ATH-PA.NYSEAthene Holding LTD
10-K: Athene Holding Ltd. Reports Strong Financial Position in 2024 Annual Filing
Sentiment:
Annual Report
Athene Holding Ltd.'s 2024 annual report highlights a robust capital position and strategic growth initiatives, leveraging its relationship with Apollo Global Management.
Worse than expectedNet income available to Athene Holding Ltd. common stockholder decreased by 27% to $3.3 billion in 2024.
Summary
- Athene Holding Ltd. specializes in retirement savings products and focuses on generating spread income through liability sourcing and asset management with Apollo Global Management.
- The company's investment strategy prioritizes incremental yield by taking measured liquidity and complexity risk.
- In 2024, Athene's gross organic inflows reached $71.0 billion, a 12% increase from 2023.
- Net income available to Athene Holding Ltd. common stockholder decreased by 27% to $3.3 billion in 2024.
- The company estimates deployable capital of approximately $8.8 billion, including excess equity capital, untapped leverage capacity, and available undrawn capital at ACRA.
- Athene is subject to various regulations and legal restrictions, including those related to insurance, securities, and data privacy.
- The company faces competition from diversified financial institutions and insurance companies in the retirement services market.
Sentiment
Score: 7
Explanation: The document presents a mixed sentiment. While there are positives such as strong organic growth and a leading market position, there are also negatives such as a decrease in net income and exposure to market risks. The overall sentiment is cautiously optimistic.
Positives
- Strong organic growth in 2024, with a 12% increase in gross inflows.
- Significant capital available for deployment, estimated at $8.8 billion.
- Leading market position in the retirement services market.
- Successful track record in sourcing and consummating complex transactions.
- Strong financial strength ratings from major rating agencies.
- Ability to leverage the scale and expertise of Apollo Global Management.
Negatives
- Net income available to Athene Holding Ltd. common stockholder decreased by 27% in 2024.
- Exposure to market and credit risks that could diminish the value of investments.
- Reliance on third parties for various services.
- Potential conflicts of interest between Apollo and the holders of Athene's preferred stock.
- Increased regulatory scrutiny and compliance costs.
- Competition in the fixed annuity and reinsurance markets.
Risks
- Inaccuracy of management's assumptions and estimates.
- Financial strength rating downgrades.
- Intense competition in the industry.
- Inability to attract and retain IMOs, banks, and broker-dealers.
- Operational failures in telecommunications and information technology systems.
- Liquidity risk and the ability to meet near-term obligations.
- Market and credit risks that could diminish the value of investments.
- Interest rate fluctuations.
- Reliance on Apollo for investment management services.
- Changes in laws and regulations governing the insurance industry.
- Tax risks associated with the company's structure and operations.
- Potential impacts from climate change and related regulations.
- Risks associated with pandemics and other public health crises.
- Risks associated with the use of artificial intelligence.
Future Outlook
Athene expects to continue growing its existing organic channels and source additional volumes of profitably underwritten liabilities in various market environments, with a focus on international expansion, particularly in Asia.
Industry Context
The document provides insights into Athene's competitive positioning within the annuity and reinsurance markets, highlighting its market share and ranking among competitors.
Comparison to Industry Standards
- According to LIMRA, total annuity market sales in the US were $332.0 billion for the nine months ended September 30, 2024, a 23.1% increase from the same time period in 2023.
- In the total annuity market, for the nine months ended September 30, 2024 (the most recent period for which specific market share data is available), we were the largest provider of annuities based on sales of $28.0 billion, translating to an 8.4% market share.
- For the nine months ended September 30, 2023, we were the largest provider of annuities based on sales of $22.0 billion, translating to an 8.2% market share.
- According to LIMRA, total fixed annuity market sales in the US were $239.9 billion for the nine months ended September 30, 2024, a 22.3% increase from the same time period in 2023.
- In the total fixed annuity market, for the nine months ended September 30, 2024 (the most recent period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $27.2 billion, translating to an 11.3% market share.
- For the nine months ended September 30, 2023, we were the largest provider of fixed annuities based on sales of $21.4 billion, translating to a 10.9% market share.
- According to LIMRA, total fixed indexed annuity market sales in the US were $95.1 billion for the nine months ended September 30, 2024, a 33.9% increase from the same time period in 2023.
- For the nine months ended September 30, 2024 (the most recent period for which specific market share data is available), we were the largest provider of FIAs based on sales of $10.9 billion, translating to an 11.5% market share.
