10-Q: Athene Reports Q2 2025 Results, Strategic Capital Growth

Athene Holding Ltd. reports a decrease in net income for Q2 2025 but highlights significant growth in net invested assets and strategic capital management fees, driven by strong organic inflows and favorable investment performance.

Summary

• Net income available to Athene Holding Ltd. common stockholders decreased by 14% to $503 million for the three months ended June 30, 2025, compared to $583 million for the same period in 2024.
• For the six months ended June 30, 2025, net income available to common stockholders decreased by 47% to $923 million, from $1.73 billion in the prior year period.
• Total revenues increased by $695 million to $5.4 billion for Q2 2025, but decreased by $840 million to $9.5 billion for H1 2025, primarily due to a significant decrease in investment related gains (losses) and premiums.
• Benefits and expenses increased by $1.1 billion to $4.7 billion for Q2 2025 and by $383 million to $8.0 billion for H1 2025.
• Spread Related Earnings (SRE), a non-GAAP measure of underlying profitability, increased by 15% to $820 million for Q2 2025 and by 6% to $1.624 billion for H1 2025.
• Net Investment Spread decreased by 6 basis points to 1.58% for Q2 2025 and by 12 basis points to 1.62% for H1 2025, primarily due to higher cost of funds.
• Total assets grew to $405.3 billion as of June 30, 2025, up from $363.3 billion as of December 31, 2024.
• Net invested assets increased to $275.0 billion as of June 30, 2025, from $248.6 billion as of December 31, 2024.
• Gross organic inflows for the six months ended June 30, 2025, were $46.8 billion, a 27% increase from $36.8 billion in the prior year period.
• Gross outflows decreased by $2.6 billion to $15.6 billion for H1 2025, compared to $18.2 billion for H1 2024.
• Retail fixed annuity sales decreased to $16.7 billion for H1 2025 from $18.6 billion for H1 2024, driven by a decrease in multi-year guaranteed annuity (MYGA) products.
• Flow reinsurance inflows significantly increased to $7.0 billion for H1 2025 from $3.6 billion for H1 2024.
• Institutional channel inflows rose to $22.9 billion for H1 2025 from $14.6 billion for H1 2024.
• The company redeemed its 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C, for $600 million at par value on June 30, 2025.
• A 1-for-1,000 reverse stock split of common stock was approved by the board, effective August 5, 2025, reducing outstanding shares to 203,805, all held by Apollo Global Management, Inc.
• Authorized shares of common stock were reduced from 360,000,000 to 250,000, and preferred stock from 40,000,000 to 200,000.
• The cooperation agreement with Athora Holding Ltd. was mutually terminated effective August 5, 2025.
• A new liquidity facility with a borrowing capacity of $2.6 billion, expandable to $3.1 billion, was entered into on June 27, 2025.
• The company issued $1.0 billion of 6.625% Senior Notes due May 19, 2055, and $600 million of 6.875% Fixed-Rate Reset Junior Subordinated Debentures due June 28, 2055.

Sentiment

Score: 7

Explanation: While GAAP net income declined due to market volatility adjustments, the company's core profitability (Spread Related Earnings) and net investment spread improved or remained strong. Significant organic growth, increased assets under management, and a robust capital position indicate a healthy underlying business and strong future prospects. The strategic capital solutions and market leadership in key annuity segments are also positive indicators.

Positives

• Total assets increased significantly to $405.3 billion and net invested assets grew to $275.0 billion, reflecting strong business expansion.
• Spread Related Earnings (SRE), a key measure of underlying profitability, increased by 15% for Q2 2025 and 6% for H1 2025, demonstrating robust core performance despite GAAP net income fluctuations.
• Net investment earned rate improved to 5.21% in Q2 2025 and 5.14% in H1 2025, driven by higher returns in both fixed income and alternative investment portfolios.
• Achieved strong organic inflows of $46.8 billion for H1 2025, a 27% increase year-over-year, showcasing the strength of its multi-channel distribution platform.
• Experienced record volumes in flow reinsurance ($7.0 billion for H1 2025) and funding agreements ($22.9 billion for H1 2025).
• Successfully redeemed Series C preferred stock for $600 million at par value, which was below its carrying value, optimizing capital structure.
• Maintained strong capital adequacy with a US RBC ratio of 419% and a Bermuda BSCR ratio of 243% as of December 31, 2024, well above regulatory minimums.
• Reported an estimated $8.7 billion in capital available to deploy, including $3.1 billion in excess equity capital, $2.4 billion in untapped leverage capacity, and $3.2 billion in available undrawn capital at ACRA, supporting future growth initiatives.
• Favorable performance of equity indices, particularly the S&P 500 (up 10.6% in Q2 2025), positively impacted the valuation of FIA hedging derivatives.

