Overview

Athene Holding Ltd. (AGM) is a leading financial services company that specializes in issuing, reinsuring and acquiring retirement savings products. The company focuses on generating spread income by combining its expertise in sourcing long-term liabilities and leveraging Apollo’s global asset management platform to actively source or originate assets.

As of March 31, 2025, Athene has an expected annual net investment spread of 1-2% over the estimated 7.6 year weighted-average life of its net reserve liabilities. The company’s total assets have grown to $381.5 billion, and for the first quarter of 2025, it generated an annualized net investment spread of 1.65%.

Organic Growth Channels

Athene’s organic channels, including retail, flow reinsurance and institutional products, provided gross inflows of $25.6 billion in Q1 2025, up 27% from the prior year. This reflects the strength of the company’s multi-channel distribution platform and ability to pivot into optimal and profitable channels.

In the retail channel, Athene had fixed annuity sales of $9.5 billion, with growth in multi-year guaranteed annuities (MYGAs) and registered index-linked annuities (RILAs) offsetting a decrease in fixed indexed annuity (FIA) sales. The company aims to continue growing this channel by deepening relationships with its network of independent marketing organizations, banks and broker-dealers.

The flow reinsurance channel generated inflows of $4.9 billion, up from $2.4 billion in the prior year, driven by record volumes from a strategic opportunity with a US partner as well as growth in Asia Pacific. Athene expects its credit profile and reputation will help it continue to source additional reinsurance partners.

In the institutional channel, Athene generated inflows of $11.1 billion, up from $8.0 billion, primarily from higher funding agreement issuances, including record quarterly issuances under its Funding Agreement Backed Note (FABN) program. The company also issued funding agreements to the Federal Home Loan Bank (FHLB) and through long-term repurchase agreements. Athene expects to grow this channel through continued pension group annuity transactions and programmatic funding agreement issuances.

Inorganic Growth

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

To support growth and capital deployment, Athene established ACRA 1 and ACRA 2 as long-duration, on-demand capital vehicles. These allow Athene flexibility to deploy capital across multiple accretive avenues while maintaining a strong financial position.

Industry Trends and Competition

Athene is affected by global economic and market conditions, including equity market performance, interest rates, inflation and foreign exchange rates. The company carefully monitors these factors and manages its investment portfolio and derivatives accordingly.

Athene operates in highly competitive markets, facing a variety of large and small industry participants. However, the company believes its leading presence, diverse capabilities and broad distribution network position it well to effectively serve consumers’ increasing demand for retirement solutions.

In the total annuity market, Athene was the largest provider in 2024 with an 8.3% market share. It was also the largest provider of fixed annuities with an 11.4% market share and the largest provider of fixed indexed annuities with a 10.7% market share. The company sees registered index-linked annuities (RILAs) as a significant growth opportunity.

Key Operating and Non-GAAP Measures

Athene uses several non-GAAP measures to evaluate its financial performance, including:

• Spread Related Earnings (SRE): A pre-tax measure that excludes the impact of market volatility, integration/restructuring expenses and other non-operating items.
• Net Investment Spread: Measures investment performance plus strategic capital management fees, less the total cost of liabilities.
• Net Investment Earned Rate: Evaluates the performance of Athene’s net invested assets.
• Cost of Funds: Includes liability costs related to crediting on deferred annuities and institutional products, as well as other liability costs.
• Other Operating Expenses: Excludes interest expense, policy acquisition costs, integration/restructuring expenses and stock compensation.
• Adjusted Leverage Ratio: Evaluates Athene’s capital structure, excluding the impacts of accumulated other comprehensive income (AOCI) and fair value changes.

Results of Operations

In Q1 2025, Athene’s net income available to common stockholders decreased 63% to $420 million, primarily driven by a $1.5 billion decrease in revenues, partially offset by a $687 million decrease in benefits and expenses.

The decrease in revenues was mainly due to a $2.5 billion decline in investment related gains, partially offset by a $699 million increase in net investment income and a $216 million increase in VIE investment related gains.

The decrease in benefits and expenses was primarily driven by a $1.4 billion decrease in interest sensitive contract benefits, partially offset by a $539 million increase in market risk benefits remeasurement losses, a $106 million increase in policy and other operating expenses, and a $60 million increase in DAC/DSI/VOBA amortization.

Athene’s spread related earnings decreased 1% to $804 million, as higher cost of funds and interest/financing costs were partially offset by higher net investment earnings. Net investment spread decreased 18 basis points to 1.65%, driven by a 36 basis point increase in cost of funds, partially offset by a 17 basis point increase in net investment earned rate.

Investment Portfolio

Athene’s total investments, including related parties and consolidated VIEs, grew to $333.3 billion as of March 31, 2025, up from $315.0 billion at the end of 2024. This growth was driven by strong organic inflows, reinvestment of earnings, and unrealized gains, partially offset by decreases in short-term repurchase agreements and derivative assets.

The investment portfolio consists primarily of high-quality fixed maturity securities, loans and short-term investments, as well as opportunistic holdings in investment funds. Athene also holds derivatives for economic hedging purposes, primarily to provide the income needed to fund annual index credits on its FIA products.

As of March 31, 2025, 97.1% of Athene’s available-for-sale (AFS) securities were considered investment grade based on NAIC designations, and 96.6% were investment grade based on NRSRO ratings. The company’s AFS securities had $13.8 billion in gross unrealized losses, down from $15.4 billion at the end of 2024, primarily due to a decrease in Treasury rates.

Athene’s related party investments totaled $49.4 billion, or 12.9% of total assets, as of March 31, 2025. These include investments in Apollo-managed securitizations, funds and direct origination platforms, as well as the Venerable reinsurance portfolio.

Outlook

Athene is well-positioned to continue growing both organically and inorganically, leveraging its diverse distribution channels, strong financial profile and strategic capital solutions. The company believes it has significant capital available, with approximately $8.2 billion deployable as of March 31, 2025.

Athene expects its credit profile, product offerings, and growing reputation will enable it to further expand its existing organic channels and source additional profitable liabilities. The company also sees continued opportunities for inorganic growth, particularly in international markets like Asia.

Overall, Athene remains focused on generating sustainable, risk-adjusted returns by prudently managing its investment portfolio and liability profile. The company’s diversified business model, disciplined approach and strategic partnerships position it well to capitalize on the increasing demand for retirement solutions.