Athene Holding Ltd. · NYSE:ATH/PA
Athene — Debt Investor Presentation (August 2024)
55 slides from Athene's debt investor presentation, Aug 8, 2024
Slide 1: Athene Fixed Income Investor Presentation August 2024
Athene Fixed Income Investor Presentation August 2024
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security of Athene Holding Ltd. (“AHL” and together with its consolidated subsidiaries, “Athene”). This presentation is not intended to constitute a solicitation of any insurance policy or
Slide 3: Perspectives on Recent Performance
Perspectives on Recent Performance
Slide 4: Athene's Operating Performance Continues to be Strong
Record YTD gross organic inflows, and continued momentum with financial institutions (74% of YTD retail sales) Strong new business profitability Robust capitalization in excess of ‘AA’ rating levels Operating expense improvement Quantum of outflows in line with expectations 4 Athene’s Operating Perf
Slide 5: Third-Party Capital Raised by Athene Sidecars
$3.3B $6B ADIP I (2019) ADIP II (2024) Third-Party Capital Raised by Athene Sidecars +~85% Net IRR1: High Teens Target Net IRR2: Mid-Teens 1. IRR presented is calculated based upon (i) actual Apollo/Athene Dedicated Investment Program (ADIP I) cash flows since inception and (ii) Apollo analysts’ exp
Slide 6: Continued Recognition of Athene's Financial Strength through AM Best Upgrade
Continued Recognition of Athene’s Financial Strength through AM Best Upgrade Note: Athene data as of June 30, 2024. Peer Data as of December 31, 2023. 1. Represents the aggregate capital of Athene's US and Bermuda insurance entities, determined with respect to each insurance entity by applying the s
Slide 7: Review of Special Business Topics
Review of Special Business Topics 2 3 1 Interest Rate Hedging and Floating Rate Portfolio Run-off of Profitable COVID Business Alternatives Portfolio Update 7
Slide 8: Athene Has Produced a Decade of Profitable Growth
$0.8 $0.8 $0.8 $0.7 $1.1 $1.3 $1.4 $1.3 $2.5 $2.5 $3.1 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Athene Has Produced a Decade of Profitable Growth Spread Related Earnings (SRE)1 ($B) 15% CAGR 8 Alternative net investment income delta to long-term expectation (in millions)2 ($287) $52 $1
Slide 9: Athene's Asymmetric Approach to Rate Hedging
Low-Rate Environment Normal Environment • Run with higher floating rate position with a fixed floor • Upside from higher income as rates rise • Write new business at acceptable returns while sacrificing some near term profitability for upside if rates rise • Reduce floating rate position materially
Slide 10: In 2023, Athene Captured Outsized Profitability on its Net Floating Position
Source: Federal Reserve Economic Data (FRED) for 3-month SOFR data as of August 5, 2024. Athene’s Net Floating Rate Position Over Time In 2023, Athene Captured Outsized Profitability on its Net Floating Position 10
Slide 11: Substantial De-Risking of Rates Exposure
Current SRE Sensitivity to a 25 basis point move in interest rates is $30 – $40 million annually1 In Summary, We Have Reset SRE Higher at 2023 Levels Asymmetric approach to interest rates Countercyclical in-force assets that can be opportunistically redeployed if rates fall Substantial De-Risking of
Slide 12: Why Does Athene Invest in Alternative Assets?
Why Does Athene Invest in Alternative Assets? Athene’s Asset Portfolio Why Invest in Alternatives? Increase allocation opportunistically into attractive market opportunities Reduce allocation when returns are less attractive Seek to Generate Income Strategic Asset & Liability Partnerships Defease Lo
Slide 13: Investments in AAA Have Historically Provided Downside Protected Hybrid Exposure
Sharpe RatioStandard Dev. 11.8% 9.2% 30bps cash drag 12.2% 11.5% 4% 17% 2.7 0.6 10.3% 128 Positions Investments in AAA Have Historically Provided Athene Downside Protected Hybrid Exposure AAA Strategy Performance AAA2 S&P 500 Net Returns Note: Data as of June 30, 2024. For illustrative purposes only
Slide 14: Retirement Services Platforms Enable Attractive Growth
Retirement Services Platforms Enable Attractive Growth Our strategic partnerships have enabled $90B+ of transaction value to the Athene ecosystem $29B Reinsurance Transaction plus VA Equity Interest Australian Asset Origination Partnership $53B FA & VA Reinsurance Transaction $5B Funding Agreement B
Slide 15: Perspectives on Retirement Services Platforms
Perspectives on Retirement Services Platforms 2021 2021 Athene Strategic Thesis Go Forward Perspectives Athene’s retirement services platform portfolio has delivered ~12% inception to date gross IRR and a MOIC of ~1.5x • Partner for Variable Annuities • No Change • Partner on European liabilities •
