UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-37963
ATHENE HOLDING LTD.
(Exact name of registrant as specified in its charter)
Delaware
98-0630022
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification Number)
7700 Mills Civic Pkwy
West Des Moines, Iowa 50266
1-(515) 342-4678
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of each exchange on which registered
Depositary Shares, each representing a 1/1,000th interest in a share of
6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A
ATHPrA
New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of
5.625% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series B
ATHPrB
New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of
6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C
ATHPrC
New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of
4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D
ATHPrD
New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share of
7.75% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E
ATHPrE
New York Stock Exchange
7.250% Fixed-Rate Reset Junior Subordinated Debentures due 2064
ATHS
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☑
Smaller reporting company ☐Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of February 21, 2025, 203,805,432 shares of our common stock were outstanding, all of which are held by Apollo Global Management, Inc.
TABLE OF CONTENTS
PART I
Item 1.
Business
9
Item 1A.
Risk Factors
42
Item 1B.
Unresolved Staff Comments
62
Item 1C.
Cybersecurity
62
Item 2.
Properties
63
Item 3.
Legal Proceedings
63
Item 4.
Mine Safety Disclosures
63
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
64
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
65
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
110
Item 8.
Financial Statements
114
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
186
Item 9A.
Controls and Procedures
186
Item 9B.
Other Information
186
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
187
Item 11.
Executive Compensation
196
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
209
Item 13.
Certain Relationships and Related Transactions, and Director Independence
211
Item 14.
Principal Accountant Fees and Services
222
PART IV
Item 15.
Exhibits, Financial Statement Schedules
223
As used in this Annual Report on Form 10-K (report), unless the context otherwise indicates, any reference to “Athene,” “our Company,” “the
Company,” “us,” “we” and “our” refer to Athene Holding Ltd. together with its consolidated subsidiaries and any reference to “AHL” refers
to Athene Holding Ltd. only.
Forward-Looking Statements
Certain statements in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended
(Exchange Act). You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These
statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “seek,” “assume,” “believe,” “may,”
“will,” “should,” “could,” “would,” “likely” and other words and terms of similar meaning, including the negative of these or similar words and
terms, in connection with any discussion of the timing or nature of future operating or financial performance or other events. However, not all
forward-looking statements contain these identifying words. Forward-looking statements appear in a number of places throughout and give our
current expectations and projections relating to our business, financial condition, results of operations, plans, strategies, objectives, future
performance and other matters.
We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated financial condition,
results of operations, liquidity, cash flows and performance may differ materially from that made in or suggested by the forward-looking
statements contained in this report. A number of important factors could cause actual results or conditions to differ materially from those
contained or implied by the forward-looking statements, including the risks discussed in Item 1A. Risk Factors. Factors that could cause actual
results or conditions to differ from those reflected in the forward-looking statements contained in this report include:
•
the accuracy of management’s assumptions and estimates;
•
variability in the amount of statutory capital that our insurance and reinsurance subsidiaries have or are required to hold;
•
interest rate and/or foreign currency fluctuations;
•
our potential need for additional capital in the future and the potential unavailability of such capital to us on favorable terms or at all;
•
major public health issues, such as the pandemic caused by the effects of the spread of the Coronavirus Disease of 2019 (COVID-19);
•
changes in relationships with important parties in our product distribution network;
•
the activities of our competitors and our ability to grow our retail business in a highly competitive environment;
•
the impact of general economic conditions on our ability to sell our products and on the fair value of our investments;
•
our ability to successfully acquire new companies or businesses and/or integrate such acquisitions into our existing framework;
•
downgrades, potential downgrades or other negative actions by rating agencies;
•
our dependence on key executives and inability to attract qualified personnel;
•
market and credit risks that could diminish the value of our investments;
•
changes to the creditworthiness of our reinsurance and derivative counterparties;
•
changes in consumer perception regarding the desirability of annuities as retirement savings products;
•
potential litigation (including class action litigation), enforcement investigations or regulatory scrutiny against us and our subsidiaries,
which we may be required to defend against or respond to;
•
the impact of new accounting rules or changes to existing accounting rules on our business;
•
interruption or other operational failures in telecommunication and information technology and other operating systems, including as a
result of threat actors attempting to attack those systems, as well as our ability to maintain the security of those systems;
•
the dependence of Apollo Global Management, Inc. and its subsidiaries (other than us or our subsidiaries, Apollo) on key executives
and Apollo’s inability to attract qualified personnel;
•
the accuracy of our estimates regarding the future performance of our investment portfolio;
•
increased regulation or scrutiny of alternative investment advisers and certain trading methods;
•
potential changes to laws or regulations affecting, among other things, group supervision and/or group capital requirements, entity-
level regulatory capital standards, transactions with our affiliates, the ability of our subsidiaries to make dividend payments or
distributions to AHL, acquisitions by or of us, minimum capitalization and statutory reserve requirements for insurance companies and
fiduciary obligations on parties who distribute our products;
•
the failure to obtain or maintain licenses and/or other regulatory approvals as required for the operation of our insurance subsidiaries;
•
increases in our tax liability resulting from the implementation in various jurisdictions of measures to introduce the Organisation for
Economic Cooperation and Development’s (OECD) “Pillar Two” global minimum tax initiative, or similar rules in other jurisdictions
(including the recently enacted corporate income tax in Bermuda or otherwise);
•
certain of our non-United States (US) subsidiaries becoming subject to US federal income taxation in amounts greater than expected;
•
adverse changes in tax law;
•
the failure to achieve the economic benefits expected to be derived from Athene Co-Invest Reinsurance Affiliate Holding Ltd.
(together with its subsidiaries, ACRA 1) and Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (together with its subsidiaries,
ACRA 2), collectively defined as ACRA, or future ACRA capital raises;
•
the failure of third-party ACRA investors to fund their capital commitment obligations; and
•
other risks and factors listed under Item 1A. Risk Factors and those discussed elsewhere in this report.
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3
We caution you that the important factors referenced above may not be exhaustive. In addition, we cannot assure you that we will realize the
results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our
operations in the way we expect or anticipate. In light of these risks, you should not place undue reliance on any forward-looking statements
contained in this report. Unless an earlier date is specified, the forward-looking statements included in this report are made only as of the date
that this report was filed with the US Securities and Exchange Commission (SEC). We undertake no obligation, except as may be required by
law, to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise. Comparisons of
results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as
such, and should only be viewed as historical data.
Risk Factor Summary
Our business faces significant risks. In addition to the summary below, you should carefully review Item 1A. Risk Factors. These risks should be
read in conjunction with the other information in this report. Capitalized terms used below and not previously defined herein shall have the
respective meanings set forth elsewhere in this report. The factors that make an investment in our business speculative or risky include:
•
Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s
assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly
from actual results.
•
A financial strength rating downgrade, potential downgrade or any other negative action by a rating agency could make our product
offerings less attractive, inhibit our ability to acquire future business through acquisitions or reinsurance and increase our cost of
capital, which could have a material adverse effect on our business.
•
We operate in a highly competitive industry that includes a number of competitors, which could limit our ability to achieve our growth
strategies and could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.
•
If we are unable to attract and retain IMOs, banks and broker-dealers, sales of certain of our products may be adversely affected.
•
From time to time we may pursue acquisitions and block reinsurance transactions, and our ability to consummate these transactions on
economically advantageous terms acceptable to us in the future is unknown.
•
Interruption or other operational failures in telecommunications, information technology and other operational systems, including as a
result of threat actors attacking those systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data
residing on those systems, including as a result of human error, could have a material adverse effect on our business.
•
We rely significantly on third parties for various services, and we may be held responsible for obligations that arise from the acts or
omissions of third parties under their respective agreements with us.
•
We are subject to significant operating and financial restrictions imposed by our credit agreements and certain letters of credit, and we
are also subject to certain operating restrictions imposed by the indentures to which we are a party.
•
We are subject to risks associated with pandemics, epidemics, disease outbreaks and other public health crises which could impact our
business, financial condition and results of operations in the future.
•
Artificial intelligence could increase competitive, operational, legal and regulatory risks to our businesses in ways that we cannot
predict.
•
As a financial services company, we are exposed to liquidity risk, which is the risk that we are unable to meet near-term obligations as
they come due.
•
The amount of statutory capital that our insurance and reinsurance subsidiaries have, or that they are required to hold, can vary
significantly from time to time and is sensitive to a number of factors outside of our control.
•
Repurchase agreement programs subject us to potential liquidity and other risks.
•
Our investments are subject to market and credit risks that could diminish their value and these risks could be greater during periods of
extreme volatility or disruption in the financial and credit markets, which could adversely impact our business, financial condition,
results of operations, liquidity and cash flows.
•
Interest rate fluctuations could adversely affect our business, financial condition, results of operations, liquidity and cash flows.
•
We are subject to the credit risk of our counterparties, including ceding companies, reinsurers, plan sponsors and derivative
counterparties.
•
Our investment portfolio may be subject to concentration risk, particularly with respect to single issuers, including Athora, among
others; industries, including financial services; and asset classes, including real estate.
•
Many of our invested assets are relatively illiquid and we may fail to realize profits from these assets for a considerable period of time,
or lose some or all of the principal amount we invest in these assets if we are required to sell our invested assets at a loss at
inopportune times.
•
Our investments linked to real estate are subject to credit risk, market risk, servicing risk, loss from catastrophic events and other risks,
which could diminish the value that we obtain from such investments.
•
Our investment portfolio may include investments in securities of issuers based outside the US, including emerging markets, which
may be riskier than securities of US issuers.
•
While we seek to hedge foreign currency risks, foreign currency fluctuations may reduce our net income and our capital levels,
adversely affecting our financial condition.
•
Climate change and regulatory and other efforts to reduce climate change, as well as environmental, social and governance
requirements could adversely affect our business.
•
Financial markets have been subject to inflationary pressures, and continued rising inflation may adversely impact our business and
results of operations.
Table of Contents
4
•
There are potential conflicts of interests between Apollo, our corporate parent, and the holders of our preferred stock.
•
We rely on our investment management agreements with Apollo for the management of our investment portfolio. Apollo may
terminate these arrangements at any time, and there are limitations on our ability to terminate investment management agreements
covering assets backing reserves and surplus in ACRA, which may adversely affect our investment results.
•
Interruption or other operational failures in telecommunications, information technology and other operational systems at Apollo or a
failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on Apollo’s systems, including as a result
of human error, could have a material adverse effect on our business.
•
The historical investment portfolio performance of Apollo should not be considered as indicative of the future results of our
investment portfolio, or our future results or our ability to declare and pay dividends on our preferred stock.
•
The returns that we expect to achieve on our investment portfolio may not be realized.
•
Our industry is highly regulated and we are subject to significant legal restrictions and obligations, and these restrictions and
obligations may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and
prospects.
•
Our failure to obtain or maintain licenses and/or other regulatory approvals as required for the operations of our insurance subsidiaries
may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.
•
Changes in the laws and regulations governing the insurance industry or otherwise applicable to our business, may have a material
adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.
•
The tax treatment of our structure is complex and may be subject to change as a result of new laws or regulations or differing
interpretations of existing laws and regulations, under audit or otherwise, potentially on a retroactive basis.
•
Our ownership of certain non-US entities could cause us to be subject to US federal income tax in amounts greater than expected,
which could adversely affect the value of your investment.
•
AHL may be subject to UK taxation by reason of its historic UK tax residency or as a result of ceasing to be a UK tax resident.
•
The Base Erosion and Anti-Abuse Tax (BEAT) may significantly increase our tax liability.
•
Changes in tax law could adversely impact our earnings.
•
There is US income tax risk associated with reinsurance between US insurance companies and their Bermuda affiliates.
•
The recently enacted Bermuda Corporate Income Tax Act 2023, or other changes in Bermuda tax laws, may negatively affect our
earnings and results from operations.
•
AHL is a holding company with limited operations of its own. As a consequence, AHL’s ability to pay dividends on its securities and
to make timely payments on its debt obligations will depend on the ability of its subsidiaries to make distributions or other payments
to it, which may be restricted by law.
•
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for
certain legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum viewed by
the stockholders as more favorable for disputes with us or our directors, officers or employees, and the enforceability of the exclusive
forum provision may be subject to uncertainty.
•
Our business may be the target or subject of, and we may be required to defend against or respond to, litigation, regulatory
investigations, enforcement actions or reputational harm.
Table of Contents
5
GLOSSARY OF SELECTED TERMS
Unless otherwise indicated in this report, the following terms have the meanings set forth below:
Entities
Term or Acronym
Definition
AAA
Apollo Aligned Alternatives Aggregator, LP
AADE
Athene Annuity & Life Assurance Company
AAIA
Athene Annuity and Life Company
AAM
Apollo Asset Management, Inc.
AARe
Athene Annuity Re Ltd., a Bermuda reinsurance subsidiary
ACRA
ACRA 1 and ACRA 2
ACRA 1
Athene Co-Invest Reinsurance Affiliate Holding Ltd., together with its subsidiaries
ACRA 1A
Athene Co-Invest Reinsurance Affiliate 1A Ltd., a Bermuda reinsurance subsidiary
ACRA 1 HoldCo
Athene Co-Invest Reinsurance Affiliate Holding Ltd.
ACRA 2
Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd., together with its subsidiaries
ACRA 2A
Athene Co-Invest Reinsurance Affiliate 2A Ltd., a Bermuda reinsurance subsidiary
ACRA 2 HoldCo
Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd.
ADIP
ADIP I and ADIP II
ADIP I
Apollo/Athene Dedicated Investment Program
ADIP II
Apollo/Athene Dedicated Investment Program II
AGM
Apollo Global Management, Inc.
AHL
Athene Holding Ltd.
ALRe
Athene Life Re Ltd., a Bermuda reinsurance subsidiary
ALReI
Athene Life Re International Ltd., a Bermuda reinsurance subsidiary
Apollo
Apollo Global Management, Inc., together with its subsidiaries (other than us or our subsidiaries)
Apollo Group
(1) AGM and its subsidiaries, including AAM, (2) any investment fund or other collective investment vehicle whose general
partner or managing member is owned, directly or indirectly, by clause (1), (3) BRH Holdings GP, Ltd. and each of its
shareholders, (4) any executive officer or employee of AGM or AGM’s subsidiaries, and (5) any affiliate of a person described
in clauses (1), (2), (3) or (4) above; provided none of AHL or its subsidiaries (other than ACRA) will be deemed to be a
member of the Apollo Group
Athora
Athora Holding Ltd.
AUSA
Athene USA Corporation
BMA
Bermuda Monetary Authority
ISG
Apollo Insurance Solutions Group LP
Jackson
Jackson Financial, Inc., together with its subsidiaries
LIMRA
Life Insurance and Market Research Association
MidCap Financial
MidCap FinCo Designated Activity Company
NAIC
National Association of Insurance Commissioners
NYSDFS
New York State Department of Financial Services
US Treasury
United States Department of the Treasury
Venerable
Venerable Holdings, Inc., together with its subsidiaries
VIAC
Venerable Insurance and Annuity Company
Wheels
Wheels, Inc.
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6
Certain Terms & Acronyms
ABS
Asset-backed securities
ACL
Authorized control level RBC as defined by the model created by the NAIC
ALM
Asset liability management
Alternative investments
Alternative investments, including investment funds, VIEs and certain equity securities due to their underlying characteristics
Base of earnings
Earnings generated from our results of operations and the underlying profitability drivers of our business
Bermuda capital
The capital of Athene’s non-US reinsurance subsidiaries as reported in the Bermuda statutory financial statements and applying
US statutory accounting principles for policyholder reserve liabilities which are subjected to US cash flow testing requirements,
excluding certain items that do not exist under our applicable Bermuda requirements, such as interest maintenance reserves.
There are certain Bermuda statutory accounting differences, primarily (1) marking to market of inception date investment gains
or losses relating to reinsurance transactions and (2) admission of certain deferred tax assets, that may from time to time result
in material differences from the calculation of statutory capital under US statutory accounting principles.
Bermuda RBC
The risk-based capital ratio of our non-US reinsurance subsidiaries calculated using Bermuda capital and applying NAIC risk-
based capital factors on an aggregate basis, excluding US subsidiaries which are included within our US RBC Ratio.
Block reinsurance
A transaction in which the ceding company cedes all or a portion of a block of previously issued annuity contracts through a
reinsurance agreement
BSCR
Bermuda Solvency Capital Requirement
CAL
Company action level risk-based capital as defined by the model created by the NAIC
CLO
Collateralized loan obligation
CMBS
Commercial mortgage-backed securities
CML
Commercial mortgage loan
Consolidated RBC
The consolidated risk-based capital ratio of our non-US reinsurance and US insurance subsidiaries calculated by aggregating
US RBC and Bermuda RBC.
Cost of funds
Cost of funds includes liability costs related to cost of crediting on both deferred annuities, including, with respect to our fixed
indexed annuities, option costs, and institutional costs related to institutional products, as well as other liability costs, but does
not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interests. Other liability costs
include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than
deferred annuities and institutional products, premiums and certain product charges and other revenues. We include the costs
related to business added through assumed reinsurance transactions and exclude the costs on business related to ceded
reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets for the
relevant period, presented on an annualized basis for interim periods.
DAC
Deferred acquisition costs
Deferred annuities
Fixed indexed annuities, annual reset annuities, multi-year guaranteed annuities and registered index-linked annuities
DSI
Deferred sales inducement
Excess equity capital
Capital in excess of the level management believes is needed to support our current operating strategy
FIA
Fixed indexed annuity, which is an insurance contract that earns interest at a crediting rate based on a specified index on a tax-
deferred basis
Fixed annuities
FIAs together with fixed rate annuities
Fixed rate annuity
An insurance contract that offers tax-deferred growth and the opportunity to produce a guaranteed stream of retirement income
for the lifetime of its policyholder
Flow reinsurance
A transaction in which the ceding company cedes a portion of newly issued policies to the reinsurer
Funds withheld
Funds withheld modified coinsurance
GLWB
Guaranteed lifetime withdrawal benefit
GMDB
Guaranteed minimum death benefit
Gross invested assets
Represent the investments that directly back our gross reserve liabilities as well as surplus assets. Gross invested assets include
(a) total investments on the consolidated balance sheet with available-for-sale securities, trading securities and mortgage loans
at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related
parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and noncontrolling interest adjustments, (f) net
investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h)
an adjustment for the allowance for credit losses. Gross invested assets exclude the derivative collateral offsetting the related
cash positions. We include the investments supporting assumed funds withheld and modco agreements and exclude the
investments related to ceded reinsurance transactions in order to match the assets with the income received. Gross invested
assets include the entire investment balance attributable to ACRA as ACRA is 100% consolidated.
IMA
Investment management agreement
IMO
Independent marketing organization
Liability outflows
The aggregate of withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on
payout annuities, repurchases and maturities of our funding agreements and block reinsurance outflows.
Market risk benefits
Guaranteed lifetime withdrawal benefits and guaranteed minimum death benefits
MCR
Minimum capital requirements
MMS
Minimum margin of solvency
Modco
Modified coinsurance
Term or Acronym
Definition
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7
MVA
Market value adjustment
MYGA
Multi-year guaranteed annuity
Net invested assets
Represent the investments that directly back our net reserve liabilities as well as surplus assets. Net invested assets include (a)
total investments on the consolidated balance sheets, with available-for-sale securities, trading securities and mortgage loans at
cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related
parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and noncontrolling interest adjustments, (f) net
investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h)
an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash
positions. We include the investments supporting assumed funds withheld and modco agreements and exclude the investments
related to ceded reinsurance transactions in order to match the assets with the income received. Net invested assets include our
economic ownership of ACRA investments but do not include the investments associated with the noncontrolling interests.
Net investment earned rate
Computed as the income from our net invested assets divided by the average net invested assets for the relevant period,
presented on an annualized basis for interim periods. The primary adjustments to net investment income to arrive at our net
investment earnings are (a) net VIE impacts (revenues, expenses and noncontrolling interests), (b) forward points gains and
losses on foreign exchange derivative hedges, (c) amortization of premium/discount on held-for-trading securities, (d) the
change in fair value of reinsurance assets, (e) an adjustment to the change in net asset value of our ADIP investments to
recognize our proportionate share of spread related earnings based on our ownership in the investment funds and (f) the
removal of the proportionate share of the ACRA net investment income associated with the noncontrolling interests. Net
investment earned rate includes the income and assets supporting our change in fair value of reinsurance assets by evaluating
the underlying investments of the funds withheld at interest receivables and including the net investment income from those
underlying investments which does not correspond to the US GAAP presentation of change in fair value of reinsurance assets.
Net investment earned rate excludes the income and assets on business related to ceded reinsurance transactions.
Net investment spread
Net investment spread measures our investment performance plus our strategic capital management fees less our total cost of
funds, presented on an annualized basis for interim periods.
Net reserve liabilities
Represent our policyholder liability obligations net of reinsurance and used to analyze the costs of our liabilities. Net reserve
liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term
repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance
recoverable, excluding policy loans ceded. Net reserve liabilities include our economic ownership of ACRA reserve liabilities
but do not include the reserve liabilities associated with the noncontrolling interests. Net reserve liabilities are net of the ceded
liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore, we have no net
economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. Net reserve
liabilities include the underlying liabilities assumed through modco reinsurance agreements in order to match the liabilities
with the expenses incurred.
Payout annuities
Annuities with a current cash payment component, which consist primarily of single premium immediate annuities,
supplemental contracts and structured settlements
Policy loan
A loan to a policyholder under the terms of, and which is secured by, a policyholder’s policy
RBC
Risk-based capital
RILA
Registered index-linked annuity, which is an insurance contract similar to an FIA that has the potential for higher returns but
also has the potential risk of loss to principal and related earnings, subject to a floor
RMBS
Residential mortgage-backed securities
RML
Residential mortgage loan
Sales
All money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the
specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers)
SPIA
Single premium immediate annuity
Spread Related Earnings, or
SRE
Pre-tax non-GAAP measure used to evaluate our financial performance excluding market volatility (other than with respect to
alternative investments) as well as integration, restructuring, stock compensation and certain other expenses which are not part
of our underlying profitability drivers.
Surplus assets
Assets in excess of policyholder obligations, determined in accordance with the applicable domiciliary jurisdiction’s statutory
accounting principles
TAC
Total adjusted capital as defined by the model created by the NAIC
US GAAP
Accounting principles generally accepted in the United States of America
US RBC
The CAL RBC ratio for AAIA, our parent US insurance company
VIE
Variable interest entity
VOBA
Value of business acquired
Term or Acronym
Definition
Table of Contents
8
PART I
Item 1. Business
Index to Business
Overview
10
Growth Strategy
10
Products
12
Distribution Channels
15
Investment Management
16
Capital
19
Reinsurance
20
Outsourcing
20
Ratings
21
Competition
22
Human Capital Management
23
Regulation
24
Available Information
41
Table of Contents
9
Overview
We are a leading financial services company that specializes in issuing, reinsuring and acquiring retirement savings products designed for the
increasing number of individuals and institutions seeking to fund retirement needs. Apollo Global Management, Inc. (AGM, and together with
its subsidiaries other than us or our subsidiaries, Apollo) (NYSE: APO) is the beneficial owner of 100% of our common stock and controls all of
the voting power to elect our board of directors.
We focus on generating spread income by combining our two core competencies of (1) sourcing long-term, persistent liabilities and (2) using the
global scale and reach of Apollo’s asset management business to actively source or originate assets with our preferred risk and return
characteristics. Our investment philosophy is to invest a portion of our assets in securities that earn an incremental yield by taking measured
liquidity and complexity risk and capitalize on our long-dated, persistent liability profile to prudently achieve higher net investment earned rates,
rather than assuming incremental credit risk. Our differentiated investment strategy benefits from our relationship with Apollo, which provides a
full suite of services for our investment portfolio, including direct investment management, asset allocation, mergers and acquisitions asset
diligence and certain operational support services, including investment compliance, tax, legal and risk management support. Our relationship
with Apollo provides us with access to Apollo’s investment professionals around the world as well as Apollo’s global asset management
infrastructure across a broad array of asset classes. We are led by a highly skilled management team with extensive industry experience.
Apollo’s asset management expertise supports the sourcing and underwriting of assets for our portfolio. We are invested in a diverse array of
primarily high-grade fixed income assets including corporate bonds, structured securities and commercial and residential real estate loans,
among others. We establish risk thresholds which in turn define risk tolerance across a wide range of factors, including credit risk, liquidity risk,
concentration risk and caps on specific asset classes. In addition to other efforts, we manage the risk of rising interest rates by strategically
allocating a meaningful portion of our investment portfolio into floating rate securities. We manage our interest rate risk in a declining rate
environment through hedging activity or the issuance of additional floating rate liabilities to lower our overall net floating rate position. We also
maintain holdings in less interest rate-sensitive investments, including collateralized loan obligations (CLO), non-agency residential mortgage-
backed securities (RMBS) and various types of structured products, consistent with our strategy of pursuing incremental yield by assuming
liquidity and complexity risk, rather than assuming incremental credit risk.
Rather than increase our allocation to higher risk securities to increase yield, we pursue the direct origination of high-quality, predominantly
senior secured assets, which we believe possess greater alpha-generating qualities than securities that would otherwise be readily available in
public markets. These direct origination strategies include investments sourced by (1) affiliated platforms that originate loans to third parties and
in which we gain exposure directly to the loan or indirectly through our ownership of the origination platform and/or securitizations of assets
originated by the origination platform, and (2) Apollo’s extensive network of direct relationships with predominantly investment-grade
counterparties.
We use, and may continue to use, derivatives, including swaps, options, futures and forward contracts and reinsurance contracts to hedge risks
such as current or future changes in the fair value of assets and liabilities, current or future changes in cash flows and changes in interest rates,
equity markets, currency fluctuations and longevity.
On October 11, 2024, Athene Annuity & Life Assurance Company (AADE) merged with and into Athene Annuity & Life Company (AAIA),
with AAIA as the surviving entity following the receipt of all required regulatory approvals. The merger was completed to streamline our
operational processes, enhance operational efficiency, and reduce administrative costs.
On December 31, 2023, Athene Holding Ltd. (AHL) completed the redomestication of its jurisdiction of organization from Bermuda to the State
of Delaware, thereby discontinuing its existence as a Bermuda exempted company and continuing its existence as a corporation organized in the
State of Delaware.
Relationship with Apollo
We are a subsidiary of AGM. Through this relationship, Apollo allows us to leverage the scale of its asset management platform to source
attractive assets for our investment portfolio. In addition to co-founding the Company, Apollo assists us in identifying and capitalizing on
acquisition and block reinsurance opportunities that have helped us significantly grow our business. Six of our twelve directors are employees of
or consultants to Apollo, including our Chairman, Chief Executive Officer and Chief Investment Officer, who is also a member of the board of
directors and an executive officer of Apollo, and the Chief Executive Officer of Apollo Insurance Solutions Group LP (ISG), our investment
manager and a subsidiary of AGM. See Item 1A. Risk Factors–Risks Relating to Our Relationship with Apollo–There are potential conflicts of
interests between Apollo, our corporate parent, and the holders of our preferred stock and Item 13. Certain Relationships and Related
Transactions, and Director Independence.
Table of Contents
Item 1. Business
10
Growth Strategy
The key components of our long-term growth strategy are as follows:
•
Expand Our Organic Distribution Channels – We plan to grow organically by expanding our retail, flow reinsurance and
institutional distribution channels with a focus on international expansion, particularly in Asia. These organic channels generally allow
us to adjust our product mix to originate liabilities that meet our return targets in diverse market environments.
We expect our retail channel to continue to benefit from our credit profile, strong financial position, suite of capital-efficient products
and product design capabilities. We believe that this should support growth in sales at our desired cost of funds through increased
volumes in each of our existing retail channels, including via expanding our bank and broker-dealer networks, as well as entering new
markets such as defined contribution plans. However, we do not seek to achieve volume growth at the expense of profitability. As a
result, we adjust our retail pricing more rapidly for changes in asset yields than many of our peers.
Within our flow reinsurance channel, we expect our credit profile and growing reputation as a valuable reinsurance counterparty will
enable us to attract additional flow reinsurance partners and maintain or increase our flow reinsurance volumes with existing
counterparties. Our ability to provide attractive solutions to reinsurance partners was demonstrated by our entry into the Japanese and
other Asia-Pacific markets and the establishment of several partnerships with Japanese, other Asia-Pacific and US financial
institutions over the past several years. Similar to our retail channel, we do not seek to achieve volume growth at the expense of
profitability and therefore tend to respond more rapidly to adjust our pricing for changes in asset yields than many of our peers.
We expect to grow our institutional channel by continuing to engage in programmatic issuances of funding agreements and pursuing
additional pension group annuity transactions. Our demonstrated ability to create customized solutions for pension group annuity
counterparties seeking to reduce or eliminate their exposure to pension obligations will continue to allow us to be active in this
channel. Going forward, we expect to build on our growth in the US and explore options for transactions in other jurisdictions.
•
Pursue Attractive Inorganic Growth Opportunities – We plan to continue leveraging our expertise in sourcing and evaluating
inorganic transactions to grow our business profitably. We believe that our demonstrated ability to successfully consummate complex
transactions, as well as our relationship with Apollo, provides us with distinct advantages relative to other acquisition and block
reinsurance counterparty candidates. Furthermore, we have achieved sufficient scale to provide meaningful operational synergies for
the businesses and blocks of business that we acquire and reinsure, respectively. Consequently, we believe we are often sought out by
companies looking to restructure their businesses.
•
Expand Our Product Offering – We seek to build products that meet our policyholders’ retirement savings objectives, such as
accumulation, income and legacy planning. Our products are customized for each of the retail channels through which we distribute,
including independent marketing organizations (IMOs), banks, and independent broker dealers, and represent innovative solutions that
meet the needs of policyholders in each of these channels. We continue to release updated or new products to meet the evolving needs
of policyholders. Our diverse Fixed Indexed Annuity (FIA) product offerings are complemented by a number of innovative custom
indices, which allow our customers to gain access to sophisticated strategies that are designed for better performance within our
products. During 2024, approximately 52% of sales went to custom indices that are only available through our products. In 2024,
Athene was recognized for its indexed annuity lineup by winning “Best Fixed Indexed Annuity/Variable Indexed Annuity Carrier”
from Structured Retail Products and “Best Carrier” from Structured Product Intelligence. In addition, we are creating products that
capitalize on the capabilities of both Apollo and Athene and will facilitate Apollo’s distribution of these products.
•
Leverage Our Merger with Apollo – We intend to continue leveraging our close relationship with Apollo to source high-quality
assets with attractive risk-adjusted returns. Apollo’s global scale and reach provide us with broad market access across environments
and geographies and allow us to actively source assets that exhibit our preferred risk and return characteristics. We will also continue
to partner with Apollo’s portfolio of origination platforms, which provide us assets with higher spreads than those available in the
public markets. See –Investment Management for more information regarding Apollo’s origination platforms. Our relationship with
Apollo will allow us to continue to offer creative solutions to insurance companies seeking to restructure their businesses and may
enable us opportunities to source additional volumes of attractively priced liabilities.
Finally, our relationship with Apollo will continue to provide us with access to on-demand capital through ACRA. We believe this
capital will continue to be instrumental to executing our growth strategy. See –Capital for additional information regarding ACRA.
•
Allocate Assets during Market Dislocations – As we have done successfully in the past, we plan to capitalize on future market
dislocations to opportunistically reposition our portfolio to capture incremental yield. For example, regulatory changes in the wake of
the financial crisis have made it more expensive for banks and other traditional lenders to hold certain illiquid and complex assets,
notwithstanding the fact that these assets may have prudent credit characteristics. The repressed demand for these asset classes has
provided opportunities for investors to acquire high-quality assets that offer attractive returns. For example, we see continuing
opportunities as banks retreat from direct mortgage lending, structured and asset-backed products, and middle-market commercial
loans. We intend to maintain a flexible approach to asset allocation, which will allow us to act quickly on similar opportunities that
may arise in the future across a wide variety of asset types.
Table of Contents
Item 1. Business
11
•
Maintain Risk Management Discipline – Our risk management strategy is to proactively manage our exposure to risks associated
with interest rate duration, credit risk and structural complexity of our invested assets. We address interest rate duration and liquidity
risks by managing the duration of the liabilities we source with the assets we acquire through asset liability management (ALM)
modeling. We assess credit risk by modeling our liquidity and capital under a range of stress scenarios. We manage the risks related to
the structural complexity of our invested assets through Apollo’s modeling efforts. The goal of our risk management discipline is to be
able to continue to grow and achieve profitable results across various market environments. See Item 7A. Quantitative and Qualitative
Disclosures About Market Risk for additional information.
Products
We principally offer two product lines: annuities and funding agreements. Our primary product line is annuities, which include fixed, payout and
group annuities issued in conjunction with pension group annuity transactions. We also offer funding agreements, including those issued to
institutions via direct issuances and those issued to special-purpose unaffiliated trusts in connection with our funding agreement backed notes
(FABN) and secured funding agreement backed repurchase agreement (FABR) programs.
The following summarizes our gross premiums and deposits by product, net of external ceded reinsurance:
Years ended December 31,
(In millions)
2024
2023
2022
Annuities
Indexed
$
13,877
$
12,012
$
11,212
Fixed rate
23,880
34,594
15,322
Pension group annuities
918
10,374
11,218
Payout
362
318
878
Total annuity products
39,037
57,298
38,630
Funding agreements1
28,748
7,193
10,039
Whole life and other
234
2,247
34
Gross premiums and deposits, net of external ceded reinsurance
$
68,019
$
66,738
$
48,703
1 Funding agreements are comprised of funding agreements issued under our FABN program, secured and other funding agreements, funding agreements issued
to the Federal Home Loan Bank (FHLB) and long-term repurchase agreements.
Gross premiums and deposits are comprised of all products’ deposits, which generally are not included in revenues on the consolidated
statements of income (loss), and premiums collected. Gross premiums and deposits include directly written business, flow reinsurance assumed
as well as premiums and deposits generated from assumed block reinsurance transactions, net of those ceded through reinsurance to third-party
reinsurers. Organic and inorganic inflows do not correspond to the gross premiums and deposits presented above as gross premiums and
deposits include renewal deposits and annuitizations, as well as premiums and deposits from certain life and other products other than deferred
annuities and institutional products, all of which are not included in our organic inflows.
Net reserve liabilities represent our policyholder liability obligations, including liabilities assumed through reinsurance and net of liabilities
ceded through reinsurance. Net reserve liabilities include interest sensitive contract liabilities, future policy benefits, net market risk benefits,
long-term repurchase obligations, dividends payable to policyholders and other policy claims and benefits, offset by reinsurance recoverable,
excluding policy loans ceded. Net reserve liabilities include our proportionate share of ACRA reserve liabilities, based on our economic
ownership, but do not include the proportionate share of reserve liabilities associated with the noncontrolling interests. Net reserve liabilities
include the reserves assumed through modified coinsurance (modco) agreements to encompass the liabilities for which costs are being
recognized in the consolidated statements of income (loss). Net reserve liabilities are net of the ceded liabilities to third-party reinsurers as the
costs of those liabilities are passed to such reinsurers and, therefore, we have no net economic exposure to such liabilities, assuming our
reinsurance counterparties perform under our agreements.
Table of Contents
Item 1. Business
12
The following summarizes our net reserve liabilities by product:
December 31,
(In millions, except percentages)
2024
2023
Annuities
Indexed annuities
$
82,711
36.6 %
$
84,444
42.4 %
Fixed rate annuities
62,705
27.8 %
53,282
26.7 %
Pension group annuities
24,986
11.1 %
26,313
13.2 %
Payout annuities
4,701
2.1 %
4,897
2.4 %
Total annuity products
175,103
77.6 %
168,936
84.7 %
Funding agreements1
47,384
21.0 %
26,637
13.4 %
Life and other
3,439
1.4 %
3,716
1.9 %
Total net reserve liabilities
$
225,926
100.0 %
$
199,289
100.0 %
1 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 agreements.
Annuities
Fixed Indexed Annuities – FIAs are the largest percentage of our net reserve liabilities. FIAs are a type of insurance contract in which the
policyholder makes one or more premium deposits that earn interest, on a tax deferred basis, at a crediting rate based on a specified market
index, subject to a specified cap, spread or participation rate. FIAs allow policyholders the possibility of earning interest without significant risk
to principal, unless the contract is surrendered during a surrender charge period. A market index tracks the performance of a specific group of
stocks or other assets representing a particular segment of the market, or in some cases, an entire market. We generally buy options on the
indices to which the FIAs are tied to hedge the associated market risk. The cost of the option is priced into the overall economics of the product
as an option budget.
We generate income on FIA products by earning an investment spread, based on the difference between (1) income earned on the investments
supporting the liabilities and (2) the cost of funds, including fixed interest credited to customers, option costs, the cost of providing guarantees
(net of rider fees), policy issuance and maintenance costs and commission costs.
Fixed Rate Annuities – Fixed rate annuities include annual reset annuities and multi-year guarantee annuities (MYGA). Unlike FIAs, fixed rate
annuities earn interest at a set rate (or declared crediting rate), rather than at a rate that may vary based on an index. Fixed rate annual reset
annuities have a crediting rate that is typically guaranteed for one year. After such period, we have the ability to change the crediting rate at our
discretion, generally once annually, to any rate at or above a guaranteed minimum rate. MYGAs are similar to annual reset annuities except that
the initial crediting rate is guaranteed for a specified number of years, rather than just one year, before it may be changed at our discretion. After
the initial crediting period, MYGAs can generally be reset annually. As of December 31, 2024, crediting rates on outstanding annual reset
annuities primarily ranged from 0.5% to 6.0% and crediting rates on outstanding MYGAs primarily ranged from 0.25% to 6.20%.
Registered Index-Linked Annuities (RILA) – RILAs are similar to FIAs in offering the policyholder the opportunity for tax-deferred growth
based in part on the performance of a market index. Compared to an FIA, RILAs have the potential for higher returns but also have the potential
for risk of loss to principal and related earnings. RILAs provide the ability for the policyholder to participate in the positive performance of
certain market indices during a term, limited by a cap or adjusted for a participation rate. Negative performance of the market indices during a
term can result in negative policyholder returns, with downside protection typically provided in the form of either a “buffer” or a “floor” to limit
the policyholder’s exposure to market loss. A “buffer” is protection from negative exposure up to a certain percentage, typically 10 or 20
percent. A “floor” is protection from negative exposure less than a stated percentage (i.e., the policyholder risks exposure of loss up to the
“floor,” but is protected against any loss in excess of this amount).
Private Placement Variable Annuities (PPVA) – PPVAs are not registered with the SEC and currently are only offered by private placement to
purchasers meeting both the requirements as a qualified purchaser and an accredited investor under applicable federal securities laws. Variable
annuities allow policyholders to participate directly in the investment experience of the underlying investment vehicles offered through the
product. In a variable annuity, the policyholder assumes the full investment risk of the investment options chosen. The product allows the
policyholder to allocate their money to a variety of variable separate account divisions that invest in a suite of underlying investment options and
the potential to accumulate cash value on a tax-deferred basis. Our PPVA product provides access to a suite of Apollo managed funds and other
product offerings with no surrender charges and no guaranteed lifetime withdrawal benefit (GLWB) or guaranteed minimum death benefit
(GMDB) features. We generate income on our PPVA product by collecting a management fee that is a function of the policyholder’s account
value.
Table of Contents
Item 1. Business
13
Income Riders to Fixed Annuity Products
The income riders on our deferred annuities can be broadly categorized as either guaranteed or participating. Guaranteed income riders provide
policyholders with a guaranteed lifetime withdrawal benefit, which permits policyholders to elect to receive guaranteed payments for life from
their contract without having to annuitize their policies. Participating income riders tend to have lower levels of guaranteed income than
guaranteed income riders but provide policyholders the opportunity to receive greater levels of income if the policies’ indexed crediting
strategies perform well.
Income riders, particularly on FIAs, have become very popular among policyholders. The Life Insurance and Market Research Association
(LIMRA) estimates that approximately 17% of fixed annuity premium in the US for the nine months ended September 30, 2024 (the most recent
period that specific market share data is currently available) included an income rider. As of December 31, 2024, approximately 26% of our
deferred annuity account value contained rider benefits. This includes annuities with income riders sourced through retail and reinsurance
operations as well as acquisitions. Of the deferred annuities sourced through our retail and flow reinsurance channels, for the year ended
December 31, 2024, 2% contained participating income riders and 10% contained guaranteed income riders.
Withdrawal Options for Deferred Annuities
After the first year following the issuance of a deferred annuity, the policyholder is typically permitted to make withdrawals up to 5% or 10%
(depending on the contract) of the prior year’s value without a surrender charge or market value adjustment (MVA), subject to certain
limitations. Withdrawals in excess of the allowable amounts are assessed a surrender charge and MVA if such withdrawals are made during the
surrender charge period of the policy, which generally ranges from 3 to 20 years. The surrender charge for most of our products at contract
inception is generally between 7% and 15% of the contract value and decreases by approximately one percentage point per year during the
surrender charge period. The weighted average surrender charge (excluding the impact of MVAs) was 6% for our deferred annuities as of
December 31, 2024.
At maturity, the policyholder may elect to receive proceeds in the form of a single payment or an annuity. If the annuity option is selected, the
policyholder will receive a series of payments either over the policyholder’s lifetime or over a fixed number of years, depending upon the terms
of the contract. Some contracts permit annuitization prior to maturity.
Payout Annuities
Payout annuities primarily consist of single premium immediate annuities (SPIA), supplemental contracts and structured settlements. Payout
annuities provide a series of periodic payments for a fixed period of time or for the life of the policyholder, based upon the policyholder’s
election at the time of issuance. The amounts, frequency and length of time of the payments are fixed at the outset of the annuity contract. SPIAs
are often purchased by persons at or near retirement age who desire a steady stream of payments over a future period of years. Supplemental
contracts are typically created upon the conversion of a death claim or the annuitization of a deferred annuity. Structured settlements generally
relate to legal settlements.
Group Annuities
Group annuities issued in connection with pension group annuity transactions usually involve a single premium group annuity contract issued to
discharge certain pension plan liabilities. The group annuities that we issue are nonparticipating contracts. The assets supporting the guaranteed
benefits for each contract may be held in a separate account. Group annuity benefits may be purchased for current, retired and/or terminated
employees and their beneficiaries covered under terminating or continuing pension plans. Both immediate and deferred annuity certificates may
be issued pursuant to a single group annuity contract. Immediate annuity certificates cover those retirees and beneficiaries currently receiving
payments, whereas deferred annuity certificates cover those participants who have not yet begun receiving benefit payments. Immediate annuity
certificates have no cash surrender rights, whereas deferred annuity certificates may include an election to receive a lump sum payment,
exercisable by the participant upon either the participant achieving a specified age or the occurrence of a specified event, such as termination of
the participant’s employment.
A pension group annuity transaction may be structured as a buyout or buy-in transaction. A buyout transaction involves the issuance by an
insurer of a group annuity contract to the plan sponsor and individual annuity certificates to each plan participant, resulting in the transfer of the
contractual obligation to pay pension benefits from the plan sponsor to the insurer. A buyout transaction may be a full buyout or a partial
buyout. A pension group annuity transaction structured as a buy-in includes an option to convert to buyout at the election of the plan sponsor, or
the option to be surrendered at the election of the plan sponsor, subject to certain conditions that may reflect both a market value adjustment and
a surrender charge, resulting in a refund in an amount determined in accordance with the group annuity contract. Generally, a buy-in structure is
selected when the plan sponsor seeks to eliminate risk but is not yet prepared to terminate the plan or recognize any adverse accounting impact
that may accompany a plan termination. During the buy-in phase, the group annuity contract represents an asset of the plan sponsor with no
annuity certificates issued to the plan participants unless and until an election is made under the contract to convert to a buyout.
Table of Contents
Item 1. Business
14
We earn income on group annuities based upon the spread between the return on the assets received in connection with the pension group
annuity transaction and the cost of the pension obligations assumed. Group annuities expose us to longevity risk, which would be realized if plan
participants live longer than assumed in underwriting the transaction, resulting in aggregate payments that exceed our expectations. However,
our conservative underwriting process makes use of a wealth of reliable pre- and post-selection participant data, including mortality experience
data, particularly for mid- to large-sized transactions, to mitigate this risk.
Funding Agreements
We issue funding agreements opportunistically to institutional investors at attractive risk-adjusted funding costs. They are designed to provide
an agreement holder with a guaranteed return of principal and periodic interest payments, while offering competitive yields and predictable
returns. The interest rate can be fixed or floating. If the interest rate is a floating rate, it may be linked to the Secured Overnight Financing Rate,
the federal funds rate or other major index. We also include repurchase agreements with a term that exceeds one year at the time of execution
within the funding agreement product category.
Life and Other
Life and other products include life insurance policies assumed through reinsurance transactions, other retail products, including legacy run-off
or ceded business, and statutory closed blocks.
Distribution Channels
We have developed four dedicated distribution channels to address the retirement services market: retail, flow reinsurance, institutional, and
acquisitions and block reinsurance, which support opportunistic origination across different market environments. Additionally, we believe these
distribution channels enable us to achieve stable asset growth while maintaining attractive returns.
We are diligent in setting our return targets based on market conditions and risks inherent in the products we offer, as well as in the acquisition
or block reinsurance transactions we pursue. Generally, we target mid-teen returns for sources of organic growth and mid-teen or higher returns
for sources of inorganic growth. However, specific return targets are established with due consideration to the facts and circumstances
surrounding each growth opportunity and may be higher or lower than those that we target more generally. Factors that we consider in
establishing return targets for a given growth opportunity include, but are not limited to, the certainty of the return profile, the strategic nature of
the opportunity, the size and scale of the opportunity, the alignment and fit of the opportunity with our existing business, the opportunity for risk
diversification and the existence of increased opportunities for higher returns or growth. If market conditions or risks inherent in a product or
transaction create return profiles that are not acceptable to us, we generally will not sacrifice our profitability merely to facilitate growth.
Retail
We have built a scalable platform that allows us to originate and rapidly grow our business in deferred annuity products. We have developed a
suite of retirement savings products, distributed through our network of 41 IMOs and our growing network of 19 banks and 151 broker-dealers,
collectively representing approximately 140,000 independent agents in all 50 states. We are focused in every aspect of our retail channel on
providing high quality products and service to our policyholders and maintaining appropriate financial protection over the life of their policies.
Flow Reinsurance
Flow reinsurance provides another channel for us to source liabilities with attractive crediting rates and offers insurance companies the
opportunity to improve their product offerings and enhance their financial results. As in the retail channel, we do not pursue flow volume growth
at the expense of profitability and will respond rapidly to adjust pricing for changes in asset yields.
Reinsurance is an arrangement under which an insurance company, the reinsurer, agrees to indemnify another insurance company, the ceding
company or cedant, for all or a portion of certain insurance risks underwritten by the ceding company. Reinsurance is designed to (1) reduce the
net amount at risk on individual risks, thereby enabling the ceding company to increase the volume of business it can underwrite, as well as
increase the maximum risk it can underwrite on a single risk, (2) stabilize operating results by reducing volatility in the ceding company’s loss
experience, (3) assist the ceding company in meeting applicable regulatory requirements and (4) enhance the ceding company’s financial
strength and surplus position.
Within our flow reinsurance channel, we conduct third-party flow reinsurance transactions through our insurance subsidiaries. As a reinsurer, we
partner with insurance companies to develop solutions to their capital requirements, enhance their presence in the retirement market and
improve their financial results. We target reinsuring spread-based liabilities which can include FIAs, MYGAs, traditional one-year guarantee
fixed deferred annuities, immediate annuities, whole life insurance, universal life insurance, indexed universal life insurance and institutional
products.
As of December 31, 2024, we had ongoing flow reinsurance and retrocession agreements involving 20 third-party cedants, for a quota share of
the cedants’ new inflows.
Table of Contents
Item 1. Business
15
Institutional
Our institutional channel includes funding agreements and pension group annuity transactions.
Funding Agreements
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 agreements. We have an FABN program, which allows Athene Global Funding, a
special-purpose, unaffiliated statutory trust to offer its senior secured medium-term notes. The notes are underwritten and marketed by major
investment banks’ broker-dealer operations and are sold to institutional investors. Athene Global Funding uses the net proceeds from each sale
to purchase one or more funding agreements from us with matching interest and maturity payment terms. We also established a secured FABR
program in which a special-purpose, unaffiliated entity enters into a repurchase agreement with a bank and the proceeds of the repurchase
agreement are used by the special-purpose entity to purchase funding agreements from us. In addition to the funding agreements issued to
special-purpose unaffiliated trusts or other unaffiliated entities, we engage in direct issuances with various institutions. Additionally, we are a
member of the Federal Home Loan Bank of Des Moines and, through membership, we have issued funding agreements to the FHLB in
exchange for cash advances. We are required to provide collateral in excess of the funding agreement amounts outstanding, considering any
discounts to the securities posted and prepayment penalties. Long-term repurchase agreements with a term that exceeds one year at the time of
execution are also included within the funding agreement product category.
Pension Group Annuities
We partner with institutions seeking to transfer and thereby reduce their obligation to pay future pension benefits to retirees and deferred
participants through pension group annuities. We work with advisors, brokers and consultants to source pension group annuity transactions and
design solutions that meet the needs of prospective pension group annuity counterparties and their participants, with a focus on medium- and
large-sized deals involving retirees and/or deferred participants that are structured as either a buyout or a buy-in transaction. Since entering the
pension group annuity market in 2017, we have closed 49 deals resulting in the issuance or reinsurance of group annuities of $52.7 billion with
more than 550,000 plan participants as of December 31, 2024.
We believe we have established ourselves as a trusted and market-leading pension group annuity solutions provider and expect that our
experience in crafting customized pension group annuity solutions and our improving credit profile will enable us to continue to source and
execute pension group annuity transactions. We have the ability to design tailored solutions that meet the needs of our pension group annuity
counterparties, which include a range of blue-chip clients and a number of repeat clients.
Acquisitions and Block Reinsurance
Acquisitions are a complementary source of growth for our business. We have a proven ability to acquire businesses in complex transactions at
favorable terms, manage the liabilities acquired and reinvest the associated assets.
Through block reinsurance transactions, we partner with life and annuity companies to decrease their exposure to one or more products or to
divest of lower-margin or non-core segments of their businesses. Unlike acquisitions in which we acquire the assets or stock of a target
company, block reinsurance allows us to contractually assume assets and liabilities associated with a certain book of business. In doing so, we
contractually assume responsibility for only that portion of the business that we deem desirable, without assuming additional liabilities.
As we continue to expand into new markets and geographies, we have been disciplined in only retaining liabilities that are core to our strategy
and competitive advantages. This can be accomplished through structural solutions, including mortality and longevity reinsurance. For example,
in our most recent Japanese block reinsurance transaction in 2023, we entered into an arrangement with a highly rated reinsurer to retrocede the
mortality risk associated with the whole life liability.
We plan to continue leveraging our expertise in sourcing and evaluating transactions to profitably grow our business. We believe our
demonstrated ability to source transactions, consummate complex transactions and reinvest assets into higher yielding investments as well as our
access to capital provide us with distinct advantages relative to other acquisition or block reinsurance candidates.
Investment Management
Investment activities are an integral part of our business, and our net investment income is a significant component of our total revenues. Our
investment philosophy is to invest a portion of our assets in securities that earn an incremental yield by taking measured liquidity and
complexity risk and capitalize on our long-dated, persistent liability profile to prudently achieve higher net investment earned rates, rather than
assuming incremental credit risk. A cornerstone of our investment philosophy is that given the operating leverage inherent in our business,
modest investment outperformance can translate to outsized return performance. Because we maintain discipline in underwriting attractively
priced liabilities, we have the ability to invest in a broad range of high-quality assets to generate attractive earnings.
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Our differentiated investment strategy benefits from our relationship with Apollo, which provides a full suite of services for our investment
portfolio, including direct investment management, asset allocation, mergers and acquisitions asset diligence and certain operational support
services, including investment compliance, tax, legal and risk management support. Apollo provides portfolio management services for
substantially all of our invested assets.
We are downside focused and our asset allocations reflect the results of stress testing analysis. Additionally, we establish risk thresholds which
in turn define risk tolerance across a wide range of factors, including credit risk, liquidity risk, concentration risk and caps on specific asset
classes. In addition to other efforts, we manage the risk of rising interest rates by strategically allocating a meaningful portion of our investment
portfolio into floating rate securities.
Apollo’s investment team and credit portfolio managers employ their deep experience to assist us in sourcing and underwriting complex asset
classes. Apollo has selected a diverse array of corporate bonds and more structured, but highly rated, asset classes. We also maintain holdings in
floating rate and less interest rate-sensitive investments, including CLOs, non-agency RMBS and various types of structured products. These
asset classes permit us to earn incremental yield by assuming liquidity and complexity risk, rather than assuming incremental credit risk.
Apollo sources assets for our investment portfolio based upon the unique characteristics of our business, including desired asset allocation and
risk tolerance, and with regard to the ever-changing macroeconomic environment in which we operate. In recent years, we and Apollo have
recognized that a heightened demand for investment grade marketable securities has placed substantial downward pressure on credit spreads of
such securities, which adversely impacts the returns we are able to achieve on new investment purchases. Rather than increase our allocation to
higher risk securities to increase yield, we pursue the direct origination of high-quality, predominantly senior secured assets, which we believe
possess greater alpha-generating qualities than securities that would otherwise be readily available in public markets. These direct origination
strategies include investments sourced by (1) affiliated platforms that originate loans to third parties and in which we gain exposure directly to
the loan or indirectly through our ownership of the origination platform and/or securitizations of assets originated by the origination platform,
and (2) Apollo’s extensive network of direct relationships with predominantly investment-grade counterparties.
We believe that a greater focus on these direct origination strategies affords us both quantitative and qualitative advantages, including
eliminating the cost of intermediaries, recognizing an origination premium, having direct access to diligence and having greater control over the
terms of the investment. Furthermore, we believe these direct origination strategies will often provide us with the flexibility to choose the
location in the capital structure in which we invest, affording us the opportunity to select the risk/return profile that we deem optimal and limit
our exposure to assets with sub-optimal risk/return characteristics. Employing these direct origination strategies comports well with our
investment philosophy of earning incremental spread by taking measured liquidity and complexity risk, rather than taking excessive credit risk.
As part of our direct origination strategy, we may invest in two types of equity investments. First, we make strategic investments in the equity of
asset origination platforms themselves. Second, we retain equity risk alongside our investments in investment grade tranches of the assets that
Apollo directly originates. We typically refer to both of these types of equity investments as ‘alternatives.’ In 2022, we contributed certain of our
net alternative investments to Apollo Aligned Alternatives Aggregator, LP (AAA), a consolidated variable interest entity (VIE), in exchange for
limited partnership interests in the fund. Apollo established AAA for the purpose of providing a single vehicle through which we and third-party
investors can participate in a portfolio of alternative investments. AAA enhances Apollo’s ability to increase alternative assets under
management (AUM) while also allowing us to achieve greater scale and diversification for alternatives.
We and Apollo have made and are continuing to make significant investments in establishing a portfolio of asset origination platforms and
investment teams across a variety of asset classes. In connection with this effort, we have made and are expected to continue to make strategic
investments in certain direct origination platforms. These investments may take the form of debt and/or equity and align with our investment
strategy as it relates to alternative investments. Certain of the asset origination platforms in which we have invested and/or have sourced directly
originated assets in the past or may source directly originated assets in the future are set forth below.
MidCap FinCo Designated Activity Company (MidCap Financial) is a commercial finance company
that provides various financial products to middle-market businesses in multiple industries, primarily
located in the US. MidCap Financial primarily originates and invests in commercial and industrial
loans, including senior secured corporate loans, working capital loans collateralized mainly by
accounts receivable and inventory, senior secured loans collateralized by portfolios of commercial
and consumer loans and related products, secured loans to highly capitalized pharmaceutical and
medical device companies, and commercial real estate loans, including multifamily independent-
living properties, assisted living, skilled nursing and medical office properties, warehouse, office
building, hotel and other commercial use properties and multifamily properties. MidCap Financial
originates and acquires loans using borrowings under financing arrangements that it has in place
with numerous financial institutions.
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Redding Ridge Asset Management LLC and Redding Ridge Asset Management (UK) LLP
(collectively, Redding Ridge) is a registered investment advisor specializing in leveraged loans and
global CLO management. Redding Ridge’s primary business consists of acting as collateral manager
for CLO transactions and related warehouse facilities and as holder of CLO retention interests in
both the US and Europe. Redding Ridge is strategically positioned with access to significant CLO
management and structuring expertise, industry contacts and investor relationships globally.
Pursuant to various service agreements with AGM, Redding Ridge is supported by top tier credit
research, credit risk management, credit trading platform and other corporate/administrative services.