- For the nine months ended September 30, 2023, we were the second largest provider of FIAs based on sales of $7.6 billion, translating to a 10.7% market share.
- According to LIMRA, total RILA market sales in the US were $47.9 billion for the nine months ended September 30, 2024, a 39.6% increase from the same time period in 2023.
- For the nine months ended September 30, 2024 (the most recent period for which specific market share data is available), we were the eleventh largest provider of RILAs based on sales of $823 million, translating to a 1.7% market share.
- For the nine months ended September 30, 2023, we were the eleventh largest provider of RILAs based on sales of $650 million, translating to a 1.9% market share.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Executive Vice President and Chief Financial Officer | Martin P. Klein | TBD | TBD (expected in 2025) | Retirement |
Legal Proceedings
- The business may be the target or subject of, and we may be required to defend against or respond to, litigation, regulatory investigations, enforcement actions or reputational harm.
Related Party Transactions
- The document details numerous related party transactions with Apollo Global Management and its affiliates, including investment management fees, fund investments, and shared service agreements.
Stakeholder Impact
- The document provides information relevant to shareholders, policyholders, employees, and other stakeholders, including financial performance, risk factors, and corporate governance practices.
Next Steps
- Expand organic distribution channels.
- Pursue attractive inorganic growth opportunities.
- Expand product offering.
- Leverage merger with Apollo.
- Allocate assets during market dislocations.
- Maintain risk management discipline.
Key Dates
| Date | Description |
|---|---|
| 1995 | Reference to the Private Securities Litigation Reform Act of 1995 regarding forward-looking statements. |
| 1933 | Reference to Section 27A of the Securities Act of 1933 regarding forward-looking statements. |
| 1934 | Reference to Section 21E of the Securities Exchange Act of 1934 regarding forward-looking statements. |
| 1978 | Reference to the Bermuda Insurance Act 1978. |
| 1980 | Reference to the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980. |
| 1981 | Reference to Bermudas Companies Act 1981. |
| 1986 | Reference to the US Internal Revenue Code of 1986. |
| 1992 | Reference to Schedule 7AC of the Taxation of Chargeable Gains Act 1992. |
| 1999 | Reference to the Gramm-Leach-Bliley Act of 1999. |
| 2000 | Reference to Bermudas Employment Act 2000. |
| 2001 | Reference to the Massachusetts Uniform Securities Act. |
| 2003 | Reference to the Income Tax (Earnings & Pensions) Act 2003. |
| 2005 | Reference to the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005. |
| 2009 | Reference to the European Union (EU) Directive (2009/138/EC) (Solvency II). |
| 2010 | Reference to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. |
| 2011 | Reference to the Insurance (Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Rules 2011. |
| 2016 | Reference to the Bermuda Personal Information Protection Act 2016. |
| 2017 | Athene entered the pension group annuity market. |
| 2017 | The NYSDFS enacted 23 NYCRR 500, a cybersecurity regulation governing financial companies (Cybersecurity Regulation). |
| 2018 | The EU General Data Protection Regulation (EU GDPR) came into direct effect in all EU Member States on May 25, 2018. |
| 2018 | Athene entered into a coinsurance agreement with Global Atlantic Financial Group Limited. |
| 2018 | The Economic Substance Act 2018 (ESA) was enacted. |
| 2019 | The NAIC adopted amendments to the Credit for Reinsurance Model Law and Regulation. |
| 2019 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A. |
| 2019 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 5.625% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series B. |
| 2019 | The International Association of Insurance Supervisors (IAIS) adopted the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). |
| 2020 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C. |
| 2020 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D. |
| 2020 | The SEC adopted a rule under the Exchange Act that establishes a standard of conduct for broker-dealers and associated persons of a broker-dealer when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities. |
| 2020 | The DOL issued final regulatory action on December 15, 2020, which confirmed the reinstatement of the definition of investment advice that applied prior to 2016 but broadens the circumstances under which financial institutions, including insurers, could be considered fiduciaries under ERISA in connection with recommendations to rollover assets from a qualified retirement plan to an IRA. |
| 2021 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 3.950% Senior Notes due 2051. |
| 2021 | Colorado adopted legislation that restricts the use of consumer data sources, algorithms, and predictive models that unfairly discriminate against an individual. |
| 2022 | Athene completed its merger with Apollo Global Management, Inc. on January 1, 2022. |
| 2022 | Athene issued Depositary Shares, each representing a 1/1,000 th interest in a share of 7.750% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E. |
