Athene’s Steady Growth and Diversification

Athene, a leading financial services company, has continued to demonstrate strong performance and growth in 2024. As a specialist in retirement savings products, the company has capitalized on favorable demographic and market trends to expand its business across multiple channels.

Diversified Growth Across Retail, Reinsurance and Institutional Channels Athene’s organic inflows, which include retail annuity sales, flow reinsurance, and institutional products like funding agreements and pension group annuities, reached a record $71 billion in 2024, up 12% from the prior year. This growth reflects the strength of Athene’s multi-channel distribution platform and its ability to pivot quickly to capitalize on the most attractive opportunities.

Within the retail channel, Athene saw fixed annuity sales of $35.8 billion, driven by strong demand for its fixed indexed annuity (FIA) and registered index-linked annuity (RILA) products. The company has maintained a disciplined pricing approach while expanding relationships with independent marketing organizations, banks and broker-dealers.

In the flow reinsurance business, Athene generated $5.6 billion in inflows, though this was down from the prior year due to increased competition. The company continues to expand its presence in Asia through new partnerships and product offerings.

Athene’s institutional channel saw a significant increase in funding agreement inflows to $28.7 billion, reflecting a resurgence in the FABN market as well as growth in other funding agreement products. Pension group annuity inflows of $918 million were lower than 2023 due to a more competitive environment. Overall, the institutional business contributed $29.7 billion in organic inflows.

Inorganic Growth through Acquisitions and Reinsurance Deals In addition to its organic growth, Athene has continued to pursue inorganic expansion through acquisitions and block reinsurance transactions. The company believes its corporate development team, supported by parent company Apollo, has an industry-leading ability to source, underwrite and execute such transactions.

Establishing Flexible Capital Vehicles to Support Growth To fund its growth strategies and capital deployment opportunities, Athene has established two long-duration, on-demand capital vehicles - ACRA 1 and ACRA 2. These allow the company to simultaneously deploy capital across multiple accretive avenues while maintaining a strong financial position. ACRA 2 was established in 2022 and has since increased third-party ownership to 63%, providing additional flexibility.

Solid Financial Performance Athene’s financial results demonstrate the strength of its business model. Net income available to common shareholders was $3.3 billion in 2024, down 27% from the prior year, primarily due to a decrease in revenues and an increase in income tax expense, partially offset by lower benefits and expenses.

The company’s spread-related earnings, a key measure of profitability, increased 4% to $3.2 billion. This was driven by higher net investment earnings and strategic capital management fees, partially offset by higher cost of funds and interest/financing costs.

Athene’s net investment spread, which measures investment performance less the cost of liabilities, was 1.78% in 2024, down slightly from 1.93% in 2023. The decrease was primarily due to higher cost of funds, partially offset by a higher net investment earned rate.

Navigating Economic and Market Conditions As a retirement services provider, Athene is affected by broader economic and market conditions. The company carefully monitors factors like interest rates, equity market performance, inflation and foreign exchange rates that can impact its investment portfolio and product demand.

In 2024, the company navigated a mixed economic environment. US inflation eased to 2.9%, the Federal Reserve cut interest rates, and equity markets performed strongly. However, the US dollar strengthened against foreign currencies, impacting Athene’s international exposures.

Athene manages interest rate risk through asset-liability management, including the use of floating rate investments and liabilities. The company also hedges foreign exchange exposure to mitigate currency risks.

Competitive Landscape and Market Share Athene operates in highly competitive markets for retirement savings products. It faces a variety of large and small industry participants, including diversified financial institutions, insurance/reinsurance companies, and private equity firms.

Despite the competitive landscape, Athene has maintained its position as the largest provider of annuities in the US market. For the first nine months of 2024, the company had an 8.4% market share of total annuity sales and an 11.3% share of fixed annuity sales.

Within the fixed indexed annuity (FIA) market, Athene was the largest provider with an 11.5% share. The company sees registered index-linked annuities (RILAs) as a significant growth opportunity, though its current market share is smaller at 1.7%.

Diversified, High-Quality Investment Portfolio Athene’s investment strategy focuses on disciplined management of its portfolio to match its long-duration liabilities. The majority of the $315 billion investment portfolio is managed by parent company Apollo and consists primarily of high-quality fixed income assets like corporate bonds, structured securities, and commercial/residential real estate loans.

Approximately 97% of Athene’s available-for-sale (AFS) securities are considered investment grade based on NAIC designations. The portfolio also includes a targeted allocation to alternative investments, where the company focuses on fixed income-like, cash flow-based strategies.

Athene holds a significant amount of related party investments, primarily comprising structured securities managed by Apollo, investments in Apollo funds, and strategic investments in Apollo’s direct origination platforms. These related party holdings represented 12.8% of the company’s net invested assets as of year-end 2024.

Outlook and Growth Strategies Looking ahead, Athene remains well-positioned to capitalize on favorable demographic and market trends driving demand for retirement savings products. The company intends to continue growing organically by expanding its retail, flow reinsurance, and institutional distribution channels.

Inorganically, Athene plans to pursue additional acquisitions and block reinsurance transactions, leveraging its corporate development expertise and Apollo’s support. The company also sees opportunities for international expansion, particularly in Asia.

To fund its growth initiatives, Athene will continue to utilize its flexible capital vehicles like ACRA 2, which provide access to third-party capital while maintaining a strong financial position.

Overall, Athene’s diversified business model, disciplined risk management, and strategic partnership with Apollo position the company for continued success in the retirement services market.