Skylign
Aviation
Skylign Aviation Holdings, L.P. (Skylign) is a leading aviation finance group focused on aircraft
lending and leasing. The group comprises two operating businesses, namely PK AirFinance (PK
Air), a provider and arranger of loans secured by commercial aircraft and aircraft engines, and
Perseus Aviation (Perseus), a global aircraft leasing, management and finance company. PK Air has
comprehensive origination, underwriting, and syndication lending capabilities across products and
geographies. PK Air maintains a global customer base that includes airlines, aircraft traders, lessors,
investors and financial institutions with product expertise spanning senior secured loans, finance
leases, conditional sales, loan participations, pre-delivery payment loans, and bridge loans. Perseus
focuses on investing in aviation assets and managing aircraft leases to a wide range of airline
customers worldwide, with full flexibility across the spectrum of investment scale, duration, asset
type, asset age and structure. Both PK Air and Perseus employ a differentiated, asset-focused
underwriting approach supplemented by credit underwriting and cash flow analysis.
Wheels, Inc. (Wheels) is a leading US-based fleet management company that provides fleet leasing
and value-added services to corporate clients. The fleet platform has billions of vehicle assets and
manages hundreds of thousands of fleet vehicles. Given the essential-use nature of the vehicles and
services provided by Wheels, the company is deeply embedded in client operations, driving high
customer retention rates and an annuity-like earnings stream.
Foundation Home Loans is a specialist mortgage originator and servicer focused on the UK buy-to-
let and owner-occupied market. Foundation exclusively originates new mortgages through
intermediaries/brokers and is funded through mortgage-backed securities, warehouse loans, and
forward flow agreements. Foundation provides full mortgage servicing in-house through its
proprietary asset management platform.
Aqua Finance is a US consumer loan originator and servicer. The company works with dealers and
contractors to provide secured financing solutions for primarily prime and super-prime customers to
fund home improvement projects and recreational vehicles.
Atlas Securitized Products Holdings LP (Atlas) is a structured products business focused on
underwriting, originating, owning and servicing certain warehouse and similar loans extended to
asset originators. As part of its business, Atlas also provides securitization structuring services to
clients.
We opportunistically allocate approximately 5% of our portfolio to alternative investments where we primarily focus on fixed income-like, cash
flow-based investments. Individual alternative investments are selected based on the investment’s risk-reward profile, incremental effect on
diversification and potential for attractive returns due to sector and/or market dislocations. We have a strong preference for alternative
investments that have some or all of the following characteristics, among others: (1) investments with credit- or debt-like characteristics (for
example, a stipulated maturity and par value), or alternatively, investments with reduced volatility when compared to pure equity; or
(2) investments that we believe have less downside risk. In general, we target returns for alternative investments of 10% or higher on an internal
rate of return basis over the expected lives of such investments.
Our investment portfolio is managed within the limits and protocols set forth in our Investment and Credit Risk Policy. Under this policy, we set
limits on investments in our portfolio by asset class, such as corporate bonds, emerging markets securities, municipal bonds, non-agency RMBS,
commercial mortgage-backed securities (CMBS), CLOs, commercial mortgage whole loans and mezzanine loans and investment funds. We also
set credit risk limits for exposure to a single issuer, which vary based on the issuer’s ratings. Our strategic investments are also governed by our
Strategic Investment Risk Policy which provides for special governance and risk management procedures for these transactions. In addition, our
investment portfolio is constrained by its scenario-based capital ratio limits and its liquidity limits.
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Item 1. Business
18
Capital
We believe we have a strong capital position and are well positioned to meet policyholder and other obligations. We measure capital sufficiency
using various internal capital metrics which reflect management’s view on the various risks inherent to our business, the amount of capital
required to support our core operating strategies and the amount of capital necessary to maintain our current ratings in a recessionary
environment. The amount of capital required to support our core operating strategies is determined based upon internal modeling and analysis of
economic risk, as well as inputs from rating agency capital models and consideration of both National Association of Insurance Commissioners
(NAIC) risk-based capital (RBC) and Bermuda capital requirements. Capital in excess of this required amount is considered excess equity
capital, which is available to deploy.
As discussed previously in –Growth Strategy, we seek to achieve profitable growth that maximizes stockholder value. Executing on our growth
strategy requires that we have access to adequate amounts of capital. Our deployable capital and uses thereof are set forth below.
Deployable Capital
Our deployable capital is comprised of capital from three sources: excess equity capital, untapped leverage capacity and available undrawn
capital commitments from ACRA. As of December 31, 2024, we estimate that we had approximately $8.8 billion in capital available to deploy,
consisting of approximately $2.0 billion in excess equity capital, $3.3 billion in untapped leverage capacity, and $3.5 billion in available
undrawn capital at ACRA. We determine our untapped leverage capacity by comparing our leverage ratio and adjusted leverage ratio, which
were 41.7% and 22.6%, respectively, as of December 31, 2024, against our estimated maximum adjusted leverage ratio of 30%, subject to
maintaining a sufficient level of capital required to maintain our desired financial strength ratings from rating agencies.
ACRA
In order to support growth strategies and capital deployment opportunities, we established ACRA 1 as a long-duration, on-demand capital
vehicle. We directly own 37% of ACRA 1’s economic interests and all of ACRA 1’s voting interests, with the remaining 63% of the economic
interests being owned by Apollo/Athene Dedicated Investment Program (ADIP I), a series of funds managed by Apollo. During the commitment
period, ACRA 1 participated in certain transactions by drawing a portion of the required capital for such transactions from third-party investors
equal to ADIP I’s proportionate economic interests in ACRA 1. The commitment period for ACRA 1 expired in August 2023.
To further support our growth and capital deployment opportunities following the deployment of capital by ACRA 1, we funded ACRA 2 in
December 2022 as another long-duration, on-demand capital vehicle. Effective July 1, 2023, Athene Life Re Ltd. (ALRe) sold 50% of its non-
voting, economic interests in ACRA 2 to Apollo/Athene Dedicated Investment Program II (ADIP II) for $640 million, while maintaining all of
ACRA 2’s voting interests. Effective December 31, 2023, ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP II’s
ownership of economic interests in ACRA 2 to 60%, with ALRe owning the remaining 40% of the economic interests. Effective October 1,
2024, ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP II’s ownership of economic interests in ACRA 2 to
63%, with ALRe owning the remaining 37% of the economic interests. ACRA 2 participates in certain transactions by drawing a portion of the
required capital for such transactions from third-party investors equal to ADIP II’s proportionate economic interests in ACRA 2.
These strategic capital solutions allow us the flexibility to simultaneously deploy capital across multiple accretive avenues and sustain our
profitable growth strategy at scale in a capital efficient manner, while maintaining a strong financial position.
In connection with each transaction in which an ACRA entity elects to participate (each, a Participating Transaction), such ACRA entity will
generally pay ALRe a fee (Wrap Fee) on the reserves of the assumed or acquired business. The Wrap Fee is expected to be approximately 15
basis points per year, based on a scale which increases from 10 to 16 basis points as the portion of the reserves economically attributed to the
applicable ADIP fund increases.
In general, (a) on or about the 10th anniversary of the effective date of any Participating Transaction (other than a flow reinsurance transaction)
or (b) on or about the 10th anniversary of the date on which reinsurance is terminated as to new business under any Participating Transaction
that is a flow reinsurance transaction (which would occur no later than the end of the commitment period), ALRe or its applicable affiliate has
the right (Commutation Right) to terminate the applicable ACRA entity’s participation in such Participating Transaction based on a book value
pricing mechanism and subject to the ability of the applicable ADIP fund to reject the commutation if a minimum return with respect to such
Participating Transaction is not achieved. If ALRe does not exercise the Commutation Right with respect to a Participating Transaction, then the
applicable ACRA entity’s obligation to pay the Wrap Fee in connection with such Participating Transaction will terminate, and, subject to
certain exceptions (and the applicable terms and conditions of the applicable ACRA Framework Agreement and related transaction documents),
ALRe will be required to pay such ACRA entity a fee calculated in the same manner as the Wrap Fee. In addition, if the applicable ACRA entity
fails to satisfy minimum aggregate capital requirements, ALRe has the right to recapture or assign to another of our subsidiaries a portion of the
business retroceded to such ACRA entity (and/or any of its insurance or reinsurance subsidiaries) to the extent necessary to cure such failure.
As of December 31, 2024, ALRe, Athene Life Re International Ltd. (ALReI) and Athene Annuity Re Ltd. (AARe) had retroceded to ACRA
$114.2 billion of reserve liabilities. In connection with future Participating Transactions, ACRA 2 will draw from ADIP II and ALRe their
respective share of the amount of capital necessary to consummate such Participating Transactions. The terms of any Participating Transaction
may vary from the terms described above.
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19
As of December 31, 2024, ADIP II raised approximately $6.0 billion in capital commitments, of which $3.5 billion was available to deploy into
future transactions. As of December 31, 2024, there were no remaining ADIP I capital commitments available to deploy.
Uses of Capital
Capital deployment includes the payment for a business opportunity, such as the payment of a ceding commission to enter into a block
reinsurance transaction, and the retention of capital based on our internal capital model. Currently, we deploy capital in four primary ways: (1)
supporting organic growth, (2) supporting inorganic growth, (3) making dividend payments to AGM, and (4) retaining capital to support
financial strength ratings upgrades. We generally seek mid-teen or higher returns on our capital deployment.
Reinsurance
Internal Ceded Reinsurance
Subject to quota shares generally ranging from 80% to 100%, substantially all of the existing deposits held and new deposits generated by our
US insurance subsidiaries are reinsured to our Bermuda reinsurance subsidiaries. We maintain the same reserving principles for our Bermuda
reinsurance subsidiaries as we do for our US insurance subsidiaries. We also retrocede certain inorganic transactions and organic business to
ACRA. Our internal reinsurance structure provides us with several strategic and operational advantages, including the aggregation of regulatory
capital, which makes the aggregate capital of our Bermuda reinsurance subsidiaries available to support the risks assumed by each entity, and
enhanced operating efficiencies. As a result of our internal reinsurance structure and third-party direct to Bermuda business, a significant
majority of our aggregate capital is held by our Bermuda reinsurance subsidiaries.
We use two principal forms of internal reinsurance arrangements, modco and coinsurance on a funds withheld basis (funds withheld). Under
modco, the reinsured reserves are retained by the US cedant, whereas under funds withheld, the Bermuda reinsurer is required to establish
reserves for the obligations ceded. Under both modco and funds withheld, the Bermuda reinsurer holds capital against the reserves and the US
cedant retains physical possession and legal ownership of the assets supporting the reserves. The profit and loss with respect to the obligations
ceded flow from the US cedant to the Bermuda reinsurer through periodic net settlements. Generally, our modco and funds withheld agreements
require the US cedant to establish a segregated account in which the assets supporting the ceded obligations are maintained. The US cedant is
authorized under the respective agreement to make payments on the ceded obligations directly from the segregated account. The assets
maintained in the segregated account are valued at statutory carrying value for purposes of determining settlement amounts. Under the
respective agreements, the US cedants have an obligation to make payments to the Bermuda reinsurers to the extent that the statutory carrying
value of the assets maintained in the applicable segregated account exceeds 100% of the reserves maintained in respect of the reinsured
business, and the Bermuda reinsurers have an obligation to make payments to the US cedants to the extent that the statutory carrying value of
the assets maintained in the applicable segregated account is less than 100% of the reserves maintained in respect of the reinsured business.
Third-Party Ceded Reinsurance
In addition, from time to time, we may opportunistically cede certain of our business from our US insurance subsidiaries, or Bermuda
reinsurance subsidiaries, to third party reinsurers, to generate capital and/or limit our exposure to certain risks.
Outsourcing
With regard to our US business, we outsource some portion or all of each of the following functions to third-party service providers:
•
hosting of financial systems;
•
policy administration of existing policies;
•
custody;
•
information technology development and maintenance; and
•
investment management.
We closely monitor our outsourcing partners and integrate their services into our operations. We believe that outsourcing such functions allows
us to focus capital and our employees on our core business operations and perform higher utility functions, such as actuarial, product
development and risk management. In addition, we believe an outsourcing model provides predictable pricing and service levels and operational
flexibility while further allowing us to benefit from technological developments that enhance our capabilities, each in a manner that we would
not otherwise be able to achieve without investing more of our own capital. We believe we have a good relationship with our principal outsource
service providers.
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Item 1. Business
20
Ratings
As of December 31, 2024, each of our significant insurance subsidiaries is rated “A+” or “A1” by the four rating agencies that evaluate the
financial strength of such subsidiaries. To achieve our financial strength ratings aspirations, we may choose to retain additional capital above the
level required by the rating agencies to support our operating needs. We believe there are numerous benefits to achieving stronger ratings over
time, including increased recognition of and confidence in our financial strength by prospective business partners, particularly within product
distribution, as well as potential profitability improvements in certain organic channels through lower funding costs.
Financial strength and credit ratings directly affect our ability to access funding and the related cost of borrowing, the attractiveness of certain
products of ours to customers, our attractiveness as a reinsurer to potential ceding companies and the requirements for collateral posting on our
derivatives. These ratings are periodically reviewed by the rating agencies.
Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. Financial strength ratings represent
the opinions of rating agencies regarding the financial ability of an insurer or reinsurer to meet its obligations under an insurance policy or
reinsurance arrangement and generally involve quantitative and qualitative evaluations by rating agencies of a company’s financial condition
and operating performance. Generally, rating agencies base their financial strength ratings upon information furnished to them by the respective
company and upon their own investigations, studies and assumptions. Financial strength ratings are based upon factors of concern to
policyholders, agents, intermediaries and ceding companies and are not directed toward the protection of investors. Credit and financial strength
ratings are not recommendations to buy, sell or hold securities and they may be revised or revoked at any time at the sole discretion of the rating
organization.
As of February 21, 2025, AM Best, Standard & Poor’s Rating Services (S&P), Fitch Ratings (Fitch) and Moody’s Investors Service (Moody’s)
had issued credit or financial strength ratings and outlook statements regarding us as follows:
Company
AM Best
S&P
Fitch
Moody’s
Athene Holding Ltd.
Long-Term Issuer Credit Rating/Issuer Default Rating
a-
A-
A-
NR
Outlook
Stable
Stable
Stable
NR
Athene Insurance Subsidiaries1
Financial Strength Rating
A+
A+
A+
A1
Outlook
Stable
Stable
Stable
Stable
1 Athene insurance subsidiaries include AARe, ALRe, ALReI, AAIA, Athene Annuity & Life Assurance Company of New York (AANY), Athene Life Insurance
Company of New York (ALICNY), Athene Co-Invest Reinsurance Affiliate 1A Ltd. (ACRA 1A), Athene Co-Invest Reinsurance Affiliate 1B Ltd. (ACRA 1B),
Athene Co-Invest Reinsurance Affiliate 2A Ltd. (ACRA 2A), Athene Co-Invest Reinsurance Affiliate 2B Ltd. (ACRA 2B) and Athene Co-Invest Reinsurance
Affiliate International Ltd. ALICNY is not rated by S&P, Fitch, and Moody's.
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Item 1. Business
21
Rating Agency
Financial Strength
Rating Scale
Issuer Credit
Rating Scale
AM Best1
“A++” to “D”
“aaa” to “c”
S&P2
“AAA” to “D”
“AAA” to “D”
Fitch3
“AAA” to “C”
“AAA” to “D”
Moody’s4
“Aaa” to “C”
“Aaa” to “C”
1 AM Best’s financial strength rating is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract
obligations. AM Best’s financial strength rating categories from “A+” to “C” include a ratings notch to reflect a gradation of financial strength within the
category. Ratings notches for AM Best’s financial strength rating are expressed with either a second plus “+” or a minus “-”. AM Best’s long-term issuer credit
rating is an opinion of an entity’s ability to meet its ongoing senior financial obligations. AM Best’s long-term issuer credit rating categories from “aa” to
“ccc” include rating notches to reflect a gradation within the category to indicate whether credit quality is near the top or bottom of a particular rating
category. Rating notches for AM Best’s long-term issuer credit rating are expressed with a plus “+” or a minus “-”.
2 S&P’s insurer financial strength rating is a forward-looking opinion about the financial security characteristics of an insurance organization with respect to
its ability to pay under its insurance policies and contracts in accordance with their terms. S&P’s issuer credit rating is a forward-looking opinion about an
obligor’s overall creditworthiness. This opinion focuses on the obligor’s capacity and willingness to meet its financial commitments as they come due. Long-
term issuer credit ratings focus on the obligor’s capacity and willingness to meet all of its financial commitments, both long- and short-term, as they come due.
A plus “+” or a minus “-” indicates relative standing within a rating category.
3 Fitch’s insurer financial strength ratings provide an assessment of the financial strength of an insurance organization. The insurer financial strength rating is
assigned to the insurance company’s policyholder obligations, including assumed reinsurance obligations and contract holder obligations, such as guaranteed
investment contracts. The insurer financial strength rating reflects both the ability of the insurer to meet these obligations on a timely basis and expected
recoveries received by claimants in the event the insurer stops making payments or payments are interrupted, due to either the failure of the insurer or some
form of regulatory intervention. Fitch’s issuer default ratings opine on an entity’s relative vulnerability to default on financial obligations. The threshold default
risk addressed by issuer default ratings is generally that of financial obligations whose non-payment would best reflect the uncured failure of that entity. As
such, issuer default ratings also address relative vulnerability to bankruptcy, administrative receivership or similar concepts. A plus “+” or a minus “-” may be
appended to a rating to denote relative status within major rating categories.
4 Moody’s provides credit ratings that are publicly available serving the public debt capital markets. Moody’s insurance financial strength ratings range from
“Aaa (highest quality)” to “C (lowest)”. A rating of Aa3 is the fourth highest of twenty-one rating categories. Numeric modifiers are used to refer to the ranking
within the group, with 1 being the highest and 3 being the lowest. These modifiers are used to indicate relative strength within a category. Moody’s long-term
credit ratings range from “Aaa” (highest) to “C” (default).
In addition to the financial strength ratings, rating agencies use an outlook statement to indicate a medium or long-term trend which, if
continued, may lead to a rating change. A positive outlook indicates a rating may be raised and a negative outlook indicates a rating may be
lowered. A stable outlook is assigned when ratings are not likely to be changed. Outlooks should not be confused with expected stability of the
issuer’s financial or economic performance. A rating may have a stable outlook to indicate that the rating is not expected to change, but a stable
outlook does not preclude a rating agency from changing a rating at any time without notice.
AM Best, S&P, Fitch and Moody’s review their ratings of insurance companies from time to time. There can be no assurance that any particular
rating will continue for any given period of time or that it will not be changed or withdrawn entirely if the respective rating agency’s judgment
or circumstances so warrant. Further, rating agencies may change their capital adequacy assessment methodologies in a manner that could
adversely affect the financial strength ratings of insurance companies. While the degree to which ratings adjustments will affect sales and
persistency is unknown, we believe if our ratings were to be negatively adjusted for any reason, we could experience a material decline in the
sales of our products and the persistency of our existing business. See Item 1A. Risk Factors–Risks Relating to Our Business Operations–A
financial strength rating downgrade, potential downgrade or any other negative action by a rating agency could make our product offerings
less attractive, inhibit our ability to acquire future business through acquisitions or reinsurance and increase our cost of capital, which could
have a material adverse effect on our business for further discussion about risks associated with financial strength ratings.
Competition
We face competition from a variety of large and small industry participants, including diversified financial institutions and insurance and
reinsurance companies. These companies compete in one form or another for the growing pool of retirement assets driven by a number of
external factors such as the continued aging of the population and the reduction in safety nets provided by governments and private employers.
In the markets in which we operate, scale and the ability to provide value-added services and build long-term relationships are important factors
to compete effectively. See Item 1A. Risk Factors–Risks Relating to Our Business Operations–We operate in a highly competitive industry that
includes a number of competitors, which could limit our ability to achieve our growth strategies and could materially and adversely affect our
business, financial condition, results of operations, cash flows and prospects for further discussion on competitive risks. We believe that our
leading presence in the retirement services market, diverse range of capabilities and broad distribution network uniquely position us to
effectively serve consumers’ increasing demand for retirement solutions.
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Item 1. Business
22
We experience competition in the fixed annuity market from all traditional carriers and new entrants. Principal competitive factors for fixed
annuities are initial crediting rates, reputation for renewal crediting action, product features, brand recognition, customer service, distribution
capabilities and financial strength ratings of the provider. Competition may affect, among other matters, both business growth and the pricing of
our products and services. See Item 7.–Management’s Discussion and Analysis of Financial Condition and Results of Operations–Industry
Trends and Competition–Competition for a discussion of our ranking and market share within the total annuity, total fixed annuity, FIA and
RILA markets.
Reinsurance markets are highly competitive, as well as cyclical by product and market. As a reinsurer, we compete based on many factors,
including, among other things, financial strength, pricing and other terms and conditions of reinsurance agreements, reputation, service, and
experience in the types of business underwritten. The impact of these and other factors is generally not consistent across lines of business,
domestic and international geographical areas, and distribution channels. Within the reinsurance market, we compete with other insurance and
reinsurance companies.
We encounter strong competition within our institutional channel. With respect to funding agreements, namely those issued in connection with
our FABN program, we compete with other insurers that have active FABN programs. Within the funding agreement market, we compete
primarily on the basis of perceived financial strength, interest rates and term. With respect to group annuities, we compete with other insurers
that offer such annuities. Within the pension group annuities market, we compete primarily on the basis of price, underwriting, investment
capabilities and our ability to provide quality service to the corporate sponsor’s pension participants.
Finally, we experience competition in the market for acquisition targets and profitable blocks of insurance. Such competition is likely to
intensify as insurance businesses become more attractive acquisition targets for both other insurance companies and financial institutions and as
the already substantial consolidation in the financial services industry continues. We compete for potential acquisition and block reinsurance
opportunities based on a number of factors including perceived financial strength, brand recognition, reputation and the pricing we are able to
offer, which, to the extent we determine to finance a transaction, is in turn dependent on our ability to do so on suitable terms. We believe our
demonstrated ability to source and consummate large and complex transactions is a competitive advantage over other potential acquirers.
Human Capital Management
As of December 31, 2024, we had 1,983 employees, including 1,858 located in the US, primarily in West Des Moines, Iowa, and 89 located in
Bermuda. We believe our employee relations are good. None of our employees are subject to collective bargaining agreements, nor are we
aware of any efforts to implement such agreements.
We are dedicated to fostering a culture that prioritizes teamwork, engagement, inclusivity and pride of ownership. We believe that when
employees feel a sense of purpose and belonging, they are more engaged and motivated to contribute to the organization’s success. Our core
values—Believe in Your Co-workers, Engage Actively, Act Like Owners, and Make It Happen (BEAM)—form the foundation of our culture.
Developed by a team of employees, BEAM reflects our shared beliefs and inspires positive action both within our workplace and in the
communities we serve.
Talent
Recruiting, developing and retaining top talent is essential to our success. We value each employee’s unique talents and skills and are committed
to fostering their professional growth. By investing in employee development, we enhance our workforce’s value while ensuring our business
remains competitive. We closely monitor turnover rates by function and actively implement strategies to retain key talent, including measures to
defend against competitive attrition. To maintain a robust pipeline of leaders, we conduct annual succession planning to ensure preparedness for
turnover, organizational growth, and promotional opportunities.
Employee satisfaction and engagement are critical metrics for us. We administer an annual engagement survey to gather feedback, which is
reviewed by management and shared with employees. The scores and feedback are reviewed by management in addition to being communicated
to all employees. We adjust our business practices based on feedback received. High participation rates are encouraged to ensure meaningful
feedback.
Our performance-based compensation philosophy rewards employees for their contributions to our success. We strive to provide strong,
equitable incentives for performance. Compensation may be comprised of up to three elements: base compensation, which is determined based
upon a number of factors, including size, scope and impact of the employee’s role, the market value associated with the employee’s role,
leadership skills, length of service and individual performance; an annual incentive award, which if applicable, is a cash incentive award
determined based on a combination of individual and company performance during the period to which the incentive award relates; and a long-
term incentive award, which if applicable, is a stock-based award intended to compensate an employee for her or his contribution to our success
and to align the interest of the award recipient with our interest during the vesting period of the award. We seek to determine compensation on
the basis of merit and without regard to demographic characteristics.
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Inclusion and Well-being
We are committed to fostering a work environment where everyone can thrive. Our policies are designed to attract a diverse workforce and
support ongoing growth and career development.
Merit is our guiding principle for hiring (and promotion). When hiring, we seek a broad pool of candidates and evaluate them through an
unbiased process. Ultimately, we select the individual best suited for the circumstances, without predetermined quotas or mandated outcomes.
We also recognize that well-being is essential to our collective success. By promoting a workplace where employees feel valued, supported, and
inspired—both professionally and personally—we cultivate a culture in which everyone can excel.
Regulation
A summary of certain of the laws, regulations and frameworks to which we are subject is set forth below.
General
United States
Each of our primary US insurance subsidiaries, AAIA, AANY and ALICNY, is organized and domiciled in either Iowa or New York (each, an
Athene Domiciliary State) and also licensed in such state as an insurer. On October 10, 2024, AADE merged with and into AAIA, with AAIA as
the surviving company.
The insurance department of each Athene Domiciliary State regulates the applicable US insurance subsidiary, and each US insurance subsidiary
is regulated by each of the insurance regulators in the other states where such company is authorized to transact insurance business. The primary
purpose of such regulatory supervision is to protect policyholders rather than holders of any securities. The extent of regulation varies by state,
but generally, state insurance regulators have broad administrative powers over the business activities and financial aspects of our US insurance
subsidiaries. This includes licensing producers who sell our products, regulating premium rates and approving policy forms, establishing reserve
requirements, solvency standards, and minimum capital requirements (MCR), regulating the type, amounts, and valuations of permitted
investments, examining the business conduct of licensed insurance companies, and other related matters.
From time to time, increased scrutiny has been placed upon the US insurance regulatory framework, and a number of state legislatures have
considered or enacted legislative measures that alter, and in many cases increase, regulation of insurers and reinsurers. Additionally, state
insurance regulators are regularly involved in a process of reexamining existing laws and regulations and their application to insurance and
reinsurance companies.
Furthermore, while the federal government in most contexts currently does not directly regulate the insurance business, federal legislation and
administrative policies in a number of areas, such as employee benefits and pension regulation, age, sex and disability-based discrimination,
financial services regulation, securities regulation, derivatives regulation, privacy regulation and federal taxation, can significantly affect the
insurance business. It is not possible to predict the future impact of changing regulation on our operations. See Item 1A. Risk Factors–Risks
Relating to Insurance and Other Regulatory Matters.
Bermuda
The Bermuda regulatory regime has been deemed to be equivalent to the European Union (EU) Directive (2009/138/EC) (Solvency II). The
Bermuda Insurance Act 1978 (Bermuda Insurance Act) regulates the insurance business of our Bermuda reinsurance subsidiaries, and provides
that no person may carry on any insurance business in or from within Bermuda unless registered as an insurer under such act by the Bermuda
Monetary Authority (BMA). The BMA is required by the Bermuda Insurance Act to determine whether an applicant is a fit and proper body to
be engaged in the insurance business and, in particular, whether it has, or has available to it, adequate knowledge and expertise to operate an
insurance business. See –Regulation of an Insurer’s Stockholders below.
The continued registration of an insurer is subject to the insurer complying with the terms of its registration and such other conditions as the
BMA may impose from time to time. The Bermuda Insurance Act also grants the BMA powers to supervise, investigate and intervene in the
affairs of insurers. The Bermuda Insurance Act imposes on Bermuda insurers solvency standards as well as auditing and reporting requirements.
Japan
The Financial Services Agency (FSA) of the Government of Japan is vested with extensive regulatory authority under the Insurance Business
Act. This authority enables the FSA to establish rules, as well as to monitor, direct, and intervene in the operations and financial health of
insurers, including life insurance companies. This oversight extends to insurers that either cede or contemplate ceding their flow or block
business to our reinsurance subsidiaries in Bermuda or the US.
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The Insurance Business Act permits offshore reinsurers to assume Japan-originated risks from abroad without the need for Japanese licensing or
compliance with other regulatory requirements. As a result, our reinsurance subsidiaries, which currently reinsure flow or block business from
Japanese ceding companies offshore, are not directly subject to the supervisory authority of the FSA. However, our reinsurance subsidiaries
could be indirectly affected by the enforcement of the Insurance Business Act if our Japanese cedants, or the flow or block business they cede to
us, encounter regulatory conditions significantly different from those in place at the time the relevant reinsurance agreements were executed
(e.g., substantial changes in regulations or requirements related to the recognition of reinsurance credit or reinsurance-related risk charges in the
solvency capital calculations for Japanese ceding companies).
Regulation of an Insurance Group
Group Supervision
Many insurers, including us, operate within a group structure. An insurance group is two or more affiliated persons, one or more of which is an
insurer. As an insurer’s financial position and risk profile may be impacted by being part of a group, US state and international regulators have
developed group supervisory frameworks in order to provide regulators with the ability to scrutinize the activities of an insurance group and
assess its potential impact on individual insurers within the group. The Iowa Insurance Division (IID) and the BMA are the lead regulators of
our largest subsidiaries. Under the Iowa Insurance Holding Company Act (Iowa HCA), the IID is our group supervisor. Separately, the BMA is
the subgroup supervisor for our Bermuda reinsurance subsidiaries. Under applicable US state law, Apollo and (except as otherwise excluded
with regulatory approval) its affiliates, including its insurance interests, are included within the holding company system for purposes of certain
supervision requirements, even though many of such entities have no material relationship to us.
The group supervisor may impose certain requirements on the insurance group, including to make provision for, among other things: (1)
assessing the financial situation and the solvency position of the insurance group and/or its members; and (2) regulating intra-group transactions,
risk concentration, governance procedures, risk management and regulatory reporting and disclosure. Many of these requirements have not yet
been applied in substance to us or our affiliates or, to the extent they have been applied, remain subject to modification as part of larger
prudential regulatory initiatives.
Group Capital
The Iowa HCA requires, subject to certain exceptions, the ultimate controlling person of every insurer subject to the holding company
registration requirement to file an annual group capital calculation (GCC) with its lead state on a confidential basis. The GCC is a tool
developed by the NAIC to provide US insurance regulators with a method to aggregate the available capital and the minimum capital of each
entity in a group in a manner that applies to groups meeting certain criteria regardless of their structure. The Iowa HCA also requires the
ultimate controlling person for certain large US life insurers and insurance groups to file the results of a liquidity stress test (LST) annually with
the lead state regulator of the insurance group. The LST utilizes a company cash-flow projection approach incorporating liquidity sources and
uses over various time horizons under a baseline assumption and stress scenarios that may vary from year to year. The NAIC has stated that the
GCC will be a regulatory tool and will not constitute a requirement or standard; however, these regulatory requirements may over time increase
the amount of capital that we are required to hold and could result in our being subject to increased regulatory requirements. Under the Bermuda
rules, our Bermuda reinsurance subsidiaries are required to file with the BMA group audited financial statements prepared using accounting
principles generally accepted in the United States of America (US GAAP) and an annual group capital and solvency return, which includes the
Group Bermuda Solvency Capital Requirement (BSCR) model showing the Group’s Enhanced Capital Requirement (ECR), within five months
after the financial year-end.
Internationally Active Insurance Groups and the Common Framework for the Supervision of Internationally Active Insurance Groups
At the end of 2019, the International Association of Insurance Supervisors (IAIS) adopted the Common Framework for the Supervision of
Internationally Active Insurance Groups (ComFrame), which will apply for all large internationally active insurance groups (IAIGs) that meet
the IAIS’ criteria and are designated as an IAIG by their group-wide supervisor. A group-wide supervisor also has discretion to determine that a
group either (1) is not an IAIG even if it meets the IAIS’ criteria or (2) is an IAIG even if it does not meet the IAIS’ criteria.
ComFrame establishes international standards for the designation of a group-wide supervisor for each IAIG, and the IAIS includes a group
capital requirement (the global insurance capital standard (ICS)) applicable to an IAIG in addition to the current legal entity capital requirements
and any group capital requirements imposed by relevant insurance laws and regulations. The ICS was adopted by the IAIS in December 2024.
Following this adoption, the IAIS is expected to encourage jurisdictions to implement the ICS as a prescribed capital requirement beginning in
2025. US members of the IAIS will be subject to an alternative approach to the ICS, called the Aggregation Method (AM), which is expected to
be adopted in the US. Like the GCC, the AM is an RBC aggregation-based approach. In November 2024, the IAIS determined the AM provides
comparable outcomes to the ICS. ComFrame also includes uniform standards for insurer corporate governance, enterprise risk management and
other control functions and resolution planning.
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The NAIC Model Insurance Holding Company System Regulatory Act, adopted by all of the Athene Domiciliary States, allows state insurance
regulators in the US to be group-wide supervisors for US-based IAIGs and also acknowledge another regulatory official acting as the group-
wide supervisor of an IAIG. On February 6, 2024, the IID identified AGM as meeting the criteria as an IAIG and further identified AHL as the
Head of the IAIG. The Head of the IAIG is a legal entity identified by the group-wide supervisor as controlling all of the group’s insurance legal
entities and non-insurance legal entities that pose a risk to the group’s insurance operations. In general, the Head of the IAIG is the uppermost
entity to which obligations associated with being an IAIG designation attach. As a result of these identifications, we expect AHL to be subject to
the relevant capital standard that the US applies to IAIGs. At this time, we do not expect a significant impact on AHL’s capital position or
capital structure; however, we cannot fully predict with certainty the impact (if any) on AHL’s capital position or capital structure and any other
burdens being named an IAIG may impose on AHL or its insurance affiliates. The IID further identified itself as the Group-Wide Supervisor for
AGM (in a distinct capacity from its role as supervisor for AHL). The IID has been effectively serving in this role for a significant period of
time; this identification is a formalization of AGM and the IID’s existing relationships and processes.
Own Risk and Solvency Assessment (ORSA) Model Act
We are subject to the ORSA Model Act, which has been enacted by each Athene Domiciliary State, and requires insurers to assess the adequacy
of their and their group’s risk management and current and future solvency position. Under the ORSA Model Act, certain insurers must
undertake an internal risk management review at least annually (but also at any time when there are significant changes to the risk profile of the
insurer or its insurance group), in accordance with the NAIC’s ORSA Guidance Manual, and prepare an ORSA Summary Report (ORSA
Report) assessing the adequacy of the insurer’s risk management and capital in light of its current and future business plans. The ORSA Report
is required to be filed annually with a company’s lead state regulator and made available to other domiciliary regulators within the holding
company system. We file the ORSA Report with the IID as our lead state regulator and concurrently provide the ORSA Report to the New York
State Department of Financial Services (NYSDFS). We also submit the ORSA Report to the BMA. Additionally, for the purposes of satisfying
the assessment requested in the Schedule of Commercial Insurer’s Solvency Self-Assessment, each Bermuda reinsurance subsidiary submits
supporting documentation to the BMA regarding specific queries presented in the BSCR, to supplement the information provided in the ORSA
Report.
Corporate Governance Annual Disclosure Model Act and Model Regulation (together, the Corporate Governance Model Act)
We are subject to the Corporate Governance Model Act, which has been enacted by each Athene Domiciliary State and requires insurers to
provide an annual disclosure regarding its corporate governance practices to its lead state and/or domestic regulator.
Insurance Holding Company Regulation
Each direct and indirect parent of our US insurance subsidiaries (including Apollo and AHL) is subject to the insurance holding company laws
of each of the Athene Domiciliary States. These laws generally require an insurance holding company and insurers that are members of such
holding company system to register with their US insurance regulators and to file certain reports with those authorities, including information
concerning their capital structure, ownership, financial condition, certain intercompany transactions and general business operations. Generally,
under these laws, transactions between our US insurance subsidiaries and their affiliates, including any reinsurance transactions and affiliated
investments, must be fair and reasonable and, if material or included within a specified category, require prior notice and approval or non-
disapproval by the insurance department of each applicable Athene Domiciliary State.
Most states, including each of the Athene Domiciliary States, have insurance laws that require regulatory approval of a direct or indirect change
of control of an insurer, which would include a change of control of its holding company. Such laws prevent any person from acquiring direct or
indirect control of any of our US insurance subsidiaries or their holding companies unless that person has filed a statement with specified
information with the commissioner, superintendent or director of the insurance department of the applicable Athene Domiciliary State (each, a
Commissioner) and has obtained the Commissioner’s prior approval. Under most states’ statutes, including those of each of the Athene
Domiciliary States, acquiring 10% or more of a voting interest in an insurer or its parent company is presumptively considered a change of
control, although such presumption may be rebutted. Accordingly, any person who acquires 10% or more of a voting interest in a direct or
indirect parent of any of our US insurance subsidiaries (or Apollo or AHL) without the prior approval of the Commissioner of the applicable
Athene Domiciliary State will be in violation of the applicable Athene Domiciliary State’s law and may be subject to injunctive action requiring
the disposition or seizure of those securities by the Commissioner or prohibiting the voting of those securities and/or to other actions determined
by the Commissioner. Further, a willful violation of these laws is punishable in each Athene Domiciliary State as a criminal offense.
These laws may discourage potential acquisition proposals and may delay, deter or prevent an acquisition of control of a direct or indirect parent
of any of our US insurance subsidiaries (including Apollo or AHL) (in particular through an unsolicited transaction), even if the stockholders of
such parent consider such transaction to be desirable.
The NAIC has also published in its Financial Analysis Handbook specific narrative guidance for state insurance examiners to consider in
reviewing applications for an acquisition of insurers and reinsurers by a private equity firm. The NAIC also is undertaking a review of
regulatory considerations applicable to insurers and reinsurers owned by a private equity firm, has appointed the Macroprudential (E) Working
Group to coordinate this workstream and has adopted a list of “Regulatory Considerations Applicable (But Not Exclusive) to Private Equity
(PE) Owned Insurers.” The Macroprudential (E) Working Group has referred requests to various NAIC working groups for further assessments
of the considerations described in the list. Accordingly, we currently are unable to predict the impact of such NAIC activities on our business,
including our investment activities.
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In addition, many state insurance laws require prior notification to state insurance departments of a change in control of a non-domiciliary
insurer doing business in that state. While these pre-acquisition notification statutes do not authorize the state insurance departments to
disapprove the change in control, they authorize regulatory action in the affected state if particular conditions exist such as undue market
concentration. Any future transactions that would constitute a change in control of any of our US insurance subsidiaries may require prior
notification in those states that have adopted pre-acquisition notification laws.
Each of the Athene Domiciliary States has adopted a form of the Holding Company Model Law that requires each ultimate controlling party to
file an annual enterprise risk report identifying the material risks within the insurance holding company system, which could pose enterprise risk
to the licensed companies. An enterprise risk is generally defined as an activity or event involving affiliates of an insurer that could have a
material and adverse effect on the insurer or the insurer’s holding company system.
NAIC
The NAIC is an organization, the mandate of which is to benefit state insurance regulatory authorities and consumers by promulgating model
insurance laws and regulations for adoption by the states. The NAIC also provides standardized insurance industry accounting and reporting
guidance through the NAIC Accounting Manual. However, model insurance laws and regulations are only effective when adopted by the states,
and statutory accounting and reporting principles continue to be established by individual state laws, regulations and permitted practices.
Changes to the NAIC Accounting Manual or modifications by the various state insurance departments may affect the statutory capital and
surplus of our US insurance subsidiaries.
Some of the NAIC pronouncements, particularly as they affect accounting issues, take effect automatically in the various states without
affirmative action by the states. Statutes, regulations and interpretations may be applied with retroactive impact, particularly in areas such as
accounting and reserve requirements. Also, regulatory actions with prospective impact can potentially have a significant impact on products that
we currently sell. The NAIC continues to work to reform state regulation in various areas, including reporting requirements for investment
transactions with related parties that may not be considered “affiliates” under the Holding Company Model Law.
Classification of Insurers
The Bermuda Insurance Act distinguishes between insurers carrying on long-term business, insurers carrying on special purpose business and
insurers carrying on general business. Long-term business is generally defined as life, annuity and accident and health insurance, while general
business broadly includes all types of insurance that are not long-term business or special purpose business (property and casualty business).
Special purpose business is fully funded insurance business approved by the BMA to be written by a company registered either as a Special
Purpose Insurer (SPI) or as a Collateralized Insurer. There are five classifications of insurers carrying on long-term business, ranging from
Class A insurers (pure captives) to Class E insurers (larger commercial carriers). Class A insurers are subject to the lightest regulation and Class
E insurers are subject to the strictest regulation.
Our Bermuda reinsurance subsidiaries, which are incorporated to carry on long-term business, are each registered as a Class C insurer, Class E
insurer or SPI. Class C is the license class for long-term insurers and reinsurers with total assets of less than $250 million that are not registrable
as a single parent or multi-owner long-term captive insurer or reinsurer. Class E is the license class for long-term insurers and reinsurers with
total assets of more than $500 million that are not registrable as a single-parent or multi-owner long-term captive insurer or reinsurer. SPI is the
license class for insurers that carry on either restricted special purpose business or unrestricted special purpose business. Restricted special
purpose business means special purpose business conducted between an SPI and specific insureds approved by the BMA. Our Bermuda
reinsurance subsidiaries are not licensed, accredited or approved in any US state or jurisdiction to conduct general business and have not sought
authorization as reinsurers in any US state or jurisdiction.
In order for US ceding companies to receive statutory reserve or RBC credit for the reinsurance provided, reinsurance transactions are typically
structured in primarily one of three ways: (1) modco, where both the insurance reserves and assets supporting the reserves are retained by the
applicable US ceding company; or (2) funds withheld, where, although the applicable Bermuda reinsurance subsidiary recognizes the insurance
reserve liabilities, the assets to secure such liabilities are held and maintained by the applicable ceding company, or (3) coinsurance where the
respective Bermuda reinsurance subsidiary’s obligation to the applicable US ceding company in connection with reinsurance transactions is
secured by assets held in trust for the benefit of the applicable US ceding company, which may be reduced or eliminated to the extent that the
applicable Bermuda reinsurance subsidiary is approved as a certified reinsurer or reciprocal jurisdiction reinsurer in the cedant’s domiciliary
state as discussed in more detail in the following section. Structures (1) and (2) are commonly used for our internal reinsurance arrangements,
while all three structures are typical for transactions with third-party cedants.
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Credit for Coinsurance Ceded by a US Cedant
The ability of a ceding insurer to take reserve credit for the business ceded to reinsurers through coinsurance is a significant component of
reinsurance regulation and is often a determining factor in establishing a reinsurance relationship. Under the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 (Dodd-Frank Act), only the state in which a ceding insurer is domiciled may regulate the financial
statement credit for reinsurance taken by that ceding insurer. With respect to US-domiciled ceding companies, credit is typically granted when:
(1) the reinsurer is licensed or accredited in the state where the ceding company is domiciled; (2) the reinsurer is domiciled in a state with credit
for reinsurance laws and regulations that are substantively similar to the credit for reinsurance laws and regulations in the ceding insurer’s state
of domicile and the reinsurer meets certain financial requirements; or (3) other conditions are satisfied, such as the reinsurer securing its
obligations to the cedant with qualified collateral.
Our Bermuda reinsurance subsidiaries have provided, and may in the future provide, reinsurance to our US insurance subsidiaries in the normal
course of business. As none of our Bermuda reinsurance subsidiaries are licensed, accredited or approved in any US state or jurisdiction, unless
certain conditions are satisfied (see below), when engaging in coinsurance transactions, each of our Bermuda reinsurance subsidiaries must
collateralize its obligations to US-based cedants in order for such cedants to obtain credit against their reserves on their statutory basis financial
statements.
Credit for reinsurance laws and regulations adopted by the various states are based on the NAIC’s Credit for Reinsurance Model Law (#785)
and Regulation (Credit for Reinsurance Model Law) and provide that collateral requirements may be reduced for reinsurance ceded to certain
unauthorized or non-accredited non-US-based reinsurers that satisfy certain criteria to qualify as a certified reinsurer. ALRe has been approved
as a certified reinsurer in Iowa (its new lead state, previously Delaware), and for passport applications in Delaware, Maine, Massachusetts,
Michigan, Ohio, Tennessee, and Vermont and is therefore eligible, based on its current ratings, to post reduced collateral equal to 20% of the
statutory reserves ceded under new coinsurance agreements by insurers domiciled in those states.
All states, the District of Columbia and Puerto Rico have adopted the NAIC’s 2019 revisions to the Credit for Reinsurance Model Law (NAIC
2019) to allow a ceding insurer to take credit for reinsurance ceded to a qualifying unauthorized reinsurer without collateral if the reinsurer
satisfies certain conditions, including being domiciled in a reciprocal jurisdiction. The NAIC has approved Bermuda as a reciprocal jurisdiction.
Our Bermuda reinsurance subsidiaries are eligible to apply to any state for a determination that they have satisfied the conditions specified in
NAIC 2019 and, to the extent any such determinations are made, will not be required by law on a prospective basis to post collateral, as a
condition to the cedant receiving credit for reinsurance, with respect to reinsurance entered into amended or renewed after the effective date of
NAIC 2019 and ceded by insurers domiciled in such states. ALRe and AARe have received a determination that they satisfy the conditions to
forgo the collateral posting requirements in Iowa pursuant to any coinsurance agreement entered into, amended or renewed on or after the
effective date of NAIC 2019 as adopted by Iowa, and only with respect to losses incurred and reserves reported on or after the later of the (1)
date on which ALRe or AARe has met all eligibility requirements to be designated a Reciprocal Jurisdiction Reinsurer, and (2) effective date of
the new reinsurance agreement, amendment or renewal pursuant to the provisions of the Credit for Reinsurance Model Law as adopted by Iowa.
As of February 1, 2025, ALRe has received approval for passport applications for Alabama, Colorado, Connecticut, Delaware, Illinois, Indiana,
Kansas, Maine, Massachusetts, Minnesota, Michigan, North Carolina, Ohio, Pennsylvania, Tennessee, and Vermont. AARe has received
approval for passport applications for Alabama, Colorado, Connecticut, Delaware, Illinois, Indiana, Kansas, Maine, Massachusetts, Michigan,
Minnesota, New York, North Carolina, Ohio, Pennsylvania, Tennessee and Vermont.
Statutory Investment Valuation Reserves
Life insurers domiciled in the US are required to establish an asset valuation reserve (AVR) to stabilize statutory policyholder surplus from
fluctuations in the market value of investments. The AVR consists of two components: (1) a “default component” for possible credit-related
losses on fixed maturity investments; and (2) an “equity component” for possible market-value losses on all types of equity investments,
including real estate-related investments. Although future additions to the AVR will reduce the future statutory capital and surplus of our US
insurance subsidiaries, we do not believe that the impact under current regulations of such reserve requirements will materially affect our US
insurance subsidiaries. Insurers domiciled in the US also are required to establish an interest maintenance reserve (IMR) for net realized capital
gains and losses, net of tax, on fixed maturity investments where such gains and losses are attributable to changes in interest rates, as opposed to
credit-related causes. The IMR provides a buffer to our statutory capital and surplus in the event we have to sell securities in an unrealized loss
position. The IMR is required to be amortized into statutory earnings on a basis reflecting the remaining period to maturity of the fixed maturity
securities. These reserves are required by state insurance regulatory authorities to be established as liabilities on a life insurer’s statutory
financial statements and may also be included in the liabilities assumed by our US insurance subsidiaries pursuant to their reinsurance
agreements with US-based life insurer ceding companies.
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Policy and Contract Reserve Adequacy Analysis
The Athene Domiciliary States and other states have adopted laws with respect to policy and contract reserve sufficiency. Under applicable
insurance laws, our US insurance subsidiaries are each required to annually conduct an analysis of the adequacy of all life insurance and annuity
statutory reserves. A qualified actuary appointed by each such subsidiary’s board must submit an opinion annually for each such subsidiary
stating that the statutory reserves make adequate provision, according to accepted actuarial standards of practice, for the anticipated cash flows
resulting from the contractual obligations and related expenses of such subsidiary. The adequacy of the statutory reserves is considered in light
of the assets held by such US insurance subsidiary with respect to such reserves and related actuarial items, including, but not limited to, the
investment earnings on such assets and the consideration anticipated to be received and retained under the related policies and contracts. At a
minimum, such testing is done over a number of economic scenarios prescribed by the states, with the scenarios designed to stress anticipated
cash flows for higher and/or lower future levels of interest rates. Our US insurance subsidiaries may find it necessary to increase reserves, which
may decrease their statutory surplus, in order to pass additional cash flow testing requirements.
Statutory Reporting and Regulatory Examinations
Our US insurance subsidiaries are required to file with regulatory officials in the jurisdictions in which they conduct business detailed annual
reports, including financial statements, in accordance with prescribed statutory accounting rules. In addition, each US insurance subsidiary is
required to file quarterly reports prepared on the same basis, though with considerably less detail.
As part of their routine regulatory oversight process, state insurance departments conduct periodic detailed examinations, generally once every
three to five years, of the books, records, accounts and operations of insurers that are domiciled in their states. Examinations are generally
carried out in cooperation with the insurance departments of other states under guidelines promulgated by the NAIC. We are currently not under
any examination by any of our domiciliary states. The previous exam cycle with the IID, NYSDFS, Delaware Department of Insurance and the
State of Vermont Department of Financial Regulation was completed with no material findings.
Bermuda Class C insurers, Class E insurers and SPIs must file annual statutory financial statements and annual audited financial statements
generally prepared in accordance with US GAAP, International Financial Reporting Standards, accounting principles generally accepted in the
UK or accounting principles generally accepted in Canada within four months of the end of each fiscal year, unless such deadline is specifically
extended. Where an SPI writes restricted special purpose business, the US GAAP financial statements shall be unaudited. The Bermuda
Insurance Act also prescribes rules for the preparation and substance of statutory financial statements, which include, in statutory form, an
insurer information sheet, an auditor’s report, (if applicable), a balance sheet, income statement, a statement of capital and surplus and notes
thereto. The statutory financial statements include detailed information and analysis regarding premiums, claims, reinsurance and investments of
the insurer. Further, each Class E insurer is required to file a quarterly financial return with the BMA, which includes quarterly unaudited
financial statements, a schedule of intra-group transactions, the ECR ratio and a schedule of fixed income and equity investments by BSCR
rating.
In addition, each year Class C and Class E insurers are required to file with the BMA a capital and solvency return along with its annual
statutory financial return. The prescribed form of capital and solvency return is comprised of: the BMA’s BSCR model or an approved internal
capital model in lieu thereof; a statutory economic balance sheet (EBS); the approved actuary’s opinion; and several prescribed schedules,
including a schedule of fixed income and equity investments by BSCR rating, a schedule of funds held by ceding reinsurers in segregated
accounts/trusts by BSCR rating, a schedule of risk management and a schedule of eligible capital, among others. The capital and solvency return
is not available for public inspection.
SPIs are also required to file with the BMA a statutory financial return which includes, among other matters, the US GAAP financial statements,
a cover sheet, a statement of control and changes of control, a solvency certificate, an annual statutory declaration, an own-risk assessment,
alternative capital arrangements report, cyber risk management report and compliance with sanctions report.
The Bermuda Insurance Act provides the BMA with powers to set standards on public disclosure. Using this power, the BMA requires all
commercial insurers and insurance groups, subject to certain exceptions, to prepare and publish a Financial Condition Report on their website.
Market Conduct Regulation
State insurance laws and regulations include numerous provisions governing the marketplace activities of insurers, including provisions
governing claims settlement practices, the form and content of disclosure to consumers, illustrations, advertising, sales and complaint process
practices. State regulatory authorities generally enforce these provisions through periodic market conduct examinations. In addition, our US
insurance subsidiaries must file, and in many jurisdictions and for some lines of business, obtain regulatory approval for, rates and forms
relating to the insurance written in the jurisdictions in which they operate. Our US insurance subsidiaries are currently undergoing the following
market conduct exams: (1) the California Department of Insurance is conducting an exam of AAIA as a part of a 2020 settlement agreement
regarding the company’s legacy life insurance business; (2) the IID is conducting a routine examination of AAIA’s policies and procedures to
revisions to the NAIC Model Regulation #275 – Suitability in Annuity Transactions; and (3) the NYSDFS has recently notified us of their plans
to conduct routine examinations of AANY and ALICNY for the period of January 1, 2020 to December 31, 2024. In 2024, the California
Department of Insurance concluded a routine claim exam of AANY and AADE, which resulted in no significant findings.
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Capital Requirements
Each of our insurance and reinsurance subsidiaries is subject to regulatory capital requirements based upon the laws and regulations of its
jurisdiction of incorporation. Regulators of each jurisdiction in which we operate have discretionary authority in connection with our insurance
and reinsurance subsidiaries’ continued licensing to limit or prohibit sales to policyholders within their respective jurisdiction or to restrict
continued operation of insurers or reinsurers domiciled in their respective jurisdiction if, in their judgment, such entities have not maintained the
required level of minimum surplus or capital or that the further transaction of business would be hazardous to policyholders or reinsurance
counterparties.
In order to enhance the regulation of insurers’ solvency, all states have adopted the NAIC’s RBC requirements for insurers and reinsurers or a
substantively similar law. The NAIC Risk-Based Capital for Insurers Model Act requires life insurers to submit an annual report (the Risk-
Based Capital Report), which compares an insurer’s total adjusted capital (TAC) to its authorized control level RBC (ACL), each such term as
defined pursuant to applicable state law. A company’s RBC is calculated by using a specified formula that applies factors to various risks
inherent in the insurer’s operations, including risks attributable to its assets, underwriting experience, interest rates and other business expenses.
The calculation of RBC requires certain judgments to be made, and, accordingly, our US insurance subsidiaries’ current RBC may be greater or
less than the RBC calculated as of any date of determination. The factors are higher for those items deemed to have greater underlying risk and
lower for items deemed to have less underlying risk. Statutory RBC is measured on two bases, ACL and company action level RBC (CAL), with
ACL calculated as one-half of CAL.
The Risk-Based Capital Report is used by regulators to set in motion appropriate regulatory actions relating to insurers that show indications of
weak or deteriorating status.
As of December 31, 2024, each of our US insurance subsidiaries’ TAC was significantly in excess of the levels that would prompt regulatory
action under the laws of the Athene Domiciliary States. As of December 31, 2024, the CAL RBC ratio of AAIA (US RBC ratio) was 419%. The
calculation of RBC requires certain judgments to be made, and, accordingly, our US insurance subsidiaries’ current RBC may be greater or less
than the RBC calculated as of any date of determination.
Bermuda Class C insurers, Class E insurers and SPIs must at all times maintain a minimum margin of solvency (MMS) in accordance with the
provisions of the Bermuda Insurance Act. Class C and Class E insurers must also maintain an ECR in accordance with the provisions of the
Bermuda Insurance Act. The Bermuda Insurance Act mandates certain actions and filings with the BMA if an insurer fails to meet and/or
maintain its ECR or MMS including the filing of a written report detailing the circumstances giving rise to the failure and the manner and time
within which the insurer intends to rectify the failure.
The MMS that a Class C insurer is required to maintain with respect to its long-term business is the greater of (1) $500,000, (2) 1.5% of assets
or (3) 25% of the ECR as reported at the end of the relevant year. The MMS that a Class E insurer is required to maintain with respect to its
long-term business is the greater of (1) $8 million, (2) 2% of the first $500 million of assets plus 1.5% of applicable assets above $500 million or
(3) 25% of the ECR as reported at the end of the relevant year. For an SPI to satisfy its MMS requirements, the value of the SPI’s special
purpose business assets must exceed its special purpose business liabilities by at least $1.00.
The BMA has embedded an EBS framework as part of the BSCR that forms the basis for an insurer’s ECR. The premise underlying the EBS
framework is the idea that assets and liabilities should be valued on a consistent economic basis. Under the Bermuda Regulatory Framework
there are two solvency calculations: (1) Class C and Class E Insurers must have total statutory capital and surplus as reported on the insurer’s
statutory balance sheet greater than the applicable MMS calculated pursuant to the Insurance Account Rules 2016; and (2) under the Insurance
(Prudential Standards) (Class C, Class D and Class E Solvency Requirement) Rules 2011 an insurer is required to maintain available statutory
economic capital and surplus in an amount that is equal to or exceeds the value of its ECR.
A Class C insurer’s ECR is established by reference to the Class C BSCR model, while a Class E insurer’s ECR is established by reference to
the Class E BSCR model. Each BSCR model provides a method for determining an insurer’s capital requirements (statutory economic capital
and surplus) by taking into account the risk characteristics of different aspects of the insurer’s business. The BSCR formula establishes capital
requirements for 16 categories of risk: fixed income investment risk, equity investment risk, long-term interest rate/liquidity risk, currency risk,
concentration risk, credit risk, operational risk and nine categories of long-term insurance risk. For each category, the capital requirement is
determined by applying shocks to asset, premium, reserve, creditor, probable maximum loss and operation items, with higher shocks applied to
items with greater underlying risk and lower shocks for less risky items.
