Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Investor Day (June 2022)
157 slides from Apollo Global Management, Inc. (new)'s investor day presentation, Jun 13, 2022
Slide 1: Retirement Services Business Update
APOLLO June 13, 2022 RETIREMENT SERVICES Business Update eo = i
Slide 2: Forward-Looking Statements and Important Disclosures
Forward-Looking Statements and Important Disclosures This presentation has been prepared by Apollo Global Management, Inc., a Delaware corporation. (“HoldCo” and together with its subsidiaries, “Apollo,” “we,” “us,” “our” and the “Company”), solely for informational purposes for its public stockhold
Slide 3: Forward-Looking Statements and Important Disclosures
Forward-Looking Statements and Important Disclosures Apollo makes no representation or warranty, express or implied, as to the fairness, accuracy, reasonableness or completeness of the information contained herein, including, but not limited to, information obtained from third parties. Unless otherw
Slide 4: Retirement Services Business Update – Agenda
Retirement Services Business Update – Agenda TIME TOPIC PRESENTER ROLE Welcome Remarks Noah Gunn Apollo Global Head of Investor Relations Business Overview & Investment Philosophy Jim Belardi Athene Chairman, Chief Executive Officer, & Chief Investment Officer 9:00AM-10:25AM Growth Engine Grant Kval
Slide 5: Welcome Remarks
Welcome Remarks NOAH GUNN Global Head of Investor Relations, Apollo
Slide 6: Athene Has Continued to Thrive Amid Merger with Apollo
Athene Has Continued to Thrive Amid Merger with Apollo March May August October January May 2021 2021 2021 2021 2022 1Q’22 2022 Apollo / Athene S&P Upgrades Fitch Revises Long-Term Apollo / Athene Athene Generates Fitch Upgrades Announce Athene to ‘A+’ Athene’s Outlook Business Plan Close Strategic
Slide 7: Merger Benefits Are Even Clearer and More Tangible
Merger Benefits Are Even Clearer and More Tangible Growth Accelerant Owning Asset Origination Better Client Proposition New Product Opportunities Increased Internal Collaboration Full Alignment Drives Shareholder Value Creation Enhanced Capital Efficiency & Flexibility A P O L L O R E T I R E M E N
Slide 8: Today's Presentation Will Illuminate Investor Focus Areas Regarding Athene
Today’s Presentation Will Illuminate a Variety of Investor Focus Areas Regarding Athene FOCUS Sensitivity to Sensitivity to Characteristics Capital AREA Credit Cycle Interest Rates of Funding Intensity Well Positioned Well Capitalized NET with Excess Positive Earnings Very Sticky with and Increasing
Slide 9: Business Overview & Investment Philosophy
Business Overview & Investment Philosophy JIM BELARDI Chairman, Chief Executive Officer, & Chief Investment Officer, Athene
Slide 10: Athene Was Established Amid Financial Dislocation and Has Navigated the Past Decade
Athene Was Established Amid Financial Dislocation and Has Navigated the Past Decade Exceptionally Well 9% Athene’s 8% Opportunistic Focus Traces Back 7% to Founding in Mid–2009 6% COVID–19 China 5% US Credit Growth Rating Cut Concerns 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Slide 11: Athene and Apollo Have Achieved Many Milestones Together
Athene and Apollo Have Achieved Many Milestones Together UPGRADED TO ‘A’ MERGER ANNOUNCEMENT 2022 THIRD-PARTY UPGRADED TO ‘A’ SIDECAR 2021 2020 Apollo-Athene IPO 2019 Merger Closes 2018 RATED ‘A-’ UPGRADE TO ‘A+’ 2017 2016 FOUNDING 2014 UPGRADE TO ‘A+’ 2013 2009 Notes: Financial services companies d
Slide 12: Retirement Services Benefitting From Strong Secular Tailwinds
Retirement Services Benefitting From Strong Secular Tailwinds DEMOGRAPHICS NEED FOR SHIFT FROM INDUSTRY TAILWINDS RETIREMENT INCOME DB TO DC RESTRUCTURING (ASSETS 3 , $ TRILLIONS) $9.4 Low interest rates 1.5 >80% driving down profitability billion $5.1 Legacy liability $3.7 $3.7 issues people aged 6
Slide 13: We Serve a Growing, and Increasingly Underprepared, Retirement Population
We Serve a Growing, and Increasingly Underprepared, Retirement Population US POPULATION AGE 65+ Athene issues, reinsures, and acquires retirement $4 ~TRILLION savings products designed for the increasing ESTIMATED number of individuals 35 55 80 + SAVINGS and institutions SHORTFALL seeking to fund MI
Slide 14: The Industry Has Returned ~90% of Market Cap to Shareholders
The Industry Has Returned ~90% of Market Cap to Shareholders Over the Last Decade… CUMULATIVE CAPITAL RETURN AS % OF MARKET CAP 1 “Having a large share buyback has essentially become table stakes for U.S. 89% life insurers, with capital 78% return being the primary, 72% if not the only, factor 65% i
Slide 15: Potentially Leaving Them Exposed in Times of Stress
…Potentially Leaving Them Exposed in Times of Stress CHANGE IN ESTIMATED EXCESS CAPITAL IN 1Q’22 110% 32% 0% -10% -5% -20% -14% -44% -38% -59% -57% -55% -108% PEER 1 PEER 2 PEER 3 PEER 4 PEER 5 PEER 6 PEER 7 PEER 8 PEER 9 PEER 10 PEER 11 PEER 12 PEER 13 Source: Autonomous Research. Note: When calcul
Slide 16: "Private" Sources Are Providing the Capital Backstop for Retirees
“Private” Sources Are Providing the Capital Backstop for Retirees • We seek to provide excess CAPITAL RAISED IN THE LIFE INSURANCE INDUSTRY return per unit of risk and SINCE 2010 ACROSS THE US AND EUROPE can broaden the universe of attractive fixed income assets $26.3B to support retirees $1.1B VENT
Slide 17: Athene is Very Well Capitalized
Athene is Very Well Capitalized A+ $20B $3.3B $7.3B Financial Strength Total Deployable 1 4 Regulatory Excess 2 3 Rating by S&P & Fitch Capital Equity Capital Capital “A” by AM Best Data is as of March 31, 2022. 1. Relates to Athene’s primary insurance subsidiaries; represents ratings from AM Best "
Slide 18: Athene's Substantial Available Capital = Embedded Growth
Athene’s Substantial Available Capital = Embedded Growth ~$90B $7.3B AVAILABLE EQUITY CAPITAL + GROWTH POTENTIAL FROM DEBT CAPACITY TODAY 1 DEPLOYABLE CAPITAL AVAILABLE EQUITY CAPITAL UNTAPPED DEBT CAPACITY 1. For Athene, available equity capital (inclusive of excess capital and uncommitted capital
Slide 19: Athene's Business Is Simple
Athene’s Business Is Simple PREMIER SPREAD LENDER MATCHING HIGH -QUALITY ASSETS THROUGH APOLLO WITH LOW-COST & LONG-TERM FUNDING 1 2 3 What ATHENE GENERATES INVESTS WITH KEEPS SPREAD ABOVE does INFLOWS APOLLO FUNDING COST Athene By providing a suite of principal protected In a high-quality Resulting
Slide 20: Athene's Balance Sheet is Straightforward
Athene’s Balance Sheet is Straightforward FIXED Persistent, Nearly All SPREAD-BASED INCOME / Predictable, $209B $209B LIABILITIES Investment YIELD ASSETS 9 Year Grade1 94% Weighted OF PORTFOLIO Average Life $13B ALTS, 6% OF PORTFOLIO EQUITY $20B $7B OTHER, NET 2 Note: Data as of March 31, 2022. Spre
Slide 21: Athene Generates Attractive Net Spread
Athene Generates Attractive Net Spread UNDERWRITTEN SPREAD ON RECENT NEW BUSINESS (MAY YTD) Asset Yield 4.3% ~30bps better vs others, net of fees1 Cost of Funds 3.0% Disciplined and dynamic pricing Operating Expenses 0.2% ~30bps more efficient OpEx vs others2 Net Spread 1.1% Implied ROE Mid-teens ~3
Slide 22: What Do You Need to Understand About This Business?
