Athene’s Steady Growth and Diversified Approach

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 designed to help individuals and institutions fund their retirement needs.

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, up 30% 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.

Gross outflows, which include policyholder withdrawals, death benefits, pension group annuity payments and other liability costs, were $26.3 billion in the first nine months of 2024, down slightly from $26.8 billion in the same period of 2023. This decrease was primarily driven by the VIAC recapture transaction in 2023 and lower outflows related to certain reinsurance blocks, partially offset by higher funding agreement maturities and more annuity policies reaching the end of their surrender charge periods.

Diversified Growth Strategies Athene’s growth strategy focuses on both organic and inorganic channels. In the retail channel, the company had fixed annuity sales of $27.8 billion in the first nine months of 2024, up from $21.9 billion in the same period of 2023. This increase was driven by strong sales of fixed indexed annuities (FIAs) and multi-year guaranteed annuities (MYGAs) across the 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 competitive dynamics in the current year. However, the company expects its strong credit profile and reputation as a solutions provider will help it continue to source 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 increase was driven by higher funding agreement inflows, partially offset by lower pension group annuity inflows. The company issued funding agreements totaling $23.6 billion in the first nine months of 2024, up from $4.9 billion in the same period of 2023, due to a resurgence in FABN issuance and increased secured and other funding agreement and FHLB issuances.

Athene’s inorganic channel, which includes acquisitions and block reinsurance transactions, has also contributed significantly to the company’s growth. The company believes its corporate development team, with support from Apollo, has an industry-leading ability to source, underwrite and expeditiously close transactions, making Athene an attractive partner for insurance companies seeking to restructure their business.

Strategic Capital Solutions To support its growth strategies and capital deployment opportunities, Athene has established two long-duration, on-demand capital vehicles: ACRA 1 and ACRA 2. These vehicles allow the company to simultaneously deploy capital across multiple accretive avenues while maintaining a strong financial position.

Effective July 1, 2023, Athene’s reinsurance subsidiary, ALRe, sold 50% of its non-voting, economic interests in ACRA 2 to ADIP II, a series of funds managed by Apollo. Effective December 31, 2023, ACRA 2 repurchased a portion of its shares held by ALRe, increasing ADIP II’s ownership to 60%, with ALRe owning the remaining 40%. Effective October 1, 2024, ACRA 2 repurchased additional shares from ALRe, increasing ADIP II’s ownership to 63%.

These strategic capital solutions provide Athene with the flexibility to deploy capital across multiple growth opportunities while maintaining a strong financial position. As of September 30, 2024, the company estimates it had approximately $8.4 billion in capital available to deploy, consisting of $2.0 billion in excess equity capital, $2.9 billion in untapped leverage capacity, and $3.5 billion in available undrawn capital at ACRA.

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. The company believes its leading presence in the retirement market, diverse range of capabilities, and broad distribution network uniquely position it to effectively serve consumers’ increasing demand for retirement solutions, particularly in the fixed annuity market.

According to industry data, Athene was the largest provider of annuities in the US based on sales for the six months ended June 30, 2024, with an 8.6% market share. The company was also the largest provider of fixed annuities and fixed indexed annuities during the same period, with 11.6% and 12.8% market share, respectively.

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 other operating expenses. These measures are intended to remove the impact of market volatility and certain non-operating expenses to provide a better understanding of the company’s underlying profitability drivers.

SRE, a pre-tax non-GAAP measure, was $2.4 billion for the first nine months of 2024, up slightly from $2.4 billion in the same period of 2023. The increase 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, was 1.76% for the first nine months of 2024, down from 1.98% in the same period of 2023. The decrease was primarily due to higher cost of funds, partially offset by a higher net investment earned rate.

Investment Portfolio and Risk Management Athene’s investment portfolio, including related parties and consolidated VIEs, totaled $308.0 billion as of September 30, 2024, up from $259.3 billion at the end of 2023. The company’s net invested assets, which directly back its net reserve liabilities and surplus assets, were $242.7 billion as of September 30, 2024, up from $217.4 billion at the end of 2023.

Athene’s investment strategy focuses on disciplined management of its investment portfolio against its long-duration liabilities, with an emphasis on earning incremental yield by taking measured liquidity and complexity risk rather than assuming incremental credit risk. The company’s investment portfolio is predominantly composed of high-quality fixed income securities, including corporate bonds, structured securities, and commercial and residential real estate loans.

As of September 30, 2024, 96.9% of Athene’s AFS securities, including related parties, were considered investment grade based on the NAIC designation system, and 96.1% were considered investment grade based on NRSRO ratings. The company’s AFS securities had a fair value of $182.6 billion, which was 5.1% below the amortized cost of $192.4 billion, primarily due to the significant increase in US Treasury rates.

Outlook and Conclusion Athene’s strong financial performance, diversified growth strategies, and prudent risk management position the company well for continued success. The company’s focus on generating spread income by combining its expertise in sourcing long-term liabilities and actively managing its investment portfolio has allowed it to establish a significant base of earnings and maintain a strong financial position.

Looking ahead, Athene believes it is well-positioned to capitalize on the growing demand for retirement solutions, particularly in the fixed annuity market. The company’s credit profile, product offerings, and distribution capabilities, combined with its strategic capital solutions, provide a solid foundation for future growth and value creation.