As of December 31, 2024 and 2023, AARe’s EBS capital and surplus resulted in BSCR ratios, computed as available statutory economic capital
and surplus divided by ECR, of 238% and 291%, respectively, which does not reflect the impact of any deferred taxes that may be recorded on
an EBS basis as a result of the enactment by the Government of Bermuda of the Corporate Income Tax Act 2023 (Bermuda CIT). While not
specifically referred to in the Bermuda Insurance Act, target capital level (TCL) is also an important threshold for statutory capital and surplus.
TCL is equal to 120% of ECR as calculated pursuant to the BSCR formula. TCL serves as an early warning tool for the BMA. If an insurer fails
to maintain statutory capital at least equal to its TCL, such failure will likely result in increased regulatory oversight by the BMA. A Class C or
Class E insurer which at any time fails to meet its applicable ECR shall, upon becoming aware of such failure or upon having reason to believe
that such a failure has occurred, immediately notify the BMA in writing. Within 14 days of such notification, such insurer shall file with the
BMA a written report containing details of the circumstances leading to the failure and a plan detailing the specific actions to be taken to rectify
the failure, and the time within which the insurer intends to rectify the failure. Within 45 days of becoming aware of such failure, or of having
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reason to believe that such a failure has occurred, such insurer shall furnish the BMA with (1) unaudited statutory economic balance sheets and
unaudited interim financial statements prepared in accordance with US GAAP covering such period as the BMA may require; (2) an opinion of
the approved actuary in relation to total long-term business insurance technical provisions as set out in the statutory economic balance sheet,
where applicable; (3) a long-term business solvency certificate in respect of the financial statements; and (4) a capital and solvency return
reflecting an ECR prepared using post-failure data where applicable.
To enable the BMA to better assess the quality of the insurer’s capital resources, both Class C and Class E insurers are required to disclose the
makeup of its capital in accordance with the ‘3-tiered capital system.’ Under this system, all of the insurer’s capital instruments must be
classified as either basic or ancillary capital. All capital instruments are further classified into one of three tiers based on their “loss absorbency”
characteristics. Highest quality capital will be classified as Tier 1 Capital, lesser quality capital will be classified as either Tier 2 Capital or
Tier 3 Capital. Under this regime, up to certain specified percentages of Tier 1, Tier 2 and Tier 3 Capital may be used to support the insurer’s
MMS, ECR and TCL.
Where the BMA has previously approved the use of certain instruments for capital purposes, the BMA’s consent will need to be obtained if such
instruments are to remain eligible for use in satisfying the MMS and the ECR. The BMA has approved the following capital instruments that
impact the tiering and calculation of ECR and MMS: (1) the use of surplus notes for ACRA 1B to be treated as Tier 1 Capital; (2) the use of a
subordinated loan for ACRA 1B to be treated as Tier 2 Capital; and (3) the use of surplus notes for ACRA 2B to be treated as Tier 1 Capital.
In March 2024, the BMA published revised rules and new guidance notes to enhance Bermuda’s regulatory regime for commercial insurers. The
material enhancement to the framework includes updates to the technical provisions, the computation of the BSCR, and the BSCR adjustment
framework.
Restrictions on Dividends and Other Distributions
Current law of the Athene Domiciliary State, Iowa, permits the payment of ordinary dividends or distributions that, together with dividends or
distributions paid during the preceding twelve months, do not exceed the greater of (a) 10% of the insurer’s surplus as regards policyholders as
of the immediately preceding year end or (b) the net gain from operations of the insurer for the preceding twelve-month period ending as of the
immediately preceding year end. Current law of New York permits the payment of dividends or distributions that, together with dividends or
distributions paid during any calendar year, (1) is out of earned surplus and does not exceed the greater of (a) 10% of the insurer’s surplus as
regards policyholders as of the end of the immediately preceding calendar year or (b) the net gain from operations of the insurer for the
immediately preceding calendar year, not including realized capital gains, not to exceed 30% of the insurer’s surplus as regards policyholders as
of the end of the immediately preceding calendar year or (2) do not exceed the lesser of (a) 10% of the insurer’s surplus as regards policyholders
as of the end of the immediately preceding calendar year or (b) the net gain from operations of the insurer for the immediately preceding
calendar year, not including realized capital gains. Any proposed dividend in excess of these amounts is considered an extraordinary dividend or
extraordinary distribution and may not be paid until it has been approved, or a 30-day waiting period has passed during which it has not been
disapproved, by the Commissioner. Additionally, under current law of the Athene Domiciliary States, AAIA may only pay ordinary dividends
from the insurer’s earned surplus on its business, which shall not include contributed capital or contributed surplus, and ALICNY may only pay
ordinary dividends pursuant to the “greater of” standard described above from that part of its positive unassigned funds, excluding 85% of the
change in net unrealized capital gains or losses less capital gains tax, for the immediately preceding calendar year. The Athene Domiciliary
States’ insurance laws and regulations also require that each of our US insurance subsidiaries’ surplus as regards policyholders following any
dividend or distribution be reasonable in relation to such US insurance subsidiary’s outstanding liabilities and adequate to meet its financial
needs.
Under the Bermuda Insurance Act, an insurer is prohibited from declaring or paying a dividend if in breach of its ECR or MMS or if the
declaration or payment of such dividend would cause such a breach. Where an insurer fails to meet its MMS on the last day of any financial
year, it is prohibited from declaring or paying any dividends during the next financial year without the approval of the BMA. The Bermuda
Insurance Act also prohibits our Bermuda reinsurance subsidiaries from paying a dividend in an amount exceeding 25% of the prior year’s total
statutory capital and surplus, unless at least two members of the respective Bermuda reinsurance subsidiary’s board of directors and its principal
representative sign and submit to the BMA an affidavit attesting that a dividend in excess of this amount would not cause such Bermuda
reinsurance subsidiary to fail to meet its relevant margins. In certain instances, our Bermuda reinsurance subsidiaries would also be required to
provide prior notice to the BMA in advance of the payment of dividends. In the event that such an affidavit is submitted to the BMA in
accordance with the Bermuda Insurance Act, and further subject to the applicable Bermuda reinsurance subsidiary meeting its MMS and ECR,
such Bermuda reinsurance subsidiary is permitted to distribute up to the sum of 100% of statutory surplus and an amount less than 15% of its
total statutory capital. Distributions in excess of this amount require the approval of the BMA. Further, each of our Bermuda reinsurance
subsidiaries must obtain the BMA’s prior approval before reducing its total statutory capital as shown in its previous financial year statutory
balance sheet by 15% or more. Each of our Bermuda reinsurance subsidiaries is also prohibited from declaring or paying any dividends unless
the value of its long-term business assets exceeds its long-term business liabilities, as certified by its approved actuary, by the amount of the
dividend and at least the MMS. These restrictions on declaring or paying dividends and distributions under the Bermuda Insurance Act are in
addition to those under Bermuda’s Companies Act 1981 (the Companies Act) which apply to all Bermuda companies. Under the Companies
Act, a company may not declare or pay a dividend, or make a distribution out of contributed surplus, if there are reasonable grounds for
believing that: (1) the company is, or would after the payment be, unable to pay its liabilities as they become due, or (2) the realizable value of
the company’s assets would thereby be less than its liabilities.
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Regulation of Investments
Each of our US insurance subsidiaries is subject to laws and regulations in each Athene Domiciliary State that require diversification of its
investment portfolio and limit the amounts of investments in certain asset categories, such as below-investment grade fixed income securities,
real estate-related equity, partnerships, other equity investments, derivatives and alternative investments. Failure to comply with these laws and
regulations would cause investments exceeding regulatory limitations to be treated as non-admitted assets for purposes of measuring statutory
surplus and, in some instances, could require the divestiture of such non-qualifying investments.
The NAIC is considering actions that may be required to actively manage and oversee the use of private credit rating provider (CRP) ratings in
light of the extensive reliance on CRP ratings to assess investment risk for regulatory purposes. In August 2024, the NAIC’s Financial Condition
(E) Committee adopted changes to the NAIC Securities Valuation Office’s (SVO) “filing exempt” process, which grants an exemption from
filing with the SVO for bonds and preferred stock that have been assigned a current, monitored rating by a nationally recognized statistical
rating organization. The changes, which are set forth in an amendment to the NAIC’s Purposes and Procedures Manual, include procedures for
SVO staff to identify and evaluate a filing exempt security with an NAIC designation determined by a rating that appears to be an unreasonable
assessment of investment risk and therefore should be removed from the filing exempt process. The proposed amendment has a materiality
threshold to prevent revocation on the SVO’s initiative unless the SVO determines that the rating is three or more notches different from the
SVO’s assessment. The Purposes and Procedures Manual amendment is scheduled to become effective on January 1, 2026, although the
amendment still has to be adopted by the NAIC.
Additionally, the NAIC is in the process of reviewing the definition, scope and capital charges related to residual tranches of asset backed
securities held by life insurance companies. As part of that review, in August 2023, the NAIC adopted an “Interim” Factor for determining
capital charges for residual tranches. The RBC base factor for residual tranches of 30% (with the addition of a sensitivity test) was raised to 45%
for year-end 2024 reporting. The NAIC also has expressed possible RBC arbitrage concerns regarding certain structured securities, including
CLOs. In March 2023, the NAIC adopted an amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office to
assign risk weights to CLOs based on its own modeling as opposed to credit ratings. Under the amendment, the NAIC’s Structured Securities
Group will model CLO investments and evaluate tranche level losses across all debt and equity tranches under a series of calibrated and
weighted collateral stress scenarios to assign NAIC designations that eliminate RBC arbitrage. The NAIC’s goal is to ensure that the aggregate
RBC factor for owning all tranches of a CLO is the same as that required for owning all of the underlying loan collateral, in order to avoid RBC
arbitrage with insurers first reporting the financial modeling NAIC designations for CLOs with their year-end 2025 financial statement filings. It
is possible that the NAIC or the Athene Domiciliary States may propose new regulations or changes to statutory accounting principles regarding
CLOs. Accordingly, the investment laws in the Athene Domiciliary States and the NAIC’s investment-related activities could prevent our US
insurance subsidiaries from pursuing investment opportunities that they believe are beneficial to their policyholders and stockholders, which
could in turn preclude us from realizing our investment objectives.
Restrictions on Business Operations
Pursuant to the Bermuda Insurance Act, our Bermuda reinsurance subsidiaries are not permitted to engage in non-insurance business unless such
non-insurance business is ancillary to its core business. Non-insurance business means any business other than insurance business and includes
carrying on investment business, managing an investment fund as operator, carrying on business as a fund administrator, carrying on banking
business, underwriting debt or securities or otherwise engaging in investment banking, engaging in commercial or industrial activities and
carrying on the business of management, sales or leasing of real property.
Guaranty Associations
All 50 states, Puerto Rico and the District of Columbia have insurance guaranty fund laws requiring insurance companies doing business within
those jurisdictions to participate in guaranty associations. Guaranty associations are organized to cover, subject to limits, contractual obligations
under insurance policies issued by insurance companies which later become impaired or insolvent. These associations levy assessments, up to
prescribed limits, on each member insurer doing business in a particular state on the basis of their proportionate share of the premiums written
by all member insurers in the lines of business in which the impaired or insolvent insurer previously engaged. Most states limit assessments in
any year to 2% of the insurer’s average annual premium for the three years preceding the calendar year in which the impaired insurer became
impaired or insolvent. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets, usually over
a period of years.
The guaranty fund laws in most states also apply a fifty-fifty split between life insurers (including our US insurance subsidiaries) and health
insurers (including health maintenance organizations) for long-term care insolvencies.
Assessments levied against our US insurance subsidiaries by guaranty associations during the year ended December 31, 2024 are disclosed in
Note 16 – Commitments and Contingencies to the consolidated financial statements. While we cannot accurately predict the amount of any such
future assessments, or past or future insolvencies of competitors which would lead to such assessments, it is possible that any such assessments
with respect to pending insurers’ impairments and insolvencies may have a material adverse effect on our financial condition, results of
operations, liquidity or cash flows, and any reserves we have previously established for these potential assessments may not be adequate.
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US Federal Oversight
Although the insurance business in the US is primarily regulated by the states, federal initiatives can affect the businesses of our US insurance
subsidiaries in a variety of ways. From time to time, federal measures are proposed which may significantly affect the insurance business. These
areas include financial services regulation, securities regulation, derivatives regulation, pension regulation, money laundering, privacy
regulation, taxation and the economic and trade sanctions implemented by the Office of Foreign Assets Control (OFAC). OFAC maintains and
enforces economic sanctions against certain foreign countries and groups and prohibits US persons from engaging in certain transactions with
certain persons or entities. OFAC has imposed civil penalties on persons, including insurers and reinsurers, arising from violations of its
economic sanctions program. In addition, various forms of direct and indirect federal regulation of insurance have been proposed from time to
time, including proposals for the establishment of an optional federal charter for insurance companies.
Title I of the Dodd-Frank Act established the Financial Stability Oversight Council (FSOC) and authorized the FSOC to designate non-bank
financial companies as systemically important financial institutions (SIFIs), thereby subjecting them to enhanced prudential standards and
supervision by the Board of Governors of the Federal Reserve System (Federal Reserve). The prudential standards for non-bank SIFIs include
enhanced RBC requirements, leverage limits, liquidity requirements, single counterparty exposure limits, governance requirements for risk
management, stress test requirements, special debt-to-equity limits for certain companies, early remediation procedures, and recovery and
resolution planning. There are currently no such non-bank financial companies designated by FSOC as “systemically significant.” In November
2023, the FSOC voted to adopt new guidance regarding the designation of non-bank SIFIs, which became effective January 16, 2024. The
changes from the FSOC’s prior guidance include a revised approach to SIFI designation based on risk factors contained in a proposed analytic
framework, including leverage, liquidity risk and maturity mismatch, interconnections, operational risks, complexity, or opacity, inadequate risk
management, concentration, and destabilizing activities, regardless of whether those risks arise from activities, firms, or otherwise. The FSOC’s
changes could have the effect of simplifying and shortening its procedures for designating non-bank financial companies as SIFIs compared to
the prior guidance, which would subject them to additional supervision, examination, and regulation. There is considerable uncertainty as to the
FSOC’s future determination of non-bank SIFIs and/or systemically important activities.
The Dodd-Frank Act, which effected the most far-reaching overhaul of financial regulation in the US in decades, established the Federal
Insurance Office (FIO) within the Treasury Department. While the Director of the FIO does not currently have general supervisory or regulatory
authority over the business of insurance, he or she performs various functions with respect to insurance, including serving as a non-voting
member of the FSOC and making recommendations to the FSOC regarding non-bank financial companies to be designated as SIFIs. The
Director of the FIO has also submitted reports to Congress that could ultimately lead to changes in the regulation of insurers and reinsurers in
the US.
The Dodd-Frank Act also authorizes the FIO to assist the Secretary of the Treasury Department in negotiating covered agreements. A covered
agreement is an agreement between the US and one or more foreign governments, authorities or regulatory entities, regarding prudential
measures with respect to insurance or reinsurance. The US has entered into covered agreements with the EU (EU Covered Agreement) and the
UK (UK Covered Agreement) that address, among other things, reinsurance collateral requirements. In 2019, the NAIC adopted amendments to
the Credit for Reinsurance Model Law and Regulation that are intended to implement the reinsurance reforms removing reinsurance collateral
requirements for EU and UK reinsurers that meet the prescribed minimum conditions set forth in the applicable EU Covered Agreement or UK
Covered Agreement. All states, the District of Columbia and Puerto Rico have adopted the NAIC’s amendments to the Credit for Reinsurance
Model Law. See –Credit for Coinsurance Ceded by a US Cedant. The reinsurance collateral provisions of the EU Covered Agreement and the
UK Covered Agreement may increase competition, in particular with respect to pricing for reinsurance transactions, by lowering the cost at
which competitors of ALRe are able to provide reinsurance to US insurers.
Regulation of FIAs, RILAs, and other Annuity Products
In the past, the SEC and state securities regulators have questioned whether FIAs, such as those sold by our US insurance subsidiaries, should be
treated as securities under the federal and state securities laws rather than as insurance products exempted from such laws. Under the Dodd-
Frank Act, annuities that meet specific requirements are specifically exempted from being treated as securities by the SEC. Our RILA product is
not exempted from being treated as a security by the SEC and state securities regulators, but we expect that the types of FIAs that our US
insurance subsidiaries currently sell will meet applicable requirements for exemption from treatment as securities and therefore will remain
exempt from being treated as securities by the SEC and state securities regulators. However, there can be no assurance that federal or state
securities laws or state insurance laws and regulations will not be amended or interpreted to impose further requirements on FIAs. Treatment of
these products as securities would require additional registration and licensing of these products and the agents selling them, as well as cause our
US insurance subsidiaries to seek new or additional marketing relationships for these products, any of which may impose significant restrictions
on their ability to conduct business as currently operated.
NYSDFS Insurance Regulation 210: Life Insurance and Annuity Non-Guaranteed Elements establishes standards for the determination and
readjustment of non-guaranteed elements (NGEs) that may vary at the insurer’s discretion for life insurance policies and annuity contracts
delivered or issued in New York. In addition, the regulation establishes guidelines for related disclosure to NYSDFS and policy owners prior to
any adverse change in NGEs. The regulation applies to all individual life insurance policies, individual annuity contracts and certain group life
insurance and group annuity certificates that contain NGEs. NGEs include premiums, expense charges, cost of insurance rates and interest
credits.
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Unclaimed Property Laws
Each of our US insurance subsidiaries is subject to the laws and regulations of states and other jurisdictions concerning the identification,
reporting and escheatment of abandoned or unclaimed money or property. State treasurers, controllers and revenue departments have audited life
insurers, required escheatment and imposed interest penalties on amounts escheated for failure to escheat death benefits or other contract
benefits when beneficiaries could not be found at the expiration of statutory dormancy periods. Several states have enacted new laws or adopted
new regulations mandating the use by insurance companies of the US Social Security Administration’s Social Security Death Index (Death
Master File) or other similar databases to identify deceased persons and to implement more rigorous processes to find beneficiaries. Our US
insurance subsidiaries could be subject to risks related to unpaid benefits and the Death Master File.
Regulation of OTC Derivatives
We use derivatives to mitigate a wide range of risks in connection with our businesses, including options purchased to hedge the derivatives
embedded in the FIAs that we have issued, and swaps, futures and/or options may be used to manage the impact of increased benefit exposures
from our annuity products that offer guaranteed benefits, as well as market exposures. Title VII of the Dodd-Frank Act creates a comprehensive
framework for the federal oversight and regulation of the OTC derivatives market and entities, such as us, that participate in the derivatives
market and required US regulators to promulgate rules and regulations implementing its provisions.
Title VII of the Dodd-Frank Act divides regulatory responsibility for swaps in the US between the SEC and the Commodity Futures Trading
Commission (CFTC) with the CFTC regulating swaps and the SEC regulating security-based swaps. Rules adopted by the CFTC and SEC under
Title VII of the Dodd-Frank Act impose a number of requirements related to trading swaps and security-based swaps, including
mandatory clearing, on-facility trade execution requirements, mandatory minimum margin requirements for uncleared swaps and security-based
swaps, as well as reporting and recordkeeping requirements. The mandatory clearing requirements and mandatory margin requirements have
increased the cost of our risk mitigation and have had other implications as well. For example, increased margin requirements, combined with
netting restrictions and limitations on eligible collateral have reduced our liquidity and required increased holdings of cash and highly liquid
securities with lower yields, which could have an adverse impact on income. In addition, the mandatory clearing requirement subjects us to
documentation that is significantly more favorable to the clearing members that are used to access the clearinghouses and entitles such clearing
members to unilaterally change terms such as trading limits and the amount of margin required for such cleared transactions. The ability of such
clearing members to take such actions could create trading disruptions and liquidity concerns. Additionally, the clearing requirements
concentrate counterparty risk in both clearinghouses and clearing members. The failure of a clearinghouse could have a significant impact on the
financial system. Even if a clearinghouse does not fail, large losses could force significant capital calls on clearing members during a financial
crisis, which could lead clearing members to default. Because the role of clearinghouses is still developing, the related regulations are evolving
and the related bankruptcy process is untested, it is difficult to anticipate or identify all risks related to the concentration of counterparty risk in
clearinghouses and clearing members and the risk of a clearinghouse default.
Title VII of the Dodd-Frank Act and regulations thereunder and similar regulations adopted by non-US jurisdictions that may indirectly apply to
us could significantly increase the cost of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce
our ability to monetize or restructure our existing derivative contracts, and increase our credit risk exposure. If we reduce our use of derivatives
as a result of such regulations, our results of operations may become more volatile and our cash flows may be less predictable which could
adversely affect our financial performance.
Consumer Protection Laws and Privacy and Data Security Regulation
Federal and state consumer protection laws affect our operations. Although certain federal laws exclude the regulation of insurance business of
the kind in which our US insurance subsidiaries engage, various federal regulators and state regulators do have authority to regulate non-
insurance consumer products and services which are offered by issuers of securities in our US insurance subsidiaries’ investment portfolio. Non-
insurance consumer products and services are highly regulated. Moreover, such regulators may seek to assert jurisdiction over predominantly
insurance-related products or services in instances where such products or services are related to or intertwined with the offering of consumer
financial products or services more clearly within such regulator’s remit.
The Gramm-Leach-Bliley Act of 1999 (GLBA), which implemented fundamental changes in the regulation of the financial services industry in
the US, includes privacy and security requirements for financial institutions, including obligations to protect and safeguard consumers’
nonpublic personal information and records, and limitations on the re-disclosure and re-use of such information. The GLBA and other federal
and state laws and regulations require financial institutions, including insurers, to protect the security and confidentiality of nonpublic personal
information, including certain financial-related, health-related and customer information, regulate the use and disclosure of certain personal
information, and require financial institutions to notify customers and other individuals about their policies and practices relating to their
collection and disclosure of such information and their practices relating to protecting the security and confidentiality of that information.
Federal and state laws require notice to affected individuals, regulators and others if there is a breach of the security of certain personal
information, including Social Security numbers. In addition, privacy laws also regulate the use and disclosure of personal information, including
rules on the disclosure of the medical record and health status information obtained by insurers.
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The issues surrounding data security and the safeguarding of consumers’ protected information are under increasing regulatory scrutiny by state
and federal regulators. The Federal Trade Commission, the Federal Bureau of Investigation, the Federal Communications Commission, the
NYSDFS and the NAIC have undertaken various studies, reports and actions regarding data security and privacy for entities under their
respective supervision.
The NAIC’s Insurance Data Security Model Law is intended to establish the standards for data security and standards for the investigation and
notification of data breaches applicable to insurance licensees in states adopting such law, with provisions that are generally consistent with the
NYSDFS cybersecurity regulation discussed below. Under the model law, it is intended that companies that are compliant with the NYSDFS
cybersecurity regulation are, in general, in compliance with the model law. As of February 1, 2025, a version of the model law has been adopted
in more than 25 jurisdictions, including Iowa. We anticipate that more states will begin adopting the model law in the future. The NAIC has also
adopted a guidance document that sets forth twelve principles for effective insurance regulation of cybersecurity risks based on similar
regulatory guidance adopted by the Securities Industry and Financial Markets Association and the “Roadmap for Cybersecurity Consumer
Protections,” which describes the protections to which the NAIC believes consumers should be entitled from their insurers, agents and other
businesses concerning the collection and maintenance of consumers’ personal information, as well as what consumers should expect when such
information has been involved in a data breach. We expect cybersecurity risk management, prioritization and reporting to continue to be an area
of significant regulatory focus by such regulatory bodies and self-regulatory organizations.
For example, on March 1, 2017, the NYSDFS enacted 23 NYCRR 500, a cybersecurity regulation governing financial companies
(Cybersecurity Regulation). The Cybersecurity Regulation requires banks, insurers, and other financial services institutions regulated by the
NYSDFS, including us, to establish and maintain a cybersecurity program “designed to protect consumers and ensure the safety and soundness
of New York State’s financial services industry.” Specifically, the Cybersecurity Regulation imposes a number of obligations, including to take
measures to protect data accessible to third party service providers, adopt multi-factor authentication procedures, designate a chief information
security officer who annually reports to the NYSDFS, conduct annual audits, and notify the regulator of any material cybersecurity incident
during a specified time period. Since the Cybersecurity Regulation’s effective date, we have committed significant time and resources to comply
with its requirements. Moreover, the NYSDFS has increased enforcement of the Cybersecurity Regulation in recent years, and, in November
2023, NYSDFS adopted amendments to the regulation. The amended Cybersecurity Regulation imposes heightened governance and
cybersecurity requirements, such as annual audits, vulnerability assessments, and password controls and monitoring. We anticipate that the
NYSDFS will continue to examine the cybersecurity programs of financial institutions in the future and such examinations may result in
additional regulatory scrutiny, expenditure of resources and possible regulatory actions and reputational harm.
In addition to insurance and other financial institution-specific privacy laws and regulations, an increasing number of states are considering and
passing comprehensive privacy legislation. Most of these laws broadly exempt entities covered by the GLBA or insurers more generally, and
other laws such as the California Consumer Privacy Act of 2018 (CCPA), which became effective on January 1, 2020 and was amended by the
California Privacy Rights Act (CPRA), which went into effect on January 1, 2023, exempts only personal information that is subject to the
GLBA. Such exemptions under the CCPA do not apply to the statute’s private right of action, which provides for statutory damages, in the event
of unauthorized access and exfiltration, theft, or disclosure of California consumers’ personal information as a result of the company’s failure to
maintain reasonable security procedures and practices. Additionally, the CCPA applies to the personal information of California residents
collected in the employment, job applicant, and business-to-business settings. The CPRA also established the California Privacy Protection
Agency (CPPA) to implement and enforce the law, which may result in additional regulatory scrutiny and risk. To date, the CPPA has issued
updated CCPA regulations, which took effect on March 29, 2023; the CPPA has initiated, but not yet completed, further rulemaking activities.
The CCPA and accompanying regulations (as amended) impose stringent data privacy and data protection requirements for the data of
California residents, including providing the right to request that a business provide access to or delete any personal information about the
consumer under certain circumstances, and the right to opt out of the sale of personal information. We have committed significant time and
resources to comply with the CCPA’s requirements. The amendments to the CCPA under the CPRA also expanded consumer rights and
disclosure obligations. For example, the CPRA gives California residents the ability to opt out of sharing any personal information and limits the
use of their sensitive information. Several other states have enacted comprehensive privacy legislation, and while these new laws generally
include exemptions from GLBA-covered date, they add layers of complexity to compliance in the US market, and could increase our
compliance costs and adversely affect our business. We anticipate that additional expenditure of resources will be necessary to respond to the
evolving regulatory regimes, and possibly respond to regulatory actions and mitigate reputational harm.
The Bermuda Personal Information Protection Act 2016 (PIPA) regulates how any individual, entity or public authority may use personal
information (meaning any information about an identified or identifiable natural person) in Bermuda where that personal information is used by
automated or other means which form, or are intended to form, part of a structured filing system. PIPA reflects a set of internationally accepted
privacy principles and good business practices for the use of personal information. Although PIPA was passed on July 27, 2016, the sections that
were in effect during the year ended December 31, 2024 were limited to those that related to the establishment and appointment of the Privacy
Commissioner, the hiring of the Privacy Commissioner’s staff, and the general powers of the Privacy Commissioner to monitor and administer
PIPA. The remaining principal sections of PIPA, including conditions for use of personal information, requirements to provide a privacy notice
and appoint a privacy officer, and access, rectification and erasure rights for individuals, were fully implemented on January 1, 2025.
The EU General Data Protection Regulation (EU GDPR) came into direct effect in all EU Member States on May 25, 2018 and governs the
collection, use, disclosure, transfer, and other processing of personal data. The UK has implemented the EU GDPR as the UK GDPR (which sits
alongside the UK Data Protection Act 2018, and the UK GDPR together with the EU GDPR shall be referred to as the GDPR). The GDPR has
direct effect where an entity is established in the European Economic Area (EEA) or the UK , and has extraterritorial effect where an
organization is established outside of the EEA or the UK and processes personal data of individuals in the EEA or the UK in relation to the
offering of goods or services to those individuals (the targeting test) or the monitoring of their behavior (the monitoring test). As such, the
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GDPR applies to us to the extent we are established in an EU Member State or the UK, we are processing personal data in the context of an
establishment in an EU Member State or the UK or we meet the requirements of either the targeting test or the monitoring test.
The GDPR imposes onerous and comprehensive privacy, data protection, and data security obligations on controllers and provides certain rights
for data subjects, including, among others: (i) accountability and transparency requirements, which require controllers to demonstrate and record
compliance with the GDPR and to provide more detailed information to data subjects regarding processing of their personal data; (ii) specific
requirements for obtaining valid consent; (iii) obligations to consider data protection when any new products or services are developed and
designed to limit the amount of personal data processed; (iv) obligations to comply with data protection rights of data subjects including a right
of access to and rectification of, personal data, a right of restriction of processing or to object to processing of personal data and a right to ask for
a copy of personal data to be provided to a third party in a useable format and a right of erasure of their personal data in certain circumstances;
and (v) an obligation to report personal data breaches to: (A) the data supervisory authority without undue delay (and no later than 72 hours after
discovering the personal data breach, where feasible); and (B) affected data subjects, where the personal data breach is likely to result in a high
risk to their rights and freedoms.
In addition, the EU GDPR prohibits the international transfer of personal data from the EEA to the US and other countries that the European
Commission does not recognize as having ‘adequate’ data protection laws unless the parties to the transfer have implemented specific
safeguards to protect the transferred personal data. In certain cases the parties may also be required to carry out a transfer impact assessment
which, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary
measures that provide privacy protections additional to those provided under the specific safeguard will need to be implemented to ensure an
‘essentially equivalent’ level of data protection to that afforded in the EEA.
The UK GDPR imposes similar restrictions on transfers of personal data from the UK to jurisdictions that the UK Government does not consider
adequate, including the US, in a similar manner to the EU GDPR.
Currently, the volume of personal data processed in connection with each entity’s UK activities is insignificant and limited to management and
governance matters. We regularly monitor our business activities to ensure we are prepared for compliance, should the UK GDPR ever apply to
our business more broadly.
The GDPR also imposes fines for serious breaches of up to the higher of 4% of the organization’s annual worldwide turnover or €20 million
(under the EU GDPR) or £17.5 million (under the UK GDPR). The GDPR identifies a list of points to consider when determining the level of
fines for data supervisory authorities to impose (including the nature, gravity and duration of the infringement). Data subjects also have a right
to compensation, as a result of an organization’s breach of the GDPR which has affected them, for financial or non-financial losses (e.g.,
distress). Privacy and data protection compliance has and may in the future require substantial amendments to our procedures and policies. The
changes could adversely impact our business by increasing operational and compliance costs or impact business practices. Further, there is a risk
that the amended policies and procedures will not be implemented correctly or that individuals within the business will not be fully compliant
with the new procedures. If there are breaches of these measures, we could face significant litigation, government investigations, administrative
and monetary sanctions as well as reputational damage which may have a material adverse effect on our operations, financial condition and
prospects. There is a risk that we could be impacted by a cybersecurity incident that results in loss or unauthorized disclosure of sensitive
information, potentially resulting in us facing harms similar to those described above.
The BMA has recognized that cyber incidents can cause significant financial losses and/or reputational impacts across the insurance industry
and has implemented the Insurance Sector Operation Cyber Risk Management Code of Conduct (the Cyber Risk Code) to ensure that those
operating in the Bermuda insurance sector can mitigate such risks. The Cyber Risk Code prescribes the duties, requirements, standards,
procedures and principles which all insurers, insurance managers and insurance intermediaries (agents, brokers and insurance marketplace
providers) registered under the Bermuda Insurance Act must comply. The Cyber Risk Code requires all registrants to develop a cyber risk policy
which is to be delivered pursuant to an operation cyber risk management program and appoint an appropriately qualified member of staff or
outsourced resource to the role of Chief Information Security Officer.
Our Bermuda reinsurance subsidiaries are each required to notify the BMA when the insurer has knowledge of or reason to believe, that a Cyber
Reporting Event (as defined in the Bermuda Insurance Act) has occurred. Within 14 days of such notification, the insurer must also furnish the
BMA with a written report providing details of the Cyber Reporting Event that are available.
Failure to comply with the requirements of the Cyber Risk Code will be taken into account by the BMA in determining whether a registrant is
conducting its business in a sound and prudent manner as prescribed by the Bermuda Insurance Act and may result in the BMA exercising its
powers of intervention and investigation (see below).
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Innovation and Technology
There has been increased scrutiny, including from state insurance regulators, regarding the use of “big data” techniques, including artificial
intelligence (AI), machine learning and automated decision-making. The NAIC established the Innovation, Cybersecurity and Technology (H)
Committee ((H) Committee) to address the insurance implications of cybersecurity and emerging technologies, including big data, artificial
intelligence and e-commerce. In December 2023, the (H) Committee adopted the Model Bulletin on the Use of Artificial Intelligence Systems by
Insurers (AI Bulletin), which outlines how insurance regulators should govern the development, acquisition and use of artificial intelligence
technologies, as well as the types of information that regulators may request during an investigation or examination of an insurer in relation to
artificial intelligence systems, which has already started to be adopted by the states.
As a result of increased innovation and technology in the insurance sector, the NAIC is monitoring technology developments that impact the
state insurance regulatory framework and has developed or is developing regulatory guidance, as appropriate. For example, the NAIC has
adopted amendments to the anti-rebating provisions of the NAIC’s Unfair Trade Practices Act to address new technologies that are being
deployed to add value to existing insurance products and services. The NAIC also adopted guiding principles related to artificial intelligence, its
use in the insurance sector, and its impact on consumer protection and privacy, marketplace dynamics and the state-based insurance regulatory
framework. Additional guidance or developments, including with respect to privacy, may also be forthcoming.
Additionally, the NAIC and state insurance regulators have been focused on addressing unfair discrimination in the use of consumer data and
technology, and some states have passed laws or introduced legislation targeting unfair discrimination practices. For example, in July 2021,
Colorado adopted legislation that restricts the use of consumer data sources, algorithms, and predictive models that unfairly discriminate against
an individual based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, or transgender status and would provide
the Colorado insurance commissioner with broad rule-making and enforcement authority. Pursuant to such legislation, in September 2023, the
Colorado insurance commissioner adopted rules, focused solely on the life insurance industry, establishing expansive requirements for insurers
using external consumer data and information sources to establish internal governance and risk management frameworks to ensure that such use
does not result in unfairly discriminatory insurance practices. Also in September 2023, Colorado released a draft artificial intelligence testing
regulation for life insurance underwriting to complement the rules that were recently adopted. Several states have also issued guidance regarding
the use of big data technology in compliance with anti-discrimination laws. Colorado also enacted a comprehensive AI law, Consumer
Protections for Interactions with Artificial Intelligence, which will go into effect on February 1, 2026 and will apply to “high-risk AI systems”
which include AI systems used in insurance and financial or lending services.
The UK has not adopted dedicated AI legislation and is instead relying on a principles-based, sector-specific approach to AI regulation;
however, in July 2024 it was announced that new AI regulation would be introduced.
We expect that innovation and technology, including “big data,” will remain an important issue for the NAIC and state insurance regulators. We
cannot predict what, if any, changes to laws or regulations may be enacted with regard to innovation and technology in the insurance sector.
Environmental Regulation
Our investment in mortgage loans and in a limited partnership that is in the business of originating residential mortgage loans (RML) may
expose us to various environmental and other regulations. For example, to the extent that we hold whole mortgage loans as part of our
investment portfolio, we may be responsible for certain tax payments or subject to liabilities under the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980. Additionally, we may be subject to regulation by the Consumer Financial Protection Bureau
as a mortgage holder or property owner. We are currently unable to predict the impact of such regulation on our business.
The NAIC continues to monitor and address how climate-related risks affect the insurance industry and consumers by, among other things,
collecting financial data from insurers, including information on insurer investments, which can be used to assess industry investment exposure
to various risks, and monitoring and analyzing developments and trends in the financial markets, including with respect to investment exposures.
We have already implemented consideration of financial risks from climate change into our governance frameworks and organizational structure
in response to 2021 guidance from the NYSDFS. Additionally, the NAIC is considering enhancements to financial solvency regulation manuals
to address climate-related risk and resiliency issues.
In addition, the FIO is assessing how the insurance sector may mitigate climate risks and help achieve national climate-related goals, pursuant to
its authority under the Dodd-Frank Act. On June 27, 2023, the FIO released a report titled Insurance Supervision and Regulation of Climate-
Related Risks, which evaluates climate-related issues and gaps in insurer regulation. The report urges insurance regulators to adopt climate-
related risk-monitoring guidance in order to enhance their regulation and supervision of insurers.
Broker-dealers
Our securities operations, principally conducted by our limited purpose SEC-registered broker-dealer, Athene Securities, LLC (Athene
Securities), are subject to federal and state securities and related laws, and are regulated principally by the SEC, the Financial Industry
Regulatory Authority (FINRA), and state securities authorities. Athene Securities does not hold customer funds or safekeep customer securities.
Athene Securities is the principal underwriter for the RILA and PPVA products that we offer, and has FINRA permissions to retail the PPVA
product. Athene Securities currently serves as the principal underwriter of a block of variable contracts that were closed to new investors in 2002
and issued by a predecessor of AAIA. Athene Securities continues to receive concessions on those variable annuity contracts. Athene Securities
also provides supervisory oversight to Athene employees who are registered representatives.
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Athene Securities and employees or personnel registered with Athene Securities are subject to the Exchange Act and to regulation and
examination by the SEC, FINRA and state securities commissioners. The SEC and other governmental agencies and self-regulatory
organizations, as well as state securities commissions in the US, have the power to conduct administrative proceedings that can result in censure;
penalties and fines; disgorgement of profits; restitution to customers; cease-and-desist orders; or suspension, termination or limitation of the
activities of the regulated entity or its employees.
As a registered broker-dealer and member of various self-regulatory organizations, Athene Securities is subject to the SEC’s net capital rule,
which specifies the minimum level of net capital a broker-dealer is required to maintain and requires a minimum part of its assets to be kept in
relatively liquid form. These net capital requirements are designed to measure the financial soundness and liquidity of broker-dealers. The net
capital rule imposes certain requirements that may have the effect of preventing a broker-dealer from distributing or withdrawing capital and
may require that prior notice to the regulators be provided prior to making capital withdrawals. Compliance with net capital requirements may
limit the ability of our broker-dealer subsidiary to pay dividends to us. The SEC and other governmental agencies and self-regulatory
organizations, as well as state securities commissions in the US, are currently considering a wide variety of regulatory proposals including issues
ranging from cybersecurity to marketing practices that, individually or collectively, could increase the costs of Athene Securities.
Employee Retirement Income Security Act of 1974, as amended (ERISA)
We also may be subject to regulation by the US Department of Labor (DOL) when providing a variety of products and services to employee
benefit plans governed by ERISA. ERISA is a comprehensive federal statute that applies to US employee benefit plans sponsored by private
employers and labor unions. Plans subject to ERISA include pension and profit-sharing plans and welfare plans, including health, life and
disability plans. Among other things, ERISA imposes reporting and disclosure obligations, prescribes standards of conduct that apply to plan
fiduciaries and prohibits transactions known as “prohibited transactions,” such as conflict-of-interest transactions, self-dealing and certain
transactions between a benefit plan and a “party in interest.” ERISA also provides for a scheme of civil and criminal penalties and enforcement.
We are also subject to ERISA’s prohibited transaction rules for transactions with ERISA plans, which may affect our ability to, or the terms
upon which we may, enter into transactions with those plans, even in businesses unrelated to those giving rise to “party in interest” status. The
applicable provisions of ERISA and the US Internal Revenue Code of 1986, as amended (Internal Revenue Code) are subject to enforcement by
the DOL, the Internal Revenue Service (IRS) and the US Pension Benefit Guaranty Corporation. Severe penalties are imposed for breach of duty
under ERISA.
In April 2016, the DOL issued regulations, which were later vacated effective June 2018, expanding the definition of “investment advice” and
broadening the circumstances under which distributors and manufacturers of insurance and annuity products could be considered “fiduciaries”
under ERISA. Thereafter, the DOL issued proposed regulatory action to address the vacated definition and issued final regulatory action on
December 15, 2020, which confirmed the reinstatement of the definition of “investment advice” that applied prior to 2016 but broadens the
circumstances under which financial institutions, including insurers, could be considered fiduciaries under ERISA in connection with
recommendations to “rollover” assets from a qualified retirement plan to an IRA. This guidance reverses an earlier DOL interpretation
suggesting that rollover advice did not constitute investment advice giving rise to a fiduciary relationship. In connection with the final regulatory
action, the DOL issued a prohibited transaction class exemption that allows fiduciaries to receive compensation in connection with providing
investment advice, including advice about rollovers, that would otherwise be prohibited as a result of their fiduciary relationship to the ERISA
Plan. In order to be eligible for the exemption, the investment advice fiduciary would be required, among other conditions, to acknowledge its
fiduciary status, refrain from putting its own interests ahead of the plan beneficiaries’ interests or making material misleading statements, act in
accordance with ERISA’s “prudent person” standard of care, and receive no more than reasonable compensation for the advice. On October 31,
2023, the DOL released a proposed regulation, which was issued as final on April 23, 2024, that replaced the existing definition of investment
advice fiduciary. The amended definition expands the circumstances under which certain financial institutions could be considered to be
fiduciaries under ERISA. The DOL also released amendments to certain prohibited transaction exemptions that also were issued as final on
April 23, 2024, including one that applies to the sale of annuity contracts by insurance companies, that changes the ability of advice fiduciaries
to use those exemptions for certain transactions. Various industry groups brought litigation against the DOL seeking a variety of remedies with
respect to the amended definition of fiduciary and the amendments to the prohibited transaction exemptions. In July 2024, two Texas federal
district courts issued stays on the effective date of the amendments to the definition of investment advice fiduciary and the amendments to the
prohibited transaction exemptions. In September 2024, the DOL filed a notice of appeal with respect to the national stay issued by the one of the
Texas federal district courts. As a result of these court opinions and the DOL’s notice of appeal, it is uncertain whether the amendment to the
definition of fiduciary or the amendments to the prohibited transaction exemptions will become effective. We continue to monitor this issue for
any additional developments.
SEC and State Fiduciary Standards
The SEC adopted a rule in 2020 under the Exchange Act that establishes a standard of conduct for broker-dealers and associated persons of a
broker-dealer when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities.
This rule, called “Regulation Best Interest,” requires broker-dealers, among other things, to: act in the best interest of the retail customer at the
time the recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail
customer; and address conflicts of interest by establishing, maintaining, and enforcing policies and procedures reasonably designed to identify
and fully and fairly disclose material facts about conflicts of interest, and in certain identified areas where the SEC has determined that
disclosure is insufficient to reasonably address the conflict, to mitigate or, in certain instances, eliminate the conflict. The standard of conduct
established by Regulation Best Interest cannot always be satisfied through disclosure alone. Though Regulation Best Interest does not directly
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impact the sale of our annuity products, with the exception of our RILA product, it does impact how some of our retail distribution partners
monitor insurance sales.
In addition, certain states, for example Massachusetts, Nevada, and New Jersey, have proposed measures that would make broker-dealers and
sales agents subject to a fiduciary duty when providing products and services to customers. The Massachusetts Securities Division adopted a
fiduciary duty rule applicable to broker-dealers when making recommendations concerning securities or investment strategies, effective
September 1, 2020; however, consistent with the Massachusetts Uniform Securities Act, this rule does not apply to advice concerning
commodities or insurance products, including life insurance and annuities. On September 5, 2023, the North American Securities Administrators
Association (NASAA), the association of state securities administrators in the US and Canada, proposed revisions to its Model Rule on
Dishonest and Unethical Business Practices of Broker-Dealers and Agents; these revisions purport to incorporate the standards of Regulation
Best Interest but in fact would expand those requirements in ways that would increase costs to broker-dealers. The SEC did not indicate an
intent to preempt state regulation in this area, and some of the state proposals would allow for a private right of action. As a result of these
changes, it may become more costly to provide our products and services in the states subject to these rules.
The NAIC has adopted the Suitability in Annuity Transactions Model Regulation (SAT), which places responsibilities upon insurers with
respect to the suitability of annuity sales, including responsibilities for training agents. Many states, including Athene Domiciliary States, have
already enacted laws and/or regulations based on SAT, thus imposing suitability standards with respect to sales of FIAs. Similar to New York’s
adoption of amendments to its SAT-based regulation to incorporate a “best interest” standard regarding the suitability of life insurance and
annuity sales, the NAIC adopted amendments to the SAT that include a requirement for producers to act in the “best interest” of a retail
customer when making a recommendation of an annuity. As of February 1, 2025, 48 states, including Iowa, have adopted a version of the
revised SAT that includes a best interest concept, and another state has pending legislation to adopt a version of the revised SAT that includes a
best interest concept. Future changes in such laws and regulations could adversely affect the way our US insurance subsidiaries market and sell
their annuity products.
Further, the SEC has asserted in examinations and enforcement actions that when an individual licensed both as an investment adviser
representative or broker-dealer registered representative and as an insurance agent advises customers about allocating assets between securities
and non-securities insurance products (such as indexed annuities), Regulation Best Interest and the fiduciary interpretation apply to those
recommendations.
Regulation of an Insurer’s Stockholders
The BMA maintains supervision over the “controllers” of all registered insurers in Bermuda. For these purposes, a “controller” includes (1) the
managing director of the registered insurer or its parent company, (2) the chief executive of the registered insurer or of its parent company, (3) a
stockholder controller, and (4) any person in accordance with whose directions or instructions the directors of the registered insurer or its parent
company are accustomed to act.
The definition of stockholder controller is set out in the Bermuda Insurance Act but generally refers to (1) a person who holds 10% or more of
the shares carrying rights to vote at a stockholders’ meeting of the registered insurer or its parent company, (2) a person who is entitled to
exercise 10% or more of the voting power at any stockholders’ meeting of such registered insurer or its parent company or (3) a person who is
able to exercise significant influence over the management of the registered insurer or its parent company by virtue of its shareholding or its
entitlement to exercise, or control the exercise of, the voting power at any stockholders’ meeting.
Under the Bermuda Insurance Act, stockholder controller ownership is defined as follows:
Actual Stockholder Controller Voting Power
Defined Stockholder Controller Voting Power
10% or more but less than 20%
10%
20% or more but less than 33%
20%
33% or more but less than 50%
33%
50% or more
50%
Where the shares of a registered insurer, or the shares of its parent company, are traded on a recognized stock exchange, and such stockholder
becomes a 10%, 20%, 33%, or 50% stockholder controller of the insurer, that stockholder shall, within 45 days, notify the BMA in writing that
such stockholder has become, or as a result of a disposition ceased to be, a controller of any such category.
Any person or entity who contravenes the Bermuda Insurance Act by failing to give notice or knowingly becoming a controller of any
description before the required 45 days has elapsed is guilty of an offense under Bermuda law and liable to a fine of $25,000 on summary
conviction.
The BMA may file a notice of objection to any person or entity who has become a controller of any category when it appears that such person or
entity is not, or is no longer, fit and proper to be a controller of the registered insurer. Before issuing a notice of objection, the BMA is required
to serve upon the person or entity concerned a preliminary written notice stating the BMA’s intention to issue formal notice of objection. Upon
receipt of the preliminary written notice, the person or entity served may, within 28 days, file written representations with the BMA which shall
be taken into account by the BMA in making its final determination. Any person or entity who continues to be a controller of any description
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after having received a notice of objection is guilty of an offense and liable on summary conviction to a fine of $25,000 (and a continuing fine of
$500 per day for each day that the offense is continuing) or, if convicted on indictment, to a fine of $100,000 and/or 2 years in prison.
The permission of the BMA is required, pursuant to the provisions of the Exchange Control Act 1972 and related regulations, for all issuances
and transfers of shares of Bermuda companies to or from a non-resident of Bermuda for exchange control purposes, other than in cases where
the BMA has granted a general permission.
Notification of Material Changes
All registered insurers are required to give notice to the BMA of their intention to affect a material change within the meaning of the Bermuda
Insurance Act.
As registered insurers, our Bermuda reinsurance subsidiaries may not take any steps to give effect to such a material change unless they have
first served notice on the BMA that they intend to effect such material change and before the end of 30 days, either the BMA has notified the
applicable Bermuda reinsurance subsidiary in writing that the BMA has no objection to such change or that period has lapsed without the BMA
having issued a notice of objection.
Before issuing a notice of objection, the BMA is required to serve upon the applicable Bermuda reinsurance subsidiary a preliminary written
notice stating the BMA’s intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the applicable Bermuda
reinsurance subsidiary may, within 28 days, file written representations with the BMA, which the BMA would take into account in making its
final determination.
Policyholder Priority
In the event of a liquidation or winding up of one of our Bermuda reinsurance subsidiaries, policyholders’ liabilities receive prior payment ahead
of general unsecured creditors. Subject to the prior payment of preferential debts under Bermuda’s Employment Act 2000 and the Companies
Act, the insurance debts of an insurer must be paid in priority to all other unsecured debts of the insurer. Insurance debt is defined as a debt to
which an insurer is or may become liable pursuant to an insurance contract, excluding debts owed to an insurer under an insurance contract
where the insurer is the person insured. Insurance contract is defined as any contract of insurance, capital redemption contract or a contract that
has been recorded as insurance business in the financial statements of the insurer pursuant to the Insurance Accounts 1980 or the Insurance
Account Rules 2016, as applicable.
Similarly, in the event of the impairment or insolvency of one of our US insurance subsidiaries, the applicable Commissioner will be authorized
and directed to commence delinquency proceedings for the purpose of liquidating, rehabilitating, reorganizing or conserving the applicable US
insurance subsidiary pursuant to applicable state insurance laws and regulations. In conducting delinquency proceedings, claims are prioritized
and an order of distribution is specified pursuant to applicable state insurance laws and regulations. In each of the Athene Domiciliary States,
claims of general unsecured creditors would be subordinated to claims of the insurer’s policyholders and other claimants with priority in
accordance with the priority-of-distribution scheme prescribed by applicable state insurance law.
Economic Substance Act 2018 (ESA)
Under the provisions of the ESA, every Bermuda registered entity, other than an entity which is resident for tax purposes in certain jurisdictions
outside of Bermuda, that carries on as a business in any one or more “relevant activities” referred to in the ESA must satisfy economic substance
requirements by maintaining a substantial economic presence in Bermuda. Under the ESA, certain activities, including insurance or holding
entity activities (both as defined in the ESA and Economic Substance Regulations 2018) are relevant activities. The ESA applies to our entities
registered in Bermuda that carry on “relevant activities” and are not resident for tax purposes in a jurisdiction outside of Bermuda. We are
required to file annual declarations with the Registrar of Companies in Bermuda demonstrating that an entity is either a non-resident entity for
tax purposes or is otherwise in compliance with economic substance requirements.
Any entity that must satisfy economic substance requirements but fails to do so could face automatic disclosure to competent authorities in the
US and EU of the information filed by the entity with the Bermuda Registrar of Companies in connection with the economic substance
requirements and may also face financial penalties, restriction or regulation of its business activities and/or removal from the list of registered
entities in Bermuda.
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UK Corporation Tax
Certain of our subsidiaries are treated as residents in the United Kingdom for UK tax purposes due to being centrally managed and controlled in
the UK, and will each be treated as a fiscally opaque company from a UK tax perspective (collectively, UK Resident Companies). Our UK
Resident Companies are generally subject to UK corporation tax on their respective worldwide profits. In practice, however, it is not expected
that our UK Resident Companies will be liable to account for any material UK corporation tax on the basis that: (1) in the case of the UK
Resident Companies that are holding companies, their income and gains should be primarily derived from their holding of shares in direct
subsidiaries; and (2) in the case of the UK Resident Companies that are operating companies, the majority of profits will be attributable to their
permanent establishments in Bermuda in respect of which “foreign branch exemption elections” (set out in s.18A Corporation Tax Act 2009)
have been made. Any dividends received by our UK Resident Companies should be exempt from UK corporation tax and any gains arising to
our UK Resident Companies on a disposal or deemed disposal of a subsidiary (including any potential future subsidiaries) should be exempt
from UK corporation tax on chargeable gains as a result of the application of the UK substantial shareholding exemption set out in Schedule
7AC of the Taxation of Chargeable Gains Act 1992. The UK Resident Companies are not required to withhold tax when paying a dividend.
The UK Resident Companies, as UK tax residents, will remain subject to a number of specific UK tax regimes, including the controlled foreign
company regime, the anti-hybrids and other mismatches regime the diverted profits tax, and the UK’s implementation of a multinational top-up
tax (MTT). In practice, however (subject to a change in law, including as a result of implementing recommendations from the BEPS project)
none of these specific regimes are expected to materially impact the UK tax position of the UK Resident Companies. See Item 1A. Risk Factors-
Risks Relating to Taxation-Our structure involves complex provisions of tax law for which no clear precedent or authority may be available.
Our structure is also subject to ongoing future potential legislative, judicial or administrative change and differing interpretations, possibly on
a retroactive basis and Changes in non-US tax law could adversely affect our ability to raise funds from certain investors.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to such reports are made
available, free of charge, on or through the “Investors” portion of our website www.athene.com. Information contained on our website is not
part of, nor is it incorporated by reference in, this report or any of our periodic reports. Reports filed with or furnished to the SEC will also be
available as soon as reasonably practicable after they are filed with or furnished to the SEC and are available at the SEC’s website at
www.sec.gov.
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Certain metrics discussed in this section are based on management view and therefore may not correspond to amounts disclosed in our
consolidated financial statements or the notes thereto. For example, investment figures cited represent our net invested assets, which include
assets held by cedants that correspond to liabilities ceded to us, but does not include amounts attributable to our noncontrolling interests in
ACRA. In the context discussed, we believe that these metrics provide the most comprehensive view of our risk exposures. See Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations–Key Operating and Non-GAAP Measures–Net
Invested Assets for further discussion.
Risks Relating to Our Business Operations
Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s assumptions
and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results.
We make and rely on certain assumptions and estimates regarding many matters related to our business, including valuations, interest rates,
investment returns, expenses and operating costs, tax assets and liabilities, tax rates, business mix, surrender activity, mortality and contingent
liabilities. We also use these assumptions and estimates to make decisions crucial to our business operations, including establishing pricing,
target returns and expense structures for our insurance subsidiaries’ products and pension group annuity transactions; determining the amount of
reserves we are required to hold for our policy liabilities; determining the price we will pay to acquire or reinsure business; determining the
hedging strategies we employ to manage risks to our business and operations; and determining the amount of regulatory and rating agency
capital that our insurance subsidiaries must hold to support their businesses. The factors influencing these assumptions and estimates cannot be
calculated or predicted with certainty, and if our assumptions and estimates differ significantly from actual outcomes and results, our business,
financial condition, results of operations, liquidity and cash flows may be materially and adversely affected. Certain of the assumptions relevant
to our business are discussed in greater detail below.
•
Insurance Products and Liabilities – Pricing of our annuity and other insurance products, whether issued by us or acquired through
reinsurance or acquisitions, is based upon assumptions about persistency, mortality and the rates at which optional benefits are elected.
A factor which may affect persistency for some of our products is the value of guaranteed minimum benefits. An increase in the value
of guaranteed minimum benefits could result in our policies remaining in force longer than we have estimated, which could adversely
affect our results of operations. This could be caused by extended periods of poor equity market performance and/or low interest rates,
developments affecting customer perception and other factors outside our control. Alternatively, our persistency estimates could be
negatively affected during periods of rising equity markets or interest rates or by other factors outside our control, which could result
in fewer policies remaining in force than estimated. Therefore, our results will vary based on deviations from expected policyholder
behavior.
If emerging or actual experience deviates from our assumptions, such deviations could have a significant effect on our business,
financial condition, results of operations, liquidity and cash flows. For example, a significant portion of our in-force and newly issued
products contain riders that offer guaranteed lifetime income or death benefits. These riders expose us to mortality, longevity and
policyholder behavior risks. If actual utilization of certain rider benefits is adverse when compared to our estimates used in setting our
reserves for future policy benefits, these reserves may prove to be inadequate and we may be required to increase such reserves. More
generally, deviations from our pricing expectations could result in our subsidiaries earning less of a spread between the investment
income earned on our subsidiaries’ assets and the interest credited to such products and other costs incurred in servicing the products,
or may require our subsidiaries to make more payments under certain products than our subsidiaries had projected.
