Athene Holding Ltd. · NYSE:ATH/PA
Athene — Investor Presentation (May 2023)
34 slides from Athene's investor presentation, May 18, 2023
Slide 1: Perspectives on Athene's Funding Model and Surrender Activity
Perspectives on Athene’s Funding Model and Surrender Activity May 2023
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. (“Athene”). Unless the context requires otherwise, references in this presentation to “Apollo," "AGM" and "AGM HoldCo" refer to Apollo Global Management, Inc
Slide 3: Key Takeaways
3 Key Takeaways Note: Data as of March 31, 2023, unless otherwise noted. Presented net of ACRA NCI. 1. Industry ranking per Life Insurance Marketing and Research Association (LIMRA) as of December 31, 2022. 3 1 ATHENE HAS BEEN A NET BENEFICIARY OF INDUSTRY RECYCLE, WITH INFLOWS WELL OUTPACING OUTFLO
Slide 4: Retirement Services Companies Have Superior Funding Models to Banks
Retirement Services Companies Have Superior Funding Models to Banks Illustrative Bank Funding Model Illustrative Retirement Services Funding Model 10 Years 0 Years Asset Duration Liability Duration 10-year duration mis-match between assets and liabilities 10 Year Treasuries Agency MBS 8 Years 8 Year
Slide 5: Assets and Liabilities are Matched as Interest Rates Move Up and Down
-100bps -50bps -25bps Base +25bps +50bps +100bps Du ra tio n Interest Rates Assets Liabilities Assets and Liabilities are Matched as Interest Rates Move Up and Down The duration profile remains tight even as interest rates rise and fall, creating natural economic protection against unexpected variat
Slide 6: Athene Has a Highly Stable Funding Model
1% 47% 25% 4% 12% 11% Fixed Rate Annuities Athene Has a Highly Stable Funding Model Note: Data as of March 31, 2023, unless otherwise noted. Presented net of ACRA NCI. 1. Non-surrenderable liabilities include buy-out pension group annuities other than those that can be withdrawn as lump sums, fundin
Slide 7: Composition of Athene's Funding
Composition of Athene’s Funding Note: Data as of March 31, 2023. Presented net of ACRA NCI. 1. Non-surrenderable liabilities include buy-out pension group annuities other than those that can be withdrawn as lump sums, funding agreements and payout annuities. 2. $1.9B of buy-in PGA deals and $0.8B of
Slide 8: Policies Out-of-Surrender Have Strong Economic Disincentives to Surrender
Rider Benefits, 30% High Crediting Rate, 32% Age 85+, 9% Other, 29% Policies Out-of-Surrender Have Strong Economic Disincentives to Surrender Note: Data as of March 31, 2023. Presented net of ACRA NCI. 8 Policies Outside of Surrender Charge Period $31 BILLION Rider Benefits • Policies have lifetime
Slide 9: Why Annuities are Inherently Sticky & Persistent
Why Annuities are Inherently Sticky & Persistent
Slide 10: Key Features Make Annuity Products Particularly Sticky
Key Features Make Annuity Products Particularly Sticky 1. MVAs may have the effect of limiting early withdrawals if interest rates increase but may encourage early withdrawals by effectively subsidizing a portion of surrender charges when interest rates decrease. 2. Calculated from figures disclosed
