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 its 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 Notes (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. The company plans to continue growing and diversifying its business, both organically and inorganically, with a focus on international expansion, particularly in Asia.

To support its growth and capital deployment, Athene established ACRA 1 and ACRA 2 as long-duration, on-demand capital vehicles. These strategic capital solutions allow Athene the 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, foreign exchange rates and inflation. The company carefully monitors these factors and manages its investment portfolio and derivatives to mitigate related risks.

The retirement-age population is expected to experience unprecedented growth over the next four decades, driven by technological advances and improvements in healthcare. This trend is increasing demand for tax-efficient savings products with low-risk or guaranteed return features and potential equity market upside, which Athene’s products are well positioned to meet.

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

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 Athene’s investment performance plus strategic capital management fees, less the total cost of its liabilities.
• Net Investment Earned Rate: A measure of 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: A measure of Athene’s capital structure that excludes the impacts of accumulated other comprehensive income (AOCI) and certain fair value adjustments.

These non-GAAP measures provide insight into Athene’s underlying profitability drivers and are useful for analyzing the company’s business performance and trends.

Results of Operations

For the first quarter of 2025, Athene reported net income available to common stockholders of $420 million, down 63% from the prior year period. This decrease was primarily driven by a $1.5 billion decline in revenues, partially offset by a $687 million decrease in benefits and expenses and a $132 million decrease in income tax expense.

The revenue decrease 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 decline 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 and VOBA amortization.

Athene’s spread related earnings decreased by $12 million, or 1%, to $804 million. This was primarily due to a $487 million increase in cost of funds and a $39 million increase in interest and other financing costs, partially offset by a $510 million increase in net investment earnings.

The 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, were $333.3 billion as of March 31, 2025, up from $315.0 billion at the end of 2024. This growth was driven by strong net organic inflows, reinvestment of earnings, and unrealized gains on AFS securities and mortgage loans, 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 holds derivatives for economic hedging purposes to manage its exposure to cash flow variability, equity market risk, foreign exchange risk and interest rate risk.

As of March 31, 2025, 97.1% of Athene’s AFS securities, including related parties, were considered investment grade based on NAIC designations. The company’s international exposure, which comprised 39% of the AFS portfolio, is generally either US dollar-denominated or hedged against foreign currency risk.

Athene’s mortgage loan portfolio, including related parties and consolidated VIEs, was $74.7 billion as of March 31, 2025, up from $67.1 billion at the end of 2024. The portfolio is primarily composed of high-quality commercial first lien and mezzanine real estate loans, as well as residential mortgage loans.

The company’s investment fund portfolio, including related parties and consolidated VIEs, was $20.4 billion as of March 31, 2025. This portfolio focuses on strategic origination and retirement services platforms, as well as equity and credit funds.

Athene also holds $22.7 billion in funds withheld at interest receivables, including related parties, as of March 31, 2025. Approximately 95.7% of the fixed maturity securities within these funds are investment grade.

Outlook

Athene believes it is well-positioned to continue growing its business, both organically and inorganically, driven by favorable demographic trends and its competitive advantages in the retirement services market. The company’s diverse product offerings, multi-channel distribution platform, and strategic capital solutions provide it with the flexibility to capitalize on a variety of growth opportunities.

However, Athene remains vigilant to potential risks, including global economic and market volatility, interest rate movements, and competitive pressures. The company will continue to actively manage its investment portfolio and liability profile to maintain a strong financial position and deliver sustainable, risk-adjusted returns for its shareholders.