Slide 16: We Target Mid-Teens Returns; Spreads will Vary Across Channels
Spread Required Capital Return on Capital Retail High High Mid-Teens Flow Medium Medium Mid-Teens Funding Agreements Lower Lower Mid-Teens PGA Medium High Mid-Teens Total Mid-Teens Illustrative Current Environment We Target Mid-Teens Returns; Spreads will Vary Across Channels 16
Slide 17: Business Mix Can Impact Spreads
Business Mix Can Impact Spreads Retail: 56% Flow Re: 17% Funding Agreement: 11% PGA: 16% 2023 New Business 2024 YTD New Business Underwritten Return on Capital: Mid-Teens Retail: 50% Flow Re: 10% Funding Agreement: 38% PGA: 2% 17 1. Funding agreements are comprised of funding agreements issued under
Slide 18: Second Quarter Outflows Included Cohort of Very Profitable Business
18 Note: Projections in above table represent a best estimate and actual experience may vary. Outflow rate is calculated as outflows attributable to Athene divided by average net invested assets for the respective period, on an annualized basis. The above data reflects Athene's core outflows for the
Slide 19: Second Quarter Update
VATHENE Second Quarter Update
Slide 20: Key Credit Highlights Reflect Relative Strength of Franchise
20 Key Credit Highlights Reflect Relative Strength of Franchise ASSET PORTFOLIO IS HIGH-QUALITY AND GENERATES SAFE INVESTMENT GRADE YIELD Athene has consistently delivered strong net spread generation with lower credit losses versus peers 3 ATHENE HAS BUILT A FORTRESS BALANCE SHEET Highly-rated and
Slide 21: Athene has a Distinct Credit Profile Within Apollo
21 Athene has a Distinct Credit Profile Within Apollo $696 billion Assets Under Management ~$29 billion Regulatory Capital2 A+ from S&P, Fitch, AM Best; A1 from Moody’s3 ASSET MANAGEMENT RETIREMENT SERVICES 5,000+ Employees Globally Solutions across the alternative risk spectrum Separate capital str
Slide 22: Athene is the Leading Retirement Services Business
22 Athene is the Leading Retirement Services Business As of June 30, 2024, unless otherwise noted. 1. Industry ranking per Life Insurance Marketing and Research Association (LIMRA) as of March 31, 2024. 2. Full year industry rankings per LIMRA as of December 31, 2023. Attractive savings products pro
Slide 23: Peer comparison of invested assets, income and ratings
Invested Assets ($B)1 $233 $212 $115 $104 2Q’24 LTM Operating Income ($M)2 $3,149 $3,329 $2,338 $1,641 Adjusted Senior Debt-to-Capital1 16.4% 25.3% 27.1% 22.1% Ratings1 A1/A+/A+ A2/A+/NR A1/A+/NR A1/A+/NR RBC Ratio (Consolidated)1 412% >400% 400-425% 427% 5-year FABN Secondary Credit Spread-to-US Tr
Slide 24: Athene Has Diligently Built Diversified Organic Growth Capabilities
1. Total annuity industry ranking per LIMRA as of March 31, 2024. 2. Source Deutsche Bank and Bloomberg. Funding agreements are comprised of funding agreements issued under our FABN program, secured and other funding agreements, funding agreements issued to the FHLB and long- term repurchase agreeme
Slide 25: Retail Distribution Capabilities are Expanding
19 Distribution Partners 25 Retail Distribution Capabilities are Expanding Note: Data presented for the last twelve months ended June 30, 2024. Distribution Partners as of June 30, 2024. 2Q’24 LTM Retail Inflows by Distribution Channel Athene’s Retail inflows are sourced from a diverse mix of 200+ u
Slide 26: Fortress Balance Sheet
26 Note: Athene metrics are net of the noncontrolling interests, as of June 30, 2024. 1. Relates to Athene’s primary insurance subsidiaries; represents ratings from AM Best "A+", Fitch "A+", S&P "A+" and Moody’s "A1". 2. Represents the aggregate capital of Athene's US and Bermuda insurance entities,
Slide 27: Athene versus AA-/A+ rated peers
11% 11% 27 Note: Athene metrics are net of the noncontrolling interests, unless otherwise noted, as of June 30, 2024. AA-/A+ Rated Companies are: PFG (A+), GL (AA-), MET (AA-), and PRU (AA-). 1. AA-/A+ Rated Company metrics as of March 31, 2024 per SNL Financial. Athene’s statutory reserves to capit
Slide 28: Strong Capital and Liquidity Profile
28 Strong Capital and Liquidity Profile Note: Athene metrics are net of the noncontrolling interests, as of June 30, 2024, unless otherwise noted. 1. The consolidated risk-based capital ratio of our non-US reinsurance and US insurance subsidiaries is calculated by applying NAIC risk-based capital fa
Slide 29: Athene Utilizes Numerous Sources of Capital to Grow Earnings Generation & Capital Release