•
Determination of Fair Value – We hold securities, derivative instruments and other assets and liabilities that must be, or at our election
are, measured at fair value. Fair value represents the anticipated amount that would be received upon the sale of an asset or paid to
transfer a liability in an orderly transaction. The determination of fair value involves the use of various assumptions and estimates, and
considerable judgment may be required to estimate fair value. Accordingly, estimates of fair value are not necessarily indicative of the
amounts that could be realized in a current or future market exchange. As such, changes in or deviations from the assumptions used in
such valuations can significantly affect our financial condition and results of operations. During periods of market disruption,
including periods of rapidly changing credit spreads or illiquidity, if trading becomes less frequent or market data becomes less
observable, it will likely be difficult to value certain of our investments. Further, rapidly changing credit and equity market conditions
could materially impact the valuation of investments as reported within our financial statements, and the period-to-period changes in
value could vary significantly. Even if our assumptions and valuations are accurate at the time that they are made, the market value of
these investments could subsequently decline, which could materially and adversely impact our financial condition, results of
operations or cash flows.
•
Hedging Strategies – We use, and may in the future use, derivatives and reinsurance contracts to hedge risks related to current or
future changes in the fair value of our assets and liabilities; current or future changes in cash flows; changes in interest rates, equity
markets and credit spreads; the occurrence of credit defaults; foreign currency fluctuations; and changes in mortality and longevity.
We use equity derivatives to hedge the liabilities associated with our FIAs. Our hedging strategies rely on assumptions and projections
regarding our assets and liabilities, as well as general market factors and the creditworthiness of our counterparties, any or all of which
may prove to be incorrect or inadequate. Accordingly, our hedging activities may not have the desired impact. We may also incur
significant losses on hedging transactions.
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42
•
Financial Statements – The preparation of our consolidated financial statements requires management to make various estimates and
assumptions that affect the amounts reported therein. These significant estimates and assumptions include, but are not limited to, the
fair value of investments; impairment of investments and allowances for expected credit losses; derivatives valuation, including
embedded derivatives; future policy benefit reserves; market risk benefit assets and liabilities; consolidation of VIEs; and income
taxes. The estimates and assumptions required for these calculations involve judgment and by nature are imprecise and subject to
changes and revisions over time. Accordingly, our financial condition and results of operations may be adversely affected if actual
results differ from the estimates we use or if assumptions are materially revised.
A financial strength rating downgrade, potential downgrade or any other negative action by a rating agency could make our product
offerings less attractive, inhibit our ability to acquire future business through acquisitions or reinsurance and increase our cost of capital,
which could have a material adverse effect on our business.
Various Nationally Recognized Statistical Rating Organizations (NRSROs) review the financial performance and condition of insurers and
reinsurers, including our subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder
obligations. These ratings are important to maintain public confidence in our insurance subsidiaries’ products, our insurance subsidiaries’ ability
to market their products and our competitive position. Factors that could negatively influence this analysis include:
•
changes to our business practices or organizational business plan in a manner that no longer supports our ratings;
•
unfavorable financial or market trends;
•
changes in NRSROs’ capital adequacy assessment methodologies in a manner that would adversely affect the financial strength
ratings of our insurance subsidiaries;
•
a need to increase reserves to support our outstanding insurance obligations;
•
our inability to retain our senior management and other key personnel;
•
rapid or excessive growth, especially through large reinsurance transactions or acquisitions, beyond the bounds of capital sufficiency
or management capabilities as judged by the NRSROs; and
•
significant losses to our investment portfolio.
Some other factors may also relate to circumstances outside of our control, such as views of the NRSRO and general economic conditions. Any
downgrade or other negative action by a NRSRO with respect to the financial strength ratings of our insurance subsidiaries, or an entity we
acquire, or our credit ratings, could materially adversely affect us and our ability to compete in many ways, including the following:
•
reducing new sales of insurance products;
•
harming relationships with or perceptions of distributors, IMOs, sales agents, banks and broker-dealers;
•
increasing the number or amount of policy lapses or surrenders and withdrawals of funds, which may result in a mismatch of our
overall asset and liability position;
•
requiring us to offer higher crediting rates or greater policyholder guarantees on our insurance products in order to remain competitive;
•
increase our borrowing costs;
•
reducing our level of profitability and capital position generally or hindering our ability to raise new capital; or
•
requiring us to collateralize obligations under or result in early or unplanned termination of hedging agreements and harming our
ability to enter into new hedging agreements.
In order to improve or maintain their financial strength ratings, management may attempt to implement strategies which improve capital ratios
or other measures and perceptions of our subsidiaries. We cannot guarantee any such measures will be successful. We cannot predict what
actions NRSROs may take in the future, and failure to maintain current financial strength ratings could materially and adversely affect our
business, financial condition, results of operations and cash flows.
We operate in a highly competitive industry that includes a number of competitors, which could limit our ability to achieve our growth
strategies and could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.
We operate in highly competitive markets and compete with large and small industry participants. We face intense competition, including from
US and non-US insurance and reinsurance companies, broker-dealers, financial advisors, asset managers, diversified financial institutions and
private equity firms, with respect to both the products we offer and the acquisition and block reinsurance transactions we pursue. We compete
based on a number of factors including financial strength ratings, credit ratings, brand recognition, reputation, quality of service, performance of
our products, product features, scope of distribution and price. A decline in our competitive position as to one or more of these factors could
adversely affect our profitability. In addition, we may in the future sacrifice our competitive or market position in order to improve our short-
term profitability, particularly in the highly competitive retail markets, which may adversely affect our long-term growth and results of
operations. Alternatively, we may sacrifice short-term profitability to maintain market share and long-term growth.
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43
Many of our competitors are large and well-established and some have greater breadth of distribution; offer a broader range of products, services
or features; assume a greater level of risk; or have higher financial strength, claims-paying or credit ratings than we do. Our competitors may
also have lower return on capital targets than we do which may allow them to price products, reinsurance arrangements or acquisitions more
competitively. In addition, our competitors, including new market entrants may engage in aggressive, non-economic pricing in an effort to gain
market share. If we experience a decline in our competitive position or if our financial strength and credit ratings remain lower than the ratings
of certain of our competitors, we may experience increased surrenders and/or an inability to reach sales targets or consummate block reinsurance
transactions, which may have a material and adverse effect on our growth, business, financial condition, results of operations, cash flows and
prospects.
If we are unable to attract and retain IMOs, banks and broker-dealers, sales of certain of our products may be adversely affected.
We distribute our annuity products through a variable cost distribution network, which includes 41 IMOs, 19 banks and 151 broker-dealers,
collectively representing approximately 140,000 independent agents. We must attract and retain such marketers, agents and financial institutions
to sell our products. In particular, insurance companies compete vigorously for productive agents. We compete with other life insurance
companies for marketers, agents and financial institutions primarily on the basis of our financial position, support services, compensation, credit
ratings and product features. Such marketers, agents and financial institutions may promote products offered by other life insurance companies
that may offer a larger variety of products than we do. Our competitiveness for such marketers, agents and financial institutions also depends
upon the long-term relationships we develop with them. There can be no assurance that such relationships will continue in the future. In
addition, our growth plans include increasing the distribution of annuity products through banks and broker-dealers. If we are unable to attract
and retain sufficient marketers and agents to sell our products or if we are not successful in expanding our distribution channels within the bank
and broker-dealer markets, our ability to compete and our sales volumes and results of operations could be adversely affected.
From time to time we may pursue acquisitions and block reinsurance transactions, and our ability to consummate these transactions on
economically advantageous terms acceptable to us in the future is unknown.
From time to time we may pursue acquisitions of other insurance companies and businesses and block reinsurance transactions as a way to grow
our business. Each of these transactions could require additional capital, systems development and skilled personnel. We may experience
challenges identifying, financing, consummating and integrating such acquisitions and block reinsurance transactions. While we have reviewed
various opportunities and have successfully completed transactions in the past to facilitate our growth, competition exists in the market for
profitable blocks of insurance and businesses. Such competition is likely to intensify as insurance businesses become more attractive targets. It
is also possible that merger and acquisition transactions will become less frequent. Thus, in the future, we may not be able to find suitable
acquisition or block reinsurance opportunities that are available at attractive valuations, or at all. Even if we do find suitable opportunities, we
may not be able to consummate the transactions on commercially acceptable terms. In addition, to the extent we determine to finance an
acquisition or block reinsurance transaction, suitable financing arrangements may not be available on acceptable terms, on a timely basis, or at
all. Our acquisition and block reinsurance transaction activities may also divert the attention of our management from our business, which may
have an adverse effect on our business and results of operations.
Interruption or other operational failures in telecommunications, information technology and other operational systems, including as a
result of threat actors attacking those systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data
residing on those systems, including as a result of human error, could have a material adverse effect on our business.
We are highly dependent on automated and information technology systems to record and process our internal transactions and transactions
involving our customers, as well as to calculate reserves, perform actuarial analyses, value our investment portfolio and complete certain other
components of our financial statements. We could experience a failure of one of these systems, our employees or agents could fail to monitor
and implement enhancements or other modifications to a system in a timely and effective manner or our employees or agents could fail to
complete all necessary data reconciliation or other conversion controls when implementing a new software system or modifications to an
existing system. Additionally, threat actors who are able to circumvent our security measures and penetrate our information technology systems
could access, view, misappropriate, alter or delete information in the systems, including personally identifiable customer information and
proprietary business information. Information security risks also exist with respect to the use of portable electronic devices, such as laptops,
which are particularly vulnerable to loss and theft.
We retain personally identifiable information and other confidential information, including in some instances sensitive personal information
such as health-related information, in our information technology systems and those of our business partners. Despite our security and back-up
measures, including periodic testing and our business continuity plan, our information technology systems and those of our business partners
may be vulnerable to physical or electronic intrusions, computer viruses or other malicious codes, unauthorized or fraudulent access, cyber-
attacks such as ransomware, social-engineering attacks, or denial-of-service attacks, programming or other human errors, and other breaches of
cybersecurity and information security systems and similar disruptions, and we may not be able to anticipate, detect, repel or implement
effective preventative measures against all such threats, particularly because the techniques used are increasingly sophisticated and constantly
evolving. We may also be subject to disruptions of any of these systems arising from events that are wholly or partially beyond our control (for
example, natural disasters, acts of terrorism, war, epidemics, pandemics, computer viruses, and electrical or telecommunications outages).
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44
All of these risks are also applicable where we rely on third-party suppliers to provide products and services to us and/or our customers. We rely
on products and services provided by third-party suppliers to operate certain critical business systems, including without limitation, cloud-based
infrastructure, encryption and authentication technology, employee email, and other functions, which exposes us to supply-chain attacks or other
business disruptions. While we require our critical third-party suppliers to implement and maintain what we believe to be effective cybersecurity
and data protection measures, we cannot guarantee that third parties and infrastructure in our supply chain or our partners’ supply chains have
not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information
technology systems or the third-party information technology systems that support our insurance products. Our ability to monitor these third
parties’ information security practices is limited, and these third-party suppliers may not have adequate information security measures in place.
In addition, if one of our third-party suppliers suffers a security breach, which has happened in the past, our response may be limited or more
difficult because we may not have direct access to their systems, logs and other information related to the security breach.
The failure of any one of these systems for any reason, or errors made by our employees or agents, could in each case cause significant
interruptions to our operations, which could harm our reputation, adversely affect our internal control over financial reporting or have a material
adverse effect on our business, financial condition and results of operations.
Any compromise of the security of our information technology systems that results in inappropriate disclosure or use of confidential
information, including personally identifiable customer information, could damage the reputation of our brand in the marketplace, deter
purchases of our products, subject us to heightened regulatory scrutiny or significant civil and criminal liability and require us to incur
significant technical, legal and other expenses in connection with our response, recovery, remediation, and compliance efforts. We are also
subject to data privacy and security laws applicable to our business in relevant jurisdictions. See Item 1. Business–Regulation–Consumer
Protection Laws and Privacy and Data Security Regulation for more information.
We rely significantly on third parties for various services, and we may be held responsible for obligations that arise from the acts or
omissions of third parties under their respective agreements with us.
We rely significantly on third parties to provide various services that are important to our business, including investment, distribution and
administrative services. As such, our business may be affected by the performance of those parties. Additionally, our operations are dependent
on various technologies, some of which are provided or maintained by certain key outsourcing partners and other parties. See Item 1. Business–
Outsourcing for certain of the functions that we outsource to third parties.
Many of our subsidiaries’ products and services are sold through third-party intermediaries. In particular, our insurance businesses are reliant on
such intermediaries to describe and explain these products and services to potential customers, and although we take precautions to avoid this
result, such intermediaries may be deemed to have acted on our behalf. If that occurs, the intentional or unintentional misrepresentation of our
subsidiaries’ products and services in advertising materials or other external communications, or inappropriate activities by an intermediary or
personnel employed by an intermediary could result in liability for us and have an adverse effect on our reputation and business prospects, as
well as lead to potential regulatory actions or litigation involving or against us. In addition, we rely on third-party administrators (TPAs) to
administer a portion of our annuity contracts, as well as our legacy life insurance business. Some of our reinsurers also use TPAs to administer
business we reinsure to them. To the extent any of these TPAs do not administer such business appropriately, we may experience customer
complaints, regulatory intervention and other adverse impacts, which could affect our future growth and profitability. Previously, we received a
Section 308 information request from the NYSDFS relating to the administration and lapse of certain life policies covered by a consent order we
entered into with the NYSDFS in 2018. Global Atlantic Financial Group Limited (together with its subsidiaries, Global Atlantic) and certain of
its affiliates, the reinsurer and administrator of these policies, has been assisting us in our response to the NYSDFS and is obligated to indemnify
us under the terms of the reinsurance agreement between us and Global Atlantic. If any of these TPAs or their employees are found to have
made material misrepresentations to our policyholders, violated applicable insurance, privacy or other laws and regulations or otherwise
engaged in misconduct, we could be held liable for their actions and be subject to regulatory scrutiny, which could adversely affect our
reputation, business prospects, financial condition, results of operations and cash flows.
Additionally, past or future misconduct by agents that distribute our subsidiaries’ products or employees of our vendors could result in violations
of law by us, regulatory sanctions and/or serious reputational or financial harm and the precautions we take to prevent and detect this activity
may not be effective in all cases. Although we employ controls and procedures designed to monitor associates’ business decisions and to prevent
us from taking excessive or inappropriate risks, associates may take such risks regardless of such controls and procedures.
We are subject to significant operating and financial restrictions imposed by our credit agreements and certain letters of credit, and we are
also subject to certain operating restrictions imposed by the indentures to which we are a party.
On June 30, 2023, AHL, ALRe, Athene USA Corporation (AUSA) and AARe, as borrowers, entered into a five-year revolving credit agreement
with a syndicate of banks and Citibank, N.A., as administrative agent (Credit Facility). Also on June 28, 2024, AHL and ALRe entered into a
new revolving credit agreement with a syndicate of banks and Wells Fargo Bank, National Association, as administrative agent (Liquidity
Facility), which replaced our previous revolving credit agreement dated as of June 30, 2023. The Credit Facility, Liquidity Facility, and certain
letters of credit also entered into contain various restrictive covenants which restrict the operations of our business. As a result of these
restrictions, we may be limited in how we conduct our operations and may be unable to raise additional debt financing to compete effectively or
to take advantage of new business opportunities.
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In addition to the covenants to which we are subject pursuant to our Credit Facility, Liquidity Facility and certain letters of credit, AHL is also
subject to certain limited covenants pursuant to the Indentures, dated January 12, 2018 and March 7, 2024, by and between us and U.S. Bank
National Association, as trustee (Base Indentures), as supplemented by the applicable supplemental indentures, by and among us and U.S. Bank
National Association, as trustee, (together with the Base Indentures, Indentures). The Indentures contain restrictive covenants which limit,
subject to certain exceptions, AHL’s and, in certain instances, some or all of its subsidiaries’ ability to make fundamental changes, create liens
on any capital stock of certain of AHL’s subsidiaries, and sell or dispose of the stock of certain of AHL’s subsidiaries.
The terms of any future indebtedness we may incur may contain additional restrictive covenants.
We are subject to risks associated with pandemics, epidemics, disease outbreaks and other public health crises which could impact our
business, financial condition and results of operations in the future.
We are subject to risks associated with pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19
pandemic. Such public health crises could adversely affect our business in a number of ways, including by adversely impacting the valuations of
the investments made by us, which are generally correlated to the performance of the relevant equity and debt markets; increasing volatility in
the financial markets; preventing us from capitalizing on certain market opportunities; interrupting global or regional supply chains; hurting
consumer confidence and economic activity; straining our liquidity, which may impact our credit ratings and limit the availability of future
financing; increasing the rate at which policyholders of our insurance products withdraw their policies; and reducing our ability to understand
and foresee trends and changes in the markets in which we operate.
Artificial intelligence could increase competitive, operational, legal and regulatory risks to our businesses in ways that we cannot predict.
Technological developments in artificial intelligence, including machine learning technology and generative artificial intelligence (collectively,
AI Technologies) and their current and potential future applications, including in the private investment, financial and insurance sectors, as well
as the legal and regulatory frameworks within which they operate, are rapidly evolving. The full extent of current or future risks related thereto
is not possible to predict. AI Technologies could significantly disrupt the markets in which we operate and subject us to increased competition,
legal and regulatory risks and compliance costs, which could have a material adverse effect on our business, financial condition, results of
operations, liquidity and cash flows. We also face competitive risks if we fail to adopt AI Technologies in a timely fashion.
We intend to avail ourselves of the potential benefits, insights and efficiencies that are available through the use of AI Technologies, which
presents a number of potential risks that cannot be fully mitigated. If the data we, or third parties whose services we rely on, use in connection
with the possible development or deployment of AI Technologies is incomplete, incorrect, inadequate or biased in some way, it may result in
flawed algorithms, reduce the effectiveness of AI Technologies and adversely impact us and our operations. There is also a risk that AI
Technologies and data used therewith may be misused or misappropriated by our employees, third-party service providers or other third parties.
Further, we may not be able to control how third-party AI Technologies that we choose to use are developed or maintained, or how data we
input is used or disclosed, even where we have sought contractual protections with respect to these matters. The misuse or misappropriation of
our data, including material non-public information, could have an adverse impact on our reputation, subject us to legal and regulatory
investigations and/or actions and create competitive risk.
The use of AI Technologies also requires our compliance with legal or regulatory frameworks that are not fully developed or tested, and we may
face litigation and regulatory actions related to our use of AI Technologies, including intellectual property infringement and misappropriation
claims, that could have a material and adverse impact on our business, financial condition, results of operations, liquidity and cash flows.
Risks Relating to Liquidity and Regulatory Capital
As a financial services company, we are exposed to liquidity risk, which is the risk that we are unable to meet near-term obligations as they
come due.
Liquidity risk is a manifestation of events that are driven by other risk types (e.g. market, policyholder behavior, operational). A liquidity
shortfall may arise in the event of insufficient funding sources or an immediate and significant need for cash or collateral. In addition, it is
possible that expected liquidity sources, such as our credit facilities, may be unavailable or inadequate to satisfy the liquidity demands described
below. In particular, the war between Russia and Ukraine, the conflict in the Middle East, and inflation (and the responses by the US Federal
Reserve), continue to contribute to volatility in the financial markets and may restrict the liquidity sources available to us and further may result
in an increase of our liquidity demands. We primarily have liquidity exposure through our collateral market exposure, asset liability mismatch,
dependence on the financial markets for funding and funding commitments. If a material liquidity demand is triggered and we are unable to
satisfy the demand with the sources of liquidity readily available to us, it may have a material adverse impact on our business, financial
condition, results of operations, liquidity and cash flows. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations–Liquidity and Capital Resources for a discussion of our liquidity and sources and uses of liquidity, including information about
legal and regulatory limits on the ability of our subsidiaries to pay dividends.
The amount of statutory capital that our insurance and reinsurance subsidiaries have, or that they are required to hold, can vary
significantly from time to time and is sensitive to a number of factors outside of our control.
Our US insurance subsidiaries are subject to state regulations that provide for MCR based on RBC formulas for life insurance companies
relating to insurance, business, asset, interest rate and certain other risks. Similarly, our Bermuda reinsurance subsidiaries are subject to MCR
imposed by the BMA through the BMA’s ECR and MMS.
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In any particular year, our subsidiaries’ capital ratios and/or statutory surplus amounts may increase or decrease depending on a variety of
factors, some of which are outside of our control and some of which we can only partially control, including, but not limited to, the following:
•
the amount of statutory income or loss generated by our insurance subsidiaries;
•
the amount of additional capital our insurance subsidiaries must hold to support their business growth;
•
changes in reserve requirements applicable to our insurance subsidiaries;
•
changes in market value of certain securities in our investment portfolio;
•
recognition of write-downs or other losses on investments held in our investment portfolio;
•
changes in the credit ratings of investments held in our investment portfolio;
•
changes in the value of certain derivative instruments;
•
changes in interest rates;
•
credit market volatility;
•
changes in policyholder behavior;
•
changes in corporate tax rates;
•
changes to the RBC formulas and interpretations of the NAIC instructions with respect to RBC calculation methodologies; and
•
changes to the ECR, BSCR, or TCL formulas and interpretations of the BMA’s instructions with respect to ECR, BSCR, or TCL
calculation methodologies.
Further to NAIC activities with respect to RBC calculation methodologies, the NAIC has recently adopted and is currently considering a variety
of reforms to its RBC framework, which could increase the capital requirements for our US insurance subsidiaries. For example, the NAIC
recently adopted changes to certain statements of statutory accounting principles in connection with its principles-based bond project, which
became effective on January 1, 2025, setting forth the factors to determine whether an investment in debt qualifies for reporting on an insurer’s
statutory financial statement as a bond on Schedule D-1 as opposed to Schedule BA (other long-term invested assets), the latter of which could
result, among other things, in the capital charge treatment of an investment being less favorable. The NAIC also adopted an interim change to
the life RBC formula for year-end 2023 and 2024 reporting to increase the RBC base factor for residual tranches of structured securities, and
will further consider whether to increase or decrease the base factor in future years. In addition, the NAIC is reviewing changes related to filing
exempt status for certain securities, including a proposal that sets forth procedures for the NAIC’s review of investments that are exempt from
filing with the NAIC’s Securities Valuation Office, which could result in, among other things, the capital charge treatment of the investment
being less favorable.
In March 2024, the BMA published revised rules and new guidance notes to enhance Bermuda’s regulatory regime for commercial insurers. The
material enhancement to the framework includes updates to the technical provisions, the computation of the BSCR and the BSCR adjustment
framework.
NRSROs may also implement changes to their internal models, which differ from the RBC and BSCR capital models, that have the effect of
increasing or decreasing the amount of statutory capital our subsidiaries must hold in order to maintain their current ratings. To the extent that
one of our insurance subsidiary’s solvency or capital ratios is deemed to be insufficient by one or more NRSROs to maintain their current
ratings, we may take actions either to increase the capitalization of the insurer or to reduce the capitalization requirements. If we are unable to
accomplish such actions, NRSROs may view this as a reason for a ratings downgrade. Regulatory developments, including the NAIC’s adoption
of amendments to its Insurance Holding Company System Regulatory Act and Model Regulation requiring, subject to certain exceptions, the
filing of a confidential annual GCC and an annual LST with the IID, the lead state insurance regulator of our US insurance subsidiaries, may
increase the amount of capital that we are required to hold and could result in us being subject to increased regulatory requirements.
If a subsidiary’s solvency or capital ratios reach certain minimum levels, it could subject us to further examination or corrective action imposed
by our insurance regulators. Corrective actions may include limiting our subsidiaries’ ability to write additional business, increased regulatory
supervision, or seizure or liquidation of the subsidiary’s business, each of which could materially and adversely affect our business, financial
condition, results of operations, cash flows and prospects.
Repurchase agreement programs subject us to potential liquidity and other risks.
We may engage in repurchase agreement transactions whereby we sell fixed income securities to third parties, primarily major brokerage firms
or commercial banks, with a concurrent agreement to repurchase such securities at a determined future date. These repurchase agreements
provide us with liquidity and in certain instances also allow us to earn spread income. Under such agreements we may be required to deliver
additional securities or cash as margin to the counterparty if the value of the securities sold decreases prior to the repurchase date. If we are
required to return significant amounts of cash collateral or post cash or securities as margin on short notice or have inadequate cash on hand as
of the repurchase date, we may be forced to sell securities to meet such obligations and may have difficulty doing so in a timely manner or may
be forced to sell securities in a volatile or illiquid market for less than we otherwise would have been able to realize under normal market
conditions. Rehypothecation of subject securities by the counterparty may also create risk with respect to the counterparty’s ability to perform its
obligations to tender such securities on the repurchase date. Such facilities may not be available to us on favorable terms or at all in the future.
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Item 1A. Risk Factors
47
Risks Relating to Market and Credit Risk
Our investments are subject to market and credit risks that could diminish their value and these risks could be greater during periods of
extreme volatility or disruption in the financial and credit markets, which could adversely impact our business, financial condition, results of
operations, liquidity and cash flows.
Our investments and derivative financial instruments are subject to risks of credit defaults and changes in market values. Periods of
macroeconomic weakness or recession, heightened volatility or disruption in the financial and credit markets could increase these risks,
potentially resulting in impairment of assets in our investment portfolio. The impact of geopolitical tension, such as a deterioration in the
bilateral relationship between the US and China or the war between Russia and Ukraine, including any resulting sanctions, export controls or
other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia,
also could lead to disruption, instability and volatility in the global markets, which may have an impact on our investments across negatively
impacted sectors or geographies.
We are also subject to the risk that cash flows generated from the collateral underlying the structured products we own may differ from our
expectations in timing or amount. In addition, many of our classes of investments, but in particular our alternative investments, may produce
investment income that fluctuates significantly from period to period. Any event reducing the estimated fair value of these securities, other than
on a temporary basis, could have a material and adverse effect on our business, results of operations, financial condition, liquidity and cash
flows. If our investment manager, Apollo, fails to react appropriately to difficult market, economic and geopolitical conditions, our investment
portfolio could incur material losses. Certain of our investments are more vulnerable to these risks than others, as described more fully below.
•
Fixed maturity and equity securities – We have significant investments in fixed maturity securities, equity securities, and short-term
investments, including our investments in investment grade and high-yield corporate bonds and structured products, which include
RMBS and CLOs. An economic downturn affecting the issuers or underlying collateral of these securities, ratings downgrades
affecting the issuers or guarantors of such securities, or similar trends and issues could cause the estimated fair value of our fixed
income securities portfolio and our earnings to decline and the default rates of the fixed income securities in our portfolio to increase.
•
Collateralized loan obligations – We also have significant investments in CLOs. Control over the CLOs in which we invest is
exercised through collateral managers, who may take actions that could adversely affect our interests, and we may not have the right to
direct collateral management. There may also be less information available to us regarding the underlying debt instruments held by
CLOs than if we had invested directly in the debt of the underlying companies. Additionally, the estimated fair values of subordinated
tranches of CLOs tend to be much more sensitive to adverse economic downturns and underlying borrower defaults than those of
more senior securities. Furthermore, our investments in CLOs are also subject to liquidity risk as there is a limited market for CLOs.
Accordingly, we may suffer unrealized depreciation and could incur realized losses in connection with the sale of our CLO interests.
We have a risk management framework in place to identify, assess and prioritize risks, including the market and credit risks to which our
investments are subject. As part of that framework, we test our investment portfolio based on various market scenarios. Under certain stressed
market scenarios, unrealized losses on our investment portfolio could lead to material reductions in its carrying value. Under some extreme
scenarios, total stockholders’ equity could be severely impacted prior to any potential market recovery. See Item 7A. Quantitative and
Qualitative Disclosures About Market Risks.
Interest rate fluctuations could adversely affect our business, financial condition, results of operations, liquidity and cash flows.
Interest rate risk is a significant market risk for us. We define interest rate risk as the risk of an economic loss due to changes in interest rates.
This risk arises from our holdings in interest rate-sensitive assets (e.g., fixed income assets) and liabilities (e.g., fixed deferred and immediate
annuities). Substantial and sustained increases or decreases in market interest rates could materially and adversely affect our business, financial
condition, results of operations, liquidity and cash flows, including in the following respects:
•
Significant changes in interest rates expose us to the risk of not realizing anticipated spreads between overall net investment earned
rates and our cost of funds.
•
Changes in interest rates may negatively affect the value of our assets and our ability to realize gains or avoid losses from the sale of
those assets. Significant volatility in interest rates may have a larger adverse impact on certain assets in our investment portfolio that
are highly structured or have limited liquidity.
•
Changes in interest rates may cause changes in prepayment rates on certain fixed income assets within our investment portfolio. For
instance, falling interest rates may accelerate the rate of prepayment on mortgage loans, while rising interest rates may decrease such
prepayments below the level of our expectations. At the same time, falling interest rates may result in the lengthening of duration for
our policies and liabilities due to the guaranteed minimum benefits contained in our products, while rising interest rates could lead to
increased policyholder withdrawals and a shortening of duration for our liabilities. In either case, we could experience a mismatch in
our assets and liabilities and potentially incur significant economic losses.
•
During periods of declining interest rates or a prolonged period of low interest rates, our annuity products may be relatively more
attractive to existing policyholders than other investment opportunities available to them. This may cause our assumptions regarding
persistency to prove inaccurate as our policyholders opt not to surrender or take withdrawals from their products, which may result in
us experiencing greater claim costs than we had anticipated and/or cash flow mismatches between assets and liabilities.
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•
During periods of declining interest rates, we may have to reinvest the cash we receive as interest or return of principal on our
investments into lower-yielding high-grade instruments or seek higher-yielding, but higher-risk instruments in an effort to achieve
returns comparable with those attained during more stable interest rate environments.
•
Certain securitized financial assets are accounted for based on expectations of future cash flows. To the extent future interest rates are
lower than we have projected, we will experience slower accretion of discounts on these assets and will have a lower yield on our
portfolio.
•
An extended period of declining interest rates or a prolonged period of low interest rates may cause us to decrease the crediting rates
of our products, thereby reducing their attractiveness.
•
In periods of rapidly increasing interest rates, withdrawals from and/or surrenders of annuity contracts may increase as policyholders
choose to seek higher investment returns elsewhere. Obtaining cash to satisfy these obligations may require our insurance subsidiaries
to liquidate fixed income investments at a time when market prices for those assets are depressed. This may result in realized
investment losses.
•
An increase in market interest rates could reduce the value of certain of our investments held as collateral under reinsurance
agreements and require us to provide additional collateral, thereby reducing our available capital and potentially creating a need for
additional capital which may not be available to us on favorable terms, or at all.
We are subject to the credit risk of our counterparties, including ceding companies, reinsurers, plan sponsors and derivative counterparties.
We encounter various types of counterparty credit risk. Our insurance subsidiaries cede certain risk to third-party insurance companies that may
cover large volumes of business and expose us to a concentration of credit risk with respect to such counterparties. Such subsidiaries may not
have a security interest in the underlying assets and despite certain indemnification rights, we retain liability to our policyholders if a
counterparty fails to perform. Certain of our insurance subsidiaries also reinsure liabilities from other insurance companies and these
subsidiaries may be negatively impacted by changes in the ceding companies’ ratings, creditworthiness, and market perception, or any policy
administration issues. We also assume pension obligations from plan sponsors that expose us to the credit risk of the plan sponsor. In addition,
we are exposed to credit loss in the event of nonperformance by our derivative agreement counterparties. If any of these counterparties is not
able to satisfy its obligations to us or third parties, including policyholders, we may not achieve our targeted returns and our financial position,
results of operations, liquidity and cash flow may be materially adversely affected.
Our investment portfolio may be subject to concentration risk, particularly with respect to single issuers, including Athora, among others;
industries, including financial services; and asset classes, including real estate.
We face single issuer concentration risk both in the context of strategic alternative investments, in which we occasionally hold significant equity
positions, and large asset trades, in which we generally hold significant debt positions. Our most significant concentration risk exposure arising
in the context of strategic alternative investments, on a risk-adjusted basis, is our investment in Athora, an insurance holding company focused
on the European life insurance market. Given our significant exposure to these issuers, we are subject to the risks inherent in their business. For
example, as a life insurer, Athora is subject to credit risk with respect to its investment portfolio and mortality risk with respect to its product
liabilities, each of which may be exacerbated by unforeseen events. Further, Athora has significant European operations, which expose it to
volatile economic conditions and risks relating to EU countries and withdrawals thereof. In addition, Athora is subject to multiple legal and
regulatory regimes that may hinder or prevent it from achieving its business objectives. To the extent that we suffer a significant loss on our
investment in these issuers, including Athora, our financial condition, results of operations and cash flows could be adversely affected
In addition, from time to time, in order to facilitate certain large asset trades and in exchange for commitment fees, we may commit to
purchasing a larger portion of an investment than we ultimately expect to retain, and in such instances we are reliant upon Apollo’s ability to
syndicate the transaction to other investors. If Apollo is unsuccessful in its syndication efforts, we may be exposed to greater concentration risk
than what we would deem desirable from a risk appetite perspective and the commitment fee that we receive may not adequately compensate us
for this risk.
We also have significant investments in nonbank lenders focused on providing financing to individuals or entities. As a result, through these
investments, we have significant exposure to credit risk. In addition to the concentration risk arising from our investments in single issuers
within the nonbank lending sector of the financial services industry, we have significant exposure to the financial services industry more broadly
as a result of the composition of investments in our investment portfolio. Economic volatility or any further macroeconomic, regulatory or other
changes having an adverse impact on the financial services industry more broadly, could have a material and adverse effect on our business,
financial condition, results of operations and cash flows.
A significant portion of our net invested assets is invested in real estate-related assets. Any significant decline in the value of real estate
generally or the occurrence of any of the risks described elsewhere in this report with respect to our real estate-related investments could
materially and adversely affect our financial condition and results of operations. Specifically, through our investments in commercial mortgage
loans (CML) and CMBS, we have exposure to certain categories of commercial property, including office buildings, retail, that have been
adversely affected by the spread of COVID-19 and the work from home trend. In addition, the CML we hold, and the CML underlying the
CMBS that we hold, face both default and delinquency risk.
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Many of our invested assets are relatively illiquid and we may fail to realize profits from these assets for a considerable period of time, or
lose some or all of the principal amount we invest in these assets if we are required to sell our invested assets at a loss at inopportune times.
Many of our investments are in securities that are not publicly traded or that otherwise lack liquidity, such as our privately placed fixed maturity
securities, below investment grade securities, investments in mortgage loans and alternative investments. These relatively illiquid types of
investments are recorded at fair value. If a material liquidity demand is triggered and we are unable to satisfy the demand with the sources of
liquidity available to us, we could be forced to sell certain of our assets and there can be no assurance that we would be able to sell them for the
values at which such assets are recorded and we might be forced to sell them at significantly lower prices. In many cases, we may also be
prohibited by contract or applicable securities laws from selling such securities for a period of time. Thus, it may be impossible or costly for us
to liquidate positions rapidly in order to meet unexpected policyholder withdrawal or recapture obligations. This potential mismatch between the
liquidity of our assets and liabilities could have a material and adverse effect on our business, financial condition, results of operations and cash
flows.
Further, governmental and regulatory authorities periodically review legislative and regulatory initiatives, and may promulgate new or revised,
or adopt changes in the interpretation and enforcement of existing, rules and regulations at any time that may impact our investments. For
example, Rule 15c2-11 under the Exchange Act governs the submission of quotes into quotation systems by broker-dealers and has historically
been applied to the over-the-counter equity markets. Effective October 30, 2023, the SEC adopted an order exempting securities issued pursuant
to Rule 144 from the quotation restrictions of Rule 15c2-11. However, for many other privately placed fixed income securities, Rule 15c2-11
restricted the ability of market participants to publish quotations after January 4, 2024. Such change in regulatory requirements could disrupt
market liquidity and cause securities in our investment portfolio that are not publicly traded, such as our privately placed fixed maturity
securities and below investment grade securities, to lose value, which could have a material and adverse effect on our business, financial
condition or results of operations.
Our investments linked to real estate are subject to credit risk, market risk, servicing risk, loss from catastrophic events and other risks,
which could diminish the value that we obtain from such investments.
A substantial amount of our net invested assets is linked to real estate, including fixed maturity and equity securities, such as CMBS and RMBS,
and mortgage loans, consisting of both CML and RML. Defaults by third parties in the payment or performance of their obligations underlying
these assets could reduce our investment income and realized investment gains or result in the recognition of investment losses. For example, an
unexpectedly high rate of default on mortgages held by a CMBS or RMBS may limit substantially the ability of the issuer of such security to
make payments to holders of such securities, reducing the value of those securities or rendering them worthless. The risk of such defaults is
generally higher in the case of mortgage securitizations that include “sub-prime” or “alt-A” mortgages. As of December 31, 2024, 3.2% of our
net invested assets linked to real estate were invested in such “sub-prime” mortgages and “alt-A” mortgages. Changes in laws and other
regulatory developments relating to mortgage loans may impact the investments of our portfolio linked to real estate in the future. Additionally,
cash flow variability arising from an unexpected acceleration in the rate of mortgage prepayments can be significant, and could cause a decline
in the estimated fair value of certain “interest only” securities.
The CML we hold, and CML underlying the CMBS that we hold, face both default and delinquency risk. Legislative proposals that would allow
or require modifications to the terms of CML, an increase in the delinquency or default rate of our CML portfolio or geographic or sector
concentration within our CML portfolio could materially and adversely impact our financial condition and results of operations. Our investments
in RML and RMBS also present credit risk. Higher than expected rates of default or loss severities on our RML investments and the RML
underlying our RMBS investments may adversely affect the value of such investments. A significant number of the mortgages underlying our
RML and RMBS investments are concentrated in certain geographic areas. Any event that adversely affects the economic or real estate market
in any of these areas could have a disproportionately adverse effect on our RML and RMBS investments. A rise in home prices, concern
regarding further changes to government policies designed to alter prepayment behavior, increased availability of housing-related credit and
lower interest rates could combine to increase expected or actual prepayment speeds, which would likely lower the valuations of RML and the
valuations of RMBS that we carry at a premium to par prices or that are structured as interest only securities and inverse interest only securities.
In general, any significant weakness in the broader macro economy or significant problems in a particular real estate market may cause a decline
in the value of residential properties securing the mortgages in that market, thereby increasing the risk of delinquency, default and foreclosure.
This could, in turn, have a material adverse effect on our credit loss experience.
Control over the underlying assets in all of our real estate-related investments is exercised through servicers that we do not control. If a servicer
is not vigilant in seeing that borrowers make their required periodic payments, borrowers may be less likely to make these payments, resulting in
a higher frequency of delinquency and default. If a servicer takes longer to liquidate nonperforming mortgages, our losses related to those loans
may be higher than we expected. Any failure by a servicer to service RMLs in which we are invested or which underlie a RMBS in which we
are invested in a prudent, commercially reasonable manner could negatively impact the value of our investments in the related RML or RMBS.
Our investments in assets linked to real estate are also subject to loss in the event of catastrophic events, such as earthquakes, hurricanes, floods,
tornadoes and fires.
In addition to the credit and market risk that we face in relation to all of our real estate-related investments, certain of these investments may
expose us to various environmental, regulatory and other risks. Any adverse environmental claim or regulatory action against us resulting from
our real-estate related investments could adversely impact our reputation, business, financial condition and results of operations.
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Our investment portfolio may include investments in securities of issuers based outside the US, including emerging markets, which may be
riskier than securities of US issuers.
We may invest in securities of issuers organized or based outside the US that may involve heightened risks in comparison to the risks of
investing in US securities, including unfavorable changes in currency rates and exchange control regulations, reduced and less reliable
information about issuers and markets, less stringent accounting standards, illiquidity of securities and markets, higher brokerage commissions,
transfer taxes and custody fees, local economic or political instability and greater market risk in general. In particular, investing in securities of
issuers located in emerging market countries involves additional risks, such as exposure to economic structures that are generally less diverse
and mature than, and to political systems that can be expected to have less stability than, those of developed countries; national policies that
restrict investment by foreigners in certain issuers or industries of that country; the absence of legal structures governing foreign investment and
private property; an increased risk of foreclosure on collateral located in such countries; a lack of liquidity due to the small size of markets for
securities of issuers located in emerging markets; and price volatility.
As of December 31, 2024, 40% of the carrying value of our available-for-sale (AFS) securities, including related parties, was comprised of
securities of issuers based outside of the US and debt securities of foreign governments. Of our total AFS securities, including related parties, as
of December 31, 2024, 11% were invested in CLOs of Cayman Islands issuers (for which the underlying assets are largely loans to US issuers)
and 29% were invested in other non-US issuers. While we invest in securities of non-US issuers, the currency denominations of such securities
usually match the currency denominations of the liabilities that the assets support. When the currency denominations of the assets and liabilities
do not match, we generally undertake hedging activities to eliminate or mitigate currency mismatch risk. See Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations–Investment Portfolio for further information on international exposure.
While we seek to hedge foreign currency risks, foreign currency fluctuations may reduce our net income and our capital levels, adversely
affecting our financial condition.
We are exposed to foreign currency exchange rate risk through the investments in our investment portfolio that are denominated in currencies
other than the US dollar or are issued by entities which primarily conduct their business outside of the US, as well as insurance liabilities,
funding agreements and other transactions that are denominated in currencies other than the US dollar. We are also exposed to foreign currency
exchange risk through our investment in certain subsidiaries domiciled in foreign jurisdictions, both as a result of our direct investment and as a
result of currency mismatches between the assets and liabilities of those subsidiaries. We may employ various strategies (including hedging) to
manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully hedged or the hedges are ineffective, our
results or equity may be reduced by fluctuations in foreign currency exchange rates that could materially adversely affect our financial condition
and results of operations.
Climate change and regulatory and other efforts to reduce climate change, as well as environmental, social and governance requirements
could adversely affect our business.
We face a number of risks associated with climate change including both transition and physical risks. The transition risks that could impact our
company and our investment portfolio include those risks related to the impact of US and foreign climate- and environmental, social and
governance (ESG)-related legislation and regulation, as well as risks arising from climate-related business trends. Moreover, our investments are
subject to risks stemming from the physical impacts of climate change. In particular, climate change may impact asset prices and the value of
our investments linked to real estate. For example, rising sea levels may lead to decreases in real estate values in coastal areas. We have
significant concentrations of real estate investments and collateral underlying investments linked to real estate in areas of the US prone to
catastrophe, including California, sections of the northeastern US, the South Atlantic states and the Gulf Coast.
New climate change-related regulations or interpretations of existing laws may result in enhanced disclosure obligations that could negatively
affect our investments and also materially increase our regulatory burden. We also face business trend-related climate risks. Certain investors are
increasingly taking into account ESG factors, including climate risks, in determining whether to invest in our preferred shares, debt securities
and FABN program. Our reputation and investor relationships could be damaged as a result of our involvement in certain industries, investments
or transactions associated with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue
to conduct or change our activities in response to considerations relating to climate change.
Furthermore, our financial and operational results could be impacted by emerging risk and changes to the regulatory landscape in areas like ESG
matters. Changes and uncertainty in US and non-US legislation, policy or regulation regarding ESG practices may result in higher regulatory
costs, compliance costs and increased capital expenditures, and changes in regulations may impact asset prices, resulting in realized or
unrealized losses on our investments. Undertaking initiatives to address ESG practices, including those related to human capital management
such as talent attraction and development, DEI and employee health and safety, could increase our cost of doing business and actual or
perceived failure to adequately address ESG expectations of our various stakeholders could lead to a tarnished reputation and loss of customers.
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Financial markets have been subject to inflationary pressures, and continued rising inflation may adversely impact our business and results
of operations.
Financial markets have been subject to inflationary pressures, and we cannot predict the extent to which rising inflation may be transitory.
Certain of our products are sensitive to inflation rate fluctuations, and a sustained increase in the inflation rate may adversely affect our business
and results of operations. For example, failure to accurately anticipate higher inflation and factor it into our product pricing assumptions may
result in mispricing of our products, which could materially and adversely impact our results of operations. Inflation also impacts our investment
portfolio and nature of our liability profile, thereby impacting our investment portfolio’s rate of investment return and corresponding investment
income. Continued rising inflation could adversely impact returns on our investment portfolio and results of operations.
Risks Relating to Our Relationship with Apollo
There are potential conflicts of interests between Apollo, our corporate parent, and the holders of our preferred stock.
AGM is the beneficial owner of 100% of our common stock and controls all of the voting power to elect members to our board of directors. As a
result, AGM could exercise significant influence and control over corporate matters for the foreseeable future, including approval of significant
corporate transactions, appointment of members of our management, approval of the termination of our investment management agreements
(IMA) and determination of our corporate policies.
The interests of our common stockholder, AGM, may conflict with the interests of our preferred stockholders. Actions that AGM takes as our
sole common stockholder may not be favorable to our preferred stockholders. For example, the concentration of voting power held by AGM, the
significant representation on our board of directors by individuals who are employees of AGM, or the limitations on our ability to terminate
IMAs with Apollo covering assets backing reserves and surplus in ACRA could delay, defer or prevent a change of control of us or impede a
merger, takeover or other business combination which a preferred stockholder may otherwise view favorably. AGM may, in its role as our sole
common stockholder, vote in favor of a merger, takeover or other business combination transaction which our preferred stockholders might not
consider in their best interests, including those transactions in which the AGM may have an interest. Further, AGM may cause us to declare a
cash dividend on shares of our common stock, including dividends of a greater amount than in prior years.
Our conflicts committee and our disinterested directors analyze these conflicts to protect against potential harm resulting from conflicts of
interest in connection with transactions that we have entered into or will enter into with Apollo or its affiliates. Specifically, our bylaws require
that the conflicts committee (in accordance with its charter and procedures) approve certain material transactions by and between us and Apollo
or its affiliates, including entering into material agreements or the imposition of any new fee or increase in the rate at which fees are charged to
us, subject to certain exceptions. See Item 13. Certain Relationships and Related Transactions, and Director Independence. These conflicts
provisions will not, by themselves, prohibit transactions with Apollo or its affiliates. In addition, our conflicts committee may exclusively rely
on information provided by Apollo, including with respect to fees charged by Apollo or its affiliates, and with respect to the historical
performance or fees of unrelated service providers used for comparison purposes, and may not independently verify the information so provided.
Apollo charges us management fees based on the composition and value of our assets. Substantially all of our net invested assets are managed
by Apollo. Our investment policies permit Apollo to invest in securities of issuers with which it is affiliated, including funds managed by
Apollo. Apollo may make such investments at its discretion, subject only to the approval of our conflicts committee in certain cases and/or
certain regulatory approvals. Accordingly, Apollo may have a conflict of interest in managing our investments, which could increase amounts
payable by us for asset management services or cause us to receive a lower return on our investments than if our investment portfolio was
managed by another party. Asset management fees are paid based on the value of our net invested assets regardless of the results of our
operations or investment performance. Therefore, Apollo could be incentivized to exercise its influence to cause us to increase our net invested
assets, which may have an adverse impact on our financial condition, results of operations and cash flows.
We have made investments in collective investment vehicles managed by Apollo affiliates, including seed investments in new investment
vehicles or investment strategies offered by Apollo which have limited track records, as well as junior and subordinated tranches of structured
investment vehicles which may assist Apollo in meeting certain regulatory requirements applicable to Apollo as the sponsor of such vehicles.
Such Apollo affiliates may charge us or such vehicles management or other fees, that independently, or when taken together with other fees
charged by Apollo, may not be the lowest fee available for similar investment management services offered by unrelated managers. In addition,
it is possible that such unrelated managers may perform better than Apollo. Apollo is not obligated to devote any specific amount of time to our
affairs, or to the funds in which we are invested. Affiliates of Apollo manage and expect to continue to manage other client accounts, some of
which have objectives similar to ours, including collective investment vehicles managed by Apollo and in which Apollo may have an equity
interest. We will compete with other Apollo clients not only in terms of time spent on management of our portfolio, but also for allocation of
assets that do not have significant supply. In addition, there may be different Apollo investment teams investing in the same strategies for
different clients, including us. As a result, we may compete with other Apollo clients for the same investment opportunities, potentially
disadvantaging us. Apollo may also manage accounts whose asset management fee schedules, investment objectives and policies differ from
ours, which may cause Apollo to allocate securities in a manner that may have an adverse effect on our ability to source appropriate assets and
meet our strategic objectives.
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Under our fee agreement with ISG (Fee Agreement), Apollo receives higher sub-allocation fees for investing in asset classes with higher alpha
generating abilities. See Note 15 – Related Parties–Apollo–Fee structure to the consolidated financial statements for additional information
regarding the sub-allocation fees. There is no assurance that higher returns will be achieved by investing in these asset classes. Accordingly,
Apollo is incentivized to increase the amount of investments subject to higher sub-allocation fees, which may result in greater risk to the returns
in our investment portfolio. While we believe that we and Apollo have each implemented appropriate risk governance regarding asset allocation,
it is possible that such incentives could result in increased holdings of assets with higher alpha generating abilities, and if such investments fail
to perform, it could have an adverse impact on our investment results.
From time to time, Apollo may acquire investments on our behalf which are senior or junior to other instruments of the same issuer that are held
by, or acquired for, another Apollo client (for example, we may acquire junior debt while another Apollo client may acquire senior debt). In the
event such an issuer enters bankruptcy or becomes otherwise insolvent, the client holding securities which are senior in preference may have the
right to aggressively pursue the issuer’s assets to fully satisfy the issuer’s indebtedness to the client, and the client holding the investment which
is junior in the capital structure may not have access to sufficient assets of the issuer to completely satisfy its claim against the issuer and may
suffer a loss. It is our understanding that Apollo has adopted procedures that are designed to enable it to address such conflicts and to ensure that
clients are treated fairly and equitably in these situations. However, given Apollo’s fiduciary obligations to the other client, Apollo may be
unable to manage our investment in the same manner as would have been possible without the conflict of interest. In such event, we may receive
a lower return on such investment than if another Apollo client was not in a different part of the capital structure of the issuer.
Apollo and its affiliates have diverse and expansive private equity, credit and real estate investment platforms, investing in numerous companies
across many industries. If Apollo acquires or forms a company with a business strategy competing with ours, additional conflicts may arise
between us and Apollo or between us and such company in executing our plans, including with respect to the allocation of investments or the
ability to execute on corporate opportunities. Our certificate of incorporation provides that Apollo and its members and affiliates (including
certain of our directors) generally have no duty to refrain from engaging, directly or indirectly, in the same or similar business activities or lines
of business that we do.
Apollo and its affiliates regularly obtain material non-public information regarding various potential acquisition or trading targets. When Apollo
and its affiliates obtain material non-public information regarding a potential acquisition or trading target, Apollo becomes restricted from
trading in such acquisition or trading target’s outstanding securities. Some of such securities may be potential investment opportunities for us, or
may be owned by us and be potential disposition opportunities. The inability of Apollo to purchase or sell such investments on our behalf as a
result of these restrictions may result in us acquiring investments that may otherwise underperform the restricted investments that Apollo would
have acquired, or incurring losses on investments that Apollo would have sold, on our behalf, had such restrictions not been in place.
James R. Belardi, our Chief Executive Officer, also serves as a member of the board of directors and an executive officer of AGM and as Chief
Executive Officer of ISG and receives compensation from ISG for services he provides. Mr. Belardi also owns a profits interest in ISG and in
connection with such interest receives a specified percentage of other fee streams earned by Apollo from us, including sub-allocation fees. Mr.
Belardi is also a director of the general partner of ISG. Accordingly, Mr. Belardi’s involvement as a member of our board of directors and
management team, as an officer and director of AGM, and as an officer of ISG and director of ISG’s general partner may lead to a conflict of
interest. Furthermore, certain members of our board of directors also serve on the board of directors of AGM or ISG or are employees of Apollo
or its affiliates, which could also lead to potential conflicts of interest. See Item 13. Certain Relationships and Related Transactions, and
Director Independence.
We rely on our investment management agreements with Apollo for the management of our investment portfolio. Apollo may terminate these
arrangements at any time, and there are limitations on our ability to terminate investment management agreements covering assets backing
reserves and surplus in ACRA, which may adversely affect our investment results.
We rely on Apollo to provide us with investment management services pursuant to various IMAs. Apollo relies in part on its ability to attract
and retain key people, and the loss of services of one or more of the members of Apollo or any of its subsidiaries’ senior management could
delay or prevent Apollo from fully implementing our investment strategy.
ACRA System IMA Termination Rights
The Fee Agreement provides that, with respect to IMAs covering assets backing reserves and surplus in ACRA, whether from internal
reinsurance, third party reinsurance, or inorganic transactions (ACRA System IMAs), among us or any of our subsidiaries, on the one hand, and
ISG, or another member of the Apollo Group (as defined in our certificate of incorporation) on the other hand, we may not, and will cause our
subsidiaries not to, terminate any ACRA System IMA, other than on June 4, 2023 or any two year anniversary of such date (each such date, an
IMA Termination Election Date) and any termination on an IMA Termination Election Date requires (1) the approval of two-thirds of our
Independent Directors (as defined in our bylaws) and (2) prior written notice to ISG or the applicable Apollo subsidiary of such termination at
least 30 days, but not more than 90 days, prior to an IMA Termination Election Date. If our Independent Directors make such election to
terminate and notice of such termination is delivered, the termination will be effective no earlier than the second anniversary of the applicable
IMA Termination Election Date (IMA Termination Effective Date). Notwithstanding the foregoing, our board of directors may only terminate
an ACRA System IMA on an IMA Termination Election Date for “AHL Cause” as defined in the Fee Agreement and pursuant to the provisions
set forth therein. The limitations on our ability to terminate the ACRA System IMAs with the applicable Apollo subsidiary could have a material
adverse effect on our financial condition and results of operations.
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The Fee Agreement gives our Independent Directors complete discretion, while acting in good faith, as to whether to determine if an AHL
Cause event has occurred with respect to any ACRA System IMA with the applicable Apollo subsidiary, and therefore our Independent
Directors are under no obligation to make, and accordingly may exercise their discretion never to make, such a determination.
The boards of directors of our subsidiaries may terminate an ACRA System IMA with the applicable Apollo subsidiary relating to the applicable
subsidiary if such subsidiary’s board of directors determines that such termination is required in the exercise of its fiduciary duties. If our
subsidiaries do elect to terminate any such agreement, other than as provided above, we may be in breach of the Fee Agreement, which could
subject us to regulatory scrutiny, expose us to stockholder lawsuits and could have a negative effect on our financial condition and results of
operations.
Termination by Apollo
We may be adversely affected if Apollo elects to terminate an IMA at a time when such agreement remains advantageous to us. We depend
upon Apollo to implement our investment strategy. Further, Apollo does not face the restrictions described above with regards to its ability to
terminate any ACRA System IMA with us and may terminate such agreements at any time. If Apollo chooses to terminate such agreements,
there is no assurance that we could find a suitable replacement or that certain of the opportunities made available to us as a result of our
relationship with Apollo would be offered by a suitable replacement, and therefore our financial condition and results of operations could be
adversely impacted by our failure to retain a satisfactory investment manager.
Interruption or other operational failures in telecommunications, information technology and other operational systems at Apollo or a
failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on Apollo’s systems, including as a result of
human error, could have a material adverse effect on our business.
We are highly dependent on Apollo, as our investment manager, to maintain information technology and other operational systems to record and
process its transactions with respect to our investment portfolio, which includes providing information that enables us to value our investment
portfolio and may affect our financial statements. Apollo could experience a failure of one of these systems, its employees or agents could fail to
monitor and implement enhancements or other modifications to a system in a timely and effective manner or its employees or agents could fail
to complete all necessary data reconciliation or other conversion controls when implementing a new software system or modifications to an
existing system. Additionally, anyone who is able to circumvent Apollo’s security measures and penetrate its information technology systems
could access, view, misappropriate, alter or delete information in the systems, including proprietary information relating to our investment
portfolio. The maintenance and implementation of these systems at Apollo is not within our control. Should Apollo’s systems fail to accurately
record information pertaining to our investment portfolio, we may inadvertently include inaccurate information in our financial statements and
experience a lapse in our internal control over financial reporting. The failure of any one of these systems at Apollo for any reason, or errors
made by its employees or agents, could cause significant interruptions to its operations, which could adversely affect our internal control over
financial reporting or have a material adverse effect on our business, financial condition and results of operations.
The historical investment portfolio performance of Apollo should not be considered as indicative of the future results of our investment
portfolio, or our future results or our ability to declare and pay dividends on our preferred stock.
Our investment portfolio’s returns have benefited historically from investment opportunities and general market conditions that currently may
not exist and may not repeat themselves, and there can be no assurance Apollo will be able to avail itself of profitable investment opportunities
in the future. Furthermore, the historical returns of our investments managed by Apollo are not directly linked to our ability to declare and pay
dividends on our preferred stock, which is affected by various factors, one of which is the value of our investment portfolio. In addition, Apollo
is compensated based on the aggregate value of the assets it manages on our behalf and on the allocation of those assets to certain fee categories,
rather than on the investment returns achieved. Accordingly, there can be no guarantee Apollo will be able to achieve any particular return for
our investment portfolio in the future.
