Athene Holding Ltd. Q3 2024 Filing Summary
Business Context and Reporting Period
This summary covers the Quarterly Report on Form 10-Q for Athene Holding Ltd. for the period ended September 30, 2024. Athene is a leading financial services company specializing in retirement savings products, including fixed annuities, indexed annuities, and funding agreements. The company is a direct subsidiary of Apollo Global Management, Inc. (AGM), which owns 100% of Athene's common stock. The reporting period reflects strong organic growth in retail and institutional channels, alongside significant investment portfolio expansion.
Key Financial Metrics
| Metric | Q3 2024 (3 Months) | Q3 2023 (3 Months) | YTD 2024 (9 Months) | YTD 2023 (9 Months) |
|---|---|---|---|---|
| Total Revenues | $6.52 billion | $1.44 billion | $16.91 billion | $18.18 billion |
| Net Income | $1.48 billion | $331 million | $3.83 billion | $2.05 billion |
| Net Income Attributable to Common Stockholders | $580 million | $442 million | $2.31 billion | $1.56 billion |
| Spread Related Earnings (SRE) | $855 million | $872 million | $2.38 billion | $2.36 billion |
| Net Investment Spread (Annualized) | 1.83% | 2.13% | 1.76% | 1.98% |
| Total Assets | $355.0 billion | $300.6 billion (Dec 31, 2023) | N/A | N/A |
| Net Invested Assets | $242.7 billion | $217.4 billion (Dec 31, 2023) | N/A | N/A |
| Debt Outstanding | $5.73 billion | $4.21 billion (Dec 31, 2023) | N/A | N/A |
Material Changes vs. Prior Period
- Revenue Volatility: Q3 2024 revenues surged to $6.52 billion from $1.44 billion in Q3 2023, driven primarily by a $4.2 billion increase in investment-related gains (losses). This was due to favorable fair value changes in mortgage loans, reinsurance assets, and FIA hedging derivatives resulting from lower interest rates and strong equity market performance. Conversely, YTD revenues decreased slightly due to a significant drop in pension group annuity premiums compared to a large transaction in 2023.
- Profitability: Net income attributable to common stockholders increased 31% in Q3 and 48% YTD compared to the prior year periods. However, Spread Related Earnings (SRE), a non-GAAP measure of core operating performance, decreased slightly in Q3 (-2%) and increased marginally YTD (+1%), reflecting higher costs of funds offset by higher investment earnings.
- Liability Growth: Interest-sensitive contract liabilities increased significantly, driven by strong inflows in deferred annuities and funding agreements. Gross organic inflows for the nine months ended September 30, 2024, totaled $56.8 billion, a 30% increase year-over-year.
- Debt Issuance: The company issued $1.0 billion of Senior Notes and $575 million of Subordinated Notes in Q1 2024, increasing total debt outstanding.
Guidance, Outlook, and Risks
- Outlook: Management expects to continue growing organically across retail, flow reinsurance, and institutional channels. The company estimates approximately $8.4 billion in capital available to deploy as of September 30, 2024, including excess equity capital and untapped leverage capacity.
- Interest Rate Sensitivity: The company maintains a net floating rate asset position of $14.8 billion. A 25 basis point increase in interest rates is estimated to increase SRE by $30–$40 million over 12 months, while a decrease would have a similar negative impact.
- Key Risks:
- Guaranty Association Assessments: The company recorded a $177 million liability for estimated assessments related to the insolvency of Bankers Life Insurance Company and Colorado Bankers Life Insurance Company.
- Regulatory Scrutiny: Putative class actions regarding pension group annuity (PGA) transactions filed against customers (not Athene) allege ERISA violations. While Athene is not a defendant, negative publicity could impact PGA inflows.
- Capital Requirements: The company is subject to evolving global insurance capital standards (IAIS) and US NAIC group capital calculations, which may impact capital structure.
- Investment Concentration: Significant exposure to related party investments managed by Apollo, including securitizations and direct origination platforms.
Investor Verification Checklist
- Investment Gains Volatility: Verify the sustainability of the $4.2 billion Q3 investment gain, which was heavily influenced by interest rate declines and equity market performance rather than core spread generation.
- Cost of Funds Trend: Monitor the rising cost of funds (3.34% in Q3 2024 vs. 2.67% in Q3 2023) driven by higher crediting rates on new business and a shift toward institutional products.
- Pension Group Annuity (PGA) Inflows: Assess the impact of recent litigation and competitive dynamics on the PGA channel, which saw a significant drop in inflows compared to the prior year.
- Guaranty Assessment Exposure: Confirm the final liability amount for Bankers Life assessments and potential for future assessments from other insurer insolvencies.
- Related Party Transactions: Review the scale of investments in Apollo-managed funds and platforms ($45.9 billion total related party investments) and associated fee structures.