Negatives

• Net income available to common stockholders decreased by 14% for Q2 2025 and a substantial 47% for H1 2025.
• Total revenues for H1 2025 decreased by $840 million, primarily due to unfavorable investment related gains (losses) and a decrease in premiums.
• Investment related gains (losses) saw a significant decrease of $2.4 billion for H1 2025, driven by unfavorable net foreign exchange impacts and an increase in realized losses on AFS securities.
• Premiums decreased by $566 million for Q2 2025 and $540 million for H1 2025, largely due to a $572 million decrease in pension group annuity premiums.
• Net investment spread experienced a slight compression, decreasing by 6 basis points for Q2 2025 and 12 basis points for H1 2025, primarily due to a higher cost of funds.
• Retail fixed annuity sales declined to $16.7 billion for H1 2025 from $18.6 billion for H1 2024, mainly attributed to a decrease in multi-year guaranteed annuity (MYGA) products.
• The pension group annuity channel continues to face challenges from a competitive environment and ongoing litigation against certain clients.
• Increased capital requirements related to expanded solvency regulations negatively impacted the valuation of Athora in 2025.
• The company holds $13.2 billion in gross unrealized losses on AFS securities as of June 30, 2025, although these are considered temporary and held to maturity.

Risks

• Variability in the amount of statutory capital that insurance and reinsurance subsidiaries have or are required to hold.
• Exposure to interest rate and/or foreign currency fluctuations, which can impact investment valuations and profitability.
• Potential need for additional capital in the future and the risk of such capital being unavailable on favorable terms or at all.
• Impact of major public health issues, such as the COVID-19 pandemic, on business operations.
• Changes in relationships with important parties in the product distribution network.
• Intense competition in the retail business and the ability to grow in a highly competitive environment.
• Impact of general economic conditions on the ability to sell products and on the fair value of investments.
• Challenges in successfully acquiring new companies or businesses and integrating them into the existing framework.
• Potential for downgrades, potential downgrades, or other negative actions by rating agencies.
• Dependence on key executives and the inability to attract and retain qualified personnel.
• Market and credit risks that could diminish the value of investments.
• Changes to the creditworthiness of reinsurance and derivative counterparties.
• Changes in consumer perception regarding the desirability of annuities as retirement savings products.
• Potential litigation (including class action litigation), enforcement investigations, or regulatory scrutiny.
• Impact of new accounting rules or changes to existing accounting rules on the business.
• Interruption or other operational failures in telecommunication and information technology systems, including from cyber threats.
• Dependence of Apollo Global Management, Inc. on key executives.
• Accuracy of estimates regarding the future performance of the investment portfolio.
• Increased regulation or scrutiny of alternative investment advisers and certain trading methods.
• Potential changes to laws or regulations affecting group supervision, capital requirements, affiliate transactions, dividend payments, acquisitions, minimum capitalization, statutory reserve requirements, and fiduciary obligations.
• Failure to obtain or maintain licenses and/or other regulatory approvals required for insurance subsidiaries.
• Increases in tax liability resulting from the implementation of OECD's Pillar Two global minimum tax initiative or similar rules, including the recently enacted corporate income tax in Bermuda.
• Certain non-United States subsidiaries becoming subject to United States federal income taxation in amounts greater than expected.
• Adverse changes in tax law.
• Failure to achieve the economic benefits expected from Athene Co-Invest Reinsurance Affiliate Holding Ltd. and Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (ACRA), or future ACRA capital raises.
• Failure of third-party ACRA investors to fund their capital commitment obligations.
• Litigation against certain pension group annuity clients impacting the pension group annuity channel.
• Ongoing uncertainty regarding trade policy poses a downside risk to the economic outlook, potentially leading to lower growth and higher inflationary pressures, increasing the risk of a stagflationary environment.
• Tariffs, which are inflationary in nature, remain in place and may negatively impact Gross Domestic Product (GDP) growth.
• Credit spread widening in 2025, which negatively impacted investment valuations.
• Investment funds are subject to interest rate risk and equity market risk, which can lead to volatility in earnings.
• Exposure to credit-related losses in the event of counterparty nonperformance on derivative financial instruments.
• Policyholders may elect to withdraw funds in amounts exceeding estimates, despite contractual provisions like surrender charges and market value adjustments (MVAs).
• Ability to borrow under Federal Home Loan Bank (FHLB) facilities is constrained by the availability of eligible collateral.
• Requirement to deliver additional collateral for repurchase agreements if the value of pledged securities decreases.