Slide 11: Surrender Charges Create a Clear Distinction Inside and Outside Surrender Period
Surrender Charges are Designed to Create a Clear Distinction Between Policies Inside and Outside of Surrender Charge Period Note: Data as of March 31, 2023. 1. Represents surrender charge schedule for the Performance Elite 10 FIA product, only sold through independent marketing organizations. This i
Slide 12: Surrender Charges + MVA is a Powerful Combination
$88k $89k $96k $107k $107k $93k $96k $104k $107k $111k $114k $118k $118k $118k 2017 2018 2019 2020 2021 2022 2023 MVA Increases as Interest Rates Rise Low Surrender Value at Inception Total Account Value $118k Less: Surrender Charge (8% of Account Value After 6 Years) ($10k) Less: Market Value Adjus
Slide 13: The Typical Retail Annuity Policyholder is a Fee Averse Consumer
The Typical Retail Annuity Policyholder is a Fee Averse Consumer Note: Investable asset data and reasons for purchasing an annuity from LIMRA 2022 “Focus On: Deferred Annuity Buyers”. Other data from Athene net of NCI as of March 31, 2023 2 of policies are purchased through an intermediary 100% of r
Slide 14: Policies are Designed to Mature After they Exit the Surrender Period
Policies are Designed to “Mature” After they Exit the Surrender Period 14 3 5.00% 5.00% 5.00% 5.00% 5.00% 1.50% 1.25% 1.00% 1.00% 0% 1% 2% 3% 4% 5% 6% 1 2 3 4 5 6 7 8 9 10 Cr ed iti ng R at e Number of Years Since Contract Issue In-Surrender-Charge Period Post-Surrender-Charge Period Optionality to
Slide 15: Policyholders and Athene Both Win When Policies Outside Surrender Period Lapse
Illustrative Profile of Legacy Blocks of Policies Out-of-Surrender Charge (Assuming Change in Crediting Rate) Illustrative Profile of New Business (in Surrender Charge Period) Net Investment Yield ~4.0%2 ~6.1% Cost of Funds ~3.5% ~5.0% Spread ~0.5% ~1.1% Equity Capital (% of Liabilities) ~11% ~8% 1
Slide 16: Surrenders in the Context of Flows
Surrenders in the Context of Flows
Slide 17: Higher Interest Rates + Market Volatility = Increasing Flows to Industry
$20 $21 $19 $20 $18 $20 $23 $24 $27 $26 $23 $21 $23 $24 $20 $21 $24 $30 $30 $33 $33 $33 $29 $26 $26 $25 $29 $28 $28 $33 $29 $28 $32 $48 $52 $61 $64 1Q '1 4 2Q '1 4 3Q '1 4 4Q '1 4 1Q '1 5 2Q '1 5 3Q '1 5 4Q '1 5 1Q '1 6 2Q '1 6 3Q '1 6 4Q '1 6 1Q '1 7 2Q '1 7 3Q '1 7 4Q '1 7 1Q '1 8 2Q '1 8 3Q '1 8
Slide 18: Within the Industry, There Are Relative Winners and Losers from Recycle
Within the Industry, There Are Relative Winners and Losers from Recycle 1. Data from SNL Financial. Based on total individual general account annuities. Athene total fixed, fixed indexed and payout annuity reserves are gross of ACRA non-controlling interest. 2. LIMRA fixed, fixed-indexed, and fixed
Slide 19: Athene Benefits from Industry Recycle, With ~30% of New Business From Other Carriers
Athene Benefits from Industry Recycle, With ~30% of New Business From Other Carriers Note: Data as of March 31, 2023. Presented gross of ACRA NCI. Source: Athene, with sales from industry recycle representing 1035 exchanges. 19 Athene’s Retail Fixed Annuity Sales ($ Billions) $2.2 $2.8 $4.4 $5.8 $5.
