10-Q: Athene Reports Strong Asset Growth, Mixed Q3 Earnings

Athene Holding Ltd. reports significant asset growth and increased Spread Related Earnings for the nine months ended September 30, 2025, despite a decrease in GAAP net income driven by market volatility.

Summary

• Total assets grew to $429.9 billion as of September 30, 2025, up from $363.3 billion at December 31, 2024.
• Net invested assets increased to $286.2 billion as of September 30, 2025, from $248.6 billion at December 31, 2024.
• Gross organic inflows for the nine months ended September 30, 2025, were $69.4 billion, a 22% increase from $56.8 billion in the prior year.
• Net income available to common stockholders for the nine months ended September 30, 2025, decreased to $2.146 billion from $2.310 billion in the prior year.
• Spread Related Earnings (SRE) for the nine months ended September 30, 2025, increased by 5% to $2.496 billion from $2.383 billion in the prior year.
• Net investment spread decreased to 1.61% for the nine months ended September 30, 2025, from 1.76% in the prior year.
• The company estimates $8.6 billion in capital available to deploy as of September 30, 2025, including $2.9 billion in excess equity capital, $2.7 billion in untapped leverage capacity, and $3.0 billion in available undrawn capital at ACRA.
• Redeemed $600 million of 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C on June 30, 2025.
• Completed a 1-for-1,000 reverse stock split on August 5, 2025, with 203,805 common shares outstanding, all held by Apollo Global Management, Inc.

Sentiment

Score: 7

Explanation: The company demonstrates strong underlying business growth, significant asset expansion, and increased non-GAAP Spread Related Earnings. While GAAP net income decreased due to market volatility and some market share metrics saw slight declines, the company's strategic capital management, robust capital position, and organic growth initiatives present a positive outlook for long-term performance.

Positives

• Total assets increased significantly to $429.9 billion, demonstrating strong balance sheet expansion.
• Gross organic inflows rose by 22% to $69.4 billion, reflecting effective multi-channel distribution and ability to pivot into profitable channels.
• Net investment income for the nine months increased by $2.5 billion to $13.1 billion, driven by investment portfolio growth and higher rates on new deployments.
• Spread Related Earnings (SRE) increased by 5% to $2.496 billion, indicating strong underlying operational profitability excluding market volatility.
• Flow reinsurance inflows more than doubled to $9.5 billion, driven by strategic opportunities and international expansion.
• Institutional channel inflows increased to $32.6 billion, primarily from higher funding agreement issuances.
• The company maintains a strong capital position with an estimated $8.6 billion available to deploy, including substantial excess equity and untapped leverage capacity.
• US RBC ratio improved to 419% and consolidated RBC ratio to 430% as of December 31, 2024, indicating robust regulatory capital levels.
• Redeemed $600 million of Series C preferred stock, optimizing capital structure.

Negatives

• GAAP net income available to common stockholders decreased to $2.146 billion for the nine months, down from $2.310 billion in the prior year, primarily due to market volatility in investment gains/losses and non-operating changes.
• Net investment spread decreased by 15 basis points to 1.61% for the nine months, driven by higher cost of funds.
• Retail fixed annuity sales slightly decreased to $26.8 billion, mainly due to lower multi-year guaranteed annuity (MYGA) sales.
• Pension group annuity inflows significantly decreased to $5 million from $871 million, impacted by a competitive environment and litigation against clients.
• Premiums decreased by $812 million to $351 million for the nine months, largely due to the decline in pension group annuity premiums.
• Market risk benefits remeasurement losses increased to $405 million for the nine months, reflecting unfavorable changes in fair value due to interest rates and equity market performance.

Risks

• Accuracy of management's assumptions and estimates in financial projections.
• Variability in statutory capital requirements for insurance and reinsurance subsidiaries.
• Exposure to interest rate and foreign currency fluctuations impacting investment valuations and income.
• Potential need for additional capital in the future and its availability on favorable terms.
• Impact of major public health issues, such as COVID-19, on business operations and investments.
• Changes in relationships with key parties in the product distribution network.
• Intense competition in the retirement savings market affecting growth of the retail business.
• Impact of general economic conditions on product sales and investment fair values.
• Challenges in successfully acquiring new companies or businesses and integrating them.
• Potential downgrades or negative actions by rating agencies affecting financial strength.
• Dependence on key executives and the ability to attract 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.
• Potential litigation, enforcement investigations, or regulatory scrutiny.
• Impact of new or revised accounting rules on the business.
• Interruption or operational failures in telecommunication and information technology systems, including cyber threats.
• Increased regulation or scrutiny of alternative investment advisers and trading methods.
• Potential changes to laws or regulations affecting group supervision, capital requirements, affiliate transactions, and dividend payments.
• Failure to obtain or maintain necessary licenses and regulatory approvals.
• Increases in tax liability from OECD Pillar Two global minimum tax initiative or Bermuda corporate income tax.
• Certain non-US subsidiaries becoming subject to greater-than-expected US federal income taxation.
• Adverse changes in tax law.
• Failure to achieve expected economic benefits from Athene Co-Invest Reinsurance Affiliate Holding Ltd. (ACRA) or future ACRA capital raises.
• Failure of third-party ACRA investors to fund capital commitment obligations.
• Guaranty association assessments related to insolvencies of other insurance companies (e.g., BLIC and CBLIC).