What Do You Need to Understand About This Business? PREDICTABLE, STABLE, AND GROWING OVER THE PAST 13 YEARS Key to Consistency Quality Predictable Success is Over & Liabilities Asset Yield Heroism Transparency With fixed funding We target only Full clarity Stable liabilities costs, a spread ~30-40 b
Slide 23: Athene's Team is One of the Industry's Strongest
Athene’s Team is One of the Industry’s Strongest Experienced Senior Leadership In Addition To… 1,450+ JIM TEAM MEMBERS BILL GRANT MARTY BELARDI WHEELER KVALHEIM KLEIN Chief Executive Officer Vice Chairman President Athene, EVP, & Chief Investment CEO Athene USA Chief Financial Officer Officer Deep B
Slide 24: Apollo Provides Strategic Advantages to Athene
Apollo Provides Strategic Advantages to Athene FULLY ALIGNED RELATIONSHIP ALLOWS FOR LONG -TERM OUTPERFORMANCE Portfolio Management, Asset Origination, & Structuring Leading Retirement Services Franchise 30+ Year Investment Track Record Consistent Demand for Yield Across Market Cycles Capital Raisin
Slide 25: Full Alignment Amplifies Profitability Potential of Asset Origination
Full Alignment Amplifies Profitability Potential of Asset Origination ORIGINATED ASSETS HAVE MULTIPLE HOMES Retirement ORIGINATED ASSET • Perpetual capital Services • Self-funding growth Balance • Attractive economics PARTIAL Sheets (fees + spread) ALLOCATION Third-Party • Excess return for institut
Slide 26: Athene Outperforms on Numerous Key Metrics
Athene Outperforms on Numerous Key Metrics HIGHER STAT CAPITAL LOWER DEBT / LOWER EFFICIENT VS. RESERVES1 CAPITAL 2 CREDIT LOSSES 3 COST STRUCTURE 4 23.8% $ 20 B OF STAT CAPITAL ~70 bps 12.4% 12 bps 14.6% 9 bps 40 bps 7 bps 8.9% 2 bps AA-/A+ Rated Athene AA-/A+ Rated Athene 5 Year 5 Year Avg Average
Slide 27: Organic Growth Capability is Market Leading
Organic Growth Capability is Market Leading ORGANIC INFLOWS BY CHANNEL ($B) Athene is a Market Leader $37.0 Across US Organic Inflow Channels 11.8 RETAIL FUNDING $27.5 ANNUITIES AGREEMENTS #1 Market Share 13x for Fixed Index #1 Market Share 8.3 in 20212 Annuity Issuance GROWTH $18.1 in 2020 and 2021
Slide 28: Athene Prices to a Target Spread Regardless of Market Backdrop
Athene Prices to a Target Spread Regardless of Market Backdrop PROFITABLE ORGANIC GROWTH IN DIFFERENT INTEREST RATE ENVIRONMENT S 2018 2020 1Q'22 △ from "Higher Rate "Lower Rate "Current 2018 to Environment" Environment" Environment" Current Average 10-Year US Treasury Yield 2.9% 0.9% 2.0% (90) bps
Slide 29: High Returns Attract Third-Party Capital to Finance Growth
High Returns Attract Third-Party Capital to Finance Growth IN 2019, AN INNOVATIVE SIDECAR WAS FORMED TO SUPPORT ATHENE’S CO NTINUED GROWTH APOLLO/ATHENE DEDICATED INVESTMENT PROGRAM (ADIP) $3.2B First sidecar of its kind STRONG INVESTMENT PERFORMANCE in the industry CAPITAL RAISED FOR ADIP I $2.1B D
Slide 30: Athene Has a Disciplined Investment Philosophy
Athene Has a Disciplined Investment Philosophy Target higher and Focus on downside Dynamic asset Differentiation driven sustainable risk- protection given allocation to by proprietary asset adjusted returns by long-dated liability take advantage of origination and capturing illiquidity profile and l
Slide 31: High-Quality Asset Portfolio Generates Excess Return
High-Quality Asset Portfolio Generates Excess Return CASH AND EQUIVALENTS 3% KEY ATTRIBUTES CMBS OTHER 2 ALTERNATIVES 2% 2% 6% RMBS 94% 95% 4% RML 4% $222 invested in fixed AFS fixed maturity ABS 11% income or cash securities rated investment grade1 6% RESILIENT CLO BILLION 3 Gross Invested Assets C
Slide 32: Manufacturing Asset Spread in a Low Spread World
Manufacturing Asset Spread in a Low Spread World APOLLO DIRECT ORIGINATION PLATFORMS Investment ~550-600 Grade ~350-450 ~350–500 Investment ~250-350 Universe: ~150-175 Current on the Margin PUBLIC IG CORPORATES 1 HIGH GRADE FRANCHISE PK WHEELS / Spreads ALPHA FINANCE AIRFINANCE DONLEN (bps) AVG. NAI
Slide 33: Tactical Areas of Differentiation Within Athene's Asset Portfolio
Tactical Areas of Differentiation Within Athene’s Asset Portfolio CASH AND OTHER 1 EQUIVALENTS 2% ALTERNATIVES RML 3% 6% 4% 1 2 3 $222 CML 12% CORPORATE Downside- & GOV'T Structured Commercial 46% BILLION 2 Protected CMBS Securities Real Estate 2% Gross Invested Alternatives RMBS 4% Assets Portfolio
Slide 34: Portfolio Spotlight: Alternative Investments
Portfolio Spotlight: Alternative Investments HIGHLY DIVERSIFIED AND STRATEGIC DOWNSIDE PROTECTED • $11.5 billion alternatives portfolio accounts for 6% of net invested assets • Strategic deployment to seed and co-invest in Apollo funds, continue Apollo & • Investing strategies spanning yield, hybrid
Slide 35: Athene's Alts Portfolio Performance Has Been Strong and Durable
Athene’s Alts Portfolio Performance Has Been Strong and Durable NORMALIZING ALTS TO 11% IS HISTORICAL RETURNS HAVE BEEN LESS APPROPRIATE AND CONSERVATIVE VOLATILE THAN THE EQUITY MARKET Standard Deviation Sharpe Ratio 16.6% ATHENE ALTS 9% 1.1 S&P 500 34% 0.4 13.1% 11.3% 11.9% Reference: Preqin PE In
Slide 36: Key Observations of Athene's Business
Key Observations of Athene’s Business 1 Athene has a simple and scalable spread business model Athene generates low-cost, persistent funding, with no legacy 2 liability issues 3 Athene has leading organic growth capabilities Athene is very well capitalized and has a long history of minimal 4 credit
Slide 37: Growth Engine
Growth Engine GRANT KVALHEIM President & USA Chief Executive Officer, Athene
Slide 38: Athene Has Various Channels From Which to Generate Inflows
Athene Has Various Channels From Which to Generate Inflows RETAIL FLOW BLOCK COMPELLING ANNUITIES REINSURANCE REINSURANCE GROWTH Organic Inorganic Growth Growth PENSION FUNDING ACQUISITIONS STRONG GROUP AGREEMENTS RETURNS ANNUITIES A P O L L O R E T I R E M E N T S E R V I C E S B U S I N E S S U P
Slide 39: Vast Opportunity in Current Markets
Vast Opportunity in Current Markets $3.8T $3.0T $665B $71B $32B $26B Athene Total US Retail Athene Total US and Athene FABN Total FABN Cumulative Retail Annuity and Cumulative Pension UK Pension and FHLB Issuance and FHLB Annuity Sales and Japan Life and Group Annuity Group Annuity Outstanding6 Issu
Slide 40: Diversity of Organic Channels Allows For The Ability to Pivot
Diversity of Organic Channels Allows For The Ability to Pivot 2021 NEW BUSINESS 1 MARKET VOLUMES EST. MARKET SHARE CLIENT RANK Fixed Indexed Annuity (FIA): 12.1% #1 Retail Retail $8.8B Multi-Year Guaranteed Annuity (MYGA): 1.1% #15 Customers (via third-party Registered Index-Linked Annuity (RILA): 1