Future Outlook

The company intends to continue its organic growth by expanding its retail, flow reinsurance, institutional, and other distribution channels, deepening relationships with existing partners, and increasing its presence in Asia. It also expects the inorganic channel (acquisitions and block reinsurance) to remain a significant source of profitable growth, with a focus on international expansion. The company believes it has substantial capital available ($8.7 billion) to support its growth aspirations, with most current commitments ($33.3 billion) expected to be invested over the next five years. Regular common stock dividends of $750 million per year are planned. The company will continue to monitor the impact of new tax initiatives like the OECD Pillar Two global minimum tax and the Bermuda Corporate Income Tax regime.

Management Comments

• Our steady and significant base of earnings generates capital that we opportunistically invest across our business to source attractively priced liabilities and capitalize on opportunities.
• We believe that our credit profile, current product offerings and product design capabilities, as well as our reputation as both a seasoned funding agreement issuer and a reliable pension group annuity counterparty, will continue to enable us to grow our existing organic channels and source additional volumes of profitably underwritten liabilities in various market environments.
• We believe that we have the right people, infrastructure, scale and capital discipline to position us for continued growth.
• Our strong financial position and diverse, capital-efficient products allow us to be dependable partners with IMOs, banks and broker-dealers, as well as to consistently write new business.
• We expect our retail channel to continue to benefit from our credit profile, product launches and continuous product enhancements as we look to capture new potential distribution opportunities.
• We continue to expand our presence in Asia with increased partnerships and growing product offerings.
• We expect that our credit profile and our reputation as a solutions provider will help us continue to source additional reinsurance partners, which will further diversify our flow reinsurance channel.
• We expect to grow our institutional channel by continuing to engage in pension group annuity transactions and programmatic issuances of funding agreements.
• We believe our corporate development team, with support from Apollo, has an industry-leading ability to source, underwrite and expeditiously close transactions.
• With support from Apollo, we are a solutions provider with a proven track record of closing transactions, which we believe makes us the ideal partner to insurance companies seeking to restructure their business.
• We expect that our inorganic channel will continue to be an important source of profitable growth in the future.
• These stockholder-friendly, strategic capital solutions allow us the flexibility to simultaneously deploy capital across multiple accretive avenues, while maintaining a strong financial position.
• We believe that we have significant capital available to support our growth aspirations.
• We believe we have a strong capital position and are well positioned to meet policyholder and other obligations.
• AHL believes its insurance subsidiaries have sufficient statutory capital and surplus, combined with additional capital available to be provided by AHL, to meet their financial strength ratings objectives.

Industry Context

The company operates in highly competitive financial services markets, competing with diversified financial institutions, insurance/reinsurance companies, and private equity firms for retirement assets. The aging global population and insufficient retirement savings are driving increased demand for tax-efficient savings products with low-risk or guaranteed returns. While the total annuity market saw a slight decrease of 0.3% in Q1 2025, the Registered Index-Linked Annuity (RILA) market experienced a significant 20.6% increase. Economic conditions include elevated US inflation (2.7% as of June 30, 2025), stable US Federal Reserve interest rates (4.25%-4.50%), strong equity market performance (S&P 500 up 10.6% in Q2 2025), and positive US GDP growth (3.0% in Q2 2025). The company's investment strategy is designed to perform well in varying interest rate environments, utilizing floating rate investments and hedging activities.