The returns that we expect to achieve on our investment portfolio may not be realized.
We make certain assumptions regarding our future financial performance, including but not limited to, target returns on our organic and
inorganic channels and target net spreads. Included within these assumptions are estimates regarding the level of returns to be achieved on our
investment portfolio, including assumptions regarding the expected future performance of assets directly originated by Apollo. These returns are
subject to market and other factors and we can give no assurance that they will ultimately be achieved. Actual results may differ, perhaps
significantly, from our current expectations. To the extent that such differences occur, our future financial performance may be materially and
adversely different than that communicated herein and elsewhere.
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Risks Relating to Insurance and Other Regulatory Matters
Our industry is highly regulated and we are subject to significant legal restrictions and obligations, and these restrictions and obligations
may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.
We are subject to a complex and extensive array of laws and regulations that are administered and enforced by many regulators, including the
BMA, US state insurance regulators, US state securities administrators, US state banking authorities, the SEC, FINRA, the DOL, the IRS and
the Office of the Comptroller of the Currency. See Item 1. Business–Regulation for a summary of certain of the laws and regulations applicable
to our business. Failure to comply with these laws and regulations could subject us to administrative penalties imposed by a particular
governmental or self-regulatory authority, unanticipated costs associated with remedying such failure or other claims, harm to our reputation,
revocation of our certificate of incorporation or interruption of our operations, any of which could have a material and adverse effect on our
financial position, results of operations and cash flows.
In addition to these restrictions, guaranty associations may subject member insurers, including us, to assessments that require the insurers to pay
funds to cover contractual obligations under insurance policies issued by insurance companies that become impaired or insolvent. These
associations levy assessments, up to prescribed limits, on each member insurer doing business in a particular state on the basis of their
proportionate share of the premiums written by all member insurers in the lines of business in which the impaired or insolvent insurer previously
engaged. Most states limit assessments in any year to 2% of the insurer’s average annual premium for the three years preceding the calendar
year in which the impaired insurer became impaired or insolvent. Although we have historically not paid material amounts in connection with
these assessments, we cannot accurately predict the magnitude of such amounts in the future, or accurately predict which past or future
insolvencies of other insurers could lead to such assessments. If material, such future assessments may have an adverse effect on our financial
condition, results of operations, liquidity or cash flows, and any liability we have previously established for these potential assessments may not
be adequate.
In addition to the foregoing risks, the financial services industry is the focus of increased regulatory scrutiny as various US state and federal
governmental agencies and self-regulatory organizations conduct inquiries and investigations into the products and practices of the companies
within this industry. Governmental authorities and standard setters in the US and worldwide (including the IAIS) have become increasingly
interested in potential risks posed by the insurance industry as a whole, and to commercial and financial activities and systems in general, as
indicated by the development of the ICS by the IAIS to be applicable to IAIGs and the Global Monitoring Exercise, as well as the US NAIC’s
adoption of the GCC and LST. The IID has adopted the GCC and LST amendments, which are applicable to us. On February 6, 2024, the IID
identified AGM as meeting the criteria as an IAIG and further identified AHL as the Head of the IAIG. As a result of these identifications, we
expect AHL to be subject to the relevant capital standard that the US will apply to IAIGs once adopted. At this time, we do not expect a
significant impact on AHL’s capital position or capital structure; however, we cannot fully predict with certainty the impact (if any) on AHL’s
capital position or capital structure and any other burdens being named an IAIG may impose on AHL or its insurance affiliates. See Item 1.
Business–Regulation–Regulation of an Insurance Group for further discussion. While we cannot predict the exact nature, timing or scope of
possible governmental initiatives, there may be increased regulatory intervention in the insurance and financial services industry in the future.
Our failure to obtain or maintain licenses and/or other regulatory approvals as required for the operations of our insurance subsidiaries
may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.
Each regulator retains the authority to license insurers in its jurisdiction and an insurer generally may not operate in a jurisdiction in which it is
not licensed. We have US domiciled insurance subsidiaries that collectively are currently licensed to do business in all 50 states, Puerto Rico
and the District of Columbia. Our ability to retain these licenses depends on our and our subsidiaries’ ability to meet requirements established by
the NAIC and adopted by each state, such as RBC standards and surplus requirements. Some of the factors influencing these requirements,
particularly factors such as changes in equity market levels, the value of certain derivative instruments that do not receive hedge accounting, the
value and credit ratings of certain fixed-income and equity securities in our investment portfolio, interest rate changes, changes to the applicable
RBC formulas and the interpretation of the NAIC’s instructions with respect to RBC calculation methodologies, are out of our control.
In addition, licensing regulations differ as to products and jurisdictions and may be subject to interpretation as to whether certain licenses are
required with respect to the manner in which we may sell or service some of our products in certain jurisdictions. The degree of complexity is
heightened in the context of products that are issued through our institutional channel, including our pension group annuity products, where one
product may cover risks in multiple jurisdictions.
If the factors discussed above adversely affect us or a state regulator interprets a licensing requirement differently than we do and we are unable
to meet the requirements above, our subsidiaries could lose their licenses to do business in certain states; be subject to additional regulatory
oversight; have their licenses suspended; be subject to rescission requests, fines, administrative penalties or payments to policyholders; or be
subject to seizure of assets. A loss or suspension of any of our subsidiaries’ licenses or an inability of any of our insurance subsidiaries to be able
to sell or service certain of our insurance products in one or more jurisdictions may negatively impact our reputation in the insurance market and
result in our subsidiaries’ inability to write new business, distribute funds or pursue our investment/overall business strategy.
The licenses currently held by our insurance subsidiaries are limited in scope with respect to the products that may be sold within the respective
jurisdictions. To the extent that our insurance subsidiaries seek to sell products for which we are not currently licensed, such subsidiaries would
be required to become licensed in each of the respective jurisdictions in which such products are expected to be sold. There is no assurance that
our insurance subsidiaries would be able to obtain the relevant licenses and the subsidiaries’ inability to do so may impair our competitive
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position and reduce our growth prospects, causing our financial position, results of operations and cash flows to fall below our current
expectations.
Our Bermuda reinsurance subsidiaries, as Bermuda domiciled insurers, are also required to maintain licenses. Each of our Bermuda reinsurance
subsidiaries is licensed as a reinsurer in Bermuda. Bermuda insurance statutes and regulations and policies of the BMA require that our
Bermuda reinsurance subsidiaries, among other things, maintain a minimum level of capital and surplus; satisfy solvency standards; restrict
dividends, distributions and reductions of capital; obtain prior approval or provide notification to the BMA, as the case may be, of ownership,
transfer and disposition of stockholder controller shares; maintain a head office and have certain officers resident in Bermuda; appoint and
maintain a principal representative in Bermuda; and provide for the performance of certain periodic examinations of itself and its financial
condition. A failure to meet these conditions may result in the suspension or revocation of a Bermuda reinsurance subsidiary’s license to do
business as a reinsurance company in Bermuda, which would mean that such Bermuda reinsurance subsidiary would not be able to enter into
any new reinsurance contracts until the suspension ended or it became licensed in another jurisdiction. Any such suspension or revocation of a
Bermuda reinsurance subsidiary’s license would negatively impact its and our reputation in the reinsurance marketplace and could have a
material adverse effect on our results of operations.
UK law imposes licensing and other regulatory requirements in respect of insurance and reinsurance business carried out in the UK. Certain of
our subsidiaries are UK tax resident companies but do not have the UK regulatory licenses required to write or carry out insurance business in
the UK. Accordingly, their business does not involve transactions with UK domiciled clients and we believe that their operations and
governance arrangements are otherwise undertaken to comply with UK regulatory requirements. ALReI is a Bermuda domiciled and regulated
reinsurance subsidiary that is not a UK tax resident and does not have the UK regulatory licenses required to write or carry out insurance
business in the UK. ALReI assumed reinsurance business from a UK domiciled client in December 2019, and will continue to seek other such
opportunities going forward, in accordance with and as permitted under UK law. We believe ALReI’s business, operations and governance
arrangements are undertaken to comply with UK law. We will continue to monitor developments in UK regulation to seek to cause the UK tax
resident companies and ALReI to comply with UK law and regulation at all times; however, there can be no assurance that the UK regulatory
authorities will not interpret the application of the relevant rules in a manner that differs from our interpretation and challenge the existing or
future arrangements.
The process of obtaining licenses is time consuming and costly, and we may not be able to become licensed in jurisdictions other than those in
which our subsidiaries are currently licensed and/or for products for which we are currently licensed. The modification of the conduct of our
business resulting from our and our subsidiaries becoming licensed in certain jurisdictions or for certain products could significantly and
negatively affect our business. In addition, our inability to comply with insurance statutes and regulations could materially and adversely affect
our business by limiting our ability to conduct business as well as subjecting us to penalties and fines.
Changes in the laws and regulations governing the insurance industry or otherwise applicable to our business, may have a material adverse
effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.
Certain of the laws and regulations to which we are subject are summarized in Item 1. Business–Regulation. Changes in the laws and regulations
relevant to our business may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and
prospects. Certain of the risks associated with changes in these laws and regulations are discussed in greater detail below.
The Dodd-Frank Act made sweeping changes to the regulation of financial services entities, products and markets. Historically, the federal
government had not directly regulated the insurance business. However, the Dodd-Frank Act generally provides for enhanced federal
supervision of financial institutions, including some insurance companies in defined circumstances, as well as financial activities that are
deemed to represent a systemic risk to financial stability or the economy. Certain provisions of the Dodd-Frank Act are or may become
applicable or relevant to us, our competitors or those entities with which we do business, including, but not limited to: the establishment of a
comprehensive federal regulatory regime with respect to derivatives – see Item 1, Business–Regulation–Regulation of OTC Derivatives for
further information; the establishment of consolidated federal regulation and resolution authority over SIFIs and/or systemically important
financial activities; the establishment of the Federal Insurance Office; changes to the regulation of broker-dealers and investment advisors;
changes to the regulation of reinsurance; changes to regulations affecting the rights of stockholders; the imposition of additional regulation over
credit rating agencies; and the imposition of concentration limits on financial institutions that restrict the amount of credit that may be extended
to a single person or entity.
Legislative or regulatory requirements imposed by or promulgated in connection with the Dodd-Frank Act may impact us in many ways,
including, but not limited to: placing us at a competitive disadvantage relative to our competition or other financial services entities; changing
the competitive landscape of the financial services sector or the insurance industry; making it more expensive for us to conduct our business;
requiring the reallocation of significant company resources to government affairs; increasing our legal and compliance related activities and the
costs associated therewith as the Dodd-Frank Act may permit the preemption of certain state laws when inconsistent with international
agreements, such as the EU Covered Agreement and the UK Covered Agreement; and otherwise having a material adverse effect on the overall
business climate as well as our financial condition and results of operations.
Heightened standards of sales conduct as a result of the implementation of SAT, including state adoption of a revised SAT version that includes
a best interest concept, or the adoption of other similar proposed rules or regulations could also increase the compliance and regulatory burdens
on our representatives, and could lead to increased litigation and regulatory risks, changes to our business model, a decrease in the number of
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our securities-licensed representatives and a reduction in the products we offer to our clients, any of which could have a material adverse effect
on our business, financial condition and results of operations.
In addition, we expect the worldwide demographic trend of population aging will cause policymakers to continue to focus on the framework of
US and non-US retirement systems, which may drive additional changes regarding the manner in which individuals plan for and fund their
retirement, the extent of government involvement in retirement savings and funding, the regulation of retirement products and services and the
oversight of industry participants. Any incremental requirements, costs and risks imposed on us in connection with such current or future
legislative or regulatory changes, may constrain our ability to market our products and services to potential customers, and could negatively
impact our profitability and make it more difficult for us to pursue our growth strategy.
Although we are subject to regulation in each state in which we conduct business, in many instances the state insurance laws and regulations
emanate from the NAIC. State insurance regulators and the NAIC regularly re-examine existing laws and regulations applicable to insurance
companies and their products. Any proposed or future legislation or NAIC initiatives, if adopted, may be more restrictive on our ability to
conduct business than current regulatory requirements or may result in higher costs or increased statutory capital and reserve requirements.
Changes in these laws and regulations or interpretations thereof are often made for the benefit of the consumer and at the expense of the insurer
and could have a material adverse effect on our domestic insurance subsidiaries’ businesses, financial condition and results of operations. We
are also subject to the risk that compliance with any particular regulator’s interpretation of a legal or accounting issue may not result in
compliance with another regulator’s interpretation of the same issue, particularly when compliance is judged in hindsight. There is an additional
risk that any particular regulator’s interpretation of a legal or accounting issue may change over time to our detriment, or that changes to the
overall legal or market environment, even absent any change of interpretation by a particular regulator, may cause us to change our views
regarding the actions we need to take from a legal risk management perspective, which could necessitate changes to our practices that may, in
some cases, limit our ability to grow and improve profitability.
Risks Relating to Taxation
The tax treatment of our structure is complex and may be subject to change as a result of new laws or regulations or differing interpretations
of existing laws and regulations, under audit or otherwise, potentially on a retroactive basis.
The tax treatment of our structure and transactions undertaken by us depends in some instances on determinations of fact and interpretations of
complex provisions of US federal, state, local and non-US tax law for which no clear precedent or authority may be available. In addition, US
federal, state, local and non-US tax rules are constantly under review by persons involved in the legislative process, the IRS, the US Department
of the Treasury, and state, local and non-US legislative and regulatory bodies, which frequently results in revised interpretations of established
concepts, statutory changes, revisions to regulations and other modifications and interpretations. It is possible that future legislation increases the
US federal income tax rates applicable to corporations, limits further the deductibility of interest or effects other changes that could have a
material adverse effect on our business, results of operations and financial condition.
On August 16, 2022, the US government enacted the Inflation Reduction Act of 2022 (IRA). The IRA contains a number of tax-related
provisions, including a 15% minimum corporate income tax on certain large corporations as well as an excise tax on stock repurchases. The
impact of the IRA on our financial condition will depend on the facts and circumstances of each year.
Non-US, state and local governments may enact legislation that could result in changes to non-US, state and local tax law and regulations, which
may have a material impact on our financial position and results of operations. In particular, both the rate and basis of taxation may change. We
cannot predict whether any particular proposed legislation will be enacted or, if enacted, what the specific provisions or the effective date of any
such legislation would be, or whether it would have any effect on us. As such, we cannot assure you that future legislative, administrative or
judicial developments will not result in an increase in the amount of US (including state or local) or non-US tax payable by us, our subsidiaries
or investors in our shares. If any such developments occur, our business, results of operations and cash flows could be adversely affected and
such developments could have an adverse effect on your investment in our shares.
Our effective tax rate and tax liability is based on the application of current tax laws, regulations and treaties as interpreted and applied by
various jurisdictions. These laws, regulations and treaties are complex, and the manner in which they apply to us and our subsidiaries is
sometimes open to interpretation. Moreover, the application of such laws, regulations and treaties may not be compatible with one another.
Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any
valuation allowance recorded against our net deferred tax assets. Although management believes its application of current laws, regulations and
treaties to be correct and sustainable upon examination by the tax authorities, the tax authorities could challenge our interpretation resulting in
additional tax liability or adjustment to our tax provision that could increase our effective tax rate or have other unforeseen adverse tax
consequences.
In addition, we or certain of our subsidiaries are currently (or have been recently) under tax audit in various jurisdictions, and these jurisdictions
or any others where we conduct business may assess additional tax against us. While we believe our tax positions, determinations, and
calculations are reasonable, the final determination of tax upon resolution of any audits could be materially different from our historical tax
provisions and accruals. Should additional material taxes be assessed as a result of an audit, assessment or litigation, there could be an adverse
effect on our results of operations and cash flows in the period or periods for which that determination is made. Even where an audit, assessment
or litigation is resolved favorably to us, the additional costs incurred in resisting or resolving such audits, assessments or litigation may
adversely affect our business.
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The US Congress, the OECD and other government bodies and organizations in jurisdictions where we and our affiliates are established, invest
or conduct business continue to recommend and implement changes related to the taxation of multinational companies. The OECD/G20
Inclusive Framework on BEPS (Inclusive Framework), which currently includes over 145 countries and jurisdictions, has proposed and
encouraged the implementation by its participating jurisdictions of changes to numerous long-standing tax principles through its BEPS project,
which is focused on a number of issues, including the prevention of profit shifting among affiliated entities in different jurisdictions, limitation
of improper interest deductibility claims and ensuring eligibility of taxpayers claiming the benefits of double tax treaties. Several of the BEPS
measures, including measures covering treaty abuse, the deductibility of interest expense, local nexus requirements, transfer pricing and hybrid
mismatch arrangements, are relevant to our group structure and the structure of some of our investments. There remains some significant
uncertainty regarding the timing of implementation and the specific domestic measures adopted in pursuance of the BEPS project for our
business, however. Those aspects of the BEPS proposals which have already been implemented rely on relatively new legislation in a number of
Inclusive Framework member jurisdictions, for which there is (in many cases) limited domestic precedent. Specifically, uncertainty remains
around (among other matters) access to tax treaties for some of our investments, which could create situations of double taxation and adversely
impact our investment returns.
In addition, Inclusive Framework members continue to work toward the domestic implementation of so-called “Pillar Two” which, broadly,
ensures that multinational enterprises (MNEs) with revenues over 750 million euros pay a minimum rate of corporate income tax in each
jurisdiction in which they operate. Pillar Two includes two interlocking rules for domestic adoption by Inclusive Framework members (together
the Global Anti-Base Erosion Rules (GloBE Rules)): (1) an Income Inclusion Rule (IIR), which imposes top-up tax on a parent entity in respect
of the low-taxed income of a constituent entity within that parent entity’s group; and (2) a “UTPR” (commonly known as an undertaxed profits
rule), which denies deductions or requires an equivalent adjustment to the extent the low-taxed income of a constituent entity is not subject to
tax under an IIR.
Key aspects of Pillar Two (including IIR regimes) have already become effective in jurisdictions relevant to our business as of January 1, 2024,
with other aspects (including UTPR regimes) expected to become effective in 2025. The United Kingdom, for example, enacted legislation in
July 2023 implementing an IIR via a MTT (alongside a UK domestic top-up tax) that applies to MNEs for accounting periods beginning on or
after December 31, 2023 and is proposing the introduction of a UTPR to be effective for accounting periods beginning on or after December 31,
2024.
The OECD has released administrative guidance which clarifies (and in some cases amends) previously released guidance on the application of
the model GloBE Rules, and jurisdictions enacting legislation in respect of Pillar Two have sought to implement these updates (either by way of
legislative amendment or the release of further domestic guidance). We expect that the OECD will continue to release updates to its
administrative guidance which may result in further amendments to the Pillar Two rules as they apply in relevant jurisdictions. As such, several
aspects of the Pillar Two rules, including whether some or all of our business and the companies in which we invest fall within the scope of the
exclusions therefrom, currently remain uncertain.
The release of further updates to the GloBE Rules and adoption of Pillar Two legislation (including IIR or UTPR regimes) by additional
jurisdictions may give rise to consequential amendments to tax laws (other than those which seek to enact or modify Pillar Two rules) in other
jurisdictions. As noted below (see –The recently enacted Bermuda Corporate Income Tax Act 2023, or other changes in Bermuda tax laws, may
negatively affect our earnings and results from operations), Bermuda in particular has enacted the Bermuda CIT in response to the Pillar Two
initiative. The implications of these rules for our business remain uncertain, both at a domestic level in Bermuda and in terms of how the
Bermuda CIT (which came into full effect on January 1, 2025) might interact with the MTT and UTPR legislation or other Pillar Two
implementing legislation in relevant jurisdictions.
Alongside Pillar Two, the Inclusive Framework has also developed a proposal to amend existing tax laws and principles to shift taxing rights to
the jurisdiction of the consumer (called “Pillar One”). As currently proposed, Pillar One seeks to re-allocate taxing rights over 25% of the
residual profits of MNEs with global turnover in excess of 20 billion euros (excluding extractives and regulated financial services) to the
jurisdictions where the customers and users of those MNEs are located. While the Inclusive Framework continues to seek agreement regarding
the form and timing of implementation of Pillar One, no concrete proposal has yet been achieved and therefore the likely impact on our business
and the taxes we pay remains unclear.
The timing, scope and implementation into the domestic law of relevant jurisdictions of any measures in pursuit of aspects of the BEPS project
other than Pillar One and Pillar Two remains subject to significant uncertainty, as does the content of existing and future OECD guidance and
the form of legislation which enacts these changes. Such future changes may result in material additional tax being payable by our business and
the businesses of the companies in which we invest. The ultimate implementation of the BEPS project may also increase the complexity and the
burden and costs of compliance and advice relating to our efforts to efficiently fund, hold and realize investments, and could necessitate or
increase the probability of some restructuring of our group or business operations. This may also lead to additional complexity in evaluating the
tax implications of ongoing investments and restructuring transactions within our business.
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Our ownership of certain non-US entities could cause us to be subject to US federal income tax in amounts greater than expected, which
could adversely affect the value of your investment.
Certain of our non-US subsidiaries are treated as foreign corporations under the Internal Revenue Code (such subsidiaries, the Non-US
Subsidiaries). Each of the Non-US Subsidiaries currently intends to operate in a manner that will not cause it to be subject to US federal income
taxation on a net basis in any material amount. However, there is considerable uncertainty as to whether a foreign corporation is engaged in a
trade or business (or has a permanent establishment) in the US, as the law is unclear and the determination is highly factual and must be made
annually. Therefore there can be no assurance that the IRS will not successfully contend that a Non-US Subsidiary that does not intend to be
treated as engaged in a trade or business (or as having a permanent establishment) in the US does, in fact, so engage (or have such a permanent
establishment). If any such Non-US Subsidiary is treated as engaged in a trade or business in the US (or as having a permanent establishment), it
may incur greater tax costs than expected on any income not exempt from taxation under an applicable income tax treaty, which could have a
material adverse effect on our financial condition, results of operations and cash flows.
In addition, certain of our subsidiaries are treated as resident in the UK for UK tax purposes (UK Resident Companies) and expect to qualify for
the benefits of the income tax treaty between the US and the UK (UK Treaty) by reason of being subsidiaries of AGM or by reason of satisfying
an ownership and base erosion test. Accordingly, our UK Resident Companies are expected to qualify for certain exemptions from, or reduced
rates of, US federal taxes that are provided for by the UK Treaty. However, there can be no assurances that our UK Resident Companies will
continue to qualify for treaty benefits or satisfy all of the requirements for the tax exemptions and reductions they intend to claim. If any of our
UK Resident Companies fails to qualify for such benefits or satisfy such requirements, it may incur greater tax costs than expected, which could
have a material adverse effect on our financial condition, results of operations and cash flows.
AHL may be subject to UK taxation by reason of its historic UK tax residency or as a result of ceasing to be a UK tax resident.
Prior to 2024, AHL was treated as resident in the UK for UK tax purposes. As from 2024, AHL expects to no longer be a resident of the UK for
tax purposes on the basis that it is not incorporated in the UK and its central management and control is no longer exercised from the UK.
Further, it is expected that AHL will conduct its affairs in a manner that ensures that it is not regarded as carrying on a trade in the UK through a
UK “permanent establishment” or “UK Representative.” Accordingly, AHL does not expect to be generally subject to UK tax on its worldwide
profits.
While it is not anticipated that any adverse UK tax consequences should arise to AHL as a result of its historic UK tax residency, it is possible
that HMRC may nonetheless seek to assert UK taxation with respect to AHL’s historic or future income or gains (including, without limitation,
under a number of specific UK tax regimes, including the controlled foreign company regime, the hybrids and other mismatches regime, the
diverted profits tax and the MTT). The UK tax regime also provides for certain forms of “exit taxation” to occur where a company ceases to be a
UK tax resident (broadly, by deeming such companies (in certain circumstances) to have effected a deemed realization of their assets and
liabilities at fair market value upon departure). We do not anticipate material adverse UK tax consequences for AHL arising as a result of its
historic UK tax residency or as a result of ceasing to be a UK tax resident, but no assurances can be provided that HMRC will not assert that
additional UK taxation applies.
The Base Erosion and Anti-Abuse Tax (BEAT) may significantly increase our tax liability.
The BEAT operates as a minimum tax and is generally calculated as a percentage (10% for taxable years before 2026 and 12.5% thereafter) of
the “modified taxable income” of an “applicable taxpayer.” Modified taxable income is calculated by adding back to a taxpayer’s regular taxable
income the amount of certain “base erosion tax benefits” with respect to certain payments made to foreign affiliates of the taxpayer, as well as
the “base erosion percentage” of any net operating loss deductions. The BEAT applies for a taxable year only to the extent it exceeds a
taxpayer’s regular corporate income tax liability for such year (determined without regard to certain tax credits).
Certain of our reinsurance agreements require our US subsidiaries (including any non-US subsidiaries that have elected to be subject to US
federal income taxation) to pay or accrue substantial amounts to certain of our non-US reinsurance subsidiaries that would be characterized as
“base erosion payments” with respect to which there are “base erosion tax benefits.” These and any other “base erosion payments” may cause us
to be subject to the BEAT. In addition, tax authorities may disagree with our BEAT calculations, or the interpretations on which those
calculations are based, and assess additional taxes, interest and penalties.
We establish our tax provision in accordance with US GAAP. However, there can be no assurance that this provision will accurately reflect the
amount of US federal income tax that we ultimately pay, as that amount could differ materially from the estimate. There may be material
adverse consequences to our business if tax authorities successfully challenge our BEAT calculations, in light of the uncertainties described
above.
Changes in tax law could adversely impact our earnings.
Many of the products that we sell and reinsure benefit from one or more forms of tax-favored status under current US federal and state income
tax regimes. For example, we sell and reinsure annuity contracts that allow the policyholders to defer the recognition of taxable income earned
within the contract. Future changes in US federal or state tax law could reduce or eliminate the attractiveness of such products, which could
affect the sale of our products or increase the expected lapse rate with respect to products that have already been sold. Decreases in product sales
or increases in lapse rates, in either case, brought about by changes in US tax law, may result in a decrease in net invested assets and therefore
investment income and may have a material and adverse effect on our business, financial position, results of operations and cash flows.
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Item 1A. Risk Factors
59
There is US income tax risk associated with reinsurance between US insurance companies and their Bermuda affiliates.
If a reinsurance agreement is entered into among related parties, the IRS is permitted to reallocate or recharacterize income, deductions or
certain other items, and to make any other adjustment, to reflect the proper amount, source or character of the taxable income of each of the
parties. If the IRS were to successfully challenge our reinsurance arrangements, our financial condition, results of operations and cash flows
could be adversely affected.
The recently enacted Bermuda Corporate Income Tax Act 2023, or other changes in Bermuda tax laws, may negatively affect our earnings
and results from operations.
On December 27, 2023, the Government of Bermuda enacted the Bermuda CIT. Commencing on January 1, 2025, the Bermuda CIT generally
imposes a 15% corporate income tax on entities that are tax residents in Bermuda or have a Bermuda permanent establishment and are members
of multi-national groups with consolidated revenues in excess of €750 million for at least two of the last four fiscal years. The Bermuda CIT also
includes various transitional provisions and elections that may reduce the amount of tax imposed. We expect that our subsidiaries that are
organized in Bermuda generally will be subject to tax under the Bermuda CIT. We are continuing to evaluate the impact of the Bermuda CIT on
our operations, including the transitional provisions and elections that may be available to mitigate such impact. No assurances can be provided
that the Bermuda CIT, or future amendments, regulations or other guidance in respect of the Bermuda CIT, will not negatively affect our
earnings and results of operations.
The Bermuda Minister of Finance, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, has issued Tax
Assurance Certificates to our Bermuda subsidiaries assuring such entities that if any legislation is enacted in Bermuda that would impose tax
computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax,
then the imposition of any such tax will not be applicable to such entities or any of their operations, shares, debentures or other obligations until
March 31, 2035, except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable in respect of real property
owned or leased by such entities in Bermuda. Given the limited duration of the Bermuda Minister of Finance’s assurances, and that the Bermuda
CIT described above was enacted notwithstanding such assurances, we cannot assure you that we will not be subject to any other Bermuda taxes
before or after March 31, 2035.
Risks Relating to Investment in Our Securities
AHL is a holding company with limited operations of its own. As a consequence, AHL’s ability to pay dividends on its securities and to make
timely payments on its debt obligations will depend on the ability of its subsidiaries to make distributions or other payments to it, which may
be restricted by law.
AHL is a holding company with limited business operations of its own. AHL’s primary subsidiaries are insurance and reinsurance companies
that own substantially all of our assets and conduct substantially all of our operations. Accordingly, AHL’s payment of dividends and ability to
make timely payments on its debt obligations is dependent, to a significant extent, on the generation of cash flow by its subsidiaries and their
ability to make such cash or other assets available to it, by dividend or otherwise. Dividends or distributions that may be paid by AHL’s
insurance subsidiaries are limited or restricted by applicable insurance or other laws that are based in part on the prior year’s statutory income
and surplus, or other sources. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity
and Capital Resources–Holding Company Liquidity–Dividends from Subsidiaries.
AHL’s subsidiaries may not be able to, or may not be permitted to, make distributions to enable AHL to meet its obligations and pay dividends.
These limitations on AHL’s subsidiaries’ abilities to pay dividends to AHL may negatively impact AHL’s financial condition, results of
operations and cash flows. If AHL is not able to receive sufficient distributions from its subsidiaries, AHL may be required to raise funds
through the incurrence of indebtedness, issuance of equity or sale of assets. AHL’s ability to access funds through such methods is subject to
market conditions and there can be no assurance that AHL would be able to raise funds on favorable terms or at all.
Each subsidiary is a distinct legal entity and legal and contractual restrictions may also limit AHL’s ability to obtain cash from its subsidiaries.
In addition to the specific restrictions described above, AHL’s subsidiaries, as members of its insurance holding company system, are subject to
various statutory and regulatory restrictions on their ability to pay dividends to AHL, as further described in Item 1. Business–Regulation–
Regulation of an Insurance Group–Insurance Holding Company Regulation.
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Item 1A. Risk Factors
60
Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain
legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum viewed by the
stockholders as more favorable for disputes with us or our directors, officers or employees, and the enforceability of the exclusive forum
provision may be subject to uncertainty.
Article XIII of our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action or
proceeding brought on our behalf; (b) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors,
officers, other employees or stockholders to us or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the
General Corporation Law of the State of Delaware (DGCL), our certificate of incorporation or our bylaws or as to which the DGCL confers
jurisdiction on the Court of Chancery of the State of Delaware; or (d) any action asserting a claim governed by the internal affairs doctrine,
except for, as to each of (a) through (d) above, any claim as to which the Court of Chancery determines that there is an indispensable party not
subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of
Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of
Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. The exclusive forum provision also provides that it will
not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or
concurrent federal and state jurisdiction. Stockholders cannot waive, and will not be deemed to have waived under the exclusive forum
provision, the Company’s compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this
exclusive forum provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it
applies, this exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Further, in
the event a court finds the exclusive forum provision contained in the Certificate of Incorporation to be unenforceable or inapplicable in an
action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating
results and financial condition.
General Risk Factors
Our business may be the target or subject of, and we may be required to defend against or respond to, litigation, regulatory investigations,
enforcement actions or reputational harm.
We operate in an industry in which various practices are subject to potential litigation, including class actions, and regulatory scrutiny. We, like
other financial services companies, are involved in litigation and arbitration in the ordinary course of business and may be the subject of
regulatory proceedings (including investigations and enforcement actions). Plaintiffs may seek large or indeterminate amounts of damages in
litigation and regulators may seek large fines in enforcement actions. Given the large or indeterminate amounts sometimes sought, and the
inherent unpredictability of litigation and enforcement actions, it is possible that an unfavorable resolution of one or more matters could have a
material and adverse effect on our business, financial condition, results of operations and cash flows. See Item 3. Legal Proceedings and
Note 16 – Commitments and Contingencies to the consolidated financial statements for certain matters to which we are a party, if any. Even if
we ultimately prevail in any litigation or receive positive results from investigations, we could incur material legal costs or our reputation could
be materially adversely affected.
Beginning in March 2024, a number of putative class actions were filed in federal courts in the US against certain of our customers, in their
respective capacities as plan sponsors, alleging violations of ERISA in connection with their transfer of pension obligations under defined
benefit plans governed under ERISA and their purchase of pension group annuity contracts from us. The lawsuits seek, inter alia, that
defendants guarantee the annuities purchased from us and disgorge any profits earned from the transactions. Although we are not a named
defendant, the lawsuits make several negative allegations about us and our business, which we believe to be untrue. Recently, similar claims
have been filed against customers of other insurance companies that have transferred their pension obligations to such other insurance
companies. Negative public perceptions of us and our business have adversely affected, and may continue to adversely affect, our ability to
attract and retain customers in our pension group annuity business, which could have a material adverse effect on our business, results of
operations, financial condition and cash flows. To the extent these lawsuits continue to spread to customers of other insurance companies, future
activity in the overall pension risk transfer industry may be reduced. In addition, these lawsuits could lead to increased regulatory and
governmental scrutiny of our business and the industry overall, and/or result in us becoming involved in these lawsuits or even being named as a
defendant in future lawsuits related to our pension group annuity business, which could result in additional expenses, adverse regulations and
oversight, and/or additional reputational harm. These lawsuits could also spur similar copycat lawsuits, which could further impact our pension
group annuity business. To the extent that the inflows in our pension group annuity business continue to be negatively impacted by these
lawsuits, and in the event of any related regulatory and governmental scrutiny, we may seek to increase our inflows in our other distribution
channels, including by issuing additional funding agreements within our institutional channel. However, there are no assurances that we would
be successful in replacing any future pension group annuity inflows with inflows from other distribution channels or that such other inflows
would result in comparable spreads.
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Item 1A. Risk Factors
61
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
We have developed a comprehensive information security program that is designed to protect and preserve the confidentiality, integrity, and
continued availability of all information that we own or possess. The program is a critical component of our overall IT Security, Risk, and
Compliance Management Program, which is based, in part, on recognized frameworks established by the National Institute of Standards and
Technology, the International Organization for Standardization and other applicable industry standards.
Key features of the program include:
•
Implementation of a detailed cyber incident response plan that provides controls and procedures for identifying, assessing, containing,
remediating, escalating, and reporting cyber incidents.
•
Cross-functional approach to addressing cybersecurity risk, with engagement among internal working groups such as Risk,
Information Technology, Operations, Procurement, Legal, Compliance, and Internal Audit functions.
•
Information security policies and procedures that are reviewed at least annually and updated to reflect changes in law, technology,
practice, and emerging threats.
•
Cybersecurity awareness training for employees, upon hire and at least annually thereafter;
•
Ongoing monitoring, and periodic assessment and testing, of our networks and systems for threats, vulnerabilities, and other
cybersecurity risks, internal and external.
•
Periodic tabletop exercises and response readiness assessments, with participation from senior executives, led by outside advisors who
provide a third-party independent assessment of our technical program and internal response preparedness; results are provided to the
audit committee.
•
Development of risk mitigation strategies that may defray costs associated with an information security breach.
•
Periodic cyber drills and disaster recovery tests which are designed to help ensure our business operations can continue in the event of
a cybersecurity attack.
•
Comprehensive internal risk assessment of critical third-party service providers, including of their cybersecurity posture prior to
onboarding; contractual requirements for critical third-party service providers to adhere to our standards and incidents reporting; once
engaged, critical third-party service providers are required to maintain a comprehensive cybersecurity plan in conformity with industry
standards.
We engage industry specialists and other third parties in connection with such processes.
Our information security program is managed by our Chief Information Security Officer (CISO) with collaboration across lines of businesses
and corporate functions. The CISO is a senior-level executive responsible for establishing and executing our information security strategy,
including cybersecurity oversight. The CISO reports directly to our Chief Information Officer (CIO), who reports directly to our Chief
Operating Officer (COO). The CIO and CISO are members of the management operational risk committee, which reports to the management
risk committee. The COO is a member of the management risk committee, which reports to the board risk committee. See Item 10. Directors,
Executive Officers and Corporate Governance—Corporate Governance—Committees of the Board of Directors—Management Committees for
additional information about the management operational risk committee, which is responsible for overseeing operational risk, including
cybersecurity risk, and the management risk committee, which is responsible for overseeing overall corporate risk.
In addition, the CIO, CISO, General Counsel and certain other members of senior management meet periodically with the audit, risk, and legal
and regulatory committees of the board of directors to review our information technology and cybersecurity risk profile and to discuss risk
mitigation plans. While the board risk committee is ultimately responsible for overseeing the management of our information security program
at the board level, the audit and legal and regulatory committees assist the risk committees in fulfilling its duties. Each of the board committees
regularly briefs the full board of directors on matters reported to them. See Item 10. Directors, Executive Officers and Corporate Governance—
Corporate Governance—Risk Management Oversight for additional information regarding the role of our board of directors in risk management
oversight, including its oversight of risks from cybersecurity threats. We have not identified any risks from cybersecurity threats, including as a
result of any previous cybersecurity incidents, that have materially affected us, our business strategy, results of operation or financial condition.
See Item 1A. Risk Factors—Risks Relating to Our Business Operations—Interruption or other operational failures in telecommunications,
information technology and other operational systems, including as a result of threat actors attacking those systems, or a failure to maintain the
security, integrity, confidentiality or privacy of sensitive data residing on those systems, including as a result of human error, could have a
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62
material adverse effect on our business and Item 1A. Risk Factors—Risks Relating to Our Relationship with Apollo—Interruption or other
operational failures in telecommunications, information technology and other operational systems at Apollo or a failure to maintain the
security, integrity, confidentiality or privacy of sensitive data residing on Apollo’s systems, including as a result of human error, could have a
material adverse effect on our business for further discussion of the risks we face from cybersecurity threats.
The CIO is responsible for managing our information technology strategy. Our CIO has over 30 years of insurance and financial services
operations and technology experience, including as chief information officer at large insurance companies; and received a Bachelor of Science
in business management and a Master of Business Administration in management information systems.
The CISO is responsible for managing our information security program. Our CISO has over 25 years of information technology experience and
over 20 years of information security experience; is a Certified Information Systems Security Professional, a Certified Information Systems
Manager, and holds a Bachelor of Arts in statistical science, a Bachelor of Science in computer science, and a Master of Business
Administration in business.
Item 2. Properties
We own our corporate headquarters located at 7700 Mills Civic Parkway, West Des Moines, Iowa. We lease our head office for Bermuda
operations in Hamilton, Bermuda. We consider these facilities and other properties to be suitable and adequate for the management and
operation of our business.
Item 3. Legal Proceedings
We are subject to litigation arising in the ordinary course of our business, including litigation principally relating to our retail business. We
cannot assure you that our insurance coverage will be adequate to cover all liabilities arising out of such claims. The outcomes of legal
proceedings and claims brought against us are subject to significant uncertainty. There is significant judgment required in assessing both the
probability of an adverse outcome and the determination as to whether an exposure can be reasonably estimated. In management’s opinion, the
ultimate disposition of any current legal proceedings or claims brought against us will not have a material effect on our financial condition,
results of operations or cash flows. Litigation is, however, inherently uncertain and an adverse outcome from such litigation could have a
material effect on the operating results of a particular reporting period.
From time to time, in the ordinary course of business and like others in the insurance and financial services industries, we receive requests for
information from government agencies in connection with such agencies’ regulatory or investigatory authority. Such requests can include
financial or market conduct examinations, subpoenas or demand letters for documents to assist such agencies in audits or investigations. We and
each of our US insurance subsidiaries review such requests and notices and take appropriate action. We have been subject to certain requests for
information and investigations in the past and could be subject to them in the future.
Descriptions of certain legal proceedings affecting us, if any, are included in Note 16 – Commitments and Contingencies to the consolidated
financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
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63
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information, Stockholders, Dividends, and Securities Authorized for Issuance under Equity Compensation Plans
Not applicable.
Recent Sales of Unregistered Securities and Issuer Purchases of Securities
None.
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64
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
66
Industry Trends and Competition
68
Key Operating and Non-GAAP Measures
70
Results of Operations
73
Investment Portfolio
78
Non-GAAP Measure Reconciliations
95
Liquidity and Capital Resources
99
Critical Accounting Estimates and Judgments
105
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65
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Forward-Looking
Statements, Item 1A. Risk Factors and Item 8. Financial Statements and Supplementary Data included within this report.
Overview
We are a leading financial services company that specializes in issuing, reinsuring and acquiring retirement savings products designed for the
increasing number of individuals and institutions seeking to fund retirement needs. AGM is the beneficial owner of 100% of our common stock
and controls all of the voting power to elect members to our board of directors. We focus on generating spread income by combining our two
core competencies of (1) sourcing long-term, persistent liabilities and (2) using the global scale and reach of Apollo’s asset management
business to actively source or originate assets with our preferred risk and return characteristics. Our steady and significant base of earnings
generates capital that we opportunistically invest across our business to source attractively priced liabilities and capitalize on opportunities.
We have established a significant base of earnings and, as of December 31, 2024, have an expected annual net investment spread, which
measures our investment performance plus strategic capital management fees less the total cost of our liabilities, of 1–2% over the estimated 7.8
year weighted-average life of our net reserve liabilities. The weighted-average life includes deferred annuities, pension group annuities, funding
agreements, payout annuities, life insurance contracts and other products.
Our total assets have grown to $363.3 billion as of December 31, 2024. For the year ended December 31, 2024, we generated a net investment
spread of 1.78%.
The following table presents the inflows and outflows generated from our organic and inorganic channels as well as the breakout between
Athene, the ACRA noncontrolling interests and third-party reinsurers:
Years ended December 31,
(In millions)
2024
2023
2022
Retail
$
35,764
$
35,293
$
20,407
Flow reinsurance
5,573
10,547
6,186
Funding agreements1
28,748
7,193
10,039
Pension group annuities
918
10,374
11,218
Gross organic inflows
71,003
63,407
47,850
Gross inorganic inflows2
—
2,214
—
Total gross inflows
71,003
65,621
47,850
Gross outflows3
(33,469)
(33,868)
(27,872)
Net flows
$
37,534
$
31,753
$
19,978
Inflows attributable to Athene4
$
49,084
$
43,000
$
39,244
Inflows attributable to ACRA noncontrolling interests4
17,848
22,621
8,606
Inflows ceded to third-party reinsurers5
4,071
—
—
Total gross inflows
$
71,003
$
65,621
$
47,850
Outflows attributable to Athene
$
(27,248) $
(28,763) $
(23,724)
Outflows attributable to ACRA noncontrolling interests
(6,221)
(5,105)
(4,148)
Total gross outflows3
$
(33,469) $
(33,868) $
(27,872)
1 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 agreements.
2 Gross inorganic inflows represent acquisitions and block reinsurance transactions. On November 6, 2023, we entered into an agreement with a Japanese
counterparty, effective October 1, 2023, pursuant to which we agreed to reinsure a block of whole life insurance policies on a coinsurance basis.
3 Gross outflows include full and partial policyholder withdrawals on deferred annuities, death benefits, pension group annuity benefit payments, payments on
payout annuities, payments related to interest, maturities and repurchases of funding agreements and block reinsurance outflows. Gross outflows in 2023
include the $2.7 billion of reserves recaptured by Venerable Insurance and Annuity Company (VIAC). Gross outflows in 2022 include the cession of $4.9 billion
of certain inforce funding agreements to Catalina General Insurance Ltd. (Catalina).
4 Effective July 1, 2023, ALRe sold 50% of ACRA 2’s economic interests to ADIP II. Effective December 31, 2023, ACRA 2 repurchased a portion of its shares
held by ALRe, which increased ADIP II’s ownership of economic interests in ACRA 2 to 60%, with ALRe owning the remaining 40% of the economic interests.
Effective October 1, 2024, ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP II’s ownership of economic interests in ACRA 2 to
63%, with ALRe owning the remaining 37% of the economic interests.
5 During the first quarter of 2024, we entered into a modco reinsurance agreement with Catalina to cede a quota share of our retail deferred annuity business
issued on or after January 1, 2024.
Our organic channels, including retail, flow reinsurance and institutional products, provided gross inflows of $71.0 billion, $63.4 billion and
$47.9 billion for the years ended December 31, 2024, 2023 and 2022, respectively, which were underwritten to attractive returns. Gross organic
inflows for the year ended December 31, 2024 increased $7.6 billion, or 12%, reflecting the strength of our multi-channel distribution platform
and our ability to quickly pivot into optimal and profitable channels as opportunities arise. Withdrawals on our deferred annuities, death
benefits, pension group annuity benefit payments, payments on payout annuities, payments related to interest, maturities and repurchases of
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
66
funding agreements and block reinsurance outflows (collectively, gross outflows), in the aggregate were $33.5 billion, $33.9 billion and $27.9
billion for the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in gross outflows of $399 million was primarily
driven by a decrease in outflows related to policies underlying certain reinsurance blocks compared to 2023 and the VIAC recapture transaction
in the third quarter of 2023, partially offset by an increase in funding agreement maturities in 2024 and an increase in retail outflows related to
the higher rate environment. We believe that our credit profile, current product offerings and product design capabilities, as well as our growing
reputation as both a seasoned funding agreement issuer and a reliable pension group annuity counterparty, will continue to enable us to grow our
existing organic channels and source additional volumes of profitably underwritten liabilities in various market environments. We intend to
continue to grow organically by expanding each of our retail, flow reinsurance and institutional distribution channels. We believe that we have
the right people, infrastructure, scale and capital discipline to position us for continued growth.
Within our retail channel, we had fixed annuity sales of $35.8 billion, $35.3 billion and $20.4 billion for the years ended December 31, 2024,
2023 and 2022, respectively. The increase in our retail channel was driven by record sales of our FIA and RILA products, partially offset by a
decrease in MYGA sales compared to 2023. Overall sales were strong across our bank, IMO and broker-dealer channels, exhibiting strong sales
execution, the current rate environment, growing product offerings and our continued expansion into large financial institutions. We have
maintained our disciplined approach to pricing and our targeted underwritten returns. We aim to continue to grow our retail channel by
deepening our relationships with our approximately 41 IMOs and with our growing network of 19 banks and 151 broker-dealers, collectively
representing approximately 140,000 independent agents. Our strong financial position and diverse, capital-efficient products allow us to be
dependable partners with IMOs, banks and broker-dealers as well as to consistently write new business. We expect our retail channel to continue
to benefit from our credit profile, product launches and continuous product enhancements as we look to capture new potential distribution
opportunities. We believe this can support sales growth at our targeted returns from increased volumes via existing IMO relationships and allow
continued expansion of our bank and broker-dealer channels.
Within our flow reinsurance channel, we target reinsurance business consistent with our preferred liability characteristics, which provides us
another opportunistic channel to source liabilities with attractive crediting rates. We generated inflows through our flow reinsurance channel of
$5.6 billion, $10.5 billion and $6.2 billion for the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in our flow
reinsurance channel from 2023 was primarily driven by increased competitive dynamics in 2024. We continue to expand our presence in Asia
with increased partnerships and growing product offerings. We expect that our credit profile and our reputation as a solutions provider will help
us continue to source additional reinsurance partners, which will further diversify our flow reinsurance channel.
Within our institutional channel, we generated inflows of $29.7 billion, $17.6 billion and $21.3 billion for the years ended December 31, 2024,
2023 and 2022, respectively. The increase in our institutional channel was driven by higher funding agreement inflows, partially offset by lower
pension group annuity inflows. We issued funding agreements in the aggregate principal amount of $28.7 billion, $7.2 billion and $10.0 billion
for the years ended December 31, 2024, 2023 and 2022, respectively. The increase in our funding agreement channel from 2023 was driven by
record inflows related to a resurgence in FABN issuance, as well as an increase in secured and other funding agreement and FHLB issuances in
2024 amid more favorable market conditions. Funding agreement inflows for the year ended December 31, 2024 consisted of $10.9 billion of
FABN issuances, $8.4 billion of secured and other funding agreement issuances, $9.4 billion of FHLB issuances and no long-term repurchase
agreement issuances. As of December 31, 2024, we had funding agreements outstanding of $24.1 billion under our FABN program, $14.8
billion of secured and other funding agreements, $15.6 billion with the FHLB and $2.7 billion of long-term repurchase agreements. We issued
pension group annuity contracts in the aggregate principal amount of $918 million, $10.4 billion and $11.2 billion for the years ended December
31, 2024, 2023 and 2022, respectively. The decrease in our pension group annuity channel was primarily related to closing a $7.6 billion
transaction, our largest single pension group annuity transaction to date, in the second quarter of 2023. Additionally, pension group annuity
inflows in 2024 were impacted by the competitive environment and litigation against certain of our pension group annuity clients. Since entering
the pension group annuity market in 2017, we have closed 49 deals resulting in the issuance or reinsurance of group annuities of $52.7 billion
with more than 550,000 plan participants as of December 31, 2024. We expect to grow our institutional channel by continuing to engage in
pension group annuity transactions and programmatic issuances of funding agreements.
Our inorganic channel has contributed significantly to our growth through both acquisitions and block reinsurance transactions. We plan to
continue to grow and diversify our business, both organically and inorganically, with a focus on international expansion, particularly in Asia.
We believe our corporate development team, with support from Apollo, has an industry-leading ability to source, underwrite and expeditiously
close transactions. With support from Apollo, we are a solutions provider with a proven track record of closing transactions, which we believe
makes us the ideal partner to insurance companies seeking to restructure their business. We expect that our inorganic channel will continue to be
an important source of profitable growth in the future.
To support our growth strategies and capital deployment opportunities, we established ACRA 1 as a long-duration, on-demand capital vehicle.
We directly own 37% of the economic interests in ACRA 1, with the remaining 63% of the economic interests being owned by ADIP I, a series
of funds managed by Apollo. During the commitment period, ACRA 1 participated in certain transactions by drawing a portion of the required
capital for such transactions from third-party investors equal to ADIP I’s proportionate economic interest in ACRA 1. The commitment period
for ACRA 1 expired in August 2023.
To further support our growth and capital deployment opportunities following the deployment of capital by ACRA 1, we funded ACRA 2 in
December 2022 as another long-duration, on-demand capital vehicle. Effective July 1, 2023, ALRe sold 50% of its non-voting, economic
interests in ACRA 2 to ADIP II for $640 million. Effective December 31, 2023, ACRA 2 repurchased a portion of its shares held by ALRe,
which increased ADIP II’s ownership of economic interests in ACRA 2 to 60%, with ALRe owning the remaining 40% of the economic
interests. Effective October 1, 2024, ACRA 2 repurchased a portion of its shares held by ALRe, which increased ADIP II’s ownership of
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
67
economic interests in ACRA 2 to 63%, with ALRe owning the remaining 37% of the economic interests. ALRe holds all of ACRA 2’s voting
interests. ACRA 2 participates in certain transactions by drawing a portion of the required capital for such transactions from third-party investors
equal to ADIP II’s proportionate economic interest in ACRA 2.
These stockholder-friendly, strategic capital solutions allow us the flexibility to simultaneously deploy capital across multiple accretive avenues,
while maintaining a strong financial position.
During the fourth quarter of 2024, we purchased investments in ADIP I and ADIP II, of which $65 million was acquired from Apollo. As of
December 31, 2024, we held investments in ADIP of $238 million.
Executing our growth strategy requires that we have sufficient capital available to deploy. We believe that we have significant capital available
to support our growth aspirations. As of December 31, 2024, we estimate that we had approximately $8.8 billion in capital available to deploy,
consisting of approximately $2.0 billion in excess equity capital, $3.3 billion in untapped leverage capacity (assuming an adjusted leverage ratio
of not more than 30%, subject to maintaining a sufficient level of capital required to maintain our desired financial strength ratings from rating
agencies), and $3.5 billion in available undrawn capital at ACRA.
AAA Investment
We consolidate AAA as a VIE and AAA holds the majority of our alternative investment portfolio. Apollo established AAA to provide a single
vehicle through which investors may participate in a portfolio of alternative investments, including those managed by Apollo. Additionally, we
believe AAA enhances Apollo’s ability to increase alternative AUM by raising capital from third parties, which allows us to achieve greater
scale and diversification for alternatives.
Merger with Apollo
On January 1, 2022, we completed our merger with AGM and are now a direct subsidiary of AGM. The total consideration for the transaction
was $13.1 billion. The consideration was calculated based on historical AGM’s December 31, 2021 closing share price multiplied by the AGM
common shares issued in the share exchange, as well as the fair value of stock-based compensation awards replaced, fair value of warrants
converted to AGM common shares and other equity consideration, and effective settlement of pre-existing relationships and other consideration.
At the closing of the merger, each issued and outstanding AHL Class A common share (other than shares held by Apollo, the Apollo Operating
Group (AOG) or the respective direct or indirect wholly owned subsidiaries of Athene or the AOG) was converted automatically into 1.149
shares of AGM common shares with cash paid in lieu of any fractional AGM common shares. In connection with the merger, AGM issued to
AHL Class A common shareholders 158.2 million AGM common shares in exchange for 137.6 million AHL Class A common shares that were
issued and outstanding as of the acquisition date, exclusive of the 54.6 million shares previously held by Apollo immediately before the
acquisition date.
Industry Trends and Competition
Economic and Market Conditions
As a leading financial services company specializing in retirement services, we are affected by the condition of global financial markets and the
economy. Price fluctuations within equity, credit, commodity and foreign exchange markets, as well as interest rates and global inflation, which
may be volatile and mixed across geographies, can significantly impact the performance of our business, including, but not limited to, the
valuation of investments and related income we may recognize.
Adverse economic conditions may result from domestic and global economic and political developments, including plateauing or decreasing
economic growth and business activity, changes to US and foreign tariff policies, civil unrest, geopolitical tensions or military action, such as
the armed conflicts in the Middle East and between Ukraine and Russia, and corresponding sanctions imposed on Russia by the US and other
countries, and new or evolving legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply
chains.
We carefully monitor economic and market conditions that could potentially give rise to global market volatility and affect our business
operations, investment portfolios and derivatives, which include global inflation. US inflation eased in 2024 with the US Bureau of Labor
Statistics reporting the annual US inflation rate decreased to 2.9% as of December 31, 2024, compared to 3.4% as of December 31, 2023. The
US Federal Reserve cut interest rates three times during 2024, resulting in a 100 basis point decrease to their benchmark interest rate target
range, which ended the year at 4.25% to 4.50%.
Equity market performance was strong during 2024. In the US, the S&P 500 Index increased by 23.3% in 2024, following an increase of 24.2%
in 2023. In terms of economic conditions in the US, the Bureau of Economic Analysis reported real GDP increased at an annual rate of 2.8% in
2024, following an increase of 2.9% in 2023. As of January 2025, the International Monetary Fund estimated that the US economy will expand
by 2.7% in 2025 and 2.1% in 2026. The US Bureau of Labor Statistics reported that the US unemployment rate increased to 4.1% as of
December 31, 2024, compared to 3.8% as of December 31, 2023. Oil finished 2024 in line with 2023, increasing only 0.1% from 2023.
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Foreign exchange rates can materially impact the valuations of our investments and liabilities that are denominated in currencies other than the
US dollar. The US dollar strengthened in 2024 compared to the euro and Japanese yen. Relative to the US dollar, the euro depreciated 6.2% in
2024, after appreciating 3.1% in 2023. Relative to the US dollar, the Japanese yen depreciated 10.3% in 2024, after depreciating 6.9% in 2023.
We generally undertake hedging activities to eliminate or mitigate foreign exchange currency risk.
Interest Rate Environment
Medium and long-term rates increased in 2024, with the US 10-year Treasury yield at 4.58% as of December 31, 2024 compared to 3.88% as of
December 31, 2023. Short-term rates decreased in 2024, with the 3-month secured overnight financing rate at 4.31% as of December 31, 2024
compared to 5.33% as of December 31, 2023.
Our investment portfolio consists predominantly of fixed maturity investments. See –Investment Portfolio. If prevailing interest rates were to
rise, we believe the yield on our new investment purchases may also rise and our investment income from floating rate investments would
increase, while the value of our existing investments may decline. If prevailing interest rates were to decline significantly, the yield on our new
investment purchases may decline and our investment income from floating rate investments would decrease, while the value of our existing
investments may increase.
We address interest rate risk through managing the duration of the liabilities we source with assets we acquire through ALM modeling. As part
of our investment strategy, we purchase floating rate investments, which we expect would perform well in a rising interest rate environment and
which we expect would underperform in a declining rate environment. We manage our interest rate risk in a declining rate environment through
hedging activity or the issuance of additional floating rate liabilities to lower our overall net floating rate position. As of December 31, 2024, our
net invested asset portfolio included $50.6 billion of floating rate investments, or 20% of our net invested assets, and our net reserve liabilities
included $33.6 billion of floating rate liabilities at notional, or 13% of our net invested assets, resulting in $17.0 billion of net floating rate
assets, or 7% of our net invested assets.