Slide 41: Athene Prioritizes Pricing Discipline Across Channels
Athene Prioritizes Pricing Discipline Across Channels NEW BUSINESS DECISIONS ARE BASED ON TARGET RETURN CHARACTERISTIC S, NOT VOLUME $ IN MM Pulled back $5,000 from FABN $4,000 market when $3,000 2018 terms were not $2,000 $1,000 favorable, then $0 re-entered $ IN MM $1,000 Pivoted away $750 from MY
Slide 42: Retail Annuities
Retail Annuities BUSINESS HIGHLIGHTS RETAIL ANNUITY INFLOWS ($B) • Athene is the leading fixed indexed annuity issuer • Broad range of products developed for needs of distribution $8.8 channels and retirement strategies, with focus on fixed indexed $7.8 annuities $7.5 • Product differentiation throu
Slide 43: Athene's Retail Products Offer Downside Protected Returns
Athene’s Retail Products Offer Downside Protected Returns in a Tax-Efficient Format % OF RETAIL PRODUCT INFLOWS 1 DURATION ILLUSTRATIVE RETURN PROFILE KEY CHARACTERISTICS Traditional Fixed Annuity 7% 3–7 years Like a Stable retirement savings vehicle that offers principal protection (MYGA) Fixed Rat
Slide 44: Increasing Diversity of Retail Distribution is a Strategic Advantage
Increasing Diversity of Retail Distribution is a Strategic Advantage Industry leader in the Independent Marketing Multi-year distribution expansion effort within Financial Organization (IMO) channel with 13% market Institutions is paying dividends and strengthening Athene’s share in 2021 market posi
Slide 45: Pension Group Annuities
Pension Group Annuities BUSINESS HIGHLIGHTS & KEY DRIVERS PENSION GROUP ANNUITY INFLOWS ($B) • Grew to be the market leader in 2020 and 2021 • Through several signature transactions, Athene has become a $13.8 partner of choice for blue-chip corporate pension plan sponsors • Driven by long-term secul
Slide 46: Athene Has An Established Track Record in Pension Group Annuities
Athene Has An Established Track Record in Pension Group Annuities #1 2020 & 2021 >$30B 35 440,000+ Cumulative PGA Transactions Pension US Industry Ranking Volume since 20172 Completed2 Annuitants Covered2 by Volume1 SELECT TRANSACTIONS $900 MILLION $2.6 BILLION $700 MILLION $1.7 BILLION $2.8 BILLION
Slide 47: U.S. Pension Group Annuity Market is Only Just Reaching Scale
U.S. Pension Group Annuity Market is Only Just Reaching Scale • 2021 was a record year for U.S. pension group annuities, with 8 individual transactions of more than $1 billion coming to market • Large and growing opportunity given annual market volume transacted represents only 3% of estimated addre
Slide 48: Industry Pensions Fully Funded for First Time Since 2008
Industry Pensions Fully Funded for First Time Since 2008 FUNDED STATUS OF THE 100 LARGEST DEFINED BENEFIT PENSION PLANS S PONSORED BY U.S. PUBLIC COMPANIES 1 110% 107% 105% 100% 95% 90% 85% 80% 75% 70% 65% 2007 2009 2011 2013 2015 2017 2019 2021 1. Milliman 100 Pension Funding Index (PFI), as of May
Slide 49: Funding Agreements
Funding Agreements 1 BUSINESS HIGHLIGHTS FUNDING AGREEMENT INFLOWS ($B) • While at SunAmerica in the 1990s, Jim Belardi pioneered the development of the Funding Agreement-Backed Note (FABN) $11.8 • Athene maintains issuing capabilities in six currencies across the North American and European markets
Slide 50: Athene is Among the Largest FABN Issuers in the Market
Athene is Among the Largest FABN Issuers in the Market ATHENE FABN ISSUANCE OUTSTANDING 1 BY TENOR BY CURRENCY 2 2YR, 2% CAD, 7% 10YR, EUR, GBP, 4% 9% CHF, 2% 14% 3YR, NOK, 1% $33.03 6-8YR, 34% 22% 5YR, USD, $23.3 $22.7 33% 72% $10.9 $6.7 $7.8 $7.9 $5.8 $6.1 $3.4 $3.5 $3.8 $4.6 $3.1 Prudential AIG B
Slide 51: Flow Reinsurance
Flow Reinsurance BUSINESS HIGHLIGHTS FLOW REINSURANCE INFLOWS ($B) • Ongoing priority to diversify counterparty relationships across geographies and product areas $6.0 • During 2020, built a reputation of strength in the market as a partner of choice, supporting counterparties when others chose $4.0
Slide 52: Merger Can Strengthen Athene's Distribution / Product Capabilities
Merger Can Strengthen Athene’s Distribution / Product Capabilities POST-MERGER, ATHENE AND APOLLO HAVE HAD DEEPER DIALOGUE AROUND EXPANSION OF DISTRIBUTION CHANNELS Retail Pension Group Reinsurance / New Product Distribution Annuities Asia Expansion Creation Apollo is recognized as Dialogue with Apo
Slide 53: Athene is a Solutions Provider to the Industry
Athene is a Solutions Provider to the Industry RETAIL FLOW BLOCK COMPELLING ANNUITIES REINSURANCE REINSURANCE GROWTH Organic Inorganic Growth Growth PENSION FUNDING ACQUISITIONS STRONG GROUP AGREEMENTS RETURNS ANNUITIES A P O L L O R E T I R E M E N T S E R V I C E S B U S I N E S S U P D A T E 2022
Slide 54: Disciplined Approach to Inorganic Growth
Disciplined Approach to Inorganic Growth Enables Us to Identify Best Opportunities FITS STRATEGY COMPLEX CARVE-OUTS 1 Ability to scale assets / liabilities RE-INSURANCE Leverage existing strengths MULTI-PARTY TRANSACTIONS WHOLE “VANILLA” FA BLOCKS 2 RISK PROFILE COMPANY ACQUISITIONS Liabilities must
Slide 55: Numerous Advantages Allow Us to Structure "Win-Win" Solutions
Numerous Advantages Allow Us to Structure “Win-Win” Solutions ASSETS PARTNER CAPITAL • FULL EXIT – • $29 BILLION • $8 BILLION $53 BILLION FA RESERVES FIA RESERVES FA & VA RESERVES REINSURED REINSURED SOLUTION TRANSFERRED • $500 million • Facilitated ~$500 SOURCING SCALE • 9.9% stake in validating eq
Slide 56: FAQ: How Does the Current Macro Backdrop Impact Athene's Growth Outlook?
FAQ: How Does the Current Macro Backdrop Impact Athene’s Growth Outlook? ORGANIC INORGANIC CHANNELS CHANNEL Impact of Retail Flow Pension Group Funding M&A / Block Rising Annuities Reinsurance Annuities Agreements Reinsurance Interest Rates and Declining • Offers better pricing to consumers • Partne
Slide 57: The Market Opportunity for Retirement Services is Global
The Market Opportunity for Retirement Services is Global Asia Japan TAM: $3.0T4 U.S. Ex-Japan TAM: $4.5T3 TAM: $3.7T1 Europe TAM: $7.0T2 Australia TAM: $2.5T5 Apollo’s ~$270B AUM today represents less than 2% of the $20T+ total addressable market 1. Comprised of: $1.2 trillion US general account ann
Slide 58: Liability Underwriting & Risk Profile
Liability Underwriting & Risk Profile MIKE DOWNING Chief Operating Officer & Chief Actuary, Athene
Slide 59: What is Retirement Services?