• Athene Holding Ltd. (AHL) Series A-E Preferred Equity – $2.9B issued to date • AHL Senior Debt – $5.0B notional outstanding • AHL Subordinated Debt – $0.6B notional outstanding • Targeting a conservative mid-teens adjusted senior debt-to-capital ratio 12.9% 14.9% 14.7% 14.5% 16.4% 2020 2021 2022 2
Slide 30: Disciplined Capital Management Strategy
$12.1 $13.4 $15.5 $18.3 $20.1 $21.3 $23.2 $23.6 $27.5 $30.5 $9.4 $10.2 $11.2 $13.5 $14.8 $15.6 $16.6 $17.0 $20.3 $21.7 $1.2 $1.7 $2.3 $2.3 $2.3 $2.7 $3.2 $3.2 $3.2 $3.2 $0.6 $1.5 $1.5 $2.0 $2.5 $3.0 $3.0 $3.4 $3.4 $4.0 $5.0 Adjusted AHL Common Stockholder’s Equity Preferred Equity Notional Subordina
Slide 31: Capital Allocation Priorities Support Profitable Growth
31 Capital Allocation Priorities Support Profitable Growth Balance sheet strength determines the capital available to pursue profitable growth opportunities Support Profitable Growth Preserve excess capital at ‘AA’ levels with a mid-teens adjusted senior debt-to-capital ratio and strong liquidity Ma
Slide 32: Consistent Investment Management Philosophy
32 Consistent Investment Management Philosophy Target higher and sustainable risk- adjusted returns by capturing illiquidity premia to drive consistent yield outperformance Focus on downside protection given long- dated liability profile and low cost of funding Dynamic asset allocation to take advan
Slide 33: Strong Track Record of Invested Asset Growth
$124.6 $175.4 $210.2 $238.3 $278.6 $302.2 $117.5 $150.2 $175.3 $196.5 $217.4 $233.0 $25.2 $34.9 $41.8 $61.2 $69.2 Net Invested Assets Invested Assets Attributable to Sidecars (ADIP) 2019 2020 2021 2022 2023 2Q'24 33 Strong Track Record of Invested Asset Growth 22% CAGR Composition of Athene’s Gross
Slide 34: High Quality Asset Portfolio Generates Safe Yield
Corporate & Gov’t 42% CML 12% CLO 9% ABS 11% RML 9% RMBS 3% CMBS 3% Cash and Cash Equivalents 4% Alternatives 5% Other 2% Net Invested Assets $233 BILLION3 Note: As of June 30, 2024. Net invested assets includes Athene's proportionate share of ACRA investments, based on Athene's economic ownership,
Slide 35: Proprietary asset origination through Apollo alignment
• Alignment with Apollo provides access to proprietary asset origination capabilities that allows Athene to access senior- secured, private investment grade credit, designed to capture compelling levels of excess spread • $28B of total LTM deployment activity was comprised of investment grade credit
Slide 36: Historical Credit Loss Experience Outperforms Industry
6 13 3 17 16 8 14 6 20 18 COVID-19 Russia/Ukraine CRE/Regional Banking 36 Historical Credit Loss Experience Outperforms Industry Athene1 Industry2 Historical Asset Impairments (annualized, bps) 20203 2021 202320222019 1. Athene’s statutory fixed income impairments adjusted to include changes in mort
Slide 37: Persistent and Predictable Liability Portfolio Provides Long-Dated Funding
Fixed Indexed Annuities 40% Fixed Rate Annuities 28% 2% Funding Agreements 16% Pension Group Annuities 12% $212 BILLION Persistent and Predictable Liability Portfolio Provides Long-Dated Funding Note: Metrics are as of or for the three months ended June 30, 2024. Liabilities composition and weighted
Slide 38: Historical/Projected Annualized Outflow Rates
Historical/Projected Annualized Outflow Rates 38 Note: Projections in above table represent a best estimate and actual experience may vary. Outflow rate is calculated as outflows attributable to Athene divided by average net invested assets for the respective period, on an annualized basis. 1. Repre
Slide 39: Risk Management is Embedded in Everything We Do
39 Robust risk management framework and procedures underpin focus on protecting capital and aligning risks with stakeholder expectations Risk strategy, investment, credit, asset-liability management (“ALM”) and liquidity risk policies, amongst others, at the board and management levels Stress testin
Slide 40: Rating agency commentary
“The rating upgrade to A+ reflects a continuing trend of Athene’s improving balance sheet strength. A.M Best views Athene’s consolidated risk-adjusted capitalization as strongest… supported by favorable financial flexibility, including significant excess liquidity…Athene’s favorable business profile
Slide 41: Athene is Committed to Transparency and Ongoing Disclosure
Athene Financial Supplement published quarterly Athene Holding Ltd. publishes 10-K’s and 10-Q’s as a ’34 Act SEC filer Parent company, Apollo Global Management, Inc., publishes 10-K’s and 10-Q’s as a ’34 Act SEC filer Statutory filings for main Athene operating subsidiaries, including Bermuda, avail
