10-Q: Athene Holding Ltd. Reports Strong Third Quarter Results, Navigates Market Volatility

Athene Holding Ltd. announces its third quarter 2024 results, showcasing a significant increase in net income despite a complex market environment.

Summary

• Athene Holding Ltd.'s third quarter 2024 net income available to common stockholders increased to $580 million, up from $442 million in the same period last year.
• Total assets reached $355.0 billion as of September 30, 2024.
• The company's net investment spread was 1.76% for the nine months ended September 30, 2024.
• The report details the company's investment portfolio, derivative positions, and related party transactions.
• The company is subject to a complex and extensive array of laws and regulations that are administered and enforced by many regulators.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong financial results, but also acknowledges certain risks and challenges.

Positives

• Net investment income increased by $849 million to $3.8 billion in 2024 from $2.9 billion in 2023.
• Premiums increased by $363 million to $389 million in 2024 from $26 million in 2023.
• VIE investment related gains (losses) increased by $219 million to $469 million in 2024 from $250 million in 2023.
• The company has a strong capital position and is well positioned to meet policyholder and other obligations.

Negatives

• Other revenues decreased by $560 million to $4 million in 2024 from $564 million in 2023, primarily driven by the $555 million gain on the settlement of the VIAC recapture agreement in 2023.
• Market risk benefits remeasurement (gains) losses increased by $965 million to $524 million in 2024 from $(441) million in 2023.
• DAC, DSI and VOBA amortization increased by $33 million to $244 million in 2024 from $211 million in 2023.
• The company is subject to litigation arising in the ordinary course of our business, including litigation principally relating to our retail business.

Risks

• The company is subject to litigation arising in the ordinary course of our business, including litigation principally relating to our retail business.
• The company is subject to a complex and extensive array of laws and regulations that are administered and enforced by many regulators.
• The company or its business may be the target or subject of, and the company may be required to defend against or respond to, litigation, regulatory investigations, enforcement actions or reputational harm.

Future Outlook

The company expects that its credit profile and its reputation as a solutions provider will help it continue to source additional reinsurance partners, which will further diversify its flow reinsurance channel.

Industry Context

The report notes that the company operates in highly competitive markets and faces a variety of large and small industry participants, including diversified financial institutions, insurance and reinsurance companies and private equity firms.

Comparison to Industry Standards

• According to LIMRA, total annuity market sales in the US were $216.6 billion for the six months ended June 30, 2024, a 19.6% increase from the same time period in 2023.
• For the six months ended June 30, 2024, Athene was the largest provider of annuities based on sales of $18.7 billion, translating to an 8.6% market share.
• According to LIMRA, total fixed annuity market sales in the US were $156.7 billion for the six months ended June 30, 2024, a 17.6% increase from the same time period in 2023.
• For the six months ended June 30, 2024, Athene was the largest provider of fixed annuities based on sales of $18.2 billion, translating to an 11.6% market share.
• According to LIMRA, total fixed indexed annuity market sales in the US were $59.3 billion for the six months ended June 30, 2024, a 22.5% increase from the same time period in 2023.
• For the six months ended June 30, 2024, Athene was the largest provider of FIAs based on sales of $7.6 billion, translating to a 12.8% market share.
• According to LIMRA, total registered indexed linked annuity (RILA) market sales in the US were $30.8 billion for the six months ended June 30, 2024, a 41.7% increase from the same time period in 2023.
• For the six months ended June 30, 2024, Athene was the tenth largest provider of RILAs based on sales of $568 million, translating to a 1.8% market share.

Legal Proceedings

• Beginning in March 2024, a number of putative class actions were filed in federal courts in the United States against certain of our customers, in their respective capacities as plan sponsors, alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA) in connection with their transfer of pension obligations under defined benefit plans governed under ERISA and their purchase of pension group annuity (PGA) contracts from us.

Related Party Transactions

• Substantially all of our investments are managed by Apollo.
• We have a cooperation agreement with Athora, pursuant to which, among other things, (1) for a period of 30 days from the receipt of notice of a cession, we have the right of first refusal to reinsure (i) up to 50% of the liabilities ceded from Athoras reinsurance subsidiaries to Athora Life Re Ltd. and (ii) up to 20% of the liabilities ceded from a third party to any of Athoras insurance subsidiaries, subject to a limitation in the aggregate of 20% of Athoras liabilities, (2) Athora agreed to cause its insurance subsidiaries to consider the purchase of certain funding agreements and/or other spread instruments issued by our insurance subsidiaries, subject to a limitation that the fair market value of such funding agreements purchased by any of Athoras insurance subsidiaries may generally not exceed 3% of the fair market value of such subsidiarys total assets, (3) we provide Athora with a right of first refusal to pursue acquisition and reinsurance transactions in Europe (other than the United Kingdom (UK)) and (4) Athora provides us and our subsidiaries with a right of first refusal to pursue acquisition and reinsurance transactions in North America and the UK.
• We have an equity investment in Atlas, an asset-backed specialty lender, through our investment in AAA.
• We have investments in PK AirFinance (PK Air), an aviation lending business with a portfolio of loans (Aviation Loans).
• We have an agreement pursuant to which we may invest up to $2.875 billion in funds managed by Apollo entities (Strategic Partnership).
• We have a minority equity investment in VA Capital, which is the parent of Venerable Holdings, Inc.
• We invest in Wheels, Inc., (Wheels) indirectly through our investment in AAA.
• AHL has an unsecured revolving promissory note with AGM which allows AGM to borrow funds from AHL.

Stakeholder Impact

• The company's strong capital position and diverse, capital-efficient products allow it to be dependable partners with IMOs, banks and broker-dealers as well as to consistently write new business.
• The company expects its retail channel to continue to benefit from its credit profile, product launches and continuous product enhancements as it looks to capture new potential distribution opportunities.

Key Dates

Keywords

Athene Holding Ltd, financial results, investment portfolio, reinsurance, annuities, financial services, market risk, capital, liquidity