What is Retirement Services? WHAT RETIREMENT SERVICES IS WHAT RETIREMENT SERVICES IS NOT Spread business generating Greater uncertainty investment income for retirees and tail risk Simple Variable Annuities With Riders Stable Long-Term Care Predictable Structured Settlements Growing Property & Casua
Slide 60: Athene Originates Low-Cost, Long-Dated Funding
Athene Originates Low-Cost, Long-Dated Funding SIMPLE RETIREMENT SAVINGS PRODUCTS WITH STRUCTURAL FEATURES THAT INCREASE STICKINESS PERSISTENT & PREDICTABLE ~9 Year 81% LIABILITY PORTFOLIO 30% 1 2 Non- Other Weighted Of Funding Carries a Surrenderable Pension 1%5 Group Average Life Withdrawal Penalt
Slide 61: Liability Risk Profile is Limited Due to Focus on Simple, Spread-Based Products
Liability Risk Profile is Limited Due to Focus on Simple, Spread-Based Products KEY LIABILITY RISKS POLICYHOLDER/ DURATION 1 zz LAPSE LONGEVITY CLIENT (YEARS) Retail Retail 5-15 Customers 3-7 Annuities (via third-party agents) 6-8 Flow N/A Other 3-10 Reinsurance Insurers Funding N/A N/A Capital Mark
Slide 62: Key to Success is Appropriately Pricing Risk
Key to Success is Appropriately Pricing Risk Higher Risk Requires Higher Profit Targets Key Risk LONGER DURATION SHORTER Considerations STICKY PERSISTENCY LIQUID When NARROW VOLATILITY OF OUTCOMES WIDE Originating LOW INTEGRATION RISK HIGH New Funding ATHENE UTILIZES A RISK-RETURN CONTINUUM TO EVALU
Slide 63: FAQ: Will Consumers Surrender Policies in a Rising Rate Environment?
FAQ: Will a Significant Amount of Consumers Surrender Their Policies in a Rising Interest Rate Environment? 1 2 3 Structural Fee-Averse Consumers High Considerations Protections & Suitability Predictability for Impact • Surrender charges (which are • Consumers are historically very • Athene’s histor
Slide 64: Industry Annuity Surrender Activity Highly Stable and Predictable
Industry Annuity Surrender Activity Highly Stable and Predictable SELECT U.S. ANNUITY PRODUCT SURRENDER RATES OVER TIME 18% GFC COVID-19 15% 12% 9% 6% 3% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Source: SNL select US life insurers in
Slide 65: Athene's Activity Has Been Predictable, Within a Narrow Range
Athene’s Activity Has Been Predictable, Within a Narrow Range ATHENE HISTORICAL OUTFLOWS (annualized) 1,2 18% 15% 11% 12% AVG 9% = 9% 6% 7% 3% 0% 2015 2016 2017 2018 2019 2020 2021 2022 1. Outflows consist of full and partial policyholder withdrawals on deferred annuities, death benefits, benefit pa
Slide 66: Lapse is Only Bad for a Small Subset of the Portfolio
Lapse is Only Bad for a Small Subset of the Portfolio 81% 30% • $52B from Pension Group Annuities1, Funding Agreements, of funding $174B and Payout Annuities NON-SURRENDERABLE carries a withdrawal of net reserve 51% • $89B currently in surrender charge period • Roughly two-thirds of total is also su
Slide 67: Impact of Draconian Assumptions are Extremely Manageable
Impact of Draconian Assumptions are Extremely Manageable Baseline Draconian Lifetime Adverse Annualized Shock Lapse Economic Lapse Rate1 Scenario Impact Considerations 51% OF PORTFOLIO • Cash inflows from surrender charges WITH SURRENDER 2% 20% ~$200M provides offset • MVA offset on two-thirds of po
Slide 68: FAQ: Will Athene be Impacted by LDTI Accounting Change?
FAQ: Will Athene be Impacted by LDTI Accounting Change Coming in 2023? WHAT’S WHAT DOES THIS IS THERE A WHY? HAPPENING? APPLY TO? NEGATIVE IMPACT? Transition to a new standard of accounting ~20% • No expected material impact on retained • Athene has historically used low discount rates for certain t
Slide 69: Asset Risk Framework & Stress Results
Asset Risk Framework & Stress Results DOUG NIEMANN Chief Risk Officer, Athene
Slide 70: Risk Management is Embedded in Everything We Do
Risk Management is Embedded in Everything We Do MANAGE ATHENE’S RISKS SUCH THAT IT CAN GROW PROFITABLY ACROSS MA RKET ENVIRONMENTS ATHENE’S RISK MANAGEMENT • Robust risk management framework and procedures underpin focus on protecting capital and aligning risks with stakeholder expectations • Risk s
Slide 71: An Experienced Risk Team Manages a Robust Governance & Limit Framework
An Experienced Risk Team Manages a Robust Governance & Limit Framework Supporting Athene’s Risk Appetite EXPERIENCED RISK TEAM Asset Allocation • Chief Risk Officer leads team of more than 40 professionals Limits focused on Athene’s risk profile, with reporting to the Athene Board Risk Committee Cha
Slide 72: Robust Multi-Layered Risk Governance for Investment Risk
Robust Multi-Layered Risk Governance for Investment Risk • Asset selection goes through a well-defined risk control APOLLO’S PORTFOLIO MANAGERS AND INVESTMENT COMMITTEES process aligned with Athene’s risk appetite • Ensures investments are consistent with allocation and other APOLLO’S COMPLIANCE AND
Slide 73: Athene's Strategy is to Pursue Yield Through Illiquidity and Complexity Premia
Athene’s Strategy is to Pursue Yield Through Illiquidity and Complexity Premia Without Adding Incremental Credit Risk OPTIONS TO PURSUE EXCESS RISK ADJUSTED INVESTMENT RETURNS MORE DURATION RISKIER ASSETS ILLIQUIDITY & STRUCTURE • Buy assets with longer tenor than • Buy assets farther out on the • C
Slide 74: Losses on Corporates Exceed Losses of Structured Credit Under Fed's Stress
Losses on Corporates held by U.S. Life Insurers Exceed Losses of Structured Credit Holdings Under Fed’s Stress Scenario BlackRock ran aggregate 14.7% assets of U.S. life insurers from statutory filings through the Fed’s CCAR stress test used for the 7.0% banking industry and found that the industry’
Slide 75: Athene's Portfolio Focuses on Investment Grade Securities With Downside Protection
Athene’s Portfolio Focuses on Investment Grade Securities With Downside Protection ~95% OF ATHENE’S AFS PORTFOLIO ATHENE PORTFOLIO PEERS is invested in primarily investment grade fixed and floating rate assets1 95% NAIC 1 & 2 95% NAIC 1 & 2 • Target asset classes which bring 3% illiquidity or struct
Slide 76: Asset Stress Testing Methodology is Conservative
Asset Stress Testing Methodology is Conservative Compared to Historical Experience Athene’s stress framework 1 CORPORATES Utilize Moody’s historical recession era bond default rates and recovery rates. Deep utilizes internally defined, recession applies two-year cumulative defaults experienced durin
Slide 77: Stress Assumptions in Historical Context
Stress Assumptions in Historical Context ATHENE ASSUMPTIONS SAMPLE HISTORICAL RECESSION DATA Baseline Deep Recession Euro COVID Recession 1990 2001 2008 2016 20201 Scenario Scenario 10 Yr US Down 60% Down 83% Treasury Yield Up 4% Down 21% Down 43% Down 84%2 Down 68% (e.g. ~140bps) (e.g. ~194bps) Abs
Slide 78: Athene's Stress Test Results Muted by One Year of Earnings
Athene’s Stress Test Results Muted by One Year of Earnings COMPARES TO MORE THAN $3B OF EXCESS EQUITY CAPITAL CURRENTLY 1Q’22 RECESSION SCENARIO DEEP RECESSION SCENARIO Portfolio Losses Impact Losses % of Losses Impact Losses % of Allocation ($B) Net Invested Assets ($B) Net Invested Assets Corporat
Slide 79: Management Actions Mitigate Losses and Capital Strain in Stress
