8-K: Athene Provides Overview of Corporate Structure, Highlighting Strong Capitalization and Regulatory Framework

Athene Holding Ltd. released a presentation detailing its corporate structure, emphasizing its strong capitalization, transparent operations, and regulatory compliance across its U.S. and Bermuda entities.

Summary

• Athene Holding Ltd. (AHL) has provided an overview of its corporate structure, highlighting its operations in the U.S. and Bermuda.
• The company emphasizes its strong capitalization with $26 billion in gross regulatory capital, and a consolidated risk-based capital ratio of 412% as of December 31, 2023.
• Athene's structure includes U.S. insurance subsidiaries and Bermuda reinsurance subsidiaries, with internal reinsurance operations in Bermuda.
• The company's Bermuda entities facilitate efficient raising of third-party capital, with approximately 97% of global alternative capital raised in Bermuda.
• Athene maintains consistent reserve, capital, and risk management practices across its U.S. and Bermuda operations.
• The company's assets, reserves, and capital are highly transparent throughout its structure, with approximately 75% of assets shown in U.S. statutory filings and the remaining 25% in Bermuda.
• Athene is a U.S. domiciled corporation and a full U.S. taxpayer, conducting most of its new business through its U.S. subsidiaries.
• The company has a U.S. entity RBC of 392% and a Bermuda RBC of 400% as of December 31, 2023.
• Athene's key subsidiaries are located in Iowa, Bermuda, and Delaware.
• The company uses normal-course reinsurance to support growth, transferring risks via modified or funds-withheld coinsurance.
• Policyholders benefit from the combined strength of all Athene entities, with $19 billion of capital in Bermuda.
• Athene has many regulatory constituencies, with the Iowa Insurance Division (IID) as the group supervisor.
• The company has access to approximately $8 billion of deployable capital, including excess equity capital, untapped leverage capacity, and undrawn capital at its strategic sidecar structure, ACRA.
• Athene's parent company redomiciled from Bermuda to Delaware on December 31, 2023, simplifying its corporate structure.
• The company intends to pay regular common stock dividends to its parent company of $750 million per year, subject to periodic evaluation.
• There are no cross-guarantees between the Apollo and Athene debt and preferred stock issuances.
• Athene is part of the Apollo/Athene Internationally Active Insurance Group (IAIG), with Athene as the head of the IAIG.

Sentiment

Score: 8

Explanation: The document presents a positive view of Athene's financial health, capitalization, and regulatory compliance. The company's strong ratings and transparent structure are favorable for investors. The document is factual and does not contain any negative surprises.

Positives

• Athene is very well capitalized, exceeding rating agencies AA thresholds.
• The company has a transparent corporate structure with clear visibility of assets, reserves, and capital.
• Athene efficiently raises third-party capital through its Bermuda entities.
• The company maintains consistent risk management practices across its U.S. and Bermuda operations.
• Athene's redomicile to Delaware simplifies its corporate structure.
• The company has strong financial strength ratings from AM Best, Moody's, Fitch, and S&P.
• Athene has access to significant deployable capital.
• The company's intercompany reinsurance practices are in accordance with regulatory requirements.

Negatives

• The document does not explicitly state any negatives, but it does acknowledge that forward-looking statements are subject to risks and uncertainties.
• The document notes that certain financial information is based on estimates of management and may be subject to change.

Risks

• Forward-looking statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially.
• The company's performance is dependent on various factors, many of which are beyond Athene's control.
• Changes in economic conditions could impact Athene's business and operating results.
• Regulatory changes, such as the NAIC's review of asset adequacy testing, could impact Athene.
• The company's estimates are subject to change and may not prove to be correct.
• The document notes that the models provided are for illustrative purposes only and should not be used for investment decisions.

Future Outlook

Athene intends to continue its business plan, including paying regular dividends, and will periodically evaluate its capital needs. The company expects to be subject to the Aggregation Method for group capital calculation in 2025, which is not expected to have a material impact on its capital requirements.

Management Comments

• Athene management believes that the expectations reflected in these forward-looking statements are reasonable, but it can give no assurance that these expectations will prove to be correct.
• Athene does not select the domicile in which to hold a particular type of business or asset based on the capital or reserving standards of that jurisdiction.
• Athene is committed to doing business in jurisdictions that have established, recognized and credible regulatory regimes in place.

Industry Context

Athene's structure and operations are consistent with industry practices for large insurance and reinsurance companies. The use of Bermuda entities for capital raising is a common strategy in the insurance industry. The company's focus on transparency and regulatory compliance aligns with the increasing scrutiny of financial institutions.

Comparison to Industry Standards

• Athene's RBC ratios of 392% in the U.S. and 400% in Bermuda are significantly above the regulatory minimums and compare favorably to industry peers.
• The company's financial strength ratings from AM Best, Moody's, Fitch, and S&P are in line with other major insurance and reinsurance companies such as PFG (A+), PRU (AA-), MET (AA-) and GL (AA-).
• Athene's use of intercompany reinsurance is a common practice in the insurance industry, similar to other large players like AIG, AXA XL, Chubb, MassMutual, MetLife, Munich Re, Pacific Life, Prudential and RGA, who also have substantial operations in Bermuda.
• The company's approach to managing capital and reserves across its U.S. and Bermuda entities is consistent with best practices in the industry.
• Athene's disclosure of its financial information and regulatory filings is comparable to other publicly traded insurance companies.

Stakeholder Impact

• Shareholders benefit from Athene's strong capitalization and transparent operations.
• Policyholders benefit from the combined strength of all Athene entities and the company's commitment to regulatory compliance.
• Employees benefit from the company's stability and growth.
• Customers benefit from the company's financial strength and ability to meet its obligations.
• Suppliers and creditors benefit from the company's strong financial position.

Next Steps

• Athene will continue to operate under its current business plan.
• The company will periodically evaluate its dividend policy.
• Athene will be subject to the Aggregation Method for group capital calculation in 2025.
• The company will continue to provide financial disclosures and updates to investors and regulators.

Key Dates

Keywords

Athene, reinsurance, capital, Bermuda, regulatory, insurance, risk-based capital, corporate structure, assets under management, financial strength, Apollo, IAIG