Future Outlook

The company plans to continue organic growth by expanding retail, flow reinsurance, institutional, and other distribution channels, with a focus on international expansion, particularly in Asia. It expects its credit profile and reputation to help source additional reinsurance partners and grow its institutional channel through pension group annuity transactions and programmatic funding agreement issuances. The inorganic channel is also expected to be an important source of profitable growth.

Management Comments

• Focus on generating spread income by combining core competencies of sourcing long-term liabilities and leveraging Apollo's asset management for preferred risk/return assets.
• Steady and significant base of earnings generates capital for opportunistic investment in attractively priced liabilities.
• Credit profile, product offerings, and reputation as a funding agreement issuer and pension group annuity counterparty will enable continued growth in organic channels.
• Committed to growing organically by expanding retail, flow reinsurance, institutional, and other distribution channels.
• Possesses the right people, infrastructure, scale, and capital discipline for continued growth.
• Retail channel expected to benefit from credit profile, product launches, and continuous enhancements to capture new distribution opportunities.
• Credit profile and reputation as a solutions provider will help source additional reinsurance partners, diversifying the flow reinsurance channel.
• Plans to continue growing and diversifying the business, both organically and inorganically, with a focus on international expansion, particularly in Asia.
• Corporate development team, supported by Apollo, has industry-leading ability to source, underwrite, and expeditiously close transactions.
• Strategic capital solutions like ACRA provide flexibility to deploy capital across multiple accretive avenues while maintaining a strong financial position.
• Believes significant capital is available to support growth aspirations.

Industry Context

The company operates in highly competitive retirement services markets, facing diversified financial institutions, insurance/reinsurance companies, and private equity firms. The US annuity market saw a 3.8% increase in sales for the six months ended June 30, 2025. The fixed annuity market increased by 1.0%, and the registered index-linked annuity (RILA) market grew by 18.1%. The company's performance is influenced by global financial markets, interest rates, and inflation, with a focus on managing asset-liability duration and leveraging floating-rate investments in a rising interest rate environment. Demographics indicate unprecedented growth in the retirement-age population, driving demand for tax-efficient savings products.

Comparison to Industry Standards

• In the total US annuity market, the company was the second largest provider with a 7.4% market share for the six months ended June 30, 2025, down from the largest provider with an 8.6% market share in the same period of 2024.
• In the total US fixed annuity market, the company remained the largest provider with a 10.2% market share for the six months ended June 30, 2025, a decrease from 11.6% in the same period of 2024.
• In the US fixed indexed annuity (FIA) market, the company was the largest provider with a 12.1% market share for the six months ended June 30, 2025, slightly down from 12.8% in the same period of 2024.
• In the US registered index-linked annuity (RILA) market, the company was the fifteenth largest provider with a 1.7% market share for the six months ended June 30, 2025, down from the tenth largest provider with an 1.8% market share in the same period of 2024, despite the overall market growing by 18.1%.

Management Changes

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 any current legal proceeding or claim will not have a material effect on financial condition, results of operations, or cash flows.
• Received requests for information from government agencies in connection with regulatory or investigatory authority.
• Incurred $172 million of expense related to estimated guaranty association assessments in 2024 in connection with the Bankers Life Insurance Company (BLIC) and Colorado Bankers Life Insurance Company (CBLIC) insolvencies.