Slide 42: Appendix
Appendix
Slide 43: Athene's Net Floating Rate Position Is $15B
As of 2Q’24, Athene’s Net Floating Rate Position Is $15B 43 Athene’s Current Net Floating Rate Position by Assets, Liabilities and Cash ($B) Note: Metrics as of June 30, 2024. Percentages calculated over gross invested assets and net invested assets, respectively, as of June 30, 2024. 1. Represents
Slide 44: Alternatives portfolio composition
O t h e r Equity Hybrid Yield • Athene’s $11.7 billion1 alternatives portfolio accounts for ~5% of net invested assets 46% Apollo and Other Fund Investments2 Strategic Origination Platforms Retirement Services Platforms Alts Portfolio Composition1 18% 21% 7% Note: As of June 30, 2024, 87% of Athene'
Slide 45: Key Elements of AAA's Valuation Processes
Key Elements of AAA’s Valuation Processes Based on the views and opinions of Apollo Analysts. For illustrative purposes only. Portfolio detail as of June 30, 2024. The asset allocation framework between private investments, funds/co-invests and third-party funds is meant to be illustrative and may b
Slide 46: AAA Historical Track Record Disclosure
AAA Historical Track Record Disclosure AAA’s track record has been based on all Apollo or Athene alternatives investments, where alternatives investments comprise: (i) for Apollo, GP investments transferred to Athene in early 2022 and positions directly bought or transferred into the AAA vehicle; an
Slide 47: Valuation methodologies disclosure
The valuation methodologies employed by Apollo, particularly with regard to securities of private companies and securities that are subject to lock-ups or other limitations on free marketability, vary from security to security and change from time to time, without notice, for a variety of reasons, i
Slide 48: Non-GAAP Definitions
Non-GAAP Definitions In addition to our results presented in accordance with accounting principles generally accepted in the United States of America (US GAAP), we present certain financial information that includes non-GAAP measures. Management believes the use of these non-GAAP measures, together
Slide 49: Non-GAAP Measures & Definitions
Non-GAAP Measures & Definitions 49 Other Operating Expenses Other operating expenses excludes integration, restructuring and other non-operating expenses, stock compensation and long-term incentive plan expenses, interest expense, policy acquisition expenses, net of deferrals, and the proportionate
Slide 50: Non-GAAP Measures & Definitions
Non-GAAP Measures & Definitions 50 Sales Sales statistics do not correspond to revenues under US GAAP but are used as relevant measures to understand our business performance as it relates to inflows generated during a specific period of time. Our sales statistics include inflows for fixed rate annu
Slide 51: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations (In millions, except percentages) 51 RECONCILIATION OF TOTAL AHL STOCKHOLDERS’ EQUITY TO TOTAL ADJUSTED AHL COMMON STOCKHOLDER’S EQUITY Dec. 31, 2019 June 30, 2020 Dec. 31, 2020 June 30, 2021 Dec. 31, 2021 June 30, 2022 Dec. 31, 2022 June 30, 2023 Dec. 31, 2023 June
Slide 52: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations (In millions) 52 RECONCILIATION OF NET INCOME AVAILABLE TO AHL COMMON STOCKHOLDER TO SPREAD RELATED EARNINGS Year ended December 31 2013 2014 2015 2016 2017 2018 2019 Net income available to Athene Holding Ltd. common stockholder $ 900 $ 471 $ 579 $ 773 $ 1,358 $ 1,0
Slide 53: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations (In millions, except percentages) 53 RECONCILIATION OF BENEFITS AND EXPENSES TO COST OF FUNDS Three months ended June 30, 2024 US GAAP benefits and expenses $ 3,637 6.32 % Premiums (673) (1.17) % Product charges (251) (0.44) % Other revenues (3) (0.01) % FIA option c
Slide 54: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations (In millions) 54 RECONCILIATION OF TOTAL INVESTMENTS, INCLUDING RELATED PARTIES, TO NET INVESTED ASSETS December 31, June 30, 20242019 2020 2021 2022 2023 Total investments, including related parties $ 129,845 $ 180,541 $ 209,176 $ 196,448 $ 238,941 $ 265,044 Derivat
Slide 55: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations (In millions) 55 RECONCILIATION OF TOTAL LIABILITIES TO NET RESERVE LIABILITIES June 30, 2024 Total liabilities $ 308,295 Debt (5,733) Derivative liabilities (3,212) Payables for collateral on derivatives and short-term securities to repurchase (7,210) Other liabilit
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