Management Actions Mitigate Losses and Capital Strain in Stress AVAILABLE ACTIONS ALLOW FOR AT LEAST $4B OF LIQUIDITY AND $4B OF CAPITAL RELIEF IN MARKET DISLOCATIONS ILLUSTRATIVE ACTION BENEFIT ($B) ACTIONABILITY Utilize Federal Home Loan Bank (‘FHLB’) Facility ~$0.5 CAPITAL Committed Repo ~$2.0 MA
Slide 80: Examples of Active Portfolio Management for the Last Market Crisis
Examples of Active Portfolio Management for the Last Market Crisis APOLLO/ATHENE PREEMPTIVELY REPOSITIONED PORTFOLIOS PRIOR TO MARK ET DISLOCATION <BBB 1% <BBB AAA/AA/A 20% 33% BBB1 38% Positioned CLO Portfolio 1 ~80% ~99% into ~99% Investment 2015 Investment 1Q’22 Investment Grade Tranches Grade Gr
Slide 81: Minimal Credit Losses Historically, and During Stress
Minimal Credit Losses Historically, and During Stress HISTORICAL CREDIT LOSSES 1 ATHENE’S STRONG LIQUIDITY POSITION 15 bps INDUSTRY AVERAGE ATHENE • Robust capital position includes $3.3B of excess equity capital, $2.9B of untapped debt capacity, 12 bps 12 bps $1.1B of on-demand sidecar capital 9 bp
Slide 82: Asset Class Spotlight: Structured Credit
Asset Class Spotlight: Structured Credit BRET LEAS Partner, Structured Credit, Apollo
Slide 83: Deep Dive Into Athene's Structured Credit Portfolio
Deep Dive Into Athene’s Structured Credit Portfolio CMBS Cash and 2%/ $4B Equivalents ~27% of Athene’s Investment Portfolio RMBS Other1 3% 4%/$7B 1% Alternatives 6% is Structured Credit Products ABS 11%/$20B ABS and CLO comprise the largest pieces and account for ~21% or ~$40B Net CLO 10%/$18B Inves
Slide 84: CLOs Provide a Critical Source of Capital to the US Corporate Sector
CLOs Provide a Critical Source of Capital to the US Corporate Sector FINANCING A DIVERSE CROSS-SECTION OF INDUSTRIES AND COMPANIES SOURCES OF FINANCING FOR PRIMARY PURCHASERS OF CLOS ARE VITAL TO THE US CORPORATE SECTOR NON-INVESTMENT GRADE LOANS THE ECOSYSTEM PRIVATE-DIRECT MIDDLE MARKET LOANS, 4%
Slide 85: ABS Finance Provides a Critical Source of Capital to Support Consumer Spending
ABS Finance Provides a Critical Source of Capital to Support Consumer Spending… …WHICH DRIVES 70% OF THE US ECONOMY ~70% Contribution of US $526B Outstanding $104B Outstanding economic activity derived volume of volume of from consumer spending1 consumer ABS2 commercial ABS3 IF YOU: TAKE OUT A SPEND
Slide 86: Why is Structured Credit an Attractive Asset Class for Athene?
Why is Structured Credit an Attractive Asset Class for Athene? The illiquidity and DIVERSIFICATION complexity premia offered BENEFIT by structured credit provides an attractive CREDIT means for investors with ENHANCEMENT the appropriate expertise, stable funding, and capital to earn STRUCTURAL PROTE
Slide 87: Securitization Markets Have Experienced a Wholesale Change Since the Financial Crisis
Securitization Markets Have Experienced a Wholesale Change Since the Financial Crisis EQUIPMENT 1% OTHER STUDENT LOAN STUDENT LOAN 3% 3% OTHER 3% Industry ABS 10% CREDIT CARD 5% EQUIPMENT 4% Issuance AUTO 5% NON-AGENCY CREDIT CARD 1% RMBS NON-AGENCY 27% RMBS by Collateral CDO 20% 2007 43% AUTO 14% 2
Slide 88: Structured Credit Terms Have Changed Since the Financial Crisis
Structured Credit Terms Have Changed Since the Financial Crisis PRE-CRISIS (1.0) POST-CRISIS (2.0/3.0) EXAMPLE Pre-2008 Mortgage-Backed Securities (MBS) Collateralized Loan Obligations (CLO) Subprime properties with de minimis value; ‘synthetic’ or Collateralized by first lien senior secured bank lo
Slide 89: CLO Anatomy Illustrates Structural Benefits
CLO Anatomy Illustrates Structural Benefits ILLUSTRATIVE CLO ASSETS ILLUSTRATIVE (Diversified Portfolio of Bank COMPANY STRUCTURE Loans from Different Companies) CLO SECURITIZATION • CLO debt benefits from Bank Loans diversification and Senior-Secured (Libor +385bps) credit enhancement, Bank Loans A
Slide 90: Overview of Athene's CLO Portfolio
Overview of Athene’s CLO Portfolio $18 BILLION OF NET INVESTED ASSETS, 10% OF ASSET PORTFOLIO CLO PORTFOLIO BY RATINGS CLO CREDIT ENHANCEMENT 2 CLO PORTFOLIO BY MANAGER 49% Apollo / Redding Ridge Apollo & Related <BBB 10% Entities 1% 38% MidCap BBB1 38% 32% 4% 99%+ 24% 7% >100 21% 19% 15% Investment
Slide 91: CLO Portfolio Comprised of Well Diversified Underlying Assets
CLO Portfolio Comprised of Well Diversified Underlying Assets TOP INDUSTRY EXPOSURES UNDERLYING ATHENE’S CLO PORTFOLIO 1Q’21 1Q’22 1Q’22 NO. NAME PORTFOLIO PORTFOLIO CUMULATIVE Healthcare & Pharmaceuticals 11% 12% 12% Resilient top exposures, 1 2 High Tech 10% 11% 23% 3 4 Banking, Finance, Insurance
Slide 92: Athene's CLO Portfolio Has Significant Credit Enhancement
Athene’s CLO Portfolio Has Significant Credit Enhancement to Withstand Default Rates Far in Excess of Historical Events HISTORICAL INDUSTRY NON-INVESTMENT GRADE LOAN DEFAULT AND LOSS R ATES 2 ~23% Athene Current Weighted Average Credit Enhancement 25% 20% 15% 10% Industry Non-IG Loan Losses during L
Slide 93: Two-Year Lookback: "What We Said" and "What Happened"
Two-Year Lookback: “What We Said” and “What Happened” WHAT WE SAID WHAT HAPPENED • In August 2020, Athene published a deep dive on our CLO portfolio and its (in August 2020) performance in stress (see here)1 …Defaults would • No CLO position we own has defaulted • During the market volatility in 2Q’
Slide 94: Overview of Athene's Asset-Backed Securities (ABS) Portfolio
Overview of Athene’s Asset-Backed Securities (ABS) Portfolio $20 BILLION OF NET INVESTED ASSETS, 11% OF ASSET PORTFOLIO Fund Finance <BBB 7% 11% Aircraft 11% 93 %+ Other ABS Personal Auto 36% 1% Investment Commercial Auto Fleets by Industry Franchise Loans BBB1 10% 1% 35% Grade Student Loans 1% Cred
Slide 95: ABS Case Study: Wheels Donlen
ABS Case Study: Wheels Donlen COMPANY OVERVIEW SELECT CUSTOMER EXAMPLES DONLEN SERVICE OFFERING • Leading outsourced fleet management FLEET COMPOSITION, companies entrusted by customers to VEHICLE ACQUISITION AND UPLIFTING VEHICLE FUNDING manage full life cycle of mission-critical AND SYNDICATION fl
Slide 96: ABS Case Study (Continued): Wheels Fleet Financing Facility
ABS Case Study (Continued): Wheels Fleet Financing Facility 150,000+ VEHICLES AND MASTER TRUST CREDIT ENHANCEMENT & LOSS COVERAGE RESPECTIVE LEASES ($2.5B+) ABS SECURITIZATION 1 VS. ASSET VALUE 2 Guaranteed Class A Lenders – 13.0% Residual Value of Vehicle Tranche Rated 'AAA' Blended: Class B Lender
Slide 97: Historical IG Structured Credit Impairments Compare Favorably
Historical IG Structured Credit Impairments Compare Favorably to Public Corporates of the Same Rating • Investment grade CLO RATING CORPORATES CLO OTHER ABS RMBS CMBS debt has had lower POST-CRISIS (2011-2020) average defaults than IG Corporates AAA 0.00% 0.02% 0.00% 0% AA 0.02% 0.19% 0.05% A 0.02%
Slide 98: Asset Class Spotlight: Commercial Real Estate
Asset Class Spotlight: Commercial Real Estate SCOTT WEINER Partner, Commercial Real Estate, Apollo
Slide 99: Athene's CML Allocation Benefits from Apollo's Industry-Leading Platform
Athene’s Commercial Mortgage Loan Allocation Benefits from Apollo’s Industry-Leading Platform Direct Origination Relationship Proactive Asset Business Lender Management $40 $61 $13 BILLION BILLION BILLION GLOBAL ASSETS TOTAL CAPITAL INVESTED 2021 GLOBAL UNDER MANAGEMENT SINCE 2009 LENDING VOLUME Len
Slide 100: Why is Commercial Mortgage Debt an Attractive Asset Class for Athene?