Related Party Transactions

• Apollo Global Management, Inc. (AGM) beneficially owns 100% of common stock and controls all voting power.
• Substantially all investments are managed by Apollo, with fees paid based on a defined structure (base, sub-allocation, and performance fees).
• Incurred $1.118 billion in management fees (inclusive of base, sub-allocation, and performance fees) for the nine months ended September 30, 2025.
• James R. 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 twelve board members are employees or consultants to Apollo.
• Consolidates Apollo Aligned Alternatives Aggregator, L.P. (AAA) as a variable interest entity (VIE), which holds a majority of the alternative investment portfolio.
• Athora Holding Ltd. cooperation agreement terminated; company holds investments in Athora equity ($1.162 billion) and other securities, with $2.706 billion in commitments for additional investments.
• Equity investment in Atlas through AAA, holding $4.615 billion in related party AFS securities issued by Atlas or its affiliates, with $1.363 billion in additional investment commitments.
• Issued an assurance letter to Credit Suisse AG guaranteeing a $2.5 billion deferred purchase obligation of Atlas.
• Strategic modified coinsurance reinsurance agreement with Catalina Holdings (Bermuda) Ltd. (liability of $136 million) and a modco reinsurance agreement to cede retail deferred annuity products (reinsurance recoverable of $5.907 billion).
• Various investments in MidCap FinCo Designated Activity Company and its affiliates totaling $1.808 billion.
• Direct investments in Skylign Aviation Holdings, L.P. notes of $1.364 billion, with $159 million in additional investment commitments.
• Strategic Partnership allows investment of up to $2.875 billion in Apollo-managed funds, with $1.892 billion held as of September 30, 2025.
• Investments in Venerable Holdings, Inc. and its affiliates totaling $674 million, and consolidates AP Violet ATH Holdings, L.P. ($141 million interest in VA Capital).
• Directly holds $959 million in securities issued by Wheels Inc., with $37 million in additional investment commitments.
• Athene Co-Invest Reinsurance Affiliate Holding Ltd. (ACRA) and ACRA 2 are partially owned by Apollo-managed funds (ADIP I/II), with capital contributions from ADIP of $284 million and distributions to ADIP of $254 million for the nine months ended September 30, 2025.
• Unsecured revolving promissory note receivable with AGM had an outstanding balance of $226 million.
• Intercompany note payable with ALRe had an outstanding balance of $2.1 billion.

Stakeholder Impact

• Shareholders (Apollo Global Management, Inc.) benefit from increased Spread Related Earnings and strong capital position, but GAAP net income volatility may impact reported earnings.
• Policyholders benefit from the company's strong financial position and diverse product offerings, with a significant majority of deferred annuity liabilities subject to surrender penalties or MVAs.
• Investment professionals and financial analysts will find the detailed financial metrics and non-GAAP reconciliations useful for assessing underlying performance.
• Regulatory bodies will note the company's compliance with US RBC and Bermuda BSCR ratios, indicating adherence to capital requirements.
• Employees may be impacted by management changes, such as Martin P. Klein's departure, but overall operational stability is maintained.

Next Steps

• Continue to grow organically by expanding retail, flow reinsurance, institutional, and other distribution channels.
• Focus on international expansion, particularly in Asia, to diversify business.
• Engage in pension group annuity transactions and programmatic issuances of funding agreements to grow the institutional channel.
• Leverage corporate development team and Apollo support to source, underwrite, and close inorganic transactions.
• Monitor economic and market conditions, including global inflation and interest rates, to adjust investment strategies.
• Evaluate the impact of new accounting guidance (ASU 2025-07, ASU 2025-06, ASU 2025-03, ASU 2024-03) on consolidated financial statements.
• Continue to assess deferred taxes that may be recorded on a statutory basis as a result of the Bermuda Corporate Income Tax.

Key Dates

Recommendation

Athene Holding Ltd. demonstrates robust growth in total assets and net invested assets, driven by strong organic inflows across its channels, particularly in flow reinsurance and institutional products. The increase in non-GAAP Spread Related Earnings (SRE) indicates solid underlying operational profitability when excluding market volatility and non-operating items. The company maintains a strong capital position, with significant capital available for deployment, and is actively pursuing strategic international expansion and product enhancements. However, the decline in GAAP net income available to common stockholders, primarily due to market volatility in investment gains/losses, and a slight decrease in overall annuity market share, present a mixed financial picture. While the core business appears healthy, the GAAP performance and competitive pressures in certain segments warrant a cautious 'hold' recommendation for investors seeking more consistent reported profitability or clearer market share gains, despite the underlying operational strengths.

Keywords

Annuities, Reinsurance, Retirement Savings, Investment Management, Financial Services, Fixed Indexed Annuities, Funding Agreements, Capital Management, Apollo Global Management, SEC Filing, 10-Q, Financial Results