If prevailing interest rates were to rise, we believe our products would be more attractive to consumers and our sales would likely increase. If
prevailing interest rates were to decline, it is likely that our products would be less attractive to consumers and our sales would likely decrease.
In periods of prolonged low interest rates, the net investment spread may be negatively impacted by reduced investment income to the extent
that we are unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or
otherwise due to market conditions. See Note 9 – Long-duration Contracts to the consolidated financial statements for policyholder account
balances by range of guaranteed minimum crediting rates and the related distance to those respective guaranteed minimums. The policyholder
account balances represent deferred annuities, funding agreements and other investment-type products. A significant majority of our deferred
annuity products have crediting rates that we may reset annually upon renewal, following the expiration of the current guaranteed period. While
we have the contractual ability to lower these crediting rates to the guaranteed minimum levels, our willingness to do so may be limited by
competitive pressures. Our funding agreements and other investment-type products, as well as our remaining liabilities associated with
immediate annuities, pension group annuity obligations and life contracts, provide us little to no discretionary ability to change the rates of
interest payable to the respective policyholder or institution.
See Item 7A. Quantitative and Qualitative Disclosures About Market Risk, which includes a discussion regarding interest rate and other
significant risks and our strategies for managing these risks.
Demographics
Over the next four decades, the retirement-age population is expected to experience unprecedented growth. Technological advances and
improvements in healthcare are projected to continue to contribute to increasing average life expectancy, and aging individuals must be prepared
to fund retirement periods that will last longer than ever before. Further, many working households in the US do not have adequate retirement
savings. As a tool for addressing the unmet need for retirement planning, we believe that many Americans have begun to look to tax-efficient
savings products with low-risk or guaranteed return features and potential equity market upside. Our tax-efficient savings products are well
positioned to meet this increasing customer demand.
Competition
We operate in highly competitive markets. We face a variety of large and small industry participants, including diversified financial institutions,
insurance and reinsurance companies and private equity firms. These companies compete in one form or another for the growing pool of
retirement assets driven by a number of external factors such as the continued aging of the population and the reduction in safety nets provided
by governments and private employers. In the markets in which we operate, scale and the ability to provide value-added services and build long-
term relationships are important factors to compete effectively. We believe that our leading presence in the retirement market, diverse range of
capabilities and broad distribution network uniquely position us to effectively serve consumers’ increasing demand for retirement solutions,
particularly in the fixed annuity market.
According to LIMRA, total annuity market sales in the US were $332.0 billion for the nine months ended September 30, 2024, a 23.1% increase
from the same time period in 2023. In the total annuity market, for the nine months ended September 30, 2024 (the most recent period for which
specific market share data is available), we were the largest provider of annuities based on sales of $28.0 billion, translating to an 8.4% market
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share. For the nine months ended September 30, 2023, we were the largest provider of annuities based on sales of $22.0 billion, translating to an
8.2% market share.
According to LIMRA, total fixed annuity market sales in the US were $239.9 billion for the nine months ended September 30, 2024, a 22.3%
increase from the same time period in 2023. In the total fixed annuity market, for the nine months ended September 30, 2024 (the most recent
period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $27.2 billion,
translating to an 11.3% market share. For the nine months ended September 30, 2023, we were the largest provider of fixed annuities based on
sales of $21.4 billion, translating to a 10.9% market share.
According to LIMRA, total fixed indexed annuity market sales in the US were $95.1 billion for the nine months ended September 30, 2024, a
33.9% increase from the same time period in 2023. For the nine months ended September 30, 2024 (the most recent period for which specific
market share data is available), we were the largest provider of FIAs based on sales of $10.9 billion, translating to an 11.5% market share. For
the nine months ended September 30, 2023, we were the second largest provider of FIAs based on sales of $7.6 billion, translating to a 10.7%
market share.
According to LIMRA, total RILA market sales in the US were $47.9 billion for the nine months ended September 30, 2024, a 39.6% increase
from the same time period in 2023. For the nine months ended September 30, 2024 (the most recent period for which specific market share data
is available), we were the eleventh largest provider of RILAs based on sales of $823 million, translating to a 1.7% market share. For the nine
months ended September 30, 2023, we were the eleventh largest provider of RILAs based on sales of $650 million, translating to a 1.9% market
share. We believe RILAs represent a significant growth opportunity for Athene.
Key Operating and Non-GAAP Measures
In addition to our results presented in accordance with US GAAP, we present certain financial information that includes non-GAAP measures.
Management believes the use of these non-GAAP measures, together with the relevant US GAAP measures, provides information that may
enhance an investor’s understanding of our results of operations and the underlying profitability drivers of our business. The majority of these
non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative
investments), which consists of investment gains (losses), net of offsets, and non-operating change in insurance liabilities and related
derivatives, both defined below, as well as integration, restructuring, stock compensation and certain other expenses which are not part of our
underlying profitability drivers, as such items fluctuate from period to period in a manner inconsistent with these drivers. These measures should
be considered supplementary to our results in accordance with US GAAP and should not be viewed as a substitute for the corresponding US
GAAP measures. See –Non-GAAP Measure Reconciliations for the appropriate reconciliations to the most directly comparable US GAAP
measures.
Spread Related Earnings (SRE)
Spread related earnings is a pre-tax non-GAAP measure used to evaluate our financial performance including the impact of any reinsurance
transactions and excluding market volatility and expenses related to integration, restructuring, stock compensation and other expenses. Our
spread related earnings equals net income (loss) available to AHL common stockholder adjusted to eliminate the impact of the following:
•
Investment Gains (Losses), Net of Offsets—Consists of the realized gains and losses on the sale of AFS securities and
mortgage loans, the change in fair value of reinsurance assets, unrealized gains and losses, changes in the provision for credit
losses and other investment gains and losses. Unrealized, allowances and other investment gains and losses are comprised of the
fair value adjustments of trading securities (other than certain equity tranche securities) and mortgage loans, investments held
under the fair value option, derivative gains and losses not hedging FIA index credits, all foreign exchange impacts and the
change in provision for credit losses recognized in operations net of the change in AmerUs Closed Block fair value reserve
related to the corresponding change in fair value of investments. Investment gains and losses are net of offsets related to the
MVAs associated with surrenders or terminations of contracts.
•
Non-operating Change in Insurance Liabilities and Related Derivatives
•
Change in Fair Values of Derivatives and Embedded Derivatives – FIAs—Consists of impacts related to the fair
value accounting for derivatives hedging the FIA index credits and the related embedded derivative liability
fluctuations from period to period. The index reserve is measured at fair value for the current period and all periods
beyond the current policyholder index term. However, the FIA hedging derivatives are purchased to hedge only the
current index period. Upon policyholder renewal at the end of the period, new FIA hedging derivatives are purchased to
align with the new term. The difference in duration between the FIA hedging derivatives and the index credit reserves
creates a timing difference in earnings. This timing difference of the FIA hedging derivatives and index credit reserves
is included as a non-operating adjustment.
We primarily hedge with options that align with the index terms of our FIA products (typically 1–2 years). On an
economic basis, we believe this is suitable because policyholder accounts are credited with index performance at the
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end of each index term. However, because the term of an embedded derivative in an FIA contract is longer-dated, there
is a duration mismatch which may lead to mismatches for accounting purposes.
•
Non-operating Change in Funding Agreements—Consists of timing differences caused by changes to interest rates
on variable funding agreements and funding agreement backed notes and the associated reserve accretion patterns of
those contracts. Further included are adjustments for gains associated with our repurchases of funding agreement
backed notes.
•
Change in Fair Value of Market Risk Benefits—Consists primarily of volatility in capital market inputs used in the
measurement at fair value of our market risk benefits, including certain impacts from changes in interest rates, equity
returns and implied equity volatilities.
•
Non-operating Change in Liability for Future Policy Benefits—Consists of the non-economic loss incurred at
issuance for certain pension group annuities and other payout annuities with life contingencies when valuation interest
rates prescribed by US GAAP are lower than the net investment earned rates, adjusted for profit, assumed in pricing.
For such contracts with non-economic US GAAP losses, the SRE reserve accretes interest using an imputed discount
rate that produces zero gain or loss at issuance.
•
Integration, Restructuring, and Other Non-operating Expenses—Consists of restructuring and integration expenses related to
acquisitions and block reinsurance costs as well as certain other expenses, which are not predictable or related to our underlying
profitability drivers.
•
Stock Compensation Expense—Consists of stock compensation expenses associated with our share incentive plans, including
long-term incentive expenses, which are not related to our underlying profitability drivers and fluctuate from time to time due to
the structure of our plans.
•
Income Tax (Expense) Benefit—Consists of the income tax effect of all income statement adjustments and is computed by
applying the appropriate jurisdiction’s tax rate to all adjustments subject to income tax.
We consider these adjustments to be meaningful adjustments to net income (loss) available to AHL common stockholder for the reasons
discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is useful in analyzing our
business performance and the trends in our results of operations. Together with net income (loss) available to AHL common stockholder, we
believe spread related earnings provides a meaningful financial metric that helps investors understand our underlying results and profitability.
Spread related earnings should not be used as a substitute for net income (loss) available to AHL common stockholder.
Net Investment Spread
Net investment spread is a key measure of profitability used in analyzing the trends of our core business operations. Net investment spread
measures our investment performance plus our strategic capital management fees, less our total cost of funds. Net investment earned rate is a
key measure of our investment performance while cost of funds is a key measure of the cost of our policyholder benefits and liabilities. Strategic
capital management fees consist of management fees received by us for business managed for others.
Net investment earned rate is a non-GAAP measure we use to evaluate the performance of our net invested assets. Net investment earned rate is
computed as the income from our net invested assets divided by the average net invested assets, for the relevant period. To enhance the ability to
analyze these measures across periods, interim periods are annualized. The primary adjustments to net investment income to arrive at our net
investment earnings are (a) net VIE impacts (revenues, expenses and noncontrolling interests), (b) forward points gains and losses on foreign
exchange derivative hedges, (c) amortization of premium/discount on held-for-trading securities, (d) the change in fair value of reinsurance
assets, (e) an adjustment to the change in net asset value of our ADIP investments to recognize our proportionate share of spread related
earnings based on our ownership in the investment funds and (f) the removal of the proportionate share of the ACRA net investment income
associated with the noncontrolling interests. We include the income and assets supporting our change in fair value of reinsurance assets by
evaluating the underlying investments of the funds withheld at interest receivables and we include the net investment income from those
underlying investments which does not correspond to the US GAAP presentation of change in fair value of reinsurance assets. We exclude the
income and assets on business related to ceded reinsurance transactions. We believe the adjustments for reinsurance provide a net investment
earned rate on the assets for which we have economic exposure. We believe a measure like net investment earned rate is useful in analyzing the
trends of our core business operations, profitability and pricing discipline. While we believe net investment earned rate is a meaningful financial
metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for net
investment income presented under US GAAP.
Cost of funds includes liability costs related to cost of crediting on both deferred annuities and institutional products as well as other liability
costs, but does not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interests. Cost of crediting on
deferred annuities is the interest credited to the policyholders on our fixed strategies as well as the option costs on the indexed annuity strategies.
With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable,
minimum guaranteed interest credited. Cost of crediting on institutional products is comprised of (1) pension group annuity costs, including
interest credited, benefit payments and other reserve changes, net of premiums received when issued, and (2) funding agreement costs, including
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the interest payments and other reserve changes. Additionally, cost of crediting includes forward points gains and losses on foreign exchange
derivative hedges. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on
products other than deferred annuities and institutional products, premiums and certain product charges and other revenues. We include the costs
related to business added through assumed reinsurance transactions and exclude the costs on business related to ceded reinsurance transactions.
Cost of funds is computed as the total liability costs divided by the average net invested assets for the relevant period. To enhance the ability to
analyze these measures across periods, interim periods are annualized. We believe a measure like cost of funds is useful in analyzing the trends
of our core business operations, profitability and pricing discipline. While we believe cost of funds is a meaningful financial metric and
enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total benefits and
expenses presented under US GAAP.
Other Operating Expenses
Other operating expenses excludes interest expense, policy acquisition expenses, net of deferrals, integration, restructuring and other non-
operating expenses, stock compensation and long-term incentive plan expenses and the proportionate share of the ACRA operating expenses
associated with the noncontrolling interests. We believe a measure like other operating expenses is useful in analyzing the trends of our core
business operations and profitability. While we believe other operating expenses is a meaningful financial metric and enhances our
understanding of the underlying profitability drivers of our business, it should not be used as a substitute for policy and other operating expenses
presented under US GAAP.
Adjusted Senior Debt-to-Capital Ratio
Adjusted senior 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 well as mortgage loan assets, net of tax. Adjusted senior
debt-to-capital ratio is calculated as senior debt at notional value divided by adjusted capitalization. Adjusted capitalization includes our adjusted
AHL common stockholder’s equity, preferred stock and the notional value of our total debt. Adjusted AHL common stockholder’s equity is
calculated as the ending AHL stockholders’ equity excluding AOCI, the cumulative changes in fair value of funds withheld and modco
reinsurance assets and mortgage loan assets as well as preferred stock. These adjustments fluctuate period to period in a manner inconsistent
with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses
associated with our AFS securities, reinsurance assets and mortgage loans. Except with respect to reinvestment activity relating to acquired
blocks of businesses, we typically buy and hold investments to maturity throughout the duration of market fluctuations, therefore, the period-
over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance.
Adjusted senior debt-to-capital ratio should not be used as a substitute for the debt-to-capital ratio. However, we believe the adjustments to
stockholders’ equity and debt are significant to gaining an understanding of our capitalization, debt utilization and senior debt capacity.
Adjusted Leverage Ratio
Adjusted leverage 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 well as mortgage loan assets, net of tax. Adjusted leverage ratio is
calculated as total debt at notional value adjusted to exclude 50% of the notional value of subordinated debt as an equity credit plus 50% of
preferred stock divided by adjusted capitalization. Adjusted capitalization includes our adjusted AHL common stockholder’s equity, preferred
stock and the notional value of our total debt. Adjusted AHL common stockholder’s equity is calculated as the ending AHL stockholders’ equity
excluding AOCI, the cumulative changes in fair value of funds withheld and modco reinsurance assets and mortgage loan assets as well as
preferred stock. These adjustments fluctuate period to period in a manner inconsistent with our underlying profitability drivers as the majority of
such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities, reinsurance assets and
mortgage loans. Except with respect to reinvestment activity relating to acquired blocks of businesses, we typically buy and hold investments to
maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not
necessarily indicative of current operating fundamentals or future performance. Adjusted leverage ratio should not be used as a substitute for the
leverage ratio. However, we believe the adjustments to stockholders’ equity and debt are significant to gaining an understanding of our
capitalization, debt and preferred stock utilization and overall leverage capacity, because they provide insight into how rating agencies measure
our capitalization, which is a consideration in how we manage our leverage capacity.
Net 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 invested assets represent the investments that directly back
our net reserve liabilities as well as surplus assets. Net invested assets is used in the computation of net investment earned rate, which allows us
to analyze the profitability of our investment portfolio. Net invested assets include (a) total investments on the consolidated balance sheets, with
AFS securities, trading securities and mortgage loans at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and
restricted cash, (c) investments in related parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and noncontrolling interest
adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and
(h) an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash positions.
We include the underlying investments supporting our assumed funds withheld and modco agreements and exclude the underlying investments
related to ceded reinsurance transactions in our net invested assets calculation in order to match the assets with the income received. We believe
the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Net invested assets include our
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proportionate share of ACRA investments, based on our economic ownership, but do not include the proportionate share of investments
associated with the noncontrolling interests. Our net invested assets are averaged over the number of quarters in the relevant period to compute
our net investment earned rate for such period. While we believe net invested assets is a meaningful financial metric and enhances our
understanding of the underlying drivers of our investment portfolio, it should not be used as a substitute for total investments, including related
parties, presented under US GAAP.
Net Reserve Liabilities
In managing our business, we also analyze net reserve liabilities, which does not correspond to total liabilities as disclosed in our consolidated
financial statements and notes thereto. Net reserve liabilities represent our policyholder liability obligations net of reinsurance and are used to
analyze the costs of our liabilities. Net reserve liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market
risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by
reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include our proportionate share of ACRA reserve liabilities, based
on our economic ownership, but do not include the proportionate share of reserve liabilities associated with the noncontrolling interests. Net
reserve liabilities are net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore,
we have no net economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. For such
transactions, US GAAP requires the ceded liabilities and related reinsurance recoverables to continue to be recorded in our consolidated
financial statements despite the transfer of economic risk to the counterparty in connection with the reinsurance transaction. We include the
underlying liabilities assumed through modco reinsurance agreements in our net reserve liabilities calculation in order to match the liabilities
with the expenses incurred. While we believe net reserve liabilities is a meaningful financial metric and enhances our understanding of the
underlying profitability drivers of our business, it should not be used as a substitute for total liabilities presented under US GAAP.
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 annuities and FIAs and align with
the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in
the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers). We believe
sales is a meaningful metric that enhances our understanding of our business performance and is not the same as premiums presented in our
consolidated statements of income (loss).
Results of Operations
We completed our merger with AGM on January 1, 2022 and elected pushdown accounting in which we used AGM’s basis of accounting that
reflects the fair market value of our assets and liabilities as of the date of the merger.
The following summarizes the consolidated results of operations:
Years ended December 31,
(In millions)
2024
2023
2022
Revenues
$
20,689
$
28,194
$
7,623
Benefits and expenses
15,055
23,603
13,285
Income (loss) before income taxes
5,634
4,591
(5,662)
Income tax expense (benefit)
730
(1,161)
(646)
Net income (loss)
4,904
5,752
(5,016)
Less: Net income (loss) attributable to noncontrolling interests
1,443
1,087
(2,106)
Net income (loss) attributable to Athene Holding Ltd. stockholders
3,461
4,665
(2,910)
Less: Preferred stock dividends
181
181
141
Net income (loss) available to Athene Holding Ltd. common stockholder
$
3,280
$
4,484
$
(3,051)
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023
In this section, references to 2024 refer to the year ended December 31, 2024 and references to 2023 refer to the year ended December 31, 2023.
Net Income (Loss) Available to Athene Holding Ltd. Common Stockholder
Net income (loss) available to Athene Holding Ltd. common stockholder decreased by $1.2 billion, or 27%, to $3.3 billion in 2024 from $4.5
billion in 2023. The decrease in net income (loss) available to Athene Holding Ltd. common stockholder was primarily driven by a $7.5 billion
decrease in revenues, a $1.9 billion increase in income tax expense (benefit) and a $356 million increase in net income (loss) attributable to
noncontrolling interests, partially offset by an $8.5 billion decrease in benefits and expenses.
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Revenues
Revenues decreased by $7.5 billion to $20.7 billion in 2024 from $28.2 billion in 2023. The decrease was primarily driven by a decrease in
premiums and a decrease in other revenues, partially offset by an increase in net investment income, an increase in investment related gains
(losses) and an increase in VIE investment related gains (losses).
Premiums decreased by $11.4 billion to $1.3 billion in 2024 from $12.7 billion in 2023, primarily driven by a $9.5 billion decrease in pension
group annuity premiums compared to 2023 and a decrease in premiums attributable to the execution of a whole life block reinsurance
transaction in the fourth quarter of 2023.
Other revenues decreased by $572 million to $19 million in 2024 from $591 million in 2023, primarily due to the $555 million gain on the
settlement of the VIAC recapture agreement in 2023.
Net investment income increased by $3.4 billion to $14.5 billion in 2024 from $11.1 billion in 2023, primarily driven by significant growth in
our investment portfolio attributable to strong net flows in 2024 and higher rates on new deployment in comparison to our existing portfolio
related to the higher interest rate environment. These increases were partially offset by higher investment management fees driven by the
significant growth in our investment portfolio.
Investment related gains (losses) increased by $617 million to $2.0 billion in 2024 from $1.4 billion in 2023, primarily due to favorable net
foreign exchange impacts, a favorable change in the fair value of FIA hedging derivatives and the fair value of our strategic modco reinsurance
agreement with Catalina, involving the cession of certain inforce funding agreements, and a favorable change in the provision for credit losses,
partially offset by an unfavorable change in fair value of reinsurance assets. The favorable net foreign exchange impacts were primarily related
to the strengthening of the US dollar against foreign currencies in 2024 compared to 2023. The change in fair value of FIA hedging derivatives
increased $356 million, primarily driven by the favorable performance of the equity indices upon which our call options are based, with the
2024 impact amplified by the strong growth in our FIA block of business over the previous twelve months. The largest percentage of our call
options are based on the S&P 500 Index, which increased 23.3% in 2024, compared to an increase of 24.2% in 2023. The favorable change in
the provision for credit losses of $154 million was primarily driven by intent-to-sell impairments in 2023 related to the timing of the recapture of
certain business by VIAC and impacts from the Silicon Valley Bank failure. The change in fair value of reinsurance assets decreased $932
million, primarily driven by an increase in US Treasury rates in 2024 compared to a decrease in 2023.
VIE investment related gains (losses) increased by $337 million to $1.5 billion in 2024 from $1.2 billion in 2023, primarily driven by gains
within AAA related to favorable returns on the underlying assets.
Benefits and Expenses
Benefits and expenses decreased by $8.5 billion to $15.1 billion in 2024 from $23.6 billion in 2023. The decrease was driven by a decrease in
future policy and other policy benefits and a decrease in market risk benefits remeasurement (gains) losses, partially offset by an increase in
interest sensitive contract benefits, an increase in policy and other operating expenses and an increase in DAC, DSI and VOBA amortization.
Our annual unlocking of assumptions resulted in an increase in total benefits and expenses of $31 million compared to a decrease of $22 million
in 2023. The 2024 unlocking was driven by an increase of $62 million in market risk benefits, an increase of $21 million related to DAC, DSI
and VOBA and an increase of $8 million in interest sensitive contract benefits, partially offset by a decrease of $60 million in future policy and
other policy benefits, compared to a decrease of $94 million in interest sensitive contract benefits and a decrease of $45 million in future policy
and other policy benefits, partially offset by an increase of $81 million in market risk benefits and an increase of $36 million related to DAC,
DSI and VOBA in 2023.
Future policy and other policy benefits decreased by $11.4 billion to $3.1 billion in 2024 from $14.4 billion in 2023, primarily driven by a $9.5
billion decrease in pension group annuity obligations compared to 2023, a decrease in life reserves due to the execution of a $2.2 billion whole
life block reinsurance transaction in the fourth quarter of 2023 and a favorable change in unlocking, partially offset by a $207 million increase in
accrued interest. Unlocking in 2024 was $60 million favorable consisting of $104 million of favorable future policy benefit reserve unlocking,
partially offset by $44 million of unfavorable negative VOBA and deferred profit liability unlocking. The favorable unlocking primarily related
to favorable projected mortality lowering future benefit payments, partially offset by an increase in the lump sum payment utilization
assumption. Unlocking in 2023 was $45 million favorable consisting of $297 million of favorable future policy benefit reserve unlocking,
partially offset by $252 million of unfavorable negative VOBA and deferred profit liability unlocking. The favorable unlocking primarily related
to higher interest rates and favorable mortality experience lowering future benefit payments.
Market risk benefits remeasurement (gains) losses decreased by $506 million to $(102) million in 2024 from $404 million in 2023. The gains in
2024 compared to losses in 2023 were primarily driven by a favorable change in the fair value of market risk benefits and a favorable change in
unlocking, partially offset by a $44 million increase in accrued interest. The change in fair value of market risk benefits was $567 million
favorable compared to 2023 due to an increase in the risk-free discount rate across the curve, which is used in the fair value measurement of the
liability for market risk benefits. This impact was partially offset by an unfavorable change in the fair value of market risk benefits of $25
million related to less favorable equity market performance compared to 2023. The market risk benefits unlocking in 2024 was $62 million
unfavorable primarily due to an increase in the income rider utilization assumption increasing projected claims, partially offset by favorable
changes in lapse and enhanced income utilization assumptions, while 2023 unlocking was $81 million unfavorable primarily due to an increase
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
74
in the income rider utilization assumption increasing projected claims, partially offset by favorable changes in lapse and income rider restart
assumptions.
Interest sensitive contract benefits increased by $2.7 billion to $8.9 billion in 2024 from $6.2 billion in 2023, primarily driven by significant
growth in our deferred annuity and funding agreement blocks of business, higher rates on new deferred annuity and funding agreement issuances
in comparison to our existing blocks of business and an unfavorable change in unlocking, partially offset by a decrease in the change in fair
value of FIA embedded derivatives. The decrease in the change in fair value of FIA embedded derivatives of $1.3 billion was primarily due to
the favorable change in discount rates used in our embedded derivative calculations as 2024 experienced an increase in discount rates compared
to a decrease in 2023. This was partially offset by the favorable performance of the equity indices to which our FIA policies are linked, with the
2024 impact amplified by the strong growth in our FIA block of business over the previous twelve months. The largest percentage of our FIA
policies are linked to the S&P 500 Index, which increased 23.3% in 2024, compared to an increase of 24.2% in 2023. The fair value of FIA
embedded derivatives unlocking in 2024 was $67 million unfavorable primarily due to changes to projected interest crediting, while 2023
unlocking was $20 million favorable primarily due to changes to projected interest crediting, partially offset by an increase in lapse and risk
margin assumptions. The negative VOBA unlocking related to our interest sensitive contract liabilities in 2024 was $59 million favorable
mainly due to updated economics and an increase in lapse assumptions, while 2023 unlocking was $74 million favorable mainly due to an
increase in lapse assumptions.
Policy and other operating expenses increased by $365 million to $2.2 billion in 2024 from $1.8 billion in 2023, primarily driven by $152
million of expense related to guaranty association assessments levied against us in connection with the Bankers Life Insurance Company and
Colorado Bankers Life Insurance Company insolvencies and an increase in interest expense. Additionally, policy and other operating expenses
increased due to an increase in policy acquisition expenses related to significant volume growth in 2024, as well as an increase in contingent
investment fees ACRA is obligated to pay on behalf of ADIP.
DAC, DSI and VOBA amortization increased by $253 million to $941 million in 2024 from $688 million in 2023, primarily due to strong
growth in our retail channel in 2024, partially offset by a favorable change in unlocking. Unlocking in 2024 was $21 million unfavorable mainly
related to changes to projected interest crediting and an increase in lapse assumptions, while unlocking in 2023 was $36 million unfavorable
mainly related to an increase in lapse assumptions and changes to projected interest crediting.
Income Tax Expense (Benefit)
Income tax expense (benefit) increased by $1.9 billion to $730 million in 2024 from $(1.2) billion in 2023, primarily driven by a one-time
tax benefit of $1.8 billion resulting from the establishment of deferred tax assets related to the Bermuda CIT in 2023, an increase in net
investment income and a favorable change in the fair value of market risk benefits, partially offset by an increase in policyholder and other
reserve liability costs, an unfavorable change in fair value of reinsurance assets and the gain on the settlement of the VIAC recapture agreement
in 2023. Our effective tax rate in 2024 was 13% compared to a benefit of 25% in 2023 due to the establishment of deferred tax assets related to
the Bermuda CIT in 2023. The income tax expense (benefit) was calculated by applying the 21% US statutory rate to the income of our US and
foreign subsidiaries, net of the noncontrolling interests.
Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests increased by $356 million to $1.4 billion in 2024 from $1.1 billion in 2023, primarily
due to an increase in income attributable to the ACRA 2 noncontrolling interest, which was established in the third quarter of 2023, with ADIP
II increasing its ownership stake in ACRA 2 to 60% effective December 31, 2023 and 63% effective October 1, 2024. Additionally, the increase
was driven by an increase in earnings at AAA coupled with a higher allocation of income to the AAA noncontrolling interest related to the
continued increase in the noncontrolling interest ownership of AAA. This was partially offset by the unfavorable change in fair value of
reinsurance assets related to an increase in US Treasury rates in 2024 compared to a decrease in 2023.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations in our 2023
Annual Report for the results of operations discussion for the year ended December 31, 2023 compared to the year ended December 31, 2022.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
75
Summary of Non-GAAP Earnings
The following summarizes our spread related earnings:
Years ended December 31,
(In millions)
2024
2023
2022
Fixed income and other net investment income
$
10,811
$
8,744
$
5,707
Alternative net investment income
939
864
1,206
Net investment earnings
11,750
9,608
6,913
Strategic capital management fees
105
72
53
Cost of funds
(7,702)
(5,650)
(3,755)
Net investment spread
4,153
4,030
3,211
Other operating expenses
(467)
(487)
(466)
Interest and other financing costs
(465)
(436)
(279)
Spread related earnings
$
3,221
$
3,107
$
2,466
Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023
In this section, references to 2024 refer to the year ended December 31, 2024 and references to 2023 refer to the year ended December 31, 2023.
Spread Related Earnings
SRE increased by $114 million, or 4%, to $3.2 billion in 2024 from $3.1 billion in 2023. The increase in SRE was primarily driven by higher net
investment earnings and strategic capital management fees, partially offset by higher cost of funds and interest and other financing costs.
Net investment earnings increased $2.1 billion, primarily driven by $25.3 billion of growth in our average net invested assets, higher rates on
new deployment compared to our existing portfolio related to the higher interest rate environment and an increase in alternative net investment
income, partially offset by an increase in income attributable to the ACRA noncontrolling interests following the sale of a 50% interest in
ACRA 2 to ADIP II effective July 1, 2023 and the subsequent increases in the ADIP II ownership of ACRA 2 to 60% effective December 31,
2023 and 63% effective October 1, 2024. The increase in alternative net investment income compared to 2023 was primarily driven by more
favorable performance within retirement services and strategic origination platforms, as well as credit, partially offset by less favorable
performance within equity. The increase in income from retirement services platforms was primarily related to underperformance from FWD
Group Holdings Limited (FWD) and a decrease in the share price of Challenger Limited (Challenger) in 2023, partially offset by increased
expenses and lower growth impacting the valuation of Athora in 2024. The increase in income from strategic origination platforms was mainly
attributable to unfavorable performance from Aqua Finance in 2023 related to macroeconomic headwinds for consumer loan origination,
favorable performance from Foundation Home Loans driven by increased origination volumes in 2024 and strong growth within other strategic
origination platforms related to the funding of investments in 2024, partially offset by outsized performance from MidCap Financial in 2023.
Strategic capital management fees increased $33 million due to additional fees received from ADIP II as a result of the sale of a 50% interest in
ACRA 2 to ADIP II effective July 1, 2023 and the subsequent increases in the ADIP II ownership of ACRA 2 to 60% effective December 31,
2023 and 63% effective October 1, 2024, as well as new business ceded to ACRA 2 in 2024.
Cost of funds increased $2.1 billion, primarily driven by growth in and higher rates on new deferred annuity issuances, growth in and higher
rates on new institutional business, including the additional costs of swapping to or issuing funding agreements as floating rate to mitigate SRE
sensitivity to floating rate assets, an increase in business mix to institutional business at higher crediting rates and the $114 million operating
gain on the settlement of the VIAC recapture agreement in 2023. These impacts were partially offset by an increase in costs attributable to the
ACRA noncontrolling interests following the sale of a 50% interest in ACRA 2 to ADIP II effective July 1, 2023 and the subsequent increases in
the ADIP II ownership of ACRA 2 to 60% effective December 31, 2023 and 63% effective October 1, 2024, as well as a favorable change in
unlocking and a favorable impact to pension group annuity balances related to a refinement in methodology. Unlocking, net of the
noncontrolling interests, was favorable $16 million primarily related to favorable projected mortality lowering future benefit payments, updated
economics and favorable changes in lapse and enhanced income utilization assumptions. These impacts were largely offset by an increase in the
income rider utilization assumption increasing projected claims, an increase in the lump sum payment utilization assumption and changes to
projected interest crediting. Unlocking, net of the noncontrolling interests, in 2023 was unfavorable $24 million primarily related to an increase
in the income rider utilization assumption increasing projected claims. This impact was partially offset by favorable changes in lapse and income
rider restart assumptions, as well as higher interest rates and favorable mortality experience lowering future benefit payments.
Interest and other financing costs increased $29 million related to higher interest expense resulting from our debt issuances in the fourth quarter
of 2023 and the first and fourth quarters of 2024, partially offset by lower interest expense resulting from a decrease in the average outstanding
balance of short-term repurchase agreements in 2024 compared to 2023.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
76
Net Investment Spread
Years ended December 31,
2024
2023
2022
Fixed income and other net investment earned rate
4.87 %
4.45 %
3.22 %
Alternative net investment earned rate
8.03 %
7.22 %
10.42 %
Net investment earned rate
5.03 %
4.61 %
3.66 %
Strategic capital management fees
0.04 %
0.03 %
0.03 %
Cost of funds
(3.29) %
(2.71) %
(1.98) %
Net investment spread
1.78 %
1.93 %
1.71 %
Net investment spread decreased 15 basis points to 1.78% in 2024 from 1.93% in 2023, primarily driven by higher cost of funds, partially offset
by a higher net investment earned rate.
Cost of funds increased 58 basis points to 3.29% in 2024 from 2.71% in 2023, primarily driven by higher rates on new deferred annuity
issuances, higher rates on new institutional business, including the additional costs of swapping to or issuing funding agreements as floating rate
to mitigate SRE sensitivity to floating rate assets, an increase in business mix to institutional business at higher crediting rates and the $114
million operating gain on the settlement of the VIAC recapture agreement in 2023. These impacts were partially offset by an increase in costs
attributable to the ACRA noncontrolling interests following the sale of a 50% interest in ACRA 2 to ADIP II effective July 1, 2023 and the
subsequent increases in the ADIP II ownership of ACRA 2 to 60% effective December 31, 2023 and 63% effective October 1, 2024, as well as a
favorable change in unlocking and a favorable impact to pension group annuity balances related to a refinement in methodology.
Net investment earned rate increased 42 basis points to 5.03% in 2024 from 4.61% in 2023, primarily due to higher returns in both our fixed
income and alternative investment portfolios, partially offset by an increase in income attributable to the ACRA noncontrolling interests
following the sale of a 50% interest in ACRA 2 to ADIP II effective July 1, 2023 and the subsequent increases in the ADIP II ownership of
ACRA 2 to 60% effective December 31, 2023 and 63% effective October 1, 2024. Fixed income and other net investment earned rate was
4.87% in 2024, an increase from 4.45% in 2023, primarily driven by higher rates on new deployment compared to our existing portfolio related
to the higher interest rate environment. Alternative net investment earned rate was 8.03% in 2024, an increase from 7.22% in 2023, primarily
driven by more favorable performance within retirement services and strategic origination platforms, as well as credit, partially offset by less
favorable performance within equity. The higher returns on retirement services platforms was primarily related to underperformance from FWD
and a decrease in the share price of Challenger in 2023, partially offset by increased expenses and lower growth impacting the valuation of
Athora in 2024. The higher returns from strategic origination platforms was mainly attributable to unfavorable performance from Aqua Finance
in 2023 related to macroeconomic headwinds for consumer loan origination and favorable performance from Foundation Home Loans driven by
increased origination volumes in 2024, partially offset by outsized performance from MidCap Financial in 2023.
Adjustments to Net Income (Loss) Available to Athene Holding Ltd. Common Stockholder
The adjustments to net income (loss) available to Athene Holding Ltd. common stockholder are comprised of investment gains (losses), net of
offsets; non-operating change in insurance liabilities and related derivatives; integration, restructuring and other non-operating expenses; stock
compensation expense and the non-operating income tax expense (benefit) related to these adjustments. The decrease in adjustments to net
income (loss) available to Athene Holding Ltd. common stockholder in 2024 compared to 2023 was primarily driven by non-operating income
tax expense compared to a significant benefit in 2023 and an increase in integration, restructuring and other non-operating expenses, partially
offset by an increase in non-operating change in insurance liabilities and related derivatives and an increase in investment gains (losses), net of
offsets. Our annual unlocking of assumptions, net of the noncontrolling interests, resulted in a decrease in our adjustments to net income (loss)
available to AHL common stockholder of $11 million compared to an increase of $71 million in 2023. The 2024 unlocking was driven by $26
million unfavorable FIA embedded derivative unlocking, partially offset by $14 million favorable market risk benefits unlocking and $1 million
favorable liability for future policy benefits unlocking, compared to $71 million favorable FIA embedded derivative unlocking in 2023.
Non-operating income tax expense (benefit) increased $1.9 billion, primarily due to a one-time tax benefit of $1.8 billion resulting from the
establishment of deferred tax assets related to the Bermuda CIT in 2023, as well as a favorable change in the fair value of market risk benefits,
partially offset by an unfavorable change in fair value of reinsurance assets and the gain on the settlement of the VIAC recapture agreement in
2023.
Integration, restructuring and other non-operating expenses increased $109 million, primarily related to guaranty association assessments levied
against us in connection with the Bankers Life Insurance Company and Colorado Bankers Life Insurance Company insolvencies.
Non-operating change in insurance liabilities and related derivatives increased $664 million, primarily due to the favorable change in fair value
of market risk benefits and the increase in net FIA derivatives. The $428 million favorable change in fair value of market risk benefits was
primarily driven by an increase in the risk-free discount rate across the curve, which is used in the fair value measurement of the liability for
market risk benefits, as well as a favorable change in unlocking, partially offset by less favorable equity market performance compared to 2023.
The fair value of market risk benefits unlocking, net of the noncontrolling interests, in 2024 was $14 million favorable primarily due to updated
economics, while 2023 unlocking resulted in no market risk benefit impacts. The $147 million favorable change in net FIA derivatives was
primarily driven by the favorable change in discount rates used in our embedded derivative calculations as 2024 experienced an increase in
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
77
discount rates compared to a decrease in 2023. This impact was partially offset by an unfavorable change in unlocking, as well as the
performance of the equity indices to which our FIA policies are linked, with the 2024 impact amplified by the strong growth in our FIA block of
business over the previous twelve months. The largest percentage of our FIA policies are linked to the S&P 500 Index, which increased 23.3%
in 2024, compared to an increase of 24.2% in 2023. The fair value of FIA embedded derivative unlocking, net of the noncontrolling interests, in
2024 was $26 million unfavorable primarily due to changes to projected interest crediting, while 2023 unlocking was $71 million favorable
primarily due to changes to projected interest crediting, partially offset by an increase in lapse and risk margin assumptions.
Investment gains (losses), net of offsets, increased $47 million, primarily due to favorable net foreign exchange impacts and a favorable change
in the provision for credit losses, partially offset by an unfavorable change in fair value of reinsurance assets and the $441 million non-operating
gain on the settlement of the VIAC recapture agreement in 2023. The favorable net foreign exchange impacts were primarily related to the
strengthening of the US dollar against foreign currencies in 2024 compared to 2023. The favorable change in the provision for credit losses of
$126 million was primarily driven by intent-to-sell impairments in 2023 related to the timing of the recapture of certain business by VIAC and
impacts from the Silicon Valley Bank failure. The unfavorable change in fair value of reinsurance assets of $454 million was primarily due to an
increase in US Treasury rates in 2024 compared to a decrease in 2023.
Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Summary of Non-GAAP Earnings in our
2023 Annual Report for the summary of non-GAAP earnings discussion for the year ended December 31, 2023 compared to the year ended
December 31, 2022.
Investment Portfolio
We had total investments, including related parties and consolidated VIEs, of $315.0 billion and $259.3 billion as of December 31, 2024 and
2023, respectively. Our investment strategy seeks to achieve sustainable risk-adjusted returns through the disciplined management of our
investment portfolio against our long-duration liabilities, coupled with the diversification of risk. The investment strategies utilized by our
investment manager focus primarily on a buy and hold asset allocation strategy that may be adjusted periodically in response to changing market
conditions and the nature of our liability profile. Substantially all of our investment portfolio is managed by Apollo, which provides a full suite
of services for our investment portfolio, including direct investment management, asset allocation, mergers and acquisitions asset diligence and
certain operational support services, including investment compliance, tax, legal and risk management support. Our relationship with Apollo
allows us to take advantage of our generally persistent liability profile by identifying investment opportunities with an emphasis on earning
incremental yield by taking measured liquidity and complexity risk rather than assuming incremental credit risk. Apollo’s investment team and
credit portfolio managers utilize their deep experience to assist us in sourcing and underwriting complex asset classes. Apollo has selected a
diverse array of primarily high-grade fixed income assets including corporate bonds, structured securities and commercial and residential real
estate loans, among others. We also maintain holdings in floating rate and less rate-sensitive instruments, including CLOs, non-agency RMBS
and various types of structured products. In addition to our fixed income portfolio, we opportunistically allocate approximately 5% of our
portfolio to alternative investments where we primarily focus on fixed income-like, cash flow-based investments.
Net investment income on the consolidated statements of income (loss) includes management fees under our investment management
arrangements with Apollo. We incurred management fees, inclusive of base, sub-allocation and performance fees, of $1.3 billion, $987 million
and $775 million, respectively, during the years ended December 31, 2024, 2023 and 2022. The total amounts we incurred, directly and
indirectly, from Apollo and its affiliates were $1.3 billion, $1.1 billion, and $1.1 billion, respectively, for the years ended December 31, 2024,
2023 and 2022. Such amounts include (1) fees associated with investment management agreements (excluding sub-advisory fees paid to ISG for
the benefit of third-party sub-advisors), which include fees charged by Apollo to third-party cedants with respect to assets supporting obligations
reinsured to us but exclude fees charged by Apollo to third-party reinsurers supporting ceded obligations, (2) fees associated with fund
investments (including those fund investments held by AAA), which include management fees, carried interest (including unrealized but
accrued carried interest fees) and other fees on Apollo-managed funds and our other alternative investments and (3) other fees resulting from
shared services, advisory and other agreements with Apollo or its affiliates; net of fees incurred directly and indirectly attributable to ACRA,
based upon the economic ownership of the noncontrolling interests in ACRA.
Our net invested assets, which are those that directly back our net reserve liabilities as well as surplus assets, were $248.6 billion and $217.4
billion as of December 31, 2024 and 2023, respectively. Apollo’s knowledge of our funding structure and regulatory requirements allows it to
design customized strategies and investments for our portfolio. Apollo manages our asset portfolio within the limits and protocols set forth in
our Investment and Credit Risk Policy. Under this policy, we set limits on investments in our portfolio by asset class, such as corporate bonds,
emerging markets securities, municipal bonds, non-agency RMBS, CMBS, CLOs, commercial mortgage whole loans and mezzanine loans and
investment funds. We also set credit risk limits for exposure to a single issuer, which vary based on the issuer’s ratings. Our strategic
investments are also governed by our Strategic Investment Risk Policy which provides for special governance and risk management procedures
for these transactions. In addition, our investment portfolio is constrained by its scenario-based capital ratio limits and its liquidity limits.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
78
The following table presents the carrying values of our total investments including related parties and consolidated VIEs:
December 31,
2024
2023
(In millions, except percentages)
Carrying Value
Percentage of
Total
Carrying Value
Percentage of
Total
AFS securities, at fair value
$
165,364
52.5 %
$
134,338
51.8 %
Trading securities, at fair value
1,583
0.5 %
1,706
0.7 %
Equity securities
1,290
0.4 %
1,293
0.5 %
Mortgage loans, at fair value
63,239
20.1 %
44,115
17.0 %
Investment funds
107
— %
109
0.1 %
Policy loans
318
0.1 %
334
0.1 %
Funds withheld at interest
18,866
6.0 %
24,359
9.4 %
Derivative assets
8,154
2.6 %
5,298
2.1 %
Short-term investments
447
0.2 %
341
0.1 %
Other investments
2,915
0.9 %
1,206
0.5 %
Total investments
262,283
83.3 %
213,099
82.3 %
Investments in related parties
AFS securities, at fair value
19,127
6.1 %
14,009
5.4 %
Trading securities, at fair value
573
0.2 %
838
0.3 %
Equity securities, at fair value
234
0.1 %
318
0.1 %
Mortgage loans, at fair value
1,297
0.4 %
1,281
0.5 %
Investment funds
1,853
0.6 %
1,632
0.6 %
Funds withheld at interest
5,050
1.6 %
6,474
2.5 %
Short-term investments
743
0.2 %
947
0.4 %
Other investments, at fair value
331
0.1 %
343
0.1 %
Total related party investments
29,208
9.3 %
25,842
9.9 %
Total investments, including related parties
291,491
92.6 %
238,941
92.2 %
Investments of consolidated VIEs
Trading securities, at fair value
2,301
0.7 %
2,136
0.8 %
Mortgage loans, at fair value
2,579
0.8 %
2,173
0.8 %
Investment funds, at fair value
17,765
5.6 %
15,927
6.2 %
Other investments
884
0.3 %
103
— %
Total investments of consolidated VIEs
23,529
7.4 %
20,339
7.8 %
Total investments, including related parties and consolidated VIEs
$
315,020
100.0 %
$
259,280
100.0 %
The increase in our total investments, including related parties and consolidated VIEs, as of December 31, 2024 of $55.7 billion compared to
December 31, 2023 was primarily driven by significant growth from gross organic inflows of $71.0 billion in excess of gross liability outflows
of $33.5 billion, reinvestment of earnings and an increase in derivative assets primarily related to the impact of favorable equity market
performance in 2024 on our call options as well as market impacts on our derivative swaps and forward contracts. Additionally, total
investments, including related parties and consolidated VIEs, increased due to the issuance of debt in 2024, the consolidation of new VIEs and
an increase in VIE investment funds attributable to favorable performance of the underlying assets within AAA and net contributions from third-
party investors into AAA, partially offset by our distribution of certain investments to AGM as a dividend and the resulting deconsolidation of
Apollo Rose as a VIE. These impacts were partially offset by unrealized losses on AFS securities in 2024 of $1.1 billion due to an increase in
US Treasury rates, partially offset by credit spread tightening.
Our investment portfolio consists largely of high quality fixed maturity securities, loans and short-term investments, as well as additional
opportunistic holdings in investment funds and other instruments, including equity holdings. Fixed maturity securities and loans include publicly
issued corporate bonds, government and other sovereign bonds, privately placed corporate bonds and loans, mortgage loans, CMBS, RMBS,
CLOs and asset-backed securities (ABS).
While the substantial majority of our investment portfolio has been allocated to corporate bonds and structured credit products, a key component
of our investment strategy is the opportunistic acquisition of investment funds with attractive risk and return profiles. Our investment fund
portfolio consists of funds or similar equity structures that employ various strategies including equity and credit funds. We have a strong
preference for alternative investments that have some or all of the following characteristics, among others: (1) investments with credit- or debt-
like characteristics (for example, a stipulated maturity and par value), or alternatively, investments with reduced volatility when compared to
pure equity; or (2) investments that we believe have less downside risk.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
79
We hold derivatives for economic hedging purposes to reduce our exposure to the cash flow variability of assets and liabilities, equity market
risk, foreign exchange risk and interest rate risk. Our primary use of derivative instruments relates to providing the income needed to fund the
annual index credits on our FIA products. We primarily use fixed indexed options to economically hedge indexed annuity products that
guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specific market index. We also use
derivative instruments, such as forward contracts and swaps, to hedge foreign currency exposure resulting from foreign denominated assets and
liabilities and to help manage our net floating rate position.
With respect to derivative positions, we transact with highly rated counterparties, and expect the counterparties to fulfill their obligations under
the contracts. We generally use industry standard agreements and annexes with bilateral collateral provisions to further reduce counterparty
credit exposure.
Related Party Investments
We hold investments in related party assets primarily comprised of AFS securities, trading securities, funds withheld at interest receivables,
mortgage loans within our triple net lease investment, short-term investments, and investment funds, which primarily include investments over
which Apollo can exercise influence. As of December 31, 2024, these investments totaled $47.4 billion, or 13.0% of our total assets. Related
party AFS and trading securities primarily consist of structured securities for which Apollo is the manager of the underlying securitization
vehicle and securities issued by Apollo direct origination platforms including Wheels and MidCap Financial. In each case, the underlying
collateral, borrower or other credit party is generally unaffiliated with us. The funds withheld at interest related party amounts are comprised of
the Venerable reinsurance portfolios, which are considered related party even though a significant majority of the underlying assets within the
investment portfolios do not have a related party affiliation. Related party investment funds include strategic investments in direct origination
and retirement services platforms and investments in Apollo managed funds. Short-term investments include reverse repurchase agreements in
Atlas, which is owned by AAA.
A summary of our related party investments reflecting the nature of the affiliation is as follows:
December 31,
2024
2023
(In millions, except percentages)
Carrying Value
Percentage of
Total Assets
Carrying Value
Percentage of
Total Assets
Venerable funds withheld reinsurance portfolio
$
5,050
1.4 %
$
6,474
2.2 %
Securitizations of unaffiliated assets where Apollo is manager
20,389
5.6 %
16,072
5.3 %
Investments in Apollo funds
12,272
3.4 %
10,683
3.6 %
Strategic investments in Apollo direct origination platforms
7,329
2.0 %
6,464
2.2 %
Investments in retirement services platforms
2,249
0.6 %
2,575
0.9 %
Other
86
— %
81
— %
Total related party investments
$
47,375
13.0 %
$
42,349
14.2 %
As of December 31, 2024, a $5.1 billion funds withheld reinsurance asset with Venerable was included in our US GAAP related party
investments. Venerable is a related party due to our minority equity investment in its holding company’s parent, VA Capital Company LLC (VA
Capital). For US GAAP, each funds withheld and modified coinsurance reinsurance portfolio is treated as one asset rather than reporting the
underlying investments in the portfolio. For our non-GAAP measure of net invested assets, we provide visibility into the underlying assets
within these reinsurance portfolios. The below table looks through to the underlying assets within our reinsurance portfolios to determine the
related party status. As of December 31, 2024, $31.9 billion, or 12.8% of our total net invested assets were related party investments. Of these,
approximately $18.5 billion, or 7.4% of our net invested assets, were structured securities for which Apollo or an affiliated direct origination
platform was the manager of the underlying securitization vehicle, but the underlying collateral, borrower or other credit party is generally
unaffiliated with us. Related party investments in strategic affiliated companies or Apollo funds represented $13.4 billion, or 5.4% of our net
invested assets.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
80
A summary of our related party net invested assets reflecting the nature of the affiliation is as follows:
December 31,
2024
2023
(In millions, except percentages)
Net Invested
Asset Value
Percentage of
Net Invested
Assets
Net Invested
Asset Value
Percentage of
Net Invested
Assets
Securitizations of unaffiliated assets where Apollo is manager
$
18,472
7.4 %
$
16,759
7.7 %
Investments in Apollo funds
7,131
2.9 %
5,928
2.7 %
Strategic investments in Apollo direct origination platforms
4,006
1.6 %
3,518
1.6 %
Investments in retirement services platforms
2,285
0.9 %
2,459
1.1 %
Other
—
— %
13
— %
Total related party net invested assets
$
31,894
12.8 %
$
28,677
13.1 %
A summary of our related party gross invested assets, which includes the proportionate share of investments associated with the ACRA
noncontrolling interests, reflecting the nature of the affiliation is as follows:
December 31,
2024
2023
(In millions, except percentages)
Gross Invested
Asset Value
Percentage of
Gross Invested
Assets
Gross Invested
Asset Value
Percentage of
Gross Invested
Assets
Securitizations of unaffiliated assets where Apollo is manager
$
25,327
7.7 %
$
21,550
7.7 %
Investments in Apollo funds
9,557
2.9 %
7,640
2.7 %
Strategic investments in Apollo direct origination platforms
5,281
1.6 %
5,089
1.8 %
Investments in retirement services platforms
2,374
0.7 %
2,539
0.9 %
Other
—
— %
13
— %
Total related party gross invested assets
$
42,539
12.9 %
$
36,831
13.1 %
AFS Securities
We invest in AFS securities and attempt to source investments that match our future cash flow needs. However, we may sell any of our
investments in advance of maturity to timely satisfy our liabilities as they become due or to respond to a change in the credit profile or other
characteristics of the particular investment.
AFS securities are carried at fair value, less allowances for expected credit losses, on our consolidated balance sheets. Changes in fair value of
our AFS securities, are charged or credited to other comprehensive income (loss), net of tax. All changes in the allowance for expected credit
losses, whether due to passage of time, change in expected cash flows or change in fair value are recorded through the provision for credit losses
within investment related gains (losses) on the consolidated statements of income (loss).
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
81
The distribution of our AFS securities, including related parties, by type is as follows:
December 31, 2024
(In millions, except percentages)
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Percentage
of Total
AFS securities
US government and agencies
$
8,413
$
—
$
8
$
(1,270) $
7,151
3.9 %
US state, municipal and political subdivisions
1,167
—
—
(246)
921
0.5 %
Foreign governments
2,082
—
—
(514)
1,568
0.8 %
Corporate
95,006
(175)
485
(11,731)
83,585
45.3 %
CLO
29,524
—
266
(608)
29,182
15.8 %
ABS
24,779
(76)
138
(640)
24,201
13.1 %
CMBS
11,158
(60)
75
(432)
10,741
5.8 %
RMBS
8,587
(397)
228
(403)
8,015
4.4 %
Total AFS securities
180,716
(708)
1,200
(15,844)
165,364
89.6 %
AFS securities – related parties
Corporate
2,502
—
18
(59)
2,461
1.3 %
CLO
6,130
—
18
(113)
6,035
3.3 %
ABS
10,899
(1)
21
(288)
10,631
5.8 %
Total AFS securities – related parties
19,531
(1)
57
(460)
19,127
10.4 %
Total AFS securities, including related parties
$ 200,247
$
(709) $
1,257
$ (16,304) $ 184,491
100.0 %
December 31, 2023
(In millions, except percentages)
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Percentage
of Total
AFS securities
US government and agencies
$
6,161
$
—
$
67
$
(829) $
5,399
3.6 %
US state, municipal and political subdivisions
1,296
—
—
(250)
1,046
0.7 %
Foreign governments
2,083
—
71
(255)
1,899
1.3 %
Corporate
88,343
(129)
830
(10,798)
78,246
52.8 %
CLO
20,506
(2)
261
(558)
20,207
13.6 %
ABS
13,942
(49)
120
(630)
13,383
9.0 %
CMBS
7,070
(29)
52
(502)
6,591
4.4 %
RMBS
8,160
(381)
252
(464)
7,567
5.1 %
Total AFS securities
147,561
(590)
1,653
(14,286)
134,338
90.5 %
AFS securities – related parties
Corporate
1,423
—
1
(72)
1,352
0.9 %
CLO
4,367
—
21
(120)
4,268
2.9 %
ABS
8,665
(1)
34
(309)
8,389
5.7 %
Total AFS securities – related parties
14,455
(1)
56
(501)
14,009
9.5 %
Total AFS securities, including related parties
$ 162,016
$
(591) $
1,709
$ (14,787) $ 148,347
100.0 %
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
82
We maintain a diversified AFS portfolio of corporate fixed maturity securities across industries and issuers and a diversified portfolio of
structured securities. The composition of our AFS securities, including related parties, is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
Corporate
Industrial other1
$
29,309
15.9 %
$
27,272
18.4 %
Financial
32,267
17.5 %
26,854
18.1 %
Utilities
16,480
8.9 %
16,048
10.9 %
Communication
5,185
2.8 %
5,063
3.4 %
Transportation
2,805
1.5 %
4,361
2.9 %
Total corporate
86,046
46.6 %
79,598
53.7 %
Other government-related securities
US government and agencies
7,151
3.9 %
5,399
3.6 %
Foreign governments
1,568
0.8 %
1,899
1.3 %
US state, municipal and political subdivisions
921
0.5 %
1,046
0.7 %
Total non-structured securities
95,686
51.8 %
87,942
59.3 %
Structured securities
CLO
35,217
19.1 %
24,475
16.5 %
ABS
34,832
18.9 %
21,772
14.7 %
CMBS
10,741
5.8 %
6,591
4.4 %
RMBS
Agency
1,032
0.6 %
962
0.6 %
Non-agency
6,983
3.8 %
6,605
4.5 %
Total structured securities
88,805
48.2 %
60,405
40.7 %
Total AFS securities, including related parties
$
184,491
100.0 %
$
148,347
100.0 %
1 Includes securities within various industry segments including capital goods, basic industry, consumer cyclical, consumer non-cyclical, industrial and
technology.
The fair value of our AFS securities, including related parties, was $184.5 billion and $148.3 billion as of December 31, 2024 and 2023,
respectively. The increase was mainly driven by the deployment of strong organic inflows in excess of liability outflows, partially offset by
unrealized losses on AFS securities during the year ended December 31, 2024 of $1.1 billion as well as unrealized losses related to foreign
exchange impacts. The unrealized losses were attributable to an increase in US Treasury rates, partially offset by credit spread tightening in
2024 while the unrealized foreign exchange losses were attributable to the strengthening of the US dollar against foreign currencies in 2024.