Why is Commercial Mortgage Debt an Attractive Asset Class for Athene? Focus on Collateralized Real estate Bespoke Attractive senior by is a hedge investments yields, wide of positions hard assets to inflation with less investment in capital volatility grade structure corporates A P O L L O R E T I R
Slide 101: Rigorous Commercial Mortgage Loan (CML) Origination Process
Rigorous Commercial Mortgage Loan (CML) Origination Process DEAL DUE INVESTMENT ASSET STRUCTURING SOURCING DILIGENCE APPROVAL MANAGEMENT ACTIONABLE ACTIONABLEINQUIRIES: INQUIRIES:Deals: Deals:2,600+ 2,600+ // ~$153B+ ~$153B+ INITIAL INITIALUNDERWRITING: UNDERWRITING: Deals: Deals: 554 ~$78B+ 554 / ~
Slide 102: Overview of Athene's CML Portfolio
Overview of Athene’s CML Portfolio $23 BILLION OF NET INVESTED ASSETS, 13% OF ASSET PORTFOLIO KEY PORTFOLIO STATS PORTFOLIO BY CLOSING YEAR 2 $ IN BILLIONS $6.5 77% 87% 1.8x 57% CM-1&2 First Mortgage Debt Service Coverage Weighted Avg LTV1 21% $4.5 Ratio CM-3 $3.2 $3.2 $2.7 $2.2 $1.9 Portfolio Low-l
Slide 103: Athene's Diversified and High Quality CML Portfolio
Athene’s Diversified and High Quality CML Portfolio FLOATING SUBORDINATE MIDWEST CML by 5% 9% Position, UK/EUROPE 11% Rate and FIXED Position & MORTGAGE 52% Geographic NORTHEAST 33% Rate Diversity Geography FLOATING MORTGAGE SUNBELT 35% 17% Type FIXED WEST 30% SUBORDINATE 8% OWNER OCCUPIED, <1% RETA
Slide 104: CML Performance During Periods of Stress
CML Performance During Periods of Stress DELINQUENCIES REMAINED LOW POST-COVID WITH PROACTIVE ASSET MANAGEMENT COMMERCIAL PROPERTY PRICE INDEX OF CRE SECTOR 1 INDUSTRY-WIDE AVERAGE CRE LOAN-TO-VALUE 2 180 75% CRE INDUSTRY LTV AVERAGES ATHENE CML PORTFOLIO WEIGHTED AVERAGE LTV Exceeded pre-crisis 160
Slide 105: CML Case Studies: Storage and Hospitality
CML Case Studies: Storage and Hospitality US SELF STORAGE PORTFOLIO CHARLOTTE, NC FULL-SERVICE HOTEL ORIGINATION DATE: April 2022 ORIGINATION DATE: May 2022 LOAN AMOUNT: $77 million LOAN AMOUNT: $86 million POSITION: First Mortgage POSITION: First Mortgage TERM: 10 years TERM: 3+1+1 years Deal Deal
Slide 106: Financial Overview & Capital Management
Financial Overview & Capital Management MARTY KLEIN Chief Financial Officer, Athene
Slide 107: Athene's Profitability Captured Within Apollo's Retirement Services Segment
Athene’s Profitability Captured Within Apollo’s Retirement Services Business Segment ASSET MANAGEMENT – = + Cost of Funds Spread RETIREMENT SERVICES Yield on Assets – Operating Expenses Financing Costs = Related Earnings + PRINCIPAL INVESTING - A P O L L O R E T I R E M E N T S E R V I C E S B U S I
Slide 108: SRE is Recurring, Predictable, and Sustainable Through the Cycle
SRE is Recurring, Predictable, and Sustainable Through the Cycle Average (2015-2021) = $1,297M $2,509M Average (2015-2021) = $1,282M $2,400M ~$2,200M $1,848M $1,463M $1,421M $1,380M $1,367M $1,255M $1,255M $1,148M $1,061M $961M $893M $790M $704M 2015 2016 2017 2018 2019 2020 2021 2022E 2015 2016 201
Slide 109: Spread Related Earnings and Fee Related Earnings Are Highly Correlated
Spread Related Earnings and Fee Related Earnings Are Highly Correlated $1,848M $1,463M $1,380M $1,367M $1,061M $961M $879M $893M 2014 2015 2016 2017 2018 2019 2020 2021 FRE NORMALIZED SRE 95% CORRELATION BETWEEN FRE AND NORMALIZED SRE 1 1. FRE and SRE correlations based on historical reported metric
Slide 110: Athene's Financial Model is Straightforward
Athene’s Financial Model is Straightforward LIABILITIES ARE SUPPORTED BY AN APPROPRIATE AMOUNT OF CAPITAL, I NVESTED IN MOSTLY FIXED INCOME ASSETS …SUPPORTED BY $1.00 OF …INVESTED $1.00 OF FUNDING… ASSETS + $0.08 OF CAPITAL... CONSERVATIVELY Marked- 8% CAPITAL 6% ALTERNATIVES to-market 100% quarterl
Slide 111: Components of Spread Related Earnings
Components of Spread Related Earnings STABLE RECURRING SPREAD 1 SPREAD COMPONENTS 3% Growth in Net Invested Assets 2% Yield on Net Invested Assets Less Cost of Funds 1% TAILWIND FROM Fees on Assets in Sidecar (ADIP)2 RISING RATES Operating Expenses & Financing Costs 0% 2015 2016 2017 2018 2019 2020
Slide 112: How Do Rising Interest Rates Impact SRE?
