adapt to changing market conditions and its commitment to disciplined underwriting and capital management are key strengths that should enable Athene to navigate the competitive landscape and deliver sustainable, long-term value for its shareholders.