The SVO of the NAIC is responsible for the credit quality assessment and valuation of securities owned by state regulated insurance companies.
Insurance companies report ownership of securities to the SVO when such securities are eligible for filing on the relevant schedule of the NAIC
Financial Statement. The SVO conducts credit analysis on these securities for the purpose of assigning an NAIC designation and/or unit price.
Generally, the process for assigning an NAIC designation varies based upon whether a security is considered “filing exempt” (General
Designation Process). Subject to certain exceptions, a security is typically considered “filing exempt” if it has been rated by an NRSRO. For
securities that are not “filing exempt,” insurance companies assign temporary designations based upon a subjective evaluation of credit quality.
The insurance company generally must then submit the securities to the SVO within 120 days of acquisition to receive an NAIC designation.
For securities considered “filing exempt,” the SVO utilizes the NRSRO rating and assigns an NAIC designation based upon the following
system:
NAIC designation
NRSRO equivalent rating
1 A-G
AAA/AA/A
2 A-C
BBB
3 A-C
BB
4 A-C
B
5 A-C
CCC
6
CC and lower
An important exception to the General Designation Process occurs in the case of certain loan backed and structured securities (LBaSS). The
NRSRO ratings methodology is focused on the likelihood of recovery of all contractual payments, including principal at par, regardless of an
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
83
investor’s carrying value. In effect, the NRSRO rating assumes that the holder is the original purchaser at par. In contrast, the SVO’s LBaSS
methodology is focused on determining the risk associated with the recovery of the amortized cost of each security. Because the NAIC’s
methodology explicitly considers amortized cost and the likelihood of recovery of such amount, we view the NAIC’s methodology as the most
appropriate means of evaluating the credit quality of our fixed maturity portfolio since a portion of our holdings were purchased and are carried
at significant discounts to par.
The SVO has developed a designation process and provides instruction on modeled LBaSS. For modeled LBaSS, the process is specific to the
non-agency RMBS and CMBS asset classes. To establish ratings at the individual security level, the SVO obtains loan-level analysis of each
RMBS and CMBS using a selected vendor’s proprietary financial model. The SVO ensures that the vendor has extensive internal quality-control
processes in place and the SVO conducts its own quality-control checks of the selected vendor’s valuation process. The SVO has retained the
services of Blackrock, Inc. (Blackrock) to model non-agency RMBS and CMBS owned by US insurers for all years presented herein. Blackrock
provides five prices (breakpoints), based on each US insurer’s statutory book value price, to utilize in determining the NAIC designation for
each modeled LBaSS.
The NAIC designation determines the associated level of risk-based capital that an insurer is required to hold for all securities owned by the
insurer. In general, under the modeled LBaSS process, the larger the discount to par value at the time of determination, the higher the NAIC
designation the LBaSS will have.
A summary of our AFS securities, including related parties, by NAIC designation is as follows:
December 31,
2024
2023
(In millions, except percentages)
Amortized
Cost
Fair Value
Percentage
of Total
Amortized
Cost
Fair Value
Percentage
of Total
NAIC designation
1 A-G
$
113,845
$
104,887
56.9 %
$
88,673
$
81,549
55.0 %
2 A-C
80,160
74,064
40.1 %
67,530
61,664
41.5 %
Total investment grade
194,005
178,951
97.0 %
156,203
143,213
96.5 %
3 A-C
3,535
3,230
1.8 %
3,869
3,544
2.4 %
4 A-C
1,479
1,378
0.7 %
1,144
1,013
0.7 %
5 A-C
345
293
0.2 %
178
129
0.1 %
6
883
639
0.3 %
622
448
0.3 %
Total below investment grade
6,242
5,540
3.0 %
5,813
5,134
3.5 %
Total AFS securities, including related parties
$
200,247
$
184,491
100.0 %
$
162,016
$
148,347
100.0 %
A significant majority of our AFS portfolio, 97.0% and 96.5% as of December 31, 2024 and 2023, respectively, was invested in assets
considered investment grade with an NAIC designation of 1 or 2.
A summary of our AFS securities, including related parties, by NRSRO ratings is set forth below:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
NRSRO rating agency designation
AAA/AA/A
$
96,095
52.2 %
$
71,887
48.5 %
BBB
70,150
38.0 %
58,010
39.1 %
Non-rated1
11,300
6.1 %
11,427
7.7 %
Total investment grade
177,545
96.3 %
141,324
95.3 %
BB
2,722
1.5 %
3,421
2.3 %
B
972
0.5 %
826
0.6 %
CCC
1,011
0.5 %
1,037
0.6 %
CC and lower
791
0.4 %
739
0.5 %
Non-rated1
1,450
0.8 %
1,000
0.7 %
Total below investment grade
6,946
3.7 %
7,023
4.7 %
Total AFS securities, including related parties
$
184,491
100.0 %
$
148,347
100.0 %
1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation.
With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from the NRSRO rating methodology.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
84
Consistent with the NAIC Process and Procedures Manual, an NRSRO rating was assigned based on the following criteria: (a) the equivalent
S&P rating when the security is rated by one NRSRO; (b) the equivalent S&P rating of the lowest NRSRO when the security is rated by two
NRSROs; and (c) the equivalent S&P rating of the second lowest NRSRO when the security is rated by three or more NRSROs. If the lowest
two NRSRO ratings are equal, then such rating will be the assigned rating. NRSRO ratings available for the periods presented were S&P, Fitch,
Moody’s, DBRS, and Kroll Bond Rating Agency, Inc.
The portion of our AFS portfolio that was considered below investment grade based on NRSRO ratings was 3.7% and 4.7% as of December 31,
2024 and 2023, respectively. The primary driver of the difference in the percentage of securities considered below investment grade by NRSRO
as compared to the securities considered below investment grade by the NAIC is the difference in methodologies between the NRSRO and
NAIC for RMBS due to investments acquired and/or carried at a discount to par value, as previously discussed.
As of each of December 31, 2024 and December 31, 2023, non-rated securities were comprised 64% of corporate private placement securities
for which we have not sought individual ratings from an NRSRO, and 23% and 22%, respectively, of RMBS, many of which were acquired at a
discount to par. We rely on internal analysis and designations assigned by the NAIC to evaluate the credit risk of our portfolio. As of
December 31, 2024 and 2023, 89% and 92%, respectively, of the non-rated securities were designated NAIC 1 or 2.
Asset-backed Securities – We invest in ABS which are securitized by pools of assets such as consumer loans, automobile loans, student loans,
insurance-linked securities, operating cash flows of corporations and cash flows from various types of business equipment. Our ABS holdings
were $34.8 billion and $21.8 billion as of December 31, 2024 and 2023, respectively.
A summary of our AFS ABS portfolio, including related parties, by NAIC designations and NRSRO quality ratings is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
NAIC designation
1 A-G
$
24,672
70.9 %
$
13,180
60.5 %
2 A-C
9,336
26.8 %
7,438
34.2 %
Total investment grade
34,008
97.7 %
20,618
94.7 %
3 A-C
658
1.9 %
802
3.7 %
4 A-C
109
0.3 %
257
1.2 %
5 A-C
12
— %
4
— %
6
45
0.1 %
91
0.4 %
Total below investment grade
824
2.3 %
1,154
5.3 %
Total AFS ABS, including related parties
$
34,832
100.0 %
$
21,772
100.0 %
NRSRO rating agency designation
AAA/AA/A
$
24,532
70.5 %
$
12,104
55.6 %
BBB
9,443
27.1 %
8,499
39.0 %
Non-rated1
64
0.2 %
15
0.1 %
Total investment grade
34,039
97.8 %
20,618
94.7 %
BB
641
1.8 %
824
3.8 %
B
95
0.3 %
236
1.1 %
CCC
12
— %
4
— %
CC and lower
13
— %
4
— %
Non-rated1
32
0.1 %
86
0.4 %
Total below investment grade
793
2.2 %
1,154
5.3 %
Total AFS ABS, including related parties
$
34,832
100.0 %
$
21,772
100.0 %
1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation.
The NAIC designation methodology differs in significant respects from the NRSRO rating methodology.
As of December 31, 2024 and 2023, a substantial majority of our AFS ABS portfolio, 97.7% and 94.7%, respectively, was invested in assets
considered to be investment grade based upon the application of the NAIC’s methodology, while 97.8% and 94.7% of securities as of
December 31, 2024 and 2023, respectively, were considered investment grade based upon NRSRO ratings. The increase in our ABS portfolio
was mainly driven by the deployment of strong organic inflows in excess of liability outflows.
Collateralized Loan Obligations – We also invest in CLOs which pay principal and interest from cash flows received from underlying
corporate loans. These holdings were $35.2 billion and $24.5 billion as of December 31, 2024 and 2023, respectively.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
85
A summary of our AFS CLO portfolio, including related parties, by NAIC designations and NRSRO quality ratings is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
NAIC designation
1 A-G
$
23,948
68.0 %
$
15,803
64.5 %
2 A-C
11,130
31.6 %
8,517
34.8 %
Total investment grade
35,078
99.6 %
24,320
99.3 %
3 A-C
118
0.3 %
137
0.6 %
4 A-C
21
0.1 %
18
0.1 %
5 A-C
—
— %
—
— %
6
—
— %
—
— %
Total below investment grade
139
0.4 %
155
0.7 %
Total AFS CLO, including related parties
$
35,217
100.0 %
$
24,475
100.0 %
NRSRO rating agency designation
AAA/AA/A
$
23,956
68.0 %
$
15,803
64.5 %
BBB
11,122
31.6 %
8,517
34.8 %
Non-rated
—
— %
—
— %
Total investment grade
35,078
99.6 %
24,320
99.3 %
BB
118
0.3 %
137
0.6 %
B
21
0.1 %
18
0.1 %
CCC
—
— %
—
— %
CC and lower
—
— %
—
— %
Non-rated
—
— %
—
— %
Total below investment grade
139
0.4 %
155
0.7 %
Total AFS CLO, including related parties
$
35,217
100.0 %
$
24,475
100.0 %
As of December 31, 2024 and 2023, 99.6% and 99.3%, respectively, of our AFS CLO portfolio was invested in assets considered to be
investment grade based upon both the application of the NAIC’s methodology and NRSRO ratings. The increase in our CLO portfolio was
mainly driven by the deployment of strong organic inflows in excess of liability outflows.
Commercial Mortgage-backed Securities – A portion of our AFS portfolio is invested in CMBS which are constructed from pools of
commercial mortgages. These holdings were $10.7 billion and $6.6 billion as of December 31, 2024 and 2023, respectively.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
86
A summary of our AFS CMBS portfolio by NAIC designations and NRSRO quality ratings is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
NAIC designation
1 A-G
$
9,300
86.6 %
$
5,231
79.4 %
2 A-C
913
8.5 %
970
14.7 %
Total investment grade
10,213
95.1 %
6,201
94.1 %
3 A-C
241
2.2 %
231
3.5 %
4 A-C
95
0.9 %
93
1.4 %
5 A-C
156
1.5 %
30
0.5 %
6
36
0.3 %
36
0.5 %
Total below investment grade
528
4.9 %
390
5.9 %
Total AFS CMBS
$
10,741
100.0 %
$
6,591
100.0 %
NRSRO rating agency designation
AAA/AA/A
$
8,448
78.6 %
$
4,718
71.6 %
BBB
1,075
10.0 %
905
13.7 %
Non-rated1
544
5.1 %
230
3.5 %
Total investment grade
10,067
93.7 %
5,853
88.8 %
BB
336
3.1 %
497
7.5 %
B
115
1.1 %
142
2.2 %
CCC
135
1.3 %
97
1.5 %
CC and lower
48
0.4 %
2
— %
Non-rated1
40
0.4 %
—
— %
Total below investment grade
674
6.3 %
738
11.2 %
Total AFS CMBS
$
10,741
100.0 %
$
6,591
100.0 %
1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation.
The NAIC designation methodology differs in significant respects from the NRSRO rating methodology.
As of December 31, 2024 and 2023, 95.1% and 94.1%, respectively, of our AFS CMBS portfolio was invested in assets considered to be
investment grade based upon application of the NAIC’s methodology, while 93.7% and 88.8% of securities as of December 31, 2024 and 2023,
respectively, were considered investment grade based upon NRSRO ratings. The increase in our CMBS portfolio was mainly driven by the
deployment of strong organic inflows in excess of liability outflows.
Residential Mortgage-backed Securities – A portion of our AFS portfolio is invested in RMBS, which are securities constructed from pools of
residential mortgages. These holdings were $8.0 billion and $7.6 billion as of December 31, 2024 and 2023, respectively.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
87
A summary of our AFS RMBS portfolio by NAIC designations and NRSRO quality ratings is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
NAIC designation
1 A-G
$
6,715
83.8 %
$
6,645
87.9 %
2 A-C
691
8.6 %
245
3.2 %
Total investment grade
7,406
92.4 %
6,890
91.1 %
3 A-C
259
3.3 %
281
3.7 %
4 A-C
186
2.3 %
235
3.1 %
5 A-C
82
1.0 %
74
1.0 %
6
82
1.0 %
87
1.1 %
Total below investment grade
609
7.6 %
677
8.9 %
Total AFS RMBS
$
8,015
100.0 %
$
7,567
100.0 %
NRSRO rating agency designation
AAA/AA/A
$
2,518
31.4 %
$
2,405
31.9 %
BBB
945
11.8 %
562
7.4 %
Non-rated1
2,523
31.5 %
2,356
31.1 %
Total investment grade
5,986
74.7 %
5,323
70.4 %
BB
46
0.6 %
101
1.3 %
B
129
1.6 %
124
1.7 %
CCC
827
10.3 %
915
12.1 %
CC and lower
679
8.5 %
715
9.4 %
Non-rated1
348
4.3 %
389
5.1 %
Total below investment grade
2,029
25.3 %
2,244
29.6 %
Total AFS RMBS
$
8,015
100.0 %
$
7,567
100.0 %
1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation.
The NAIC designation methodology differs in significant respects from the NRSRO rating methodology.
A significant majority of our RMBS portfolio, 92.4% and 91.1% as of December 31, 2024 and 2023, respectively, was invested in assets
considered to be investment grade based upon application of the NAIC’s methodology. The NAIC’s methodology with respect to RMBS gives
explicit effect to the amortized cost at which an insurance company carries each such investment. Because we invested in RMBS after the
stresses related to US housing had caused significant downward pressure on prices of RMBS, we carry some of our investments in RMBS at
significant discounts to par value, which results in an investment grade NAIC designation. In contrast, our understanding is that in setting
ratings, the NRSRO focuses on the likelihood of recovering all contractual payments including principal at par value. As a result of this
fundamental difference in approach, NRSRO characterized 74.7% and 70.4% of our RMBS portfolio as investment grade as of December 31,
2024 and 2023, respectively. The increase in our RMBS portfolio was mainly driven by the deployment of strong organic inflows in excess of
liability outflows.
Unrealized Losses
Our investments in AFS securities, including related parties, are reported at fair value with changes in fair value recorded in other
comprehensive income (loss). Certain of our AFS securities, including related parties, have experienced declines in fair value that we consider
temporary in nature. These investments are held to support our product liabilities, and we currently have the intent and ability to hold these
securities until recovery of the amortized cost basis prior to sale or maturity. As of December 31, 2024, our AFS securities, including related
parties, had a fair value of $184.5 billion, which was 7.9% below amortized cost of $200.2 billion. As of December 31, 2023, our AFS
securities, including related parties, had a fair value of $148.3 billion, which was 8.4% below amortized cost of $162.0 billion. Our fair value of
AFS securities as of both December 31, 2024 and 2023 were below amortized cost due to the investment portfolio being marked to fair value on
January 1, 2022 in conjunction with purchase accounting, with subsequent losses driven by the significant increase in US Treasury rates.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
88
The following tables reflect the unrealized losses on the AFS portfolio, including related parties, for which an allowance for credit losses has not
been recorded, by NAIC designations:
December 31, 2024
(In millions, except percentages)
Amortized Cost
of AFS
Securities with
Unrealized Loss
Gross
Unrealized
Losses
Fair Value of
AFS Securities
with Unrealized
Loss
Fair Value to
Amortized Cost
Ratio
Fair Value of
Total AFS
Securities
Gross
Unrealized
Losses to Total
AFS Fair Value
NAIC designation
1 A-G
$
67,663
$
(8,693) $
58,970
87.2 %
$
104,887
(8.3) %
2 A-C
48,729
(6,292)
42,437
87.1 %
74,064
(8.5) %
Total investment grade
116,392
(14,985)
101,407
87.1 %
178,951
(8.4) %
3 A-C
2,280
(240)
2,040
89.5 %
3,230
(7.4) %
4 A-C
889
(59)
830
93.4 %
1,378
(4.3) %
5 A-C
202
(19)
183
90.6 %
293
(6.5) %
6
256
(65)
191
74.6 %
639
(10.2) %
Total below investment grade
3,627
(383)
3,244
89.4 %
5,540
(6.9) %
Total
$
120,019
$
(15,368) $
104,651
87.2 %
$
184,491
(8.3) %
December 31, 2023
(In millions, except percentages)
Amortized Cost
of AFS
Securities with
Unrealized Loss
Gross
Unrealized
Losses
Fair Value of
AFS Securities
with Unrealized
Loss
Fair Value to
Amortized Cost
Ratio
Fair Value of
Total AFS
Securities
Gross
Unrealized
Losses to Total
AFS Fair Value
NAIC designation
1 A-G
$
60,105
$
(7,627) $
52,478
87.3 %
$
81,549
(9.4) %
2 A-C
47,893
(6,334)
41,559
86.8 %
61,664
(10.3) %
Total investment grade
107,998
(13,961)
94,037
87.1 %
143,213
(9.7) %
3 A-C
3,026
(283)
2,743
90.6 %
3,544
(8.0) %
4 A-C
533
(61)
472
88.6 %
1,013
(6.0) %
5 A-C
79
(25)
54
67.1 %
129
(19.4) %
6
223
(38)
185
82.5 %
448
(8.5) %
Total below investment grade
3,861
(407)
3,454
89.4 %
5,134
(7.9) %
Total
$
111,859
$
(14,368) $
97,491
87.2 %
$
148,347
(9.7) %
The gross unrealized losses on AFS securities, including related parties, were $15.4 billion and $14.4 billion as of December 31, 2024 and 2023,
respectively. The increase in unrealized losses on AFS securities was primarily attributable to an increase in US Treasury rates, partially offset
by credit spread tightening in 2024.
Provision for Credit Losses
For our credit loss accounting policies and the assumptions used in the allowances, see Note 1 – Business, Basis of Presentation and Significant
Accounting Policies and Note 3 – Investments to the consolidated financial statements.
As of December 31, 2024 and 2023, we held an allowance for credit losses on AFS securities of $709 million and $591 million, respectively.
During the year ended December 31, 2024, we recorded an increase in the allowance for credit losses on AFS securities of $118 million, of
which $123 million had an income statement impact and $(5) million related to Purchased Credit Deteriorated (PCD) securities and other
changes. The increase in the allowance for credit losses on AFS securities was primarily related to impacts from corporate securities as well as
CMBS and ABS. During the year ended December 31, 2023, we recorded an increase in the allowance for credit losses on AFS securities of
$132 million, of which $96 million had an income statement impact and $36 million related to PCD securities and other changes. The increase
in the allowance for credit losses on AFS securities was primarily related to deterioration in China’s residential real estate market and CMBS
impacts. The intent-to-sell impairments for the years ended December 31, 2024 and 2023 were $59 million and $239 million, respectively. The
decrease in our intent-to-sell impairments was primarily driven by the timing of the recapture of certain business by VIAC and impacts from the
Silicon Valley Bank failure in 2023.
International Exposure
A portion of our AFS securities is invested in securities with international exposure. As of December 31, 2024 and 2023, 40% and 34%,
respectively, of the carrying value of our AFS securities, including related parties, was comprised of securities of issuers based outside of the US
and debt securities of foreign governments. These securities generally are either denominated in US dollars or do not expose us to significant
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
89
foreign currency risk as a result of foreign currency swap and forward arrangements.
The following table presents our international exposure in our AFS portfolio, including related parties, by country or region of issuance:
December 31,
2024
2023
(In millions, except percentages)
Amortized
Cost
Fair Value
Percentage of
Total
Amortized
Cost
Fair Value
Percentage of
Total
Country
Ireland
$
10,918
$
10,330
14.1 %
$
7,350
$
7,099
13.9 %
Other Europe
18,190
16,450
22.4 %
13,670
12,245
24.0 %
Total Europe
29,108
26,780
36.5 %
21,020
19,344
37.9 %
Non-US North America
40,260
39,343
53.7 %
24,041
23,044
45.1 %
Australia & New Zealand
3,207
2,825
3.9 %
3,504
3,153
6.2 %
Asia/Pacific
2,212
1,821
2.5 %
2,348
2,219
4.3 %
Central & South America
1,680
1,467
2.0 %
1,630
1,438
2.8 %
Africa & Middle East
1,384
1,050
1.4 %
2,276
1,911
3.7 %
Total
$
77,851
$
73,286
100.0 %
$
54,819
$
51,109
100.0 %
Approximately 98.1% and 97.9% of these securities are investment grade by NAIC designation as of December 31, 2024 and 2023, respectively.
As of December 31, 2024, 11% of our AFS securities, including related parties, were invested in CLOs of Cayman Islands issuers (included in
Non-US North America) for which the underlying investments are largely loans to US issuers and 29% were invested in securities of other non-
US issuers.
The majority of our investments in Ireland are comprised of Euro denominated CLOs, for which the special purpose vehicle (SPV) is domiciled
in Ireland, but the underlying leveraged loans involve borrowers from the broader European region.
Trading Securities
Trading securities, including related parties and consolidated VIEs, were $4.5 billion and $4.7 billion as of December 31, 2024 and 2023,
respectively. Trading securities are primarily comprised of AmerUs Closed Block securities for which we have elected the fair value option
valuation, certain equity tranche securities, structured securities with embedded derivatives and investments which support various reinsurance
arrangements. The decrease in trading securities was primarily driven by asset sales as well as unrealized losses during the year ended December
31, 2024 attributable to an increase in US Treasury rates, partially offset by the consolidation of a new VIE with underlying trading securities in
2024.
Mortgage Loans
The following is a summary of our mortgage loan portfolio by collateral type, including assets held by related parties and consolidated VIEs:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
Property type
Apartment
$
11,746
17.5 %
$
9,591
20.2 %
Industrial
6,793
10.1 %
4,143
8.7 %
Office building
4,162
6.2 %
4,455
9.4 %
Hotels
2,786
4.1 %
2,913
6.1 %
Retail
2,269
3.4 %
2,158
4.5 %
Other commercial
4,676
7.0 %
3,352
7.0 %
Total commercial mortgage loans
32,432
48.3 %
26,612
55.9 %
Residential loans
34,683
51.7 %
20,957
44.1 %
Total mortgage loans, including related parties and consolidated VIEs
$
67,115
100.0 %
$
47,569
100.0 %
We invest a portion of our investment portfolio in mortgage loans, which are generally comprised of high quality commercial first lien and
mezzanine real estate loans. Our mortgage loan holdings, including related parties and consolidated VIEs, were $67.1 billion and $47.6 billion
as of December 31, 2024 and 2023, respectively. This included $903 million and $1.4 billion of mezzanine mortgage loans as of December 31,
2024 and 2023, respectively. We have acquired mortgage loans through acquisitions and reinsurance arrangements, as well as through an active
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
90
program to invest in new mortgage loans. We invest in CMLs on income producing properties including hotels, apartments, retail and office
buildings, and other commercial and industrial properties. Our RML portfolio primarily consists of first lien RMLs collateralized by properties
located in the US. Loan-to-value ratios at the time of loan approval are generally 75% or less.
We have elected the fair value option on our mortgage loan portfolio; therefore, we have no allowance for credit losses for commercial and
residential mortgage loans. Interest income on mortgage loans is accrued on the principal amount of the loan based on the loan’s contractual
interest rate. Interest income and prepayment fees are reported in net investment income on the consolidated statements of income (loss).
Changes in the fair value of the mortgage loan portfolio are reported in investment related gains (losses) on the consolidated statements of
income (loss).
It is our policy to cease to accrue interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued
unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is our general policy to initiate
foreclosure proceedings unless a workout arrangement to bring the loan current is in place. As of December 31, 2024 and 2023, we had $878
million and $543 million, respectively, of mortgage loans that were 90 days past due, of which $251 million and $125 million, respectively,
were in the process of foreclosure. As of December 31, 2024 and 2023, $82 million and $124 million of mortgage loans that were 90 days past
due were related to Government National Mortgage Association early buyouts that are fully or partially guaranteed and are accruing interest.
Investment Funds
Our investment fund portfolio strategy primarily focuses on core holdings of strategic origination and retirement services platforms, equity and
credit, and other funds. Strategic origination platforms include investments sourced by affiliated platforms that originate loans to third parties
and in which we gain exposure directly to the loan or indirectly through our ownership of the origination platform and/or securitizations of
assets originated by the origination platform. Retirement services platforms include investments in equity of financial services companies. Our
credit strategy comprises direct origination, asset-backed, multi-credit and opportunistic credit funds focused on generating excess returns
through high-quality credit underwriting and origination. Our equity strategy comprises private equity, hybrid value, secondaries equity, real
estate equity, impact investing, infrastructure and clean transition equity funds that raise capital from investors to pursue control-oriented
investments across the universe of private assets. Our investment funds can meet the definition of a VIE, and in certain cases, these investment
funds are consolidated in our financial statements because we meet the criteria of the primary beneficiary.
The following table illustrates our investment funds, including related parties and consolidated VIEs:
December 31,
2024
20231
(In millions, except percentages)
Carrying Value
Percentage of
Total
Carrying Value
Percentage of
Total
Investment funds
Equity
$
107
0.5 %
$
109
0.6 %
Investment funds – related parties
Strategic origination platforms
29
0.2 %
32
0.2 %
Retirement services platforms
1,317
6.7 %
1,300
7.3 %
Equity
244
1.2 %
267
1.5 %
Credit
253
1.3 %
20
0.1 %
Other
10
0.1 %
13
0.1 %
Total investment funds – related parties
1,853
9.5 %
1,632
9.2 %
Investment funds owned by consolidated VIEs
Strategic origination platforms
6,347
32.2 %
4,987
28.2 %
Retirement services platforms
—
— %
483
2.7 %
Equity
7,702
39.0 %
7,032
39.8 %
Credit
3,062
15.5 %
2,852
16.2 %
Other
654
3.3 %
573
3.3 %
Total investment funds owned by consolidated VIEs
17,765
90.0 %
15,927
90.2 %
Total investment funds, including related parties and consolidated VIEs
$
19,725
100.0 %
$
17,668
100.0 %
1 Prior period amounts have been reclassified to conform with the current year presentation as a result of aligning our investment fund categories to reflect our
updated investment strategies.
Overall, total investment funds, including related parties and consolidated VIEs, were $19.7 billion and $17.7 billion as of December 31, 2024
and 2023, respectively. See Note 3 – Investments to the consolidated financial statements for further discussion regarding how we account for
our investment funds. Our investment fund portfolio is subject to a number of market-related risks including interest rate risk and equity market
risk. Interest rate risk represents the potential for changes in the investment fund’s net asset values resulting from changes in the general level of
interest rates. Equity market risk represents the potential for changes in the investment fund’s net asset values resulting from changes in equity
markets or from other external factors which influence equity markets. These risks expose us to potential volatility in our earnings period-over-
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
91
period. We actively monitor our exposure to these risks. The increase in investment funds, including related parties and consolidated VIEs, was
primarily driven by favorable performance of the underlying assets within AAA, net contributions from third-party investors into AAA and the
consolidation of new VIEs with underlying investment funds in 2024, partially offset by the distribution of certain investments to AGM as a
dividend and the resulting deconsolidation of Apollo Rose as a VIE.
Funds Withheld at Interest
Funds withheld at interest represent a receivable for amounts contractually withheld by ceding companies in accordance with modco and funds
withheld reinsurance agreements in which we act as the reinsurer. Generally, assets equal to statutory reserves are withheld and legally owned
by the ceding company. We hold funds withheld at interest receivables, including those held with Venerable, Lincoln and Jackson. As of
December 31, 2024, the majority of the ceding companies holding the assets pursuant to such reinsurance agreements had a financial strength
rating of A or better (based on an AM Best scale).
The funds withheld at interest is comprised of the host contract and an embedded derivative. We are subject to the investment performance on
the withheld assets with the total return directly impacting the host contract and the embedded derivative. Interest accrues at a risk-free rate on
the host receivable and is recorded as net investment income in the consolidated statements of income (loss). The embedded derivative in our
reinsurance agreements is similar to a total return swap on the income generated by the underlying assets held by the ceding companies. The
change in the embedded derivative is recorded in investment related gains (losses) in the consolidated statements of income (loss). Although we
do not legally own the underlying investments in the funds withheld at interest, in each instance, the ceding company has hired Apollo to
manage the withheld assets in accordance with our investment guidelines.
The following summarizes the underlying investment composition of the funds withheld at interest, including related parties:
December 31,
2024
2023
(In millions, except percentages)
Carrying Value
Percentage of
Total
Carrying Value
Percentage of
Total
Fixed maturity securities
Corporate
$
12,452
52.1 %
$
14,840
48.1 %
ABS
2,404
10.0 %
3,285
10.6 %
CLO
1,343
5.6 %
2,612
8.5 %
CMBS
656
2.7 %
688
2.2 %
RMBS
467
2.0 %
580
1.9 %
Foreign governments
294
1.2 %
328
1.1 %
US state, municipal and political subdivisions
162
0.7 %
188
0.6 %
Mortgage loans
4,282
17.9 %
5,277
17.1 %
Investment funds
900
3.8 %
827
2.7 %
Equity securities
255
1.1 %
351
1.1 %
Short-term investments
209
0.9 %
228
0.7 %
Derivative assets
130
0.5 %
113
0.4 %
Cash and cash equivalents
517
2.1 %
1,622
5.3 %
Other assets and liabilities
(155)
(0.6) %
(106)
(0.3) %
Total funds withheld at interest, including related parties
$
23,916
100.0 %
$
30,833
100.0 %
As of December 31, 2024 and 2023, we held $23.9 billion and $30.8 billion, respectively, of funds withheld at interest receivables, including
related parties. Approximately 95.4% and 95.0% of the fixed maturity securities within the funds withheld at interest are investment grade by
NAIC designation as of December 31, 2024 and 2023, respectively. The decrease in funds withheld at interest, including related parties, was
primarily driven by run-off of the underlying blocks of business.
Derivative Instruments
We hold derivative instruments for economic hedging purposes to reduce our exposure to the cash flow variability of assets and liabilities,
equity market risk, foreign exchange risk and interest rate risk. The types of derivatives we may use include interest rate swaps, foreign currency
swaps and forward contracts, total return swaps, credit default swaps, variance swaps, futures and equity options.
A discussion regarding our derivative instruments and how such instruments are used to manage risk is included in Note 4 – Derivative
Instruments to the consolidated financial statements.
As part of our risk management strategies, management continually evaluates our derivative instrument holdings and the effectiveness of such
holdings in addressing risks identified in our operations.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
92
Net Invested Assets
The following summarizes our net invested assets:
December 31,
2024
2023
(In millions, except percentages)
Net Invested
Asset Value1
Percentage of
Total
Net Invested
Asset Value1
Percentage of
Total
Corporate
$
86,051
34.6 %
$
82,883
38.1 %
CLO
27,698
11.2 %
20,538
9.4 %
Credit
113,749
45.8 %
103,421
47.5 %
CML
28,055
11.3 %
25,977
11.9 %
RML
27,848
11.2 %
18,021
8.3 %
RMBS
7,635
3.1 %
7,795
3.6 %
CMBS
8,243
3.3 %
5,580
2.6 %
Real estate
71,781
28.9 %
57,373
26.4 %
ABS
28,670
11.5 %
22,202
10.2 %
Alternative investments
12,000
4.8 %
11,659
5.4 %
State, municipal, political subdivisions and foreign government
3,237
1.3 %
3,384
1.5 %
Equity securities
2,201
0.9 %
1,727
0.8 %
Short-term investments
1,015
0.4 %
1,048
0.5 %
US government and agencies
5,531
2.2 %
4,052
1.9 %
Other investments
52,654
21.1 %
44,072
20.3 %
Cash and cash equivalents
6,794
2.7 %
10,467
4.8 %
Other
3,665
1.5 %
2,094
1.0 %
Net invested assets
$
248,643
100.0 %
$
217,427
100.0 %
1 See Key Operating and Non-GAAP Measures for the definition of net invested assets.
Our net invested assets were $248.6 billion and $217.4 billion as of December 31, 2024 and 2023, respectively. As of December 31, 2024,
corporate securities included $24.2 billion of private placements, which represented 9.8% of our net invested assets. The increase in net invested
assets was primarily driven by growth from net organic inflows of $49.1 billion in excess of net liability outflows of $27.2 billion, reinvestment
of earnings, the issuance of debt in 2024 and an increase in short term repurchase agreements outstanding as of December 31, 2024, partially
offset by an incremental 3% increase in the ADIP II ownership of ACRA 2 to 63% effective October 1, 2024 and the distribution of certain
investments to AGM as a dividend.
In managing our business, we utilize net invested assets as presented in the above table. Net invested assets do not correspond to total
investments, including related parties, on our consolidated balance sheets, as discussed previously in Key Operating and Non-GAAP Measures.
Net invested assets represent the investments that directly back our net reserve liabilities and surplus assets. We believe this view of our
portfolio provides a view of the assets for which we have economic exposure. We adjust the presentation for assumed and ceded reinsurance
transactions to include or exclude the underlying investments based upon the contractual transfer of economic exposure to such underlying
investments. We also adjust for VIEs to show the net investment in the funds, which are included in the alternative investments line above as
well as adjusting for the allowance for credit losses. Net invested assets include our proportionate share of ACRA investments, based on our
economic ownership, but exclude the proportionate share of investments associated with the noncontrolling interests.
Net invested assets is utilized by management to evaluate our investment portfolio. Net invested assets is used in the computation of net
investment earned rate, which allows us to analyze the profitability of our investment portfolio. Net invested assets is also used in our risk
management processes for asset purchases, product design and underwriting, stress scenarios, liquidity and ALM.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
93
Net Alternative Investments
The following summarizes our net alternative investments:
December 31,
2024
20231
(In millions, except percentages)
Net Invested
Asset Value
Percentage of
Total
Net Invested
Asset Value
Percentage of
Total
Strategic origination platforms
Wheels
$
581
4.8 %
$
691
5.9 %
Redding Ridge
581
4.8 %
571
4.9 %
MidCap Financial
544
4.5 %
524
4.5 %
Aqua Finance
309
2.6 %
215
1.8 %
Skylign2
300
2.5 %
244
2.1 %
Foundation Home Loans
184
1.5 %
242
2.1 %
Other
776
6.5 %
240
2.1 %
Strategic origination platforms
3,275
27.2 %
2,727
23.4 %
Apollo and other investments
Real assets
1,691
14.1 %
2,010
17.2 %
Private equity
1,107
9.2 %
1,159
9.9 %
Structured equity and other
522
4.4 %
368
3.2 %
Equity
3,320
27.7 %
3,537
30.3 %
Credit
1,481
12.4 %
1,559
13.4 %
Liquid assets and other
851
7.1 %
298
2.6 %
Apollo and other investments
5,652
47.2 %
5,394
46.3 %
Total AAA
8,927
74.4 %
8,121
69.7 %
Retirement services
Athora
1,125
9.4 %
1,106
9.5 %
Venerable
273
2.3 %
181
1.5 %
Other
—
— %
1,014
8.7 %
Retirement services
1,398
11.7 %
2,301
19.7 %
Apollo and other investments
Equity
1,120
9.3 %
969
8.3 %
Credit
531
4.4 %
215
1.8 %
Other
24
0.2 %
53
0.5 %
Apollo and other investments
1,675
13.9 %
1,237
10.6 %
Total Non AAA
3,073
25.6 %
3,538
30.3 %
Net alternative investments
$
12,000
100.0 %
$
11,659
100.0 %
1 Prior period amounts have been reclassified to conform with the current year presentation as a result of aligning our alternative investment categories to
reflect our updated investment strategies.
2 Skylign was previously referenced as PK AirFinance. Skylign is the holding company that comprises two operating businesses, PK AirFinance and Perseus
Aviation.
Net alternative investments were $12.0 billion and $11.7 billion as of December 31, 2024 and 2023, respectively, representing 4.8% and 5.4% of
our net invested asset portfolio as of December 31, 2024 and 2023, respectively. As of December 31, 2024, we held approximately 74% of our
net alternative investments through AAA and had a gross ownership percentage in AAA of approximately 61%. The increase in net alternative
investments was primarily driven by a contribution to AAA and additional asset purchases in 2024, including the purchase of portions of ADIP I
and ADIP II funds, as well as favorable performance of the underlying assets within AAA. These impacts were partially offset by the
distribution of FWD and our Catalina common equity interests to AGM as a dividend, the sale of our Challenger common equity interests and
the reclassification of our remaining Catalina and Challenger redeemable preferred equity securities to fixed and other net invested assets.
Net alternative investments do not correspond to the total investment funds, including related parties and consolidated VIEs, on our consolidated
balance sheets. As previously discussed in the net invested assets section, we adjust the US GAAP presentation for assumed and ceded
reinsurance as well as VIEs. We include certain equity securities in alternative investments due to their underlying characteristics and equity-
like features.
Through our relationship with Apollo, we have indirectly invested in companies that meet the key characteristics we look for in net alternative
investments. Athora, our largest alternative investment, is a strategic investment.
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
94
Athora
Athora is a specialized insurance and reinsurance group fully focused on the European market. Athora’s principal operational subsidiaries are
Athora Netherlands N.V. in the Netherlands, Athora Belgium SA in Belgium, Athora Lebensversicherung AG in Germany, Athora Ireland plc in
Ireland and Athora Life Re Ltd. in Bermuda. Athora deploys capital and resources to further its mission to build a stand-alone independent and
integrated insurance and reinsurance business. Athora’s growth is achieved primarily through acquisitions, portfolio transfers and reinsurance.
Athora is building a European insurance brand and has successfully acquired, integrated and transformed multiple insurance companies.
Our alternative investment in Athora had a carrying value of $1.1 billion as of each of December 31, 2024 and 2023, respectively. Our
investment in Athora represents our proportionate share of its net asset value, which largely reflects any contributions to and distributions from
Athora and changes in its fair value. Athora returned a net investment earned rate of 1.56%, 5.38% and 13.77% for the years ended December
31, 2024, 2023 and 2022, respectively. Alternative investment income from Athora was $20 million, $60 million and $125 million for the years
ended December 31, 2024, 2023 and 2022, respectively. The decrease in alternative investment income for the year ended December 31, 2024
compared to 2023 was primarily driven by increased expenses and lower growth impacting the valuation of Athora in 2024.
Non-GAAP Measure Reconciliations
The reconciliation of net income (loss) available to AHL common stockholder to spread related earnings is as follows:
Years ended December 31,
(In millions)
2024
2023
2022
Net income (loss) available to AHL common stockholder
$
3,280
$
4,484
$
(3,051)
Preferred stock dividends
181
181
141
Net income (loss) attributable to noncontrolling interests
1,443
1,087
(2,106)
Net income (loss)
4,904
5,752
(5,016)
Income tax expense (benefit)
730
(1,161)
(646)
Income (loss) before income taxes
5,634
4,591
(5,662)
Investment gains (losses), net of offsets
217
170
(7,434)
Non-operating change in insurance liabilities and related derivatives
846
182
1,433
Integration, restructuring and other non-operating expenses
(239)
(130)
(133)
Stock compensation expense
(50)
(88)
(56)
Preferred stock dividends
181
181
141
Noncontrolling interests – pre-tax income (loss) and VIE adjustments
1,458
1,169
(2,079)
Less: Total adjustments to income (loss) before income taxes
2,413
1,484
(8,128)
Spread related earnings
$
3,221
$
3,107
$
2,466
The reconciliation of total AHL stockholders’ equity to total adjusted AHL common stockholder’s equity is as follows:
December 31,
(In millions)
2024
2023
Total AHL stockholders’ equity
$
16,360
$
13,838
Less: Preferred stock
3,154
3,154
Total AHL common stockholder’s equity
13,206
10,684
Less: Accumulated other comprehensive loss
(5,465)
(5,569)
Less: Accumulated change in fair value of reinsurance assets
(1,591)
(1,882)
Less: Accumulated change in fair value of mortgage loan assets
(2,051)
(2,233)
Total adjusted AHL common stockholder’s equity
$
22,313
$
20,368
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
95
The reconciliation of debt-to-capital ratio to adjusted senior debt-to-capital ratio is as follows:
December 31,
(In millions, except percentages)
2024
2023
Total debt
$
6,309
$
4,209
Less: Subordinated debt
1,175
—
Less: Adjustment to arrive at notional debt
134
209
Notional senior debt
$
5,000
$
4,000
Total debt
$
6,309
$
4,209
Total AHL stockholders’ equity
16,360
13,838
Total capitalization
22,669
18,047
Less: Accumulated other comprehensive loss
(5,465)
(5,569)
Less: Accumulated change in fair value of reinsurance assets
(1,591)
(1,882)
Less: Accumulated change in fair value of mortgage loan assets
(2,051)
(2,233)
Less: Adjustment to arrive at notional debt
134
209
Total adjusted capitalization
$
31,642
$
27,522
Debt-to-capital ratio
27.8 %
23.3 %
Accumulated other comprehensive loss
(4.7) %
(4.7) %
Accumulated change in fair value of reinsurance assets
(1.4) %
(1.6) %
Accumulated change in fair value of mortgage loan assets
(1.8) %
(1.9) %
Adjustment to exclude subordinated debt
(3.7) %
— %
Adjustment to arrive at notional debt
(0.4) %
(0.6) %
Adjusted senior debt-to-capital ratio
15.8 %
14.5 %
The reconciliation of leverage ratio to adjusted leverage ratio is as follows:
December 31,
(In millions, except percentages)
2024
2023
Total debt
$
6,309
$
4,209
Add: 50% of preferred stock
1,577
1,577
Less: 50% of subordinated debt
588
—
Less: Adjustment to arrive at notional debt
134
209
Adjusted leverage
$
7,164
$
5,577
Total debt
$
6,309
$
4,209
Total AHL stockholders’ equity
16,360
13,838
Total capitalization
22,669
18,047
Less: Accumulated other comprehensive loss
(5,465)
(5,569)
Less: Accumulated change in fair value of reinsurance assets
(1,591)
(1,882)
Less: Accumulated change in fair value of mortgage loan assets
(2,051)
(2,233)
Less: Adjustment to arrive at notional debt
134
209
Total adjusted capitalization
$
31,642
$
27,522
Leverage ratio
41.7 %
40.8 %
Accumulated other comprehensive loss
(7.1) %
(8.2) %
Accumulated change in fair value of reinsurance assets
(2.1) %
(2.8) %
Accumulated change in fair value of mortgage loan assets
(2.7) %
(3.3) %
Adjustment to exclude 50% of preferred stock
(5.0) %
(5.6) %
Adjustment to exclude 50% of subordinated debt
(1.9) %
— %
Adjustment to arrive at notional debt
(0.3) %
(0.6) %
Adjusted leverage ratio
22.6 %
20.3 %
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
96
The reconciliation of net investment income to net investment earnings and earned rate is as follows:
Years ended December 31,
2024
2023
2022
(In millions, except percentages)
Dollar
Rate
Dollar
Rate
Dollar
Rate
US GAAP net investment income
$ 14,481
6.19 % $ 11,130
5.34 %
$
7,571
4.01 %
Change in fair value of reinsurance assets
(129)
(0.05) %
86
0.04 %
333
0.18 %
VIE earnings and noncontrolling interests
1,310
0.56 %
1,078
0.52 %
586
0.31 %
Forward points adjustment on FX derivative hedges
133
0.06 %
187
0.09 %
125
0.07 %
Held-for-trading amortization
(108)
(0.05) %
(191)
(0.09) %
(228)
(0.12) %
Reinsurance impacts
(223)
(0.09) %
(264)
(0.13) %
(41)
(0.02) %
Apollo investment (gain) loss
—
— %
—
— %
(33)
(0.02) %
ACRA noncontrolling interests
(3,864)
(1.65) %
(2,377)
(1.14) %
(1,505)
(0.80) %
Other
150
0.06 %
(41)
(0.02) %
105
0.05 %
Total adjustments to arrive at net investment earnings/earned rate
(2,731)
(1.16) %
(1,522)
(0.73) %
(658)
(0.35) %
Total net investment earnings/earned rate
$ 11,750
5.03 % $
9,608
4.61 %
$
6,913
3.66 %
Average net invested assets
$ 233,809
$ 208,479
$ 188,742
The reconciliation of benefits and expenses to cost of funds is as follows:
Years ended December 31,
2024
2023
2022
(In millions, except percentages)
Dollar
Rate
Dollar
Rate
Dollar
Rate
US GAAP benefits and expenses
$ 15,055
6.44 %
$ 23,603
11.32 %
$ 13,285
7.04 %
Premiums
(1,318)
(0.56) %
(12,749)
(6.12) %
(11,638)
(6.17) %
Product charges
(1,016)
(0.44) %
(848)
(0.41) %
(718)
(0.38) %
Other revenues
(19)
(0.01) %
(150)
(0.07) %
28
0.01 %
FIA option costs
1,617
0.69 %
1,512
0.73 %
1,264
0.67 %
Reinsurance impacts
(157)
(0.07) %
(155)
(0.07) %
17
0.01 %
Non-operating change in insurance liabilities and embedded derivatives
(2,647)
(1.13) %
(2,930)
(1.41) %
2,825
1.50 %
Policy and other operating expenses, excluding policy acquisition expenses
(1,760)
(0.75) %
(1,341)
(0.64) %
(1,110)
(0.59) %
Forward points adjustment on FX derivative hedges
293
0.12 %
141
0.07 %
—
— %
AmerUs Closed Block fair value liability
25
0.01 %
(58)
(0.03) %
291
0.15 %
ACRA noncontrolling interests
(2,624)
(1.12) %
(1,587)
(0.76) %
(549)
(0.29) %
Other
253
0.11 %
212
0.10 %
60
0.03 %
Total adjustments to arrive at cost of funds
(7,353)
(3.15) %
(17,953)
(8.61) %
(9,530)
(5.06) %
Total cost of funds
$
7,702
3.29 %
$
5,650
2.71 %
$
3,755
1.98 %
Average net invested assets
$ 233,809
$ 208,479
$ 188,742
The reconciliation of policy and other operating expenses to other operating expenses is as follows:
Years ended December 31,
(In millions)
2024
2023
2022
US GAAP policy and other operating expenses
$
2,213
$
1,848
$
1,495
Interest expense
(552)
(459)
(227)
Policy acquisition expenses, net of deferrals
(453)
(507)
(385)
Integration, restructuring and other non-operating expenses
(239)
(130)
(133)
Stock compensation expenses
(50)
(88)
(56)
ACRA noncontrolling interests
(406)
(143)
(231)
Other
(46)
(34)
3
Total adjustments to arrive at other operating expenses
(1,746)
(1,361)
(1,029)
Other operating expenses
$
467
$
487
$
466
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
97
The reconciliation of total investments, including related parties, to net invested assets is as follows:
December 31,
(In millions)
2024
2023
Total investments, including related parties
$
291,491
$
238,941
Derivative assets
(8,154)
(5,298)
Cash and cash equivalents (including restricted cash)
13,676
14,781
Accrued investment income
2,816
1,933
Net receivable (payable) for collateral on derivatives
(4,602)
(2,835)
Reinsurance impacts
(4,435)
(572)
VIE and VOE assets, liabilities and noncontrolling interests
17,289
14,818
Unrealized (gains) losses
18,320
16,445
Ceded policy loans
(167)
(174)
Net investment receivables (payables)
97
11
Allowance for credit losses
720
608
Other investments
(87)
(41)
Total adjustments to arrive at gross invested assets
35,473
39,676
Gross invested assets
326,964
278,617
ACRA noncontrolling interests
(78,321)
(61,190)
Net invested assets
$
248,643
$
217,427
The reconciliation of total investment funds, including related parties and consolidated VIEs, to net alternative investments within net invested
assets is as follows:
December 31,
(In millions)
2024
2023
Investment funds, including related parties and consolidated VIEs
$
19,725
$
17,668
Equity securities
—
430
Certain equity securities included in AFS or trading securities
34
201
Investment funds within funds withheld at interest
900
827
Royalties
7
14
Net assets of the VIE, excluding investment funds
(4,850)
(4,508)
Unrealized (gains) losses
92
26
ACRA noncontrolling interests
(3,731)
(2,829)
Other assets
(177)
(170)
Total adjustments to arrive at net alternative investments
(7,725)
(6,009)
Net alternative investments
$
12,000
$
11,659
The reconciliation of total liabilities to net reserve liabilities is as follows:
December 31,
(In millions)
2024
2023
Total liabilities
$
337,469
$
279,344
Debt
(6,309)
(4,209)
Derivative liabilities
(3,556)
(1,995)
Payables for collateral on derivatives and short-term securities to repurchase
(8,988)
(4,370)
Other liabilities
(6,546)
(2,590)
Liabilities of consolidated VIEs
(1,640)
(1,115)
Reinsurance impacts
(11,861)
(8,574)
Ceded policy loans
(167)
(174)
Market risk benefit asset
(312)
(377)
ACRA noncontrolling interests
(72,164)
(56,651)
Total adjustments to arrive at net reserve liabilities
(111,543)
(80,055)
Net reserve liabilities
$
225,926
$
199,289
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
98
Liquidity and Capital Resources
There are two forms of liquidity relevant to our business: funding liquidity and balance sheet liquidity. Funding liquidity relates to the ability to
fund operations. Balance sheet liquidity relates to our ability to sell assets held in our investment portfolio without incurring significant costs
from fees, bid-offer spreads, or market impact. We manage our liquidity position by matching projected cash demands with adequate sources of
cash and other liquid assets. Our principal sources of liquidity, in the ordinary course of business, are operating cash flows and holdings of cash,
cash equivalents and other readily marketable assets.
Our investment portfolio is structured to ensure a strong liquidity position over time to permit timely payment of policy and contract benefits
without requiring asset sales at inopportune times or at depressed prices. In general, liquid assets include cash and cash equivalents, highly rated
bonds, short-term investments, unaffiliated preferred stock and public common stock, all of which generally have liquid markets with a large
number of buyers, but exclude pledged assets, mainly associated with funding agreement and repurchase agreement liabilities. The carrying
value of these assets, excluding assets within modified coinsurance and funds withheld portfolios, as of December 31, 2024 was $119.0 billion.
Assets included in modified coinsurance and funds withheld portfolios, including assets held in reinsurance trusts, are available to fund the
benefits for the associated obligations but are restricted from other uses. The carrying value of the underlying assets in these modified
coinsurance and funds withheld portfolios that we consider liquid as of December 31, 2024 was $11.8 billion. Although our investment portfolio
does contain assets that are generally considered less liquid for liquidity monitoring purposes (primarily mortgage loans, policy loans, real
estate, investment funds and affiliated common stock), there is some ability to raise cash from these assets if needed. In periods of economic
downturn, we may seek to raise or hold additional cash and liquid assets to manage our liquidity risk and to take advantage of market
dislocations as they arise.
We have access to additional liquidity through our Credit Facility and Liquidity Facility. The Credit Facility has a borrowing capacity of $1.25
billion, subject to being increased up to $1.75 billion in total on the terms described in the Credit Facility. The Credit Facility has a commitment
termination date of June 30, 2028, subject to up to two one-year extensions, and was undrawn as of December 31, 2024. We entered into a new
Liquidity Facility on June 28, 2024, which replaced our previous agreement dated as of June 30, 2023. The Liquidity Facility has a borrowing
capacity of $2.6 billion, subject to being increased up to $3.1 billion in total on the terms described in the Liquidity Facility. The Liquidity
Facility has a commitment termination date of June 27, 2025 subject to additional 364-day extensions, and was undrawn as of December 31,
2024. We also have access to $2.0 billion of committed repurchase facilities. Our registration statement on Form S-3 ASR (Shelf Registration
Statement) provides us with access to the capital markets, subject to market conditions and other factors. We are also the counterparty to
repurchase agreements with several different financial institutions, pursuant to which we may obtain short-term liquidity, to the extent available.
In addition, through our membership in the FHLB, we are eligible to borrow under variable rate short-term federal funds arrangements to
provide additional liquidity.
We proactively manage our liquidity position to meet cash needs while minimizing adverse impacts on investment returns. We analyze our cash-
flow liquidity over the upcoming 12 months by modeling potential demands on liquidity under a variety of scenarios, taking into account the
provisions of our policies and contracts in force, our cash flow position, and the volume of cash and readily marketable securities in our
portfolio.
Liquidity risk is monitored, managed and mitigated through a number of stress tests and analyses to assess our ability to meet our cash flow
requirements, as well as the ability of our reinsurance and insurance subsidiaries to meet their collateral obligations, under various stress
scenarios. We further seek to mitigate liquidity risk by maintaining access to alternative, external sources of liquidity as described below.
Our liquidity risk management framework is codified in the company’s Liquidity Risk Policy that is reviewed and approved by our board of
directors.
Insurance Subsidiaries’ Liquidity
Operations
The primary cash flow sources for our insurance subsidiaries include retirement services product inflows (premiums and deposits), investment
income, principal repayments on our investments, net transfers from separate accounts and financial product inflows. Uses of cash include
investment purchases, payments to policyholders for surrenders, withdrawals and payout benefits, interest and principal payments on funding
agreements and outstanding debt, payments to satisfy pension group annuity obligations, policy acquisition and general operating costs and
payment of cash dividends.
Our policyholder obligations are generally long-term in nature. However, policyholders may elect to withdraw some, or all, of their account
value in amounts that exceed our estimates and assumptions over the life of an annuity contract. We include provisions within our annuity
policies, such as surrender charges and MVAs, which are intended to protect us from early withdrawals. As of December 31, 2024 and 2023,
approximately 82% and 79%, respectively, of our deferred annuity liabilities were subject to penalty upon surrender. In addition, as of
December 31, 2024 and 2023, approximately 66% and 64%, respectively, of policies contained MVAs that may also 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. As of December 31, 2024, approximately 33% of our net reserve liabilities were generally non-surrenderable, including
buy-out pension group annuities other than those that can be withdrawn as lump sums, funding agreements and payout annuities, while 54%
were subject to penalty upon surrender.
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
99
Membership in Federal Home Loan Bank
Through our membership in the FHLB, we are eligible to borrow under variable rate short-term federal funds arrangements to provide additional
liquidity. The borrowings must be secured by eligible collateral such as mortgage loans, eligible CMBS or RMBS, government or agency
securities and guaranteed loans. As of December 31, 2024 and 2023, we had no outstanding borrowings under these arrangements.
We have issued funding agreements to the FHLB. These funding agreements were issued in an investment spread strategy, consistent with other
investment spread operations. As of December 31, 2024 and 2023, we had funding agreements outstanding with the FHLB in the aggregate
principal amount of $15.6 billion and $6.5 billion, respectively.
The maximum FHLB indebtedness by a member is determined by the amount of collateral pledged and cannot exceed a specified percentage of
the member’s total statutory assets dependent on the internal credit rating assigned to the member by the FHLB. As of December 31, 2024, our
total maximum borrowing capacity under the FHLB facilities was limited to $49.5 billion. However, our ability to borrow under the facilities is
constrained by the availability of assets that qualify as eligible collateral under the facilities and certain other limitations. Considering these
limitations, as of December 31, 2024, we had the ability to draw up to an estimated $18.9 billion, inclusive of borrowings then outstanding. This
estimate is based on our internal analysis and assumptions and may not accurately measure collateral which is ultimately acceptable to the
FHLB.
Securities Repurchase Agreements
We engage in repurchase transactions whereby we sell fixed income securities to third parties, primarily major brokerage firms or commercial
banks, with a concurrent agreement to repurchase such securities at a determined future date. We require that, at all times during the term of the
repurchase agreements, we maintain sufficient cash or other liquid assets to allow us to fund all of the repurchase price. Proceeds received from
the sale of securities pursuant to these arrangements are generally invested in short-term investments or maintained in cash, with the offsetting
obligation to repurchase the security included within payables for collateral on derivatives and securities to repurchase on the consolidated
balance sheets. As per the terms of the repurchase agreements, we monitor the market value of the securities sold and may be required to deliver
additional collateral (which may be in the form of cash or additional securities) to the extent that the value of the securities sold decreases prior
to the repurchase date.