Comparison to Industry Standards

• Athene was the largest provider of annuities in the US for Q1 2025, with an 8.9% market share based on sales of $9.5 billion, though this was a slight decrease from its 9.1% share in Q1 2024.
• The company maintained its position as the largest provider of fixed annuities in the US for Q1 2025, increasing its market share to 12.4% (from 12.0% in Q1 2024) with sales of $9.2 billion.
• In the Fixed Indexed Annuity (FIA) market, Athene remained the largest provider for Q1 2025, holding a 12.1% market share with sales of $3.4 billion, despite a decrease from its 14.5% share in Q1 2024.
• Athene was the eleventh largest provider of Registered Index-Linked Annuities (RILAs) in the US for Q1 2025, with a 2.0% market share based on sales of $353 million, maintaining its position from Q1 2024.
• The company's US RBC ratio of 419% and Bermuda BSCR ratio of 243% as of December 31, 2024, demonstrate strong capital positions well above regulatory minimums (BMA requires 100% BSCR), indicating robust financial health compared to industry benchmarks.

Corporate Governance

Legal Proceedings

• Subject to litigation arising in the ordinary course of business, primarily relating to the retail business.
• Management believes the ultimate disposition of current legal proceedings or claims will not have a material effect on financial condition, results of operations, or cash flows, though outcomes are inherently uncertain.
• Receives requests for information from government agencies in connection with regulatory or investigatory authority, which are reviewed and appropriate action is taken.

Related Party Transactions

• Substantially all investments are managed by Apollo, with management fees incurred of $383 million for Q2 2025 and $754 million for H1 2025.
• Apollo Global Management, Inc. (AGM) is the beneficial owner of 100% of the company's common stock.
• James Belardi, Executive Chairman and Chief Investment Officer, also serves on AGM's board and as CEO of Apollo Insurance Solutions Group LP (ISG), with a profit interest in ISG.
• Six of the twelve board members are employees or consultants to Apollo.
• The audit committee reviews and approves material transactions between the company and the Apollo Group.
• Consolidates Apollo Aligned Alternatives Aggregator, L.P. (AAA), which holds the majority of the alternative investment portfolio.
• The cooperation agreement with Athora Holding Ltd. was mutually terminated effective August 5, 2025.
• Investments in Athora Holding Ltd. totaled $1.487 billion as of June 30, 2025, including an investment fund and non-redeemable preferred equity/corporate debt securities.
• Had $65 million of funding agreements outstanding to Athora as of June 30, 2025, and commitments to make additional investments in Athora of $277 million.
• Made a conditional commitment to invest up to an additional $2.5 billion in Athora in connection with Athora's agreement to acquire a UK insurer.
• Holds an equity investment in Atlas, an asset-backed specialty lender, through AAA, and held $4.584 billion of related party AFS securities issued by Atlas or its affiliates as of June 30, 2025.
• Had commitments to make additional investments in Atlas of $1.384 billion as of June 30, 2025.
• Holds an investment in Apollo Rose II (B), which has interests in Catalina Holdings (Bermuda) Ltd., with $202 million in redeemable preferred equity securities as of June 30, 2025.
• Has a strategic modified coinsurance (modco) reinsurance agreement with Catalina, with a liability of $235 million as of June 30, 2025.
• Has a modco reinsurance agreement with Catalina for retail deferred annuity products, with a reinsurance recoverable balance of $5.269 billion as of June 30, 2025.
• Holds investments in MidCap Financial, including securities issued by MidCap Financial and its affiliates totaling $1.849 billion as of June 30, 2025.
• Has investments in Skylign Aviation Holdings, L.P., including direct investments in Skylign notes of $1.503 billion as of June 30, 2025, and commitments for an additional $41 million.
• Has a Strategic Partnership agreement to invest up to $2.875 billion in Apollo-managed funds, with $1.959 billion invested as of June 30, 2025.
• Holds a minority equity investment in VA Capital (parent of Venerable Holdings, Inc.) of $198 million as of June 30, 2025, and commitments for an additional $169 million in Venerable.
• Consolidates AP Violet ATH Holdings, L.P., which primarily represents an interest in VA Capital, valued at $123 million as of June 30, 2025.
• Has coinsurance and modco agreements with VIAC, a subsidiary of Venerable.
• Holds term loans receivable from Venerable totaling $339 million as of June 30, 2025.
• Invests in Wheels Inc. indirectly through AAA and directly holds securities of $974 million as of June 30, 2025, with commitments for an additional $32 million.
• Athene Co-Invest Reinsurance Affiliate Holding Ltd. (ACRA 1) and Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (ACRA 2) are partially owned by Apollo/Athene Dedicated Investment Programs (ADIP I/II).
• Received capital contributions from ADIP of $126 million and paid distributions to ADIP of $190 million for H1 2025.
• Had related party payables for contingent investment fees by ACRA to Apollo of $333 million as of June 30, 2025.
• Held investments in ADIP of $236 million as of June 30, 2025, with commitments for an additional $328 million.
• Has an unsecured revolving promissory note receivable with AGM with an outstanding balance of $177 million as of June 30, 2025.
• Had no outstanding balance on the unsecured revolving promissory note payable with AGM as of June 30, 2025.
• Has an intercompany note payable with Athene Life Re Ltd. (ALRe) with an outstanding balance of $2.2 billion as of June 30, 2025.

