8-K: Athene Holdings Reports Second Quarter 2024 Results, Highlights Strong Inflows and Capital Position

Athene Holding Ltd. released its second quarter 2024 financial results, showcasing robust organic inflows and a strong capital position.

Summary

• Athene Holding Ltd. has released its financial supplement for the second quarter ended June 30, 2024.
• The company reported a net income available to common stockholders of $583 million, a decrease of 49% quarter-over-quarter but an increase of 47% year-over-year.
• Spread related earnings (SRE) were $712 million, down 13% from the previous quarter and 11% year-over-year.
• Net spread was 1.24%, a decrease of 23 basis points quarter-over-quarter and 28 basis points year-over-year.
• Net investment spread was 1.64%, down 19 basis points quarter-over-quarter and 35 basis points year-over-year.
• Total assets reached $332.6 billion, a 4% increase from the previous quarter and a 23% increase year-over-year.
• Net invested assets totaled $232.9 billion, a 2% increase from the previous quarter and a 9% increase year-over-year.
• Gross organic inflows were $16.7 billion, a 17% decrease from the previous quarter and an 11% decrease year-over-year.
• The company's adjusted senior debt-to-capital ratio was 16.4%, a slight decrease of 10 basis points from the previous quarter.
• The adjusted leverage ratio was 22.5%, a decrease of 20 basis points from the previous quarter.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While Athene demonstrates strong asset growth and a solid capital position, there are notable declines in key profitability metrics quarter-over-quarter. The company's strategic initiatives and market position are positive, but the recent financial performance suggests some challenges.

Positives

• Athene experienced a 23% year-over-year increase in total assets, reaching $332.6 billion.
• Net invested assets grew by 9% year-over-year, totaling $232.9 billion.
• The company maintains a strong capital position with an adjusted senior debt-to-capital ratio of 16.4%.
• Athene has a diversified business mix with retail, flow reinsurance, funding agreements, and pension group annuities contributing to inflows.
• The company's strategic partnerships have enabled significant transaction value to the Athene ecosystem.
• Athene's alternative investment portfolio has historically provided downside-protected hybrid exposure.

Negatives

• Net income available to common stockholders decreased by 49% quarter-over-quarter to $583 million.
• Spread related earnings (SRE) decreased by 13% quarter-over-quarter to $712 million.
• Net spread decreased to 1.24%, a 23 basis point decrease quarter-over-quarter.
• Net investment spread decreased to 1.64%, a 19 basis point decrease quarter-over-quarter.
• Gross organic inflows decreased by 17% quarter-over-quarter to $16.7 billion.

Risks

• The company's financial results are subject to market volatility, particularly in investment gains and losses.
• Changes in interest rates can impact the company's spread related earnings and net investment spread.
• Actuarial experience, assumption updates, and other insurance adjustments can cause unusual variability in results.
• The company's alternative investments are subject to market risks and may not achieve expected returns.
• Outflows from policies can impact the company's net flows and overall financial performance.

Future Outlook

The company's presentation includes forward-looking statements regarding capital allocation, portfolio performance, and future operating results, but cautions that actual results may differ materially.

Management Comments

• Athene's operating performance continues to be strong.
• The company has a robust capitalization in excess of AA rating levels.
• Athene is focused on maintaining a fortress balance sheet.
• The company targets mid-teens returns on capital.
• Athene has a disciplined capital management strategy.

Industry Context

Athene is a leading player in the retirement services industry, with a significant market share in the U.S. annuity and pension group annuity markets. The company's strategic partnerships and diversified business model position it well within the competitive landscape.

Comparison to Industry Standards

• Athene's adjusted senior debt-to-capital ratio of 16.4% is lower than the average of 21.4% for AA-/A+ rated companies.
• Athene's credit losses are lower than the industry average, with 11 bps compared to the industry average of 13 bps.
• Athene's 5-year FABN secondary credit spread-to-US Treasury is T+120, which is higher than some peers such as PFG (T+90).
• Athene's RBC ratio of 412% is higher than some peers such as EQH (400-425%).
• Athene's gross invested assets of $302B are higher than peers such as CRBG ($233B), EQH ($212B), and PFG ($115B).

Stakeholder Impact

• Shareholders may be concerned about the decrease in profitability metrics quarter-over-quarter.
• Employees may be impacted by any changes in the company's strategic direction.
• Customers may benefit from the company's strong capital position and diversified product offerings.
• Suppliers and creditors may be impacted by any changes in the company's financial performance.

Next Steps

• The company expects to launch with two additional financial institutions in the second half of 2024.
• Athene will continue to focus on its strategic partnerships and diversified business model.
• The company will continue to monitor and manage its risk exposures.

Key Dates

Keywords

Athene, financial results, annuities, reinsurance, investments, spread related earnings, net spread, capital, inflows, outflows, alternative investments, fixed income