| 2022 | Athene contributed certain of its net alternative investments to Apollo Aligned Alternatives Aggregator, LP (AAA). |
| 2023 | Athene entered into an arrangement with a highly rated reinsurer to retrocede the mortality risk associated with the whole life liability in its most recent Japanese block reinsurance transaction. |
| 2023 | Athene completed the redomestication of its jurisdiction of organization from Bermuda to the State of Delaware on December 31, 2023. |
| 2023 | ALRe sold 50% of its non-voting, economic interests in ACRA 2 to Apollo/Athene Dedicated Investment Program II (ADIP II) for $640 million, while maintaining all of ACRA 2s voting interests. |
| 2023 | ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP IIs ownership of economic interests in ACRA 2 to 60%, with ALRe owning the remaining 40% of the economic interests. |
| 2023 | The NAIC adopted an Interim Factor for determining capital charges for residual tranches. |
| 2023 | The NAIC adopted an amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office to assign risk weights to CLOs based on its own modeling as opposed to credit ratings. |
| 2023 | The California Privacy Rights Act (CPRA) went into effect on January 1, 2023. |
| 2023 | The Bermuda Corporate Income Tax Act 2023 was enacted on December 27, 2023. |
| 2024 | The IID identified AGM as meeting the criteria as an IAIG and further identified AHL as the Head of the IAIG on February 6, 2024. |
| 2024 | The IID identified itself as the Group-Wide Supervisor for AGM on February 6, 2024. |
| 2024 | The California Department of Insurance concluded a routine claim exam of AANY and AADE, which resulted in no significant findings in 2024. |
| 2024 | ALRe has received a determination that they satisfy the conditions to forgo the collateral posting requirements in Iowa pursuant to any coinsurance agreement entered into, amended or renewed on or after the effective date of NAIC 2019 as adopted by Iowa. |
| 2024 | The IAIS determined the AM provides comparable outcomes to the ICS in November 2024. |
| 2024 | The IAIS adopted the ICS in December 2024. |
| 2024 | The FSOC voted to adopt new guidance regarding the designation of non-bank SIFIs in November 2023, which became effective January 16, 2024. |
| 2024 | The California Department of Insurance is conducting an exam of AAIA as a part of a 2020 settlement agreement regarding the companys legacy life insurance business. |
| 2024 | The IID is conducting a routine examination of AAIAs policies and procedures to revisions to the NAIC Model Regulation #275 Suitability in Annuity Transactions. |
| 2024 | The NYSDFS has recently notified us of their plans to conduct routine examinations of AANY and ALICNY for the period of January 1, 2020 to December 31, 2024. |
| 2024 | The NAICs Financial Condition (E) Committee adopted changes to the NAIC Securities Valuation Offices (SVO) filing exempt process in August 2024. |
| 2024 | ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP IIs ownership of economic interests in ACRA 2 to 63%, with ALRe owning the remaining 37% of the economic interests effective October 1, 2024. |
| 2024 | The DOL released a proposed regulation on October 31, 2023, which was issued as final on April 23, 2024, that replaced the existing definition of investment advice fiduciary. |
| 2024 | Two Texas federal district courts issued stays on the effective date of the amendments to the definition of investment advice fiduciary and the amendments to the prohibited transaction exemptions in July 2024. |
| 2024 | The DOL filed a notice of appeal with respect to the national stay issued by the one of the Texas federal district courts in September 2024. |
| 2024 | The (H) Committee adopted the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (AI Bulletin) in December 2023. |
| 2024 | The California Department of Insurance concluded a routine claim exam of AANY and AADE, which resulted in no significant findings in 2024. |
| 2024 | The UK has not adopted dedicated AI legislation and is instead relying on a principles-based, sector-specific approach to AI regulation; however, in July 2024 it was announced that new AI regulation would be introduced. |
| 2025 | The remaining principal sections of PIPA, including conditions for use of personal information, requirements to provide a privacy notice and appoint a privacy officer, and access, rectification and erasure rights for individuals, were fully implemented on January 1, 2025. |
| 2025 | The Bermuda CIT came into full effect on January 1, 2025. |
| 2025 | The Purposes and Procedures Manual amendment is scheduled to become effective on January 1, 2026, although the amendment still has to be adopted by the NAIC. |
| 2026 | Colorado enacted a comprehensive AI law, Consumer Protections for Interactions with Artificial Intelligence, which will go into effect on February 1, 2026 and will apply to high-risk AI systems which include AI systems used in insurance and financial or lending services. |
Keywords
annuities, reinsurance, investment management, risk management, financial results, capital, Apollo, ACRA, regulation, fixed income
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