Key Question: How do Rising Interest Rates Impact SRE? ATHENE FLOATING RATE POSITION +25BPS PARALLEL SHIFT IN $30–$40 million 20% or $37 billion THE CURVE of annual SRE Floating Rate Assets1 DRIVES (Primarily CLOs and CMLs) 6% or $11 billion Floating Rate Liabilities2 FORWARD CURVE AS OF ~$180 milli
Slide 113: Athene's Organic Growth Profile is Best-in-Class
Athene’s Organic Growth Profile is Best-in-Class 10.2% AVERAGE ANNUAL ORGANIC GROWTH RATES 9.2% (2019 – 2021) +$19.5B 5.9% +$13.8B +$6.9B $37.0 +$6.7B 8% $27.5 $18.1 4% $11.6 1% 1% -$4.9 TRADITIONAL INSURER ASSET FIXED INDEXED ATHENE -$11.2 -$13.7 ASSET MANAGERS 5 ANNUITY ISSUERS 6 -$17.5 MANAGERS 4
Slide 114: Growing Assets and Earnings with Efficient Capital Deployment
Growing Assets and Earnings with Efficient Capital Deployment GROSS INVESTED ASSETS OUTLOOK SPREAD RELATED EARNINGS OUTLOOK $385B $5.00 ADIP $130B SUPPORT $4.00 ~6x $3.35 $210B $3.08 $35B ATHENE $111B $255B NET INVESTED $67B $175B ASSETS 2015 2018 2021 2026E 2021 2022E 2022E 2026E ADIP Prior Target
Slide 115: ADIP Enhances Capital Efficiency
ADIP Enhances Capital Efficiency… % OF ANNUAL GROWTH ATHENE SUPPORTS WITH ITS OWN CAPITAL 100% 76% 55-60% Pre-ADIP Pre-ADIP Post-ADIP 2018-1H21 Future Next 1 5 Years (2019-2021) We anticipate Athene will be increasingly capital efficient going forward Note: There is no guarantee that targets will be
Slide 116: And Strengthens Our Earnings Power
….And Strengthens Our Earnings Power Illustrative Supports $30 Million Annual FRE ~45 bps Mgmt. Fees x $12B $150 Pre-ADIP $1 Billion $12 Billion of @ ~55% Current Margin Million of Capital Inflow Generation Total Earnings from Athene Athene @ ~12x Leverage $120 Million Annual SRE Annual Model 100 bp
Slide 117: Athene Generates Significant Capital to Fund Growth
Athene Generates Significant Capital to Fund Growth ATHENE IS TODAY, AND HAS ALWAYS BEEN, MASSIVELY CAPITAL GENERATI VE ~$2.1 B Capital Generated from Earnings1 (~70-80% of Spread Related Earnings on average) CAPITAL UTILIZATION Capital Release from ~$0.8 B normal-course run-off 1 + ORGANIC GROWTH I
Slide 118: Sources and Uses of Athene's Capital
Sources and Uses of Athene’s Capital Illustrative (in billions) 2021 2022E BEGINNING EXCESS CAPITAL ~$3.5 ~$3.4 Earnings and block Statutory Earnings1 2.5 2.1 runoff will fund current organic $3.4 BILLION Capital Released from Runoff 0.7 0.8 growth TOTAL CAPITAL GENERATED Capital Markets Issuance (D
Slide 119: FAQ: Do Credit Ratings Matter For Athene's Business?
FAQ: Do Credit Ratings Matter For Athene’s Business? ORGANIC INORGANIC Retail Pension Group Funding Flow M&A /Block Annuities Annuities Agreements Reinsurance Reinsurance Higher ratings Higher ratings Higher ratings Higher ratings Higher ratings increase ability improve provide tangible result in le
Slide 120: Athene Has Spent Years Building Its Franchise and Financial Strength
Athene Has Spent Years Diligently Building Its Franchise and Financial Strength ACQUIRES RATED RATED UPGRADED UPGRADED UPGRADED UPGRADED AVIVA USA ‘A-’ ‘A-’ TO ‘A’ TO ‘A’ TO ‘A+’ TO ‘A+’ 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Enters Enters Launches Enters pension Launches Retail Record Re
Slide 121: Athene's Financial Strength Has Been Consistently Recognized
Athene’s Financial Strength Has Been Consistently Recognized, Fitch Recently Upgraded to ‘A+’ “… Fitch notes that [Athene] has a high level of expertise in managing those ‘A+’ [lower quality commercial mortgage loans and structured] assets and the company remains well matched from a duration perspec
Slide 122: Apollo's Winning Model
Apollo’s Winning Model MARTIN KELLY Chief Financial Officer, Apollo
Slide 123: Apollo-Athene Merger Strategic on Multiple Fronts
Apollo-Athene Merger Strategic on Multiple Fronts 1 2 3 4 Full Alignment Owning Production Significant Enhanced Accelerates Growth via Origination Cross Platform Capital Efficiency and Creates a Better Platforms Creates Product Development and Flexibility Proposition for Differentiated and Innovatio
Slide 124: Apollo's Model Delivers Full Alignment
1 Apollo’s Model Delivers Full Alignment Retirement ORIGINATED ASSET • Perpetual capital DRIVES Services 1 • Self-funding growth Balance • Attractive economics FRE + SRE (fees + spread) PARTIAL Sheets GROWTH ALLOCATION Third-Party • Excess return for institutional DRIVES 2 PARTIAL and global wealth
Slide 125: Full Alignment Accelerates Growth
Full Alignment Accelerates Growth WHAT WE ACHIEVED PRE-MERGER FAR GREATER OPPORTUNITIES LIE AHEAD RUN-RATE NEW NEW FUNDS PRODUCTS SEEDED THIRD-PARTY THIRD-PARTY BY ATHENE AUM FRE REVENUE 1 PLATFORMS & PRODUCTS Life Annuity Products Goal to expand annual origination Sciences Funds ~$24B ~$88M volume
Slide 126: Case Study: High Grade Alpha Loan to Softbank Vision Fund II
Case Study: High Grade Alpha Loan to Softbank Vision Fund II SHOWCASING OUR ALIGNMENT AS PRINCIPAL Unlocked liquidity Backed by Earned attractive Allocated $1.7B Investment grade for GP through portfolio of 150+ economics for Athene & credit rating senior secured underlying (~300bps excess Athora, w
Slide 127: Third-Party Investors are Attracted to This Alignment
Third-Party Investors are Attracted to This Alignment HIGH-GRADE ALPHA ORIGINATION TRANSLATING TO AUM + FRE PRE-MERGER CLOSE POST-MERGER CLOSE FORMING STRATEGIC SYNDICATION PARTNERSHIPS WITH INSURANCE CLIENTS $7.2B $4.3B $4.5B $2.0B 10 5 6 2 0 $0.0B 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 # OF HGA SEPARATELY
Slide 128: Strategic Importance of Athene's Investment Portfolio
2 Strategic Importance of Athene’s Investment Portfolio ATHENE’S PORTFOLIO IS A HOME FOR STRATEGICALLY IMPORTANT DEBT AN D EQUITY INVESTMENTS SELECTED TRANSACTIONS ASSET PORTFOLIO 1 AND INVESTMENTS STRATEGICALLY IMPORTANT Corporates CMLs CLOs HIGH-GRADE DEBT INVESTMENTS RMBS/RMLs ABS CMBS $209B MidC
Slide 129: Controlling the "Means of Production"
Controlling the “Means of Production” ORIGINATION PLATFORMS DRIVE RECURRING SUPPLY OF HIGH -QUALITY, YIELD-ENHANCED ASSETS HOW DO WE DEFINE APOLLO’S EXISTING ORIGINATION PLATFORMS? ORIGINATION PLATFORMS Origination platforms are best-in-class businesses, Net Lease teams and technologies that origina
Slide 130: What Can Direct Origination Offer Apollo and Apollo Clients?
What Can Direct Origination Offer Apollo and Apollo Clients? EQUITY DEBT / FLOW MANAGEMENT FEES SYNDICATION DEPLOYMENT DEPLOYMENT ON DEBT / EQUITY FEES Downside-Protected ~100–200bps Fees Fees on Low-to-Mid Excess on Origination and Teens ROE Asset Yield Deployment Distribution ATHENE SPREAD EARNING
Slide 131: Bringing Together Product Development and Innovation Expertise
3 Bringing Together Product Development and Innovation Expertise NEW PRODUCTS COMING SOON PROPRIETARY PORTFOLIO OF ALT ASSETS INSURANCE WRAPPED PRODUCT • Products designed for institutional and retail • Tax efficient annuity wrapper for a suite of Description investment portfolios pursuing equity-li
Slide 132: Merger Drives Capital Efficiency & Flexibility, Not Capital Intensity
4 Merger Drives Capital Efficiency & Flexibility, Not Capital Intensity • Very capital-lite, with ~0.50% net balance sheet value to AUM ratio ASSET MANAGEMENT • GP investments will be significantly funded through Athene’s alternatives portfolio • Alternatives portfolio funds origination platforms •
Slide 133: How is Apollo's Model So Efficient?