Stakeholder Impact

• Shareholders (Apollo Global Management, Inc.) may see a mixed financial picture with decreased GAAP net income but increased underlying profitability (SRE), supported by strategic capital management and growth initiatives. The planned regular common stock dividends are a positive.
• Policyholders benefit from the company's strong capital position and diverse product offerings designed to meet retirement needs, though early withdrawal penalties and market value adjustments may apply.
• Employees are part of a growing company with a focus on strategic expansion, implying potential for career development, though no specific employee-related changes were detailed.
• Customers, including Independent Marketing Organizations (IMOs), banks, and broker-dealers, are targeted for deeper relationships due to the company's strong financial standing and product capabilities, aiming for continued sales growth.
• Creditors and debt holders are supported by the company's strong capital position, access to liquidity facilities, and recent debt issuances, indicating a stable financial counterparty.
• Regulatory bodies will continue to monitor the company's compliance with capital requirements (US RBC, Bermuda BSCR) and accounting standards, as well as its response to new tax initiatives like the Bermuda Corporate Income Tax.

Next Steps

• Continue to grow organically by expanding retail, flow reinsurance, institutional, and other distribution channels.
• Deepen relationships with independent marketing organizations (IMOs), banks, and broker-dealers.
• Expand presence in Asia with increased partnerships and growing product offerings.
• Pursue inorganic growth through acquisitions and block reinsurance transactions, with a focus on international expansion.
• Deploy the estimated $8.7 billion in available capital to support growth strategies.
• Continue engaging in pension group annuity transactions and programmatic issuances of funding agreements to grow the institutional channel.
• Pay regular common stock dividends of $750 million per year to the parent company, generally paid quarterly.
• Evaluate the impact of new accounting guidance, including ASU 2025-03, ASU 2024-03, and ASU 2023-09.
• Monitor developments regarding the OECD Pillar Two global minimum tax initiative and the Bermuda Corporate Income Tax regime.
• The Athora transaction (acquisition of a UK insurer) remains subject to closing conditions, including receipt of regulatory approvals.

Key Dates

Recommendation

Despite a reported GAAP net income decrease, the underlying business performance, as indicated by the non-GAAP Spread Related Earnings (SRE), shows a healthy increase. The company demonstrates robust organic growth in inflows, significant expansion of its asset base, and maintains a strong capital position with substantial deployable capital. While retail annuity sales saw a slight dip in certain segments, overall inflows across channels remain strong, and the company is actively pursuing strategic growth opportunities, including international expansion. The decrease in net investment spread is primarily due to higher cost of funds, which is a function of the current interest rate environment and business mix, rather than a fundamental weakness. The reverse stock split and governance changes are operational and unlikely to fundamentally alter the investment thesis. The stock appears to be a stable, well-managed entity with clear growth strategies, but the GAAP net income decline and slight compression in net investment spread warrant a 'Hold' rather than a 'Buy' until a clearer trend of sustained GAAP profitability improvement is established.

Keywords

Annuities, Reinsurance, Retirement services, Investment management, Financial services, SEC filing, 10-Q, Financial results, Capital management, Asset management, Fixed indexed annuities, Funding agreements, Pension group annuities, Apollo Global Management, ACRA, Net investment spread, Risk management, Corporate governance, Stock split, Debt issuance, Preferred stock