Slide 20: Current Trends At Athene
Current Trends At Athene
Slide 21: Outflows Continue To Be Predictable and Within Historical Range
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Outflows Continue To Be Predictable and Within Historical Range Note: Strategic Reinsurance Outflows not included in graphic. Data as of March 31, 2023. Presented net of ACRA NCI. 1. Outflow rate is calculated as outflows divided by Athene average net invested asse
Slide 22: Athene Has Four Types of Outflows
Athene Has Four Types of Outflows Maturity-Driven, Contractual-Based Outflows Income Oriented Withdrawals (Planned) From Policies Out-of-Surrender- Charge (Planned) From Policies In-Surrender-Charge (Unplanned) Policyholder Driven Outflows Outflows from funding agreements, pension group annuities, a
Slide 23: Example of Predictability: Elevated Volumes of 3-Year MYGA
$2.2 $2.4 $1.9 $2.4 $1.8 $4.1 $4.0 $2.1 $2.0 $2.0 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 1Q'24 2Q'24 Example of Predictability: Elevated Volumes of 3-Year MYGA Athene Sold in 2020 Are Starting to Come Out of Surrender Charge Period Historical Retail Annuity & Flow Reinsurance Inflows ($B) A
Slide 24: Outflows Detail Illustrates that Unplanned Surrenders are De Minimus
Outflows Detail Illustrates that Unplanned Surrenders are De Minimus Note: Projections in above table represent a best estimate and actual experience may vary. 1. Represents outflows from funding agreements, pension group annuities, and MYGA, all of which occur based on defined maturities or substan
Slide 25: Policy Value Exiting Surrender Charge is Informative to Predicting Outflows
Policy Value Exiting Surrender Charge is Informative to Predicting Outflows Account Value Exiting Surrender Charge Period by Quarter ($B) Note: Data as of March 31, 2023, unless otherwise noted. Presented net of ACRA NCI. 25 $1.6 $1.9 $1.3 $1.2 $1.4 $1.5 $1.9 $1.9 $2.1 $2.7 $2.4 $2.2 $2.2 $2.4 $1.9
Slide 26: Funding Agreements Also Have a Defined Maturity Schedule
$0.8 $0.1 $0.6 $0.2 $1.9 $0.1 $0.4 $1.2 $0.1 $0.8 $1.6 $3.7 $0.6 $0.1 $2.1 $0.4 $1.9 $0.3 $0.5 $0.2 $0.2 $1.2 $1.8 $0.2 $0.4 $1.4 Funding Agreements Also Have a Defined Maturity Schedule 26 Funding Agreement Maturities ($B) Note: Data as of March 31, 2023, unless otherwise noted. Presented net of AC
Slide 27: Severely Draconian Scenario: Athene Would Double Excess Capital
Severely Draconian Scenario: What Would Happen if All Policies Out-of- Surrender Charge Lapsed at Once? Athene Would Double Excess Capital Note: Data as of March 31, 2023 unless noted otherwise. Presented net of ACRA NCI. 1. RBC Numbers presented as of December 31, 2022. 2. Includes $57.1B liquid bo
Slide 28: Athene Observed No Material Change in Activity Through SVB Failure
Athene Observed No Material Change in Activity Through SVB Failure in March 2023 $3.5 $3.8 4Q'22 1Q'23 7.1% annualized policyholder- driven withdrawal rate 7.6% annualized policyholder- driven withdrawal rate Policyholder Driven Outflows1 ($B) 28 Note: Data as of March 31, 2023, unless otherwise not
Slide 29: Case Study: AIG & Genworth Annualized Annuity Outflows During Great Financial Crisis
Case Study: AIG & Genworth Annualized Annuity Outflows During Great Financial Crisis Note: Calculated from figures disclosed in US Life Insurer Statutory filings for entities owned by Genworth and Corebridge / AIG Life & Retirement, as aggregated by SNL Financial. Calculation represents the annualiz
Slide 30: Appendix
Appendix
Slide 31: Ongoing Commitment to Transparency Through Normal Course Disclosure
Ongoing Commitment to Transparency Through Normal Course Disclosure 31 Click Here To Access Athene’s 1Q’23 Financial Supplement Quarterly Detail Provided on Athene’s Inflows and Outflows Within Financial Supplement
Slide 32: Ongoing Commitment to Transparency Through Normal Course Disclosure (Cont.)
Ongoing Commitment to Transparency Through Normal Course Disclosure (Cont.) 32 Quarterly Detail Provided on Athene’s Account Value by Level of Surrender Charge Protection
Slide 33: Non-GAAP Measures & Definitions
33 Non-GAAP Measures & 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
Slide 34: Non-GAAP Measure Reconciliation
34 Non-GAAP Measure Reconciliation Total Liabilities Debt Derivative Laibilities Payables for collateral on derivatives and securities to repurchase Other liabilities Liabilities of consolidated VIEs Reinsurance impacts Policy loans ceded Market risk benefit asset ACRA noncontrolling interest Total