How is Apollo’s Model So Efficient? MULTIPLE SOURCES OF CAPITAL TO DRIVE GROWTH CAPITAL FUTURE CAPITAL SOURCE AVAILABLE TODAY AVAILABLE Athene Excess Capital $3.3B Future SRE ADIP Third-Party Sidecar $1.1B ADIP II Fundraising Athene Untapped Debt Capacity1 $2.9B Growth with Scale Plan to Raise Athen
Slide 134: All Pathways of Capital Deployment Drive Earnings Accretion
All Pathways of Capital Deployment Drive Earnings Accretion INCREMENTAL EARNINGS FRE SRE PII Athene Excess Capital ORGANIC GROWTH INORGANIC ADIP Third-Party Sidecar $37B OF INFLOWS P/YEAR GROWTH Athene Debt Capacity PLATFORMS NEW FUNDS Athene’s Alternatives Portfolio SEED NEW BUSINESSES CAPITAL SOLU
Slide 135: Athene's Earnings Support its Own Continued Growth
Athene’s Earnings Support its Own Continued Growth, As Well As the Broader Platform ~$4.00/share1 (pre-tax) target in 2022 Inclusive of strong 1Q’22 SPREAD RELATED alts returns and additional EARNINGS OUTLOOK ~$3.30/share2 (post-tax) target in 2022 floater income ~$ 2.0 B OF AFTER-TAX EARNINGS 3 $1.
Slide 136: Capital in Motion Creates Earnings
Capital in Motion Creates Earnings ILLUSTRATING ATHENE’S BUILT-IN CAPACITY TO FUND GROWTH SOURCE (IN $B, UNLESS OTHERWISE STATED) 2020 2021 ILLUSTRATIVE 2022E Equity Capital Created (Earnings + Runoff) $1.1 $3.2 $2.9 Debt / Pref Used for Growth $2.2 $1.0 $0.5 Capital Creation $3.3 $4.2 $3.4 Equity N
Slide 137: Projected to Generate Massive Capital at HoldCo
Projected to Generate Massive Capital at HoldCo ILLUSTRATIVE CAPITAL SPLIT… $1.60 ~$ 5 ~$15 Base Growth BILLION Dividend Engine for BILLION ~$ 5 Additional Projected Over BILLION Capital Return Next 5 Years ~$ 5 for Growth BILLION A P O L L O R E T I R E M E N T S E R V I C E S B U S I N E S S U P D
Slide 138: How Did Apollo Fund Recent Growth Investments?
How Did Apollo Fund Recent Growth Investments? INVESTMENT CAPITAL SOURCE EARNINGS CREATED Origination Platforms Foundation, Newfi, MaxCap, Retirement Service Clients’ FRE + SRE1 Petros PACE, Victory Park, Wheels Balance Sheets Strategic Assets Motive, Figure, CAIS, iCapital HoldCo FRE AUM/FRE Busine
Slide 139: SRE is a Highly Valuable Earnings Stream
SRE is a Highly Valuable Earnings Stream Recurring, predictable, and sustainable through market cycles Underpinned by a growing base of perpetual capital Largely backed by an investment grade fixed income portfolio Attractive long-term growth profile with a forecasted low-teens CAGR Increasingly cap
Slide 140: We Believe Retirement Services is a Superior Model
We Believe Retirement Services is a Superior Model NON-TRADED RETIREMENT BDC / REIT MODEL SERVICES MODEL Portfolio Non-Investment Grade Assets Investment Grade Assets Hurdle 5-8% Hurdle ~2.5% Cost of Funds High Water Mark? Yes, Driving Volatility None Profitability Cyclical All Weather Marks Marked-
Slide 141: FAQ: Are Athene Management Fees Truly Management Fees?
FAQ: Are Athene Management Fees Paid by Athene to Apollo Truly Management Fees? ATHENE MERGER DID NOT CHANGE CHARACTERISTICS OF FEE EARNINGS STR EAM TO APOLLO PAID FOR PERFORMANCE FAIRLY PRICED EXTERNALLY VALIDATED Athene has generated strong net Athene’s fees are in-line Market reception of profita
Slide 142: Today's Presentation Addressed a Variety of Investor Focus Areas
Today’s Presentation Addressed a Variety of Investor Focus Areas Regarding Athene FOCUS Sensitivity to Sensitivity to Characteristics Capital AREA Credit Cycle Interest Rates of Funding Intensity Well Positioned Well Capitalized NET with Excess Positive Earnings Very Sticky with and Increasingly TAK
Slide 143: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures
Slide 144: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO AHL COMMON SHAREHOLDER TO SPREAD RELATED EARNINGS AND NORMALIZED SPREAD RELATED EARNINGS (In millions) 2014 2015 2016 2017 2018 2019 2020 2021 1Q’22 Net income (loss) available to Athene Holding Lt
Slide 145: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures RECONCILIATION OF TOTAL INVESTMENTS INCLUDING RELATED PARTIES TO NET INVESTED ASSETS (In millions) 2015 2018 2021 1Q’22 Total investments, including related parties $ 64,525 $ 107,632 $ 209,176 $ 196,405 Derivative assets (871) (1,043) (4,387) (3
Slide 146: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures RECONCILIATION OF TOTAL INVESTMENT FUNDS, INCLUDING RECONCILIATION OF TOTAL LIABILITIES RELATED PARTIES AND VIES, TO NET ALTERNATIVE INVESTMENTS TO NET RESERVE LIABILITIES (In millions) 1Q’22 (In millions) 1Q’22 Investment funds including related
Slide 147: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures RECONCILIATION OF DEBT TO CAPITAL RATIO TO RECONCILIATION OF BENEFITS AND EXPENSES TO COST OF FUNDS ADJUSTED DEBT TO CAPITAL RATIO (In millions, except percentages) 1Q'22 (In millions, except percentages) 1Q'22 GAAP benefits and expenses $ 2,504
Slide 148: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures RECONCILIATION OF TOTAL AHL SHAREHOLDERS’ EQUITY TO TOTAL ADJUSTED AHL COMMON SHAREHOLDER’S EQUITY (In millions) 2009 2021 1Q'22 Total AHL shareholders' equity $ 113 $ 20,130 $ 11,149 Less: Preferred stock - 2,312 2,667 Total AHL common sharehold
Slide 149: Important Information & Definitions
Important Information & Definitions
Slide 150: Important Information
Important Information Estimates and Assumptions This presentation includes certain unaudited financial and business projections and goals on Apollo’s future outlook, include Athene (the “Estimates”). Apollo does not regularly provide future guidance or publicly disclose forecasts or projections as t
Slide 151: Important Information
Important Information Fee Related Earnings (“FRE”), Spread Related Earnings (“SRE”) and Principal Investing Income (“PII”) The estimates and expectations about Apollo’s fees, FRE, SRE and PII in the future depend on many assumptions about future events and circumstances, including but not limited to
Slide 152: Important Information
Important Information Target Returns Target returns including Target IRR are presented solely for providing insight into an investment’s objectives and detailing anticipated risk and reward characteristics in order to facilitate comparisons with other investments and for establishing a benchmark for
Slide 153: Non-GAAP Financial Information & Definitions
Non-GAAP Financial Information & Definitions Apollo discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (“Non-GAAP”): • “Adjusted Segment Inco
Slide 154: Non-GAAP Financial Information & Definitions
Non-GAAP Financial Information & Definitions • “ACRA” refers to Athene Co-Invest Reinsurance Affiliate Holding Ltd. • “ADIP” refers to Apollo/Athene Dedicated Investment Program, a fund managed by Apollo including third-party capital that invests alongside Athene in certain investments. • “Assets Un
Slide 155: Non-GAAP Financial Information & Definitions (Athene)
Non-GAAP Financial Information & Definitions (Athene) In addition to our results presented in accordance with GAAP, we present certain financial information that includes non-GAAP measures. Management believes the use of these non-GAAP measures, together with the relevant GAAP measures, provides inf
Slide 156: Non-GAAP Financial Information & Definitions (Athene)
Non-GAAP Financial Information & Definitions (Athene) Adjusted Debt to Capital Ratio Adjusted debt to capital ratio is a non-GAAP measure used to evaluate our capital structure excluding the impacts of AOCI and the cumulative changes in fair value of funds withheld and modco reinsurance assets as we
Slide 157: Non-GAAP Financial Information & Definitions (Athene)
Non-GAAP Financial Information & Definitions (Athene) Invested Assets In managing our business, we analyze net invested assets, which does not correspond to total investments, including investments in related parties, as disclosed in our consolidated financial statements and notes thereto. Net inves