As of December 31, 2024 and 2023, the payables for repurchase agreements were $5.7 billion and $3.9 billion, respectively, while the fair value
of securities and collateral held by counterparties backing the repurchase agreements was $5.9 billion and $4.1 billion, respectively. As of
December 31, 2024, payables for repurchase agreements, based on original issuance, were comprised of $3.0 billion of short-term and $2.7
billion of long-term repurchase agreements. As of December 31, 2023, payables for repurchase agreements, based on original issuance, were
comprised of $686 million of short-term and $3.2 billion of long-term repurchase agreements.
We have a $1.0 billion committed repurchase facility with BNP Paribas. The facility has an initial commitment period of 12 months and
automatically renews for successive 12-month periods until terminated by either party. During the commitment period, we may sell and BNP
Paribas is required to purchase eligible investment grade corporate bonds pursuant to repurchase transactions at pre-agreed discounts in
exchange for a commitment fee. As of December 31, 2024, we had no outstanding payables under this facility.
We have a $1.0 billion committed repurchase facility with Societe Generale. The facility has a commitment term of 5 years, however, either
party may terminate the facility upon 24-months’ notice, in which case the facility will end upon the earlier of (1) such designated termination
date, or (2) July 26, 2026. During the commitment period, we may sell and Societe Generale is required to purchase eligible investment grade
corporate bonds pursuant to repurchase transactions at pre-agreed rates in exchange for an ongoing commitment fee for the facility. As of
December 31, 2024, we had no outstanding payables under this facility.
Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
100
Cash Flows
Our cash flows were as follows:
Years ended December 31,
(In millions)
2024
2023
2022
Net income (loss)
$
4,904
$
5,752
$
(5,016)
Non-cash revenues and expenses
(3,028)
(769)
11,274
Net cash provided by operating activities
1,876
4,983
6,258
Sales, maturities and repayments of investments
59,369
27,801
28,163
Purchases of investments
(120,220)
(71,779)
(62,386)
Other investing activities
(1,067)
328
(152)
Net cash used in investing activities
(61,918)
(43,650)
(34,375)
Inflows on investment-type policies and contracts
71,323
53,660
33,920
Withdrawals on investment-type policies and contracts
(19,119)
(14,125)
(10,209)
Other financing activities
7,221
5,232
2,761
Net cash provided by financing activities
59,425
44,767
26,472
Effect of exchange rate changes on cash and cash equivalents
(3)
10
(15)
Net (decrease) increase in cash and cash equivalents1
$
(620) $
6,110
$
(1,660)
1 Includes cash and cash equivalents, restricted cash and cash and cash equivalents of consolidated variable interest entities.
Cash flows from operating activities
The primary cash inflows from operating activities include net investment income and insurance premiums. The primary cash outflows from
operating activities are comprised of benefit payments and operating expenses. Our operating activities generated cash flows totaling $1.9
billion, $5.0 billion and $6.3 billion for the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in cash provided by
operating activities for the year ended December 31, 2024 compared to 2023 was primarily driven by lower cash received from pension group
annuity transactions, net of cash outflows, and an increase in cash paid for taxes, interest on funding agreements and other operating expenses.
These impacts were partially offset by an increase in cash received from net investment income.
Cash flows from investing activities
The primary cash inflows from investing activities are the sales, maturities and repayments of investments. The primary cash outflows from
investing activities are the purchases and acquisitions of new investments. Our investing activities used cash flows totaling $61.9 billion, $43.7
billion and $34.4 billion for the years ended December 31, 2024, 2023 and 2022, respectively. The increase in cash used in investing activities
for the year ended December 31, 2024 compared to 2023 was primarily driven by an increase in the purchases of investments due to the
deployment of greater cash inflows from strong organic growth compared to 2023 and a decrease in net investment payables, partially offset by
an increase in sales, maturities and repayments of investments.
Cash flows from financing activities
The primary cash inflows from financing activities are inflows on our investment-type policies and contracts, changes of cash collateral for
derivative transactions posted by counterparties, capital contributions and proceeds from debt and preferred stock issuances. The primary cash
outflows from financing activities are withdrawals on our investment-type policies and contracts, changes of cash collateral posted for derivative
transactions posted by counterparties, capital distributions, repayments of outstanding borrowings and payment of preferred and common stock
dividends. Our financing activities provided cash flows totaling $59.4 billion, $44.8 billion and $26.5 billion for the years ended December 31,
2024, 2023 and 2022, respectively. The increase in cash provided by financing activities for the year ended December 31, 2024 compared to
2023 was primarily attributable to higher cash received from funding agreement inflows, net of cash outflows, an increase in the issuance of
short-term repurchase agreements, net of the repayment of a long-term repurchase agreement in 2024, the issuance of more debt in 2024, a
favorable change in cash collateral posted by counterparties for derivative transactions and the payment of less common stock cash dividends as
2024 included an assets in kind dividend of certain alternative investments to AGM in lieu of a cash dividend and 2023 included the payment of
the fourth quarter 2022 common stock dividend. These increases were partially offset by lower cash received from deferred annuity inflows, net
of cash outflows, a capital contribution of $1.25 billion from AGM in 2023 related to the net proceeds from its mandatory convertible preferred
stock offering and a decrease in net capital contributions from noncontrolling interests.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
101
Material Cash Obligations
The following table summarizes estimated future cash obligations as of December 31, 2024:
Payments Due by Period
(In millions)
2025
2026-2027
2028-2029
2030 and thereafter
Total
Interest sensitive contract liabilities
$
21,781
$
59,626
$
77,107
$
95,123
$
253,637
Future policy benefits
2,944
5,617
4,932
36,409
49,902
Market risk benefits
—
—
—
6,219
6,219
Other policy claims and benefits
107
—
—
—
107
Dividends payable to policyholders
8
15
13
56
92
Debt1
333
664
1,603
10,234
12,834
Securities to repurchase2
4,281
1,689
—
—
5,970
Total
$
29,454
$
67,611
$
83,655
$
148,041
$
328,761
1 The obligations for debt payments include contractual maturities of principal and estimated future interest payments based on the terms of the debt
agreements.
2 The obligations for securities to repurchase payments include contractual maturities of principal and estimated future interest payments based on the terms of
the agreements. Future interest payments on floating rate repurchase agreements were calculated using the December 31, 2024 interest rate.
Atlas Securitized Products Holdings LP
In connection with our, Apollo and Credit Suisse AG (CS)’s previously announced transaction, certain subsidiaries of Atlas, which is owned by
AAA, acquired certain assets of the CS Securitized Products Group (the Transaction). Under the terms of the Transaction, Atlas originally
agreed to pay CS $3.3 billion by February 8, 2028. In March 2024, in connection with Atlas concluding its investment management agreement
with CS, the deferred purchase obligation amount was reduced to $2.5 billion. In addition, certain strategic investors have made equity
commitments to Atlas which therefore obligates these investors for a portion of the deferred purchase price obligation. This deferred purchase
price is an obligation first of Atlas, and (as a result of additional guarantees provided by AAA, AAM and AHL) second of AAA, third of AAM,
fourth of AHL and fifth of AARe. AARe and AAM each issued an assurance letter to CS for the full deferred purchase obligation amount of
$3.3 billion. Our guarantees are not probable of payment; therefore, no liabilities have been recorded for the guarantees on the consolidated
financial statements.
In exchange for the purchase price, Atlas originally received approximately $0.4 billion in cash and a portfolio of senior secured warehouse
assets, subject to debt, with approximately $1 billion of tangible equity value. These warehouse assets are senior secured assets at industry
standard loan-to-value ratios, structured to investment grade-equivalent criteria, and were approved by Atlas in connection with this Transaction.
Atlas will earn total fees of $0.4 billion under the terms of the investment management agreement with CS, including management fees and
transition and termination payments. Finally, Atlas also benefits generally from the net spread earned on its assets in excess of its cost of
financing.
Holding Company Liquidity
Common Stock Dividends
We intend to pay regular common stock dividends to our parent company of $750 million per year, generally paid at the end of each quarter;
provided that the declaration and payment of any dividends are at the sole discretion of our board of directors, which may change the dividend
policy at any time, including, without limitation, eliminating the dividend entirely.
We declared common stock cash dividends of $78 million on November 18, 2024, payable to the holder of AHL’s Class A common stock with a
record date of December 11, 2024 and payment date of December 13, 2024. We paid $452 million in common stock cash dividends during the
year ended December 31, 2024. In addition to the cash dividends paid, we provided an assets in kind dividend valued at an aggregate amount of
$499 million to AGM during the third quarter of 2024.
We declared and paid common stock cash dividends of $937 million during the year ended December 31, 2023, including payment of the fourth
quarter dividend from 2022 in the first quarter of 2023.
Dividends from Subsidiaries
AHL is a holding company whose primary liquidity needs include the cash-flow requirements relating to its corporate activities, including its
day-to-day operations, debt servicing, preferred and common stock dividend payments and strategic transactions, such as acquisitions. The
primary source of AHL’s cash flow is dividends from its subsidiaries, which are expected to be adequate to fund cash flow requirements based
on current estimates of future obligations.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
102
The ability of AHL’s insurance subsidiaries to pay dividends is limited by applicable laws and regulations of the jurisdictions where the
subsidiaries are domiciled, as well as agreements entered into with regulators. These laws and regulations require, among other things, the
insurance subsidiaries to maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay.
Subject to these limitations and prior notification to the appropriate regulatory agency, the US insurance subsidiaries are permitted to pay
ordinary dividends based on calculations specified under insurance laws of the relevant state of domicile. Any distributions above the amount
permitted by statute in any twelve-month period are considered to be extraordinary dividends, and require the approval of the appropriate
regulator prior to payment. AHL does not currently plan on having the US subsidiaries pay any dividends to their parents.
Dividends from subsidiaries are projected to be the primary source of AHL’s liquidity. Under the Bermuda Insurance Act, each of our Bermuda
insurance subsidiaries is prohibited from paying a dividend in an amount exceeding 25% of the prior year’s statutory capital and surplus, unless
at least two members of the board of directors of the Bermuda insurance subsidiary and its principal representative in Bermuda sign and submit
to the BMA an affidavit attesting that a dividend in excess of this amount would not cause the Bermuda insurance subsidiary to fail to meet its
relevant margins. In certain instances, the Bermuda insurance subsidiary would also be required to provide prior notice to the BMA in advance
of the payment of dividends. In the event that such an affidavit is submitted to the BMA in accordance with the Bermuda Insurance Act, and
further subject to the Bermuda insurance subsidiary meeting its relevant margins, the Bermuda insurance subsidiary is permitted to distribute up
to the sum of 100% of statutory surplus and an amount less than 15% of its total statutory capital. Distributions in excess of this amount require
the approval of the BMA.
The maximum distribution permitted by law or contract is not necessarily indicative of our actual ability to pay such distributions, which may be
further restricted by business and other considerations, such as the impact of such distributions on surplus, which could affect our ratings or
competitive position and the amount of premiums that can be written. Specifically, the level of capital needed to maintain desired financial
strength ratings from rating agencies, including S&P, AM Best, Fitch and Moody’s, is of particular concern when determining the amount of
capital available for distributions. AHL believes its insurance subsidiaries have sufficient statutory capital and surplus, combined with additional
capital available to be provided by AHL, to meet their financial strength ratings objectives. Finally, state insurance laws and regulations require
that the statutory surplus of our insurance subsidiaries following any dividend or distribution must be reasonable in relation to their outstanding
liabilities and adequate for the insurance subsidiaries’ financial needs.
Other Sources of Funding
We may seek to secure additional funding at the holding company level by means other than dividends from subsidiaries, such as by drawing on
our undrawn $1.25 billion Credit Facility, drawing on our undrawn $2.6 billion Liquidity Facility or by pursuing future issuances of debt or
preferred stock to third-party investors. Certain other sources of liquidity potentially available at the holding company level are discussed below.
Our Credit Facility contains various standard covenants with which we must comply, including maintaining a consolidated debt-to-capitalization
ratio of not greater than 35%, maintaining a minimum consolidated net worth of no less than $14.8 billion and restrictions on our ability to incur
liens, with certain exceptions. Rates, ratios and terms are as defined in the Credit Facility. Our Liquidity Facility also contains various standard
covenants with which we must comply, including maintaining an ALRe minimum consolidated net worth of no less than $10.2 billion and
restrictions on our ability to incur liens, with certain exceptions. Rates and terms are as defined in the Liquidity Facility.
Shelf Registration – Under our Shelf Registration Statement, subject to market conditions, we have the ability to issue, in indeterminate
amounts, debt securities, preferred stock, depositary shares, warrants and units.
Debt – The following summarizes our outstanding long-term senior and subordinated notes as of December 31, 2024 (in millions, except
percentages):
Issuance
Issue Date
Maturity Date
Interest Rate
Principal Balance
2028 Senior Notes
January 12, 2018
January 12, 2028
4.125%
$1,000
2030 Senior Notes
April 3, 2020
April 3, 2030
6.150%
$500
2031 Senior Notes
October 8, 2020
January 15, 2031
3.500%
$500
2051 Senior Notes
May 25, 2021
May 25, 2051
3.950%
$500
2052 Senior Notes
December 13, 2021
May 15, 2052
3.450%
$500
2033 Senior Notes
November 21, 2022
February 1, 2033
6.650%
$400
2034 Senior Notes
December 12, 2023
January 15, 2034
5.875%
$600
2064 Subordinated Notes
March 7, 2024
March 30, 2064
7.250%1
$575
2054 Senior Notes
March 22, 2024
April 1, 2054
6.250%
$1,000
2054 Subordinated Notes
October 10, 2024
October 15, 2054
6.625%2
$600
1 The 2064 Subordinated Notes bear interest at an annual fixed rate of 7.250% until March 30, 2029. On March 30, 2029, and every fifth annual anniversary
thereafter, the interest rate resets to the five-year US Treasury rate (as defined in the applicable prospectus supplement) plus 2.986%.
2 The 2054 Subordinated Notes bear interest at an annual fixed rate of 6.625% until October 15, 2034. On October 15, 2034, and every fifth annual anniversary
thereafter, the interest rate resets to the five-year US Treasury rate (as defined in the applicable prospectus supplement) plus 2.607%.
See Note 11 – Debt to the consolidated financial statements for further information on debt.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
103
Preferred Stock – The following summarizes our perpetual non-cumulative preferred stock issuances as of December 31, 2024 (in millions,
except share, per share data and percentages):
Issuance
Fixed/Floating
Rate
Issue Date
Optional
Redemption Date1
Shares
Issued
Par Value Per
Share
Liquidation
Value Per Share
Aggregate
Net Proceeds
Series A
Fixed-to-Floating Rate
6.350%
June 10, 2019
June 30, 2029
34,500
$1.00
$25,000
$839
Series B
Fixed-Rate
5.625%
September 19, 2019
September 30, 2024
13,800
$1.00
$25,000
$333
Series C
Fixed-Rate Reset
6.375%
June 11, 2020
Variable2
24,000
$1.00
$25,000
$583
Series D
Fixed-Rate
4.875%
December 18, 2020
December 30, 2025
23,000
$1.00
$25,000
$557
Series E
Fixed-Rate Reset
7.750%
December 12, 2022
Variable3
20,000
$1.00
$25,000
$487
1 We may redeem preferred stock anytime on or after the dates set forth in this column, subject to the terms of the applicable certificate of designations.
2 We may redeem during a period from and including June 30 of each year in which there is a Reset Date to and including such Reset Date. Reset Date means
September 30, 2025 and each date falling on the fifth anniversary of the preceding Reset Date.
3 We may redeem during a period from and including December 30 of each year in which there is a Reset Date to and including such Reset Date. Reset Date
means December 30, 2027 and each date falling on the fifth anniversary of the preceding Reset Date.
See Note 12 – Equity to the consolidated financial statements for further information on preferred stock.
Unsecured Revolving Promissory Note Payable with AGM – AHL has an unsecured revolving promissory note with AGM which allows AHL to
borrow funds from AGM. The note has a borrowing capacity of $500 million and maturity date of December 13, 2025, or earlier at AGM’s
request. There was no outstanding balance on the note payable as of December 31, 2024.
Intercompany Note – AHL has an unsecured revolving note payable with ALRe, which permits AHL to borrow up to $4.0 billion with a fixed
interest rate of 2.29% and a maturity date of December 15, 2028. As of December 31, 2024 and 2023, the revolving note payable had an
outstanding balance of $1.6 billion and $486 million, respectively.
Use of Captives
While our business strategy does not involve the use of captives, we ceded certain liabilities to a captive reinsurer that we acquired in connection
with the Aviva USA acquisition. The captive reinsurer was formed in 2011 and is domiciled in the state of Vermont. The statutory reserves of
the affiliated captive reinsurer are supported by a combination of funds withheld receivable assets and letters of credit issued by an unaffiliated
financial institution. The reinsurance activities within the captive reinsurer are eliminated in consolidation. As discussed in Note 14 – Statutory
Requirements to the consolidated financial statements, a permitted practice of the state of Vermont allows the captive to include issued and
outstanding letters of credit in the amount of $86 million and $96 million as of December 31, 2024 and 2023, respectively, as admitted assets in
its statutory financial statements. The NAIC and certain state insurance departments have scrutinized insurance companies’ use of affiliated
captive reinsurers. Regulatory changes regarding the use of captives could affect our financial position and results of operations.
Capital
We believe we have a strong capital position and are well positioned to meet policyholder and other obligations. We measure capital sufficiency
using various internal capital metrics which reflect management’s view on the various risks inherent to our business, the amount of capital
required to support our core operating strategies and the amount of capital necessary to maintain our current ratings in a recessionary
environment. The amount of capital required to support our core operating strategies is determined based upon internal modeling and analysis of
economic risk, as well as inputs from rating agency capital models and consideration of both NAIC RBC and Bermuda capital requirements.
Capital in excess of this required amount is considered excess equity capital, which is available to deploy.
As of December 31, 2024 and 2023, our US insurance companies’ TAC, as defined by the NAIC, was $7.7 billion and $5.8 billion, respectively,
and our US RBC ratio was 419% and 392%, respectively. Each US domestic insurance subsidiary’s state of domicile imposes minimum RBC
requirements that were developed by the NAIC. The formulas for determining the amount of RBC specify various weighting factors that are
applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio
of TAC to its ACL. Our TAC was significantly in excess of all regulatory standards as of December 31, 2024 and 2023, respectively.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
104
Bermuda statutory capital and surplus for our Bermuda insurance companies in aggregate was $17.0 billion and $14.6 billion as of
December 31, 2024 and 2023, respectively. Our Bermuda insurance companies adhere to BMA regulatory capital requirements to maintain
statutory capital and surplus to meet the MMS and maintain minimum EBS capital and surplus to meet the ECR. Under the EBS framework,
assets are recorded at market value and insurance reserves are determined by reference to nine prescribed scenarios, with the scenario resulting
in the highest reserve balance being ultimately required to be selected. For the Bermuda group, which includes the capital and surplus of AARe
and all of its subsidiaries, including AAIA and its subsidiaries, EBS capital and surplus was $27.7 billion and $26.6 billion, resulting in a BSCR
ratio of 238% and 291% as of December 31, 2024 and 2023, respectively. An insurer must have a BSCR ratio of 100% or greater to be
considered solvent by the BMA. As of December 31, 2024 and 2023, our Bermuda insurance companies held the appropriate capital to adhere to
these regulatory standards. As of December 31, 2024 and 2023, our Bermuda RBC ratio was 450% and 400%, respectively. The Bermuda RBC
ratio is calculated using Bermuda capital and applying NAIC RBC factors on an aggregate basis, excluding US subsidiaries which are included
within our US RBC ratio. The statutory capital and surplus and RBC of our Bermuda insurance companies presented herein exclude the impact
of any deferred taxes that may be recorded on a statutory basis as a result of the Bermuda CIT. We are currently assessing deferred taxes that
may be recorded on a statutory basis as a result of the Bermuda CIT, which could have a positive impact on the statutory capital and surplus of
our Bermuda insurance companies.
As of December 31, 2024 and 2023, our consolidated statutory capital and surplus in the aggregate was $24.8 billion and $21.8 billion,
respectively, and our consolidated RBC ratio was 430% and 412%, respectively. Our consolidated regulatory capital represents the aggregate
capital of our US and Bermuda insurance entities, determined with respect to each insurance entity by applying the statutory accounting
principles applicable to each such entity with adjustments made to, among other things, assets and expenses at the holding company level. The
consolidated RBC ratio is calculated by aggregating US RBC and Bermuda RBC.
ACRA 1 – ACRA 1 provided us with access to on-demand capital to support our growth strategies and capital deployment opportunities.
ACRA 1 provided a capital source to fund both our inorganic and organic channels. The commitment period for ACRA 1 expired in August
2023.
ACRA 2 – Similar to ACRA 1, we funded ACRA 2 in December 2022 as another long-duration, on-demand capital vehicle. ACRA 2 is partially
owned by ADIP II, a fund managed by Apollo. Effective October 1, 2024, ACRA 2 repurchased a portion of its shares held by ALRe, which
increased ADIP II’s ownership of economic interests in ACRA 2 to 63%, with ALRe owning the remaining 37%. ALRe holds all of ACRA 2’s
voting interests. ACRA 2 participates in certain transactions by drawing a portion of the required capital for such transactions from third-party
investors equal to ADIP II’s proportionate economic interest in ACRA 2.
These strategic capital solutions allow us the flexibility to simultaneously deploy capital across multiple accretive avenues, while maintaining a
strong financial position.
Critical Accounting Estimates and Judgments
The preparation of consolidated financial statements in conformity with US GAAP requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Amounts based on such estimates involve numerous
assumptions subject to varying and potentially significant degrees of judgment and uncertainty, particularly related to the future performance of
the underlying business, and will likely change in the future as additional information becomes available. Critical estimates and assumptions are
evaluated on an ongoing basis based on historical developments, market conditions, industry trends and other information that is reasonable
under the circumstances. There can be no assurance that actual results will conform to estimates and assumptions and that reported results of
operations will not be materially affected by the need to make future accounting adjustments to reflect periodic changes in these estimates and
assumptions. Critical accounting estimates are impacted significantly by our methods, judgments and assumptions used in the preparation of the
consolidated financial statements and should be read in conjunction with our significant accounting policies described in Note 1 – Business,
Basis of Presentation and Significant Accounting Policies to the consolidated financial statements. The following summary of our critical
accounting estimates is intended to enhance one’s ability to assess our financial condition and results of operations and the potential volatility
due to changes in estimate.
Investments
We are responsible for the fair value measurement of investments presented in our consolidated financial statements. We perform regular
analysis and review of our valuation techniques, assumptions and inputs used in determining fair value to evaluate if the valuation approaches
are appropriate and consistently applied, and the various assumptions are reasonable. We also perform quantitative and qualitative analysis and
review of the information and prices received from commercial pricing services and broker-dealers, to verify it represents a reasonable estimate
of the fair value of each investment. In addition, we use both internally-developed and commercially-available cash flow models to analyze the
reasonableness of fair values using credit spreads and other market assumptions, where appropriate. For investment funds, we typically
recognize our investment, including those for which we have elected the fair value option, based on net asset value information provided by the
general partner or related asset manager. For a discussion of our investment funds for which we have elected the fair value option, see Note 6 –
Fair Value to the consolidated financial statements.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
105
Valuation of Fixed Maturity Securities, Equity Securities and Mortgage Loans
The following table presents the fair value of fixed maturity securities, equity securities and mortgage loans, including those with related parties
and those held by consolidated VIEs, by pricing source and fair value hierarchy:
December 31, 2024
(In millions, except percentages)
Total
Level 1
Level 2
Level 3
Fixed maturity securities
AFS securities
Priced via commercial pricing services
$
116,317
$
7,818
$
108,495
$
4
Priced via independent broker-dealer quotations
37,582
—
34,896
2,686
Priced via models or other methods
30,592
—
278
30,314
Trading securities
Priced via commercial pricing services
1,130
21
1,109
—
Priced via independent broker-dealer quotations
453
1
430
22
Priced via models or other methods
573
—
—
573
Trading securities of consolidated VIEs
2,301
—
347
1,954
Total fixed maturity securities, including related parties and consolidated VIEs
188,948
7,840
145,555
35,553
Equity securities
Priced via commercial pricing services
1,263
190
1,073
—
Priced via independent broker-dealer quotations
—
—
—
—
Priced via models or other methods
261
—
—
261
Total equity securities, including related parties
1,524
190
1,073
261
Mortgage loans
Priced via commercial pricing services
61,057
—
—
61,057
Priced via independent broker-dealer quotations
—
—
—
—
Priced via models or other methods
3,479
—
—
3,479
Mortgage loans of consolidated VIEs
2,579
—
—
2,579
Total mortgage loans, including related parties and consolidated VIEs
67,115
—
—
67,115
Total fixed maturity securities, equity securities and mortgage loans, including
related parties and consolidated VIEs
$
257,587
$
8,030
$
146,628
$
102,929
Percentage of total
100.0 %
3.1 %
56.9 %
40.0 %
We measure the fair value of our securities based on assumptions used by market participants in pricing the assets, which may include inherent
risk, restrictions on the sale or use of an asset, or nonperformance risk. The estimate of fair value is the price that would be received to sell a
security in an orderly transaction between market participants in the principal market, or the most advantageous market in the absence of a
principal market, for that security. Market participants are assumed to be independent, knowledgeable, able and willing to transact an exchange
while not under duress. The valuation of securities involves judgment, is subject to considerable variability and is revised as additional
information becomes available. As such, changes in, or deviations from, the assumptions used in such valuations can significantly affect our
consolidated financial statements. Financial markets are susceptible to severe events evidenced by rapid depreciation in security values
accompanied by a reduction in asset liquidity. Our ability to sell securities, or the price ultimately realized upon the sale of securities, depends
upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities.
Accordingly, estimates of fair value are not necessarily indicative of the amounts that could be realized in a current or future market exchange.
For fixed maturity securities, we obtain the fair values, when available, based on quoted prices in active markets that are regularly and readily
obtainable. Generally, these are liquid securities and the valuation does not require significant management judgment. When quoted prices in
active markets are not available, fair value is based on market standard valuation techniques, giving priority to observable inputs. We obtain the
fair value for most marketable bonds without an active market from several commercial pricing services. The pricing services incorporate a
variety of market observable information in their valuation techniques, including benchmark yields, broker-dealer quotes, credit quality, issuer
spreads, bids, offers, and other reference data. For certain fixed maturity securities without an active market, an internally-developed discounted
cash flow or other approach is utilized to calculate the fair value. A discount rate is used, which adjusts a market comparable base rate for
securities with similar characteristics for credit spread, market illiquidity or other adjustments. The fair value of privately placed fixed maturity
securities is based on the credit quality and duration of comparable marketable securities, which may be securities of another issuer with similar
characteristics. In some instances, we use a matrix-based pricing model, which considers the current level of risk-free interest rates, corporate
spreads, credit quality of the issuer and cash flow characteristics of the security. We also consider additional factors, such as net worth of the
borrower, value of collateral, capital structure of the borrower, presence of guarantees and our evaluation of the borrower’s ability to compete in
its relevant market.
For equity securities, we obtain the fair value, when available, based on quoted market prices. Other equity securities, typically private equities
or equity securities not traded on an exchange, are valued based on other sources, such as commercial pricing services or brokers.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
106
For mortgage loans, we use independent commercial pricing services. Discounted cash flow analysis is performed through which the loans’
contractual cash flows are modeled and an appropriate discount rate is determined to discount the cash flows to arrive at a present value.
Financial factors, credit factors, collateral characteristics and current market conditions are all taken into consideration when performing the
discounted cash flow analysis.
We perform vendor due diligence exercises annually for all asset classes to review vendor processes, models and assumptions. Additionally, we
review price movements on a quarterly basis to ensure reasonableness.
Derivatives
Valuation of Embedded Derivatives on Indexed Annuities
We issue and reinsure products, primarily indexed annuity products, or purchase investments that contain embedded derivatives. If we determine
the embedded derivative has economic characteristics not clearly and closely related to the economic characteristics of the host contract, and a
separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract
and accounted for separately, unless the fair value option is elected on the host contract.
Indexed annuities and indexed universal life insurance contracts allow the policyholder to elect a fixed interest rate return or an equity market
component for which interest credited is based on the performance of certain equity market indices. The equity market option is an embedded
derivative, similar to a call option. The benefit reserve is equal to the sum of the fair value of the embedded derivative and the host (or
guaranteed) component of the contracts. The fair value of the embedded derivative represents the present value of cash flows attributable to the
indexed strategies. The embedded derivative cash flows are based on assumptions for future policy growth, which include assumptions for
expected index credits on the next policy anniversary date, future equity option costs, volatility, interest rates and policyholder behavior. The
embedded derivative cash flows are discounted using a rate that reflects our own credit rating. The host contract is established at contract
inception as the initial account value less the initial fair value of the embedded derivative and accreted over the policy’s life. Contracts acquired
through a business combination which contain an embedded derivative are re-bifurcated as of the acquisition date.
In general, the change in the fair value of the embedded derivatives will not directly correspond to the change in fair value of the hedging
derivative assets. The derivatives are intended to hedge the index credits expected to be granted at the end of the current term. The options
valued in the embedded derivatives represent the rights of the policyholder to receive index credits over the period indexed strategies are made
available to the policyholder, which is typically longer than the current term of the options. From an economic basis, we believe it is suitable to
hedge with options that align with the index terms of our indexed annuity products because policyholder accounts are credited with index
performance at the end of each index term. However, because the value of an embedded derivative in an indexed annuity contract is longer-
dated, there is a duration mismatch which may lead to differences in the recognition of income and expense for accounting purposes.
A significant assumption in determining policy liabilities for indexed annuities is the vector of rates used to discount indexed strategy cash
flows. The change in risk-free rates is expected to drive most of the movement in the discount rates between periods. Changes to credit spreads
for a given credit rating as well as any change to our credit rating requiring a revised level of nonperformance risk would also be factors in the
changes to the discount rate. If the discount rates used to discount the indexed strategy cash flows were to fluctuate, there would be a resulting
change in reserves for indexed annuities recorded through the consolidated statements of income (loss).
As of December 31, 2024, we had embedded derivative liabilities classified as Level 3 in the fair value hierarchy of $11.2 billion. The increase
(decrease) to the embedded derivatives on indexed annuity products from hypothetical changes in discount rates is summarized as follows:
(In millions)
December 31, 2024
+100 bps discount rate
$
(569)
–100 bps discount rate
626
However, these estimated effects do not take into account potential changes in other variables, such as equity price levels and market volatility,
which can also contribute significantly to changes in carrying values. Therefore, the quantitative impact presented in the table above does not
necessarily correspond to the ultimate impact on the consolidated financial statements. In determining the ranges, we have considered current
market conditions, as well as the market level of discount rates that can reasonably be anticipated over the near-term. For additional information
regarding sensitivities to interest rate risk and public equity risk, see Item 7A. Quantitative and Qualitative Disclosures About Market Risk—
Sensitivities.
Future Policy Benefits
The future policy benefit liabilities associated with long duration contracts include term and whole-life products, accident and health, disability,
and deferred and immediate annuities with life contingencies, which include pension group annuities with life contingencies. Liabilities for
nonparticipating long duration contracts are established as the estimated present value of benefits we expect to pay to or on behalf of the
policyholder and related expenses less the present value of the net premiums to be collected. For immediate annuities with life contingencies, the
liability for future policy benefits is equal to the present value of future benefits and related expenses.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
107
Liabilities for nonparticipating long-duration contracts are established using accepted actuarial valuation methods which require the use of
assumptions related to discount rate, expenses and policyholder behavior. We base certain key assumptions related to policyholder behavior on
industry standard data, adjusted to align with company experience, if needed. All cash flow assumptions, apart from expense assumptions, are
established at contract issuance and reviewed annually, or more frequently, if actual experience suggests a revision is necessary.
Immediate annuities with life contingencies, which include pension group annuities with life contingencies, and assumed whole life contracts
represent the significant majority of our liabilities for future policy benefits. Significant assumptions for our immediate annuities with life
contingencies include discount rates, assumptions for policyholder longevity and policyholder utilization for contracts with deferred lives, while
significant assumptions for our whole life contracts include discount rates and assumptions for policyholder mortality, morbidity and lapse rates.
In general, the reserve for future policy benefits associated with life-contingent payout annuities will decrease when longevity decreases,
resulting in remeasurement gains in the consolidated statements of income (loss). Changes in the discount rate in periods after a cohort has
closed will not impact interest expense recognition within the consolidated statements of income (loss). However, changes in the discount rate
will impact the recorded reserve on the consolidated balance sheets, with an offsetting unrealized gain or loss recorded to other comprehensive
income (loss). We use a single A rate to calculate the present value of reserves related to our immediate annuities with life contingencies and
assumed whole life products.
For our limited-payment contracts where premiums are due over a significantly shorter period than the period over which benefits are provided,
a deferred profit liability is established to the extent that gross premium exceeds the net premium reserve and included within future policy
benefits. When the net premium ratio for the corresponding future policy benefit is updated for actual experience and changes to projected cash
flow assumptions, both the future policy benefit reserve and deferred profit liability are retrospectively recalculated from the contract issuance
date. Also included within the liability for future policy benefits is negative VOBA that was established for blocks of insurance contracts
acquired through the merger with Apollo. Negative VOBA is related to our immediate annuities with life contingencies and is subsequently
measured on a basis generally consistent with the deferred profit liability.
The increase (decrease) to future policy benefit reserves from hypothetical changes in discount rates is summarized as follows:
(In millions)
December 31, 2024
+100 bps discount rate
$
(3,393)
–100 bps discount rate
4,048
Market Risk Benefits
Market risk benefits represent contracts or contract features that both provide protection to the contract holder from, and expose the insurance
entity to, other-than-nominal capital market risk. We issue and reinsure deferred annuity contracts, which include both traditional deferred and
indexed annuities, that contain GLWB and GMDB riders. These riders meet the criteria for and are classified as market risk benefits.
Market risk benefits are measured at fair value at the contract level and may be recorded as a liability or an asset. At contract inception, we
assess the fees and assessments that are collectible from the policyholder, which include explicit rider fees and other contract fees, and allocate
them to the extent they are attributable to the market risk benefit. These attributed fees are used in the valuation of the market risk benefits and
are never negative or exceed total explicit fees collectible from the policyholder. We are also required to project the expected benefits that will
be required for the riders in excess of the projected account balance. Determining the projected benefits in excess of the projected account
balance requires judgment for economic and actuarial assumptions, both of which are used in determining future policyholder account growth
that will drive the amount of benefits required.
Economic assumptions include interest rates and implied equity volatilities throughout the duration of the liability. For riders on indexed
annuities, this also includes assumptions about projected equity returns, which impact expected index credits on the next policy anniversary date
and future equity option costs. When economic assumptions lead to an increase in expected future policy growth from higher interest and index
crediting during the accumulation period, the higher projected account balance at the time of rider utilization decreases the inherent value of the
rider as less payments for benefits are required in excess of the account balance. All else constant, the increase in the projected account balance
will, therefore, result in a decrease to the market risk benefit liability, or an increase if the market risk benefit is in an asset position, with
remeasurement gains recorded in the consolidated statements of income (loss).
Policyholder behavior assumptions are established using accepted actuarial valuation methods to estimate decrements to policies with riders
including lapses, full and partial withdrawals (surrender rate) and mortality and the utilization of the benefit riders. Base lapse rates consider the
level of surrender charges and are dynamically adjusted based on the level of current interest rates relative to the guaranteed rates and the
amount by which any rider guarantees are in a net positive position. Rider utilization assumptions consider the number and timing of
policyholders electing the riders. We track and update this assumption as experience emerges. Mortality assumptions are set at the product level
and are generally based on standard industry tables with adjustments for historical experience and a provision for mortality improvement. While
economic assumptions impact the projected account value and the benefits paid in excess of the account value, policyholder behavior
assumptions, such as surrenders, impact the expected number of policies that will elect to utilize the rider. An expected increase in decrements
and decrease in rider utilization, all else constant, will result in a decrease to the market risk benefit liability or an increase in the market risk
benefit asset with remeasurement gains recorded in the consolidated statements of income (loss).
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
108
All inputs, including expected fees and assessments and economic and policyholder behavior assumptions, are used to project excess benefits
and fees over a range of risk-neutral, stochastic interest rate scenarios. For riders on indexed annuities, stochastic equity return scenarios are also
included within the range. The discount rate used to present value the projected cash flows is a significant assumption, with the change in risk-
free rates expected to drive most of the movement in discount rates between periods. A risk margin is deducted from the discount rate to reflect
the uncertainty in the projected cash flows, such as variations in policyholder behavior, and a credit spread is added to reflect our risk of
nonperformance. If the discount rates used were to fluctuate, there would be a resulting change in reserves for the market risk benefits recorded
through the consolidated statements of income (loss), except for the portion related to the change in nonperformance risk, which is recorded
through other comprehensive income (loss).
The increase (decrease) to the net market risk benefit balance from hypothetical changes in the discount rate is summarized as follows:
(In millions)
December 31, 2024
+100 bps discount rate
$
(867)
–100 bps discount rate
748
Consolidation
We consolidate all entities in which we hold a controlling financial interest as of the financial statement date whether through a majority voting
interest or otherwise, including those investment funds that meet the definition of a VIE in which we are determined to be the primary
beneficiary. If we are not the primary beneficiary, the general partner or another limited partner may consolidate the investment fund, and we
record the investment as an equity method investment. See Note 5 – Variable Interest Entities to the consolidated financial statements.
The assessment of whether an entity is a VIE and the determination of whether we should consolidate such VIE requires judgment. Those
judgments include, but are not limited to: (1) determining whether the total equity investment at risk is sufficient to permit the entity to finance
its activities without additional subordinated financial support, (2) evaluating whether the holders of equity investment at risk, as a group, can
make decisions that have a significant effect on the success of the entity, (3) determining whether the equity investors have proportionate voting
rights to their obligations to absorb losses or rights to receive the expected residual returns from an entity and (4) evaluating the nature of the
relationship and activities of those related parties with shared power or under common control for purposes of determining which party within
the related-party group is most closely associated with the VIE. Judgments are also made in determining whether a member in the equity group
has a controlling financial interest, including power to direct activities that most significantly impact the VIE’s economic performance and rights
to receive benefits or obligations to absorb losses that could be potentially significant to the VIE. This analysis considers all relevant economic
interests, including proportionate interests held through related parties.
Additionally, evaluating an entity to determine whether it meets the characteristics of an investment company under US GAAP is qualitative in
nature and may involve significant judgment. We have retained this specialized accounting for investment companies in consolidation.
Income Taxes
Significant judgment is required in determining tax expense and in evaluating certain and uncertain tax positions. We recognize the tax benefit
of uncertain tax positions when the position is “more likely than not” to be sustained upon examination, including resolution of any related
appeals or litigation processes, based on the technical merits of the position. The tax benefit is measured as the largest amount of benefit that has
a greater than 50% likelihood of being realized upon ultimate settlement. If a tax position is not considered more likely than not to be sustained,
then no benefits of the position are recognized. We review and evaluate our tax positions quarterly to determine whether we have uncertain tax
positions that require financial statement recognition. For more information regarding income taxes, see Note 13 – Income Taxes to the
consolidated financial statements.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amount of assets
and liabilities and their respective tax bases using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period during which the change is enacted. Deferred tax assets are reduced by a valuation allowance when it
is more likely than not that all or a portion of the deferred tax assets will not be realized. We test the value of deferred tax assets for realizability
at the taxpaying-component level within each tax jurisdiction. Significant judgment and estimates are required in determining whether valuation
allowances should be established as well as the amount of such allowances. When making such determination, consideration is given to, among
other things, the following:
•
whether sufficient taxable income exists within the allowed carryback or carryforward periods;
•
whether future reversals of existing taxable temporary differences will occur, including any tax planning strategies that could be used;
•
nature or character (e.g., ordinary vs. capital) of the deferred tax assets and liabilities; and
•
whether future taxable income exclusive of reversing temporary differences and carryforwards exist.
Impact of Recent Accounting Pronouncements
For a discussion of new accounting pronouncements affecting us, see Note 1 – Business, Basis of Presentation and Significant Accounting
Policies to the consolidated financial statements.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
109
Risk Management Framework
The function of our risk management framework is to identify, assess and prioritize risks to ensure that both senior management and the board
of directors understand and can manage our risk profile. The processes supporting risk management are designed to ensure that our risk profile is
consistent with our stated risk appetite and that we maintain sufficient capital and liquidity to support our corporate plan, while meeting the
requirements imposed by our policyholders, regulators and other stakeholders. Risk management strives to maximize the value of our existing
business platform to stockholders, preserve our ability to realize business and market opportunities under stressed market conditions and
withstand the impact of severely adverse events.
The risk management framework includes a governance committee structure that supports accountability in current risk-based decision making
and effective risk management. Governance committees are established at three levels: the board of directors, AHL management and subsidiary
management. We utilize a host of assessment tools to monitor and assess our risk profile, results of which are shared with senior management
periodically at management level committees, such as the risk committee (RC) and the investment and asset liability committee (IALC), and
with the board of directors quarterly. Business management retains the primary responsibility for day-to-day management of risk.
Risk Management
The risk management team consists of eight teams: Business and Operational Risk, ALM, Regulatory and Risk Analytics, Risk Policy and
Derivatives Risk, Derivatives and Structured Solutions, Asset Risk Management, Strategic and Emerging Risk and Risk Operations and Change
Management. The risk management team is led by our Chief Risk Officer, who reports to the chair of the AHL Risk Committee. Our risk
management team is comprised of more than 50 dedicated, full-time employees.
Asset and Liability Management
Asset and liability risk management is a joint effort that spans business management and the entire risk management team. Processes established
to analyze and manage the risks of our assets and liabilities include but are not limited to:
•
analyzing our liabilities to ascertain their sensitivity to behavioral variations and changes in market conditions and actuarial
assumptions;
•
analyzing interest rate risk, cash flow mismatch, and liquidity risk;
•
performing scenario and stress analyses to examine their impacts on capital and earnings;
•
performing cash flow testing and capital modeling;
•
modeling the values of the derivatives embedded in our policy liabilities so that they can be effectively hedged;
•
hedging unwanted risks, including from embedded derivatives, interest rate exposures and currency risks;
•
reviewing our corporate plan and strategic objectives, and identifying prospective risks to those objectives under normal and stressed
economic, behavioral and actuarial conditions; and
•
providing appropriate risk reports that show consolidated risk exposures from assets and liabilities as well as the economic
consequences of stress events and scenarios.
Market Risk and Management of Market Risk Exposures
Market risk is the risk of incurring losses due to adverse changes in market rates and prices. Included in market risk are potential losses in value
due to credit and counterparty risk, interest rate risk, currency risk, commodity price risk, equity price risk and inflation risk. We are primarily
exposed to credit risk, interest rate risk, equity price risk and inflation risk.
Credit Risk and Counterparty Risk
To operate our business model, which is based on generating spread related earnings, we must bear credit risk. However, as we assume credit
risk through our investment, reinsurance and hedging activities, we endeavor to ensure that risk exposures remain diversified, that we are
adequately compensated for the risks we assume and that the level of risk is consistent with our risk appetite and objectives.
Credit risk is a key risk taken in the asset portfolio, as the credit spread on our investments is what drives our spread related earnings. We
manage credit risk by avoiding idiosyncratic risk concentrations, understanding and managing our systematic exposure to economic and market
conditions through stress testing, monitoring investment activity daily and distinguishing between price and default risk from credit exposures.
Concentration and portfolio limits are designed to ensure that exposure to default and impairment risk is sufficiently modest to not represent a
solvency risk, even in severe economic conditions.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
110
The investment teams within Apollo, which manage substantially all of our fixed income assets, focus on in-depth, bottom-up portfolio
construction, and disciplined risk management. Their approach to taking credit risk is formulated based on:
•
a fundamental view on existing and potential opportunities at the security level;
•
an assessment of the current risk/reward proposition for each market segment;
•
identification of downside risks and assigning a probability for those risks; and
•
establishing a plan for best execution of the investment action.
A dedicated set of AHL risk managers, who are on-site with Apollo, monitor the asset risks to ensure that such risks are consistent with our risk
appetite, standards for committing capital and overall strategic objectives. Our risk management team is also a key contributor to the credit
impairment evaluation process.
In addition to credit-risk exposures from our investment portfolio, we are also exposed to credit risk from our counterparty exposures related to
derivative hedging and reinsurance activities. Derivative counterparty risk is managed by trading on a collateralized basis with counterparties
under International Swaps and Derivatives Association documents with a credit support annex having zero-dollar collateral thresholds.
We utilize reinsurance to mitigate risks that are inconsistent with our strategy or objectives. For example, we have reinsured much of the
mortality risk we would otherwise have accumulated through our various acquisitions and block reinsurance transactions, allowing us to focus
on our core annuity business. These reinsurance agreements expose us to the credit risk of our counterparties. We manage this risk to avoid
counterparty risk concentrations through various mechanisms: utilization of reinsurance structures such as funds withheld or modco to retain
ownership of the assets and limit counterparty risk to the cost of replacing the counterparty; diversification across counterparties; and when
possible, novating policies to eliminate counterparty risk altogether.
Interest Rate Risk
Significant interest rate risk may arise from mismatches in the timing of cash flows from our assets and liabilities. Management of interest rate
risk at the company-wide level, and at the various operating company levels, is one of the main risk management activities in which senior
management engages.
Depending upon the materiality of the risk and our assessment of how we would perform across a spectrum of interest rate environments, we
may seek to mitigate interest rate risk using on-balance-sheet strategies (portfolio management) or off-balance-sheet strategies (derivative
hedges such as interest rate swaps and futures). We monitor ALM metrics (such as key-rate durations and convexity) and employ quarterly cash
flow testing requirements across all of our insurance companies to assure the asset and liability portfolios are managed to maintain net interest
rate exposures at levels that are consistent with our risk appetite. We have established a set of exposure and stress limits to communicate our risk
tolerance and to ensure adherence to those risk tolerance levels. Risk management personnel and the RC and/or IALC (together, management
committees) are notified in the event that risk tolerance levels are exceeded. Depending on the specific risk threshold that is exceeded, the
appropriate management committee then makes a decision as to what actions, if any, should be undertaken.
Active portfolio management is performed by the investment managers at Apollo, with direction from the management committees. ALM risk is
also managed by the management committees. The performance of our investment portfolio managed by Apollo is reviewed periodically by the
management committees and board of directors. The management committees strive to improve returns to stockholders and protect
policyholders, while dynamically managing the risk within our expectations.
Equity Risk
Our FIAs require us to make payments to policyholders that are dependent on the performance of equity market indices. We seek to minimize
the equity risk from our liabilities by economically defeasing this equity exposure with granular, policy-level-based hedging. In addition, our
investment portfolio can be invested in strategies involving public and private equity positions, though in general, we have limited appetite for
passive, public equity investments.
The equity index hedging framework implemented is one of static and dynamic replication. Unique policy-level liability options are matched
with static OTC options and residual risk arising from (1) policyholder behavior and other trading constraints (for example minimum trade size)
and (2) the decision by the organization to enhance the value of the product offerings by dynamically managing a small portion of the exposure
on custom indices, are managed dynamically by decomposing the risk of the portfolio (asset and liability positions) into market risk measures
which are managed to pre-established risk limits. The portfolio risks are measured overnight and rebalanced daily to ensure that the risk profile
remains within risk appetite. Valuation is done at the position level, and risks are aggregated and shown at the level of each underlying index.
Risk measures that have term structure sensitivity, such as index volatility risk and interest rate risk, are monitored and risk managed along the
term structure.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
111
We are also exposed to equity risk in our alternative investment portfolio. The form of those investments is typically a limited partnership
interest in a fund. We currently target fund investments that have characteristics resembling fixed income investments versus those resembling
pure equity investments, but as holders of partnership positions, our investments are generally held as equity positions. Alternative investments
are comprised of several categories, including at the most liquid end of the spectrum “liquid strategies”, (which is mostly exposure to publicly
traded equities), followed by “equity” and “credit” strategies. Our alternatives portfolio also includes strategic equity investments in origination
platforms, insurance platforms and others.
Our investment mandate in our alternative investment portfolio is inherently opportunistic. Each investment is examined and analyzed on its
own merits to gain a full understanding of the risks present, and with a view toward determining likely return scenarios, including the ability to
withstand stress in a downturn. We have a strong preference for alternative investments that have some or all of the following characteristics,
among others: (1) investments with credit- or debt-like characteristics (for example, a stipulated maturity and par value), or alternatively,
investments with reduced volatility when compared to pure equity; or (2) investments that we believe have less downside risk.
The alternative investment portfolio is monitored to ensure diversification across asset classes and strategy, and the portfolio's performance
under stress scenarios is evaluated routinely as part of management and board reviews. Since alternative investments are marked-to-market on
the consolidated balance sheets, risk analyses focus on potential changes in market value across a variety of market stresses.
Currency Risk
We manage our currency risk to maintain minimal exposure to currency fluctuations. We attempt to hedge completely the currency risk arising
on our balance sheet. In general, we match currency exposure of assets and liabilities. When the currency denominations of the assets and
liabilities do not match, we generally undertake hedging activities to eliminate or mitigate currency mismatch risk.
Inflation Risk
We manage our inflation risk to maintain minimal exposure to changes in purchasing power. In general, we attempt to match inflation exposure
of assets and liabilities. When the inflation exposure profiles of assets and liabilities do not match, we generally undertake hedging activities to
eliminate or mitigate inflation mismatch risk. We attempt to hedge the majority of inflation risk arising from the pension group annuity business
that we reinsure.
Scenario Analysis
We evaluate our exposure to credit risk by analyzing our portfolio’s performance during simulated periods of economic stress. We manage our
business, capital and liquidity needs to withstand stress scenarios and target capital we believe will maintain our current ratings in a moderate
recession scenario and maintain investment grade ratings under a deep recession scenario, a substantially severe financial crisis akin to the
Lehman scenario in 2008. In the recession scenario, we calibrate recessionary shocks to several key risk factors (including but not limited to
default rates, recoveries, credit spreads and US Treasury yields) using data from the 1991, 2001 and 2008 recessions, and estimate impacts to the
various sectors in our portfolio. In the deep recession scenario, we use default probabilities from the 2008-2009 period, along with recovery and
ratings migration rates, to estimate impairment impacts, and we use credit spread and interest rate movements from the 2008–2009 period to
estimate mark to market changes. Management reviews the impacts of our stress test analyses on a quarterly basis.
Sensitivities
Interest Rate Risk
We assess interest rate exposure for financial assets and liabilities using hypothetical stress tests and exposure analyses. Assuming all other
factors are constant, if there was an immediate parallel increase in interest rates of 100 basis points from levels as of December 31, 2024, we
estimate a net decrease to our point-in-time income (loss) before income taxes from changes in the fair value of these financial instruments of
$3.0 billion, net of offsets. If there was a similar parallel increase in interest rates from levels as of December 31, 2023, we estimate a net
decrease to our point-in-time income (loss) before income taxes from changes in the fair value of these financial instruments of $2.5 billion, net
of offsets. The increase in sensitivity to point-in-time pre-tax income from changes in the fair value of these financial instruments as of
December 31, 2024, when compared to December 31, 2023, was primarily driven by the growth experienced in 2024. The financial instruments
included in the sensitivity analysis are carried at fair value and changes in fair value are recognized in earnings. These financial instruments
include derivative instruments, embedded derivatives, mortgage loans, certain fixed maturity securities and market risk benefits. The sensitivity
analysis excludes those financial instruments carried at fair value for which changes in fair value are recognized in equity, such as AFS fixed
maturity securities.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
112
Assuming a 25 basis point increase in interest rates that persists for a 12-month period, the estimated impact to spread related earnings due to the
change in net investment spread from floating rate assets and liabilities would be an increase of approximately $30 – $40 million, and a 25 basis
point decrease would generally result in a similar decrease. This is calculated without regard to future changes to assumptions and excludes the
impact of rate changes on cash and cash equivalents. As of December 31, 2024 the balance in cash and cash equivalents plus restricted cash, net
investment payables and receivables, reinsurance impacts and the net derivative collateral offsetting the related cash positions, was $6.8 billion,
net of the amount attributable to the noncontrolling interests. The decrease in sensitivity to spread related earnings due to the change in net
investment spread from floating rate assets and liabilities as of December 31, 2024, when compared to December 31, 2023, was driven by the
decrease in our net floating rate position related to hedging actions as well as additional issuances of floating rate funding agreements in 2024.
Changes in the fair value of market risk benefits due to current period movement in the interest rate curve used to discount the reserve are
reflected in net income (loss) but excluded from spread related earnings. However, changes in interest rates that impact the cost of the projected
GLWB and GMDB rider benefits, included within our market risk benefit reserve, are amortized within cost of funds in spread related earnings
over the life of the business. Assuming a parallel increase in interest rates of 25 basis points, the estimated impact to spread related earnings over
a 12-month period related to market risk benefits would be an increase of approximately $30 – $50 million, and a parallel decrease in interest
rates of 25 basis points would generally result in a similar decrease. This is calculated without regard to future changes to assumptions.
We are unable to make forward-looking estimates regarding the impact on net income (loss) of changes in interest rates that persist for a longer
period of time, or changes in the shape of the yield curve over time, as a result of an inability to determine how such changes will affect certain
of the items that we characterize as “adjustments to income (loss) before income taxes” in our reconciliation between net income (loss) available
to AHL common stockholder and spread related earnings. See Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Non-GAAP Measure Reconciliations for the reconciliation of net income (loss) available to Athene Holding Ltd.
common stockholder to spread related earnings. The impact of changing rates on these adjustments is likely to be significant. See above for a
discussion regarding the estimated impact on income (loss) before income taxes of an immediate, parallel increase in interest rates of 100 basis
points from levels as of December 31, 2024, which discussion encompasses the impact of such an increase on certain of the adjustment items.
The models used to estimate the impact of changes in market interest rates incorporate numerous assumptions, require significant estimates and
assume an immediate change in interest rates without any discretionary management action to counteract such a change. Consequently, potential
changes in our valuations indicated by these simulations will likely be different from the actual changes experienced under any given interest
rate scenarios and these differences may be material. Because we actively manage our assets and liabilities, the net exposure to interest rates can
vary over time. However, any such decreases in the fair value of fixed maturity securities, unless related to credit concerns of the issuer
requiring recognition of credit losses, would generally be realized only if we were required to sell such securities at losses to meet liquidity
needs.
Public Equity Risk
We assess public equity market risk for financial assets and liabilities using hypothetical stress tests and exposure analyses. Assuming all other
factors are constant, if there was a decline in public equity market prices of 10% as of December 31, 2024, we estimate a net decrease to our
point-in-time income (loss) before income taxes from changes in the fair value of these financial instruments of $617 million. As of
December 31, 2023, we estimate that a decline in public equity market prices of 10% would cause a net decrease to our point-in-time income
(loss) before income taxes from changes in the fair value of these financial instruments of $538 million. The increase in sensitivity to point-in-
time income (loss) before income taxes from changes in the fair value of these financial instruments as of December 31, 2024, when compared
to December 31, 2023, is primarily driven by equity market performance during the year, which has resulted in more equity exposure to public
equity market price declines. The financial instruments included in the sensitivity analysis are carried at fair value and changes in fair value are
recognized in earnings. These financial instruments include public equity investments, derivative instruments, market risk benefits and the FIA
embedded derivative.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
113
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 34)
115
Consolidated Balance Sheets
117
Consolidated Statements of Income (Loss)
119
Consolidated Statements of Comprehensive Income (Loss)
120
Consolidated Statements of Equity
121
Consolidated Statements of Cash Flows
122
Notes to Consolidated Financial Statements
124
Note 1. Business, Basis of Presentation and Significant Accounting Policies
124
Note 2. Business Combination
133
Note 3. Investments
135
Note 4. Derivative Instruments
144
Note 5. Variable Interest Entities
147
Note 6. Fair Value
148
Note 7. Reinsurance
160
Note 8. Deferred Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired
161
Note 9. Long-duration Contracts
162
Note 10. Closed Block
171
Note 11. Debt
173
Note 12. Equity
174
Note 13. Income Taxes
176
Note 14. Statutory Requirements
179
Note 15. Related Parties
181
Note 16. Commitments and Contingencies
184
Note 17. Segment Information
185
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114
Report of Independent Registered Public Accounting Firm
To the shareholders and the Board of Directors of Athene Holding Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Athene Holding Ltd. and subsidiaries (the “Company”) as of December 31,
2024 and 2023, the related consolidated statements of income (loss), comprehensive income (loss), equity, and cash flows, for each of the three
years in the period ended December 31, 2024, and the related notes and the financial statement schedules listed in the Index at Item 15.2
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is
not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Certain Structured Level 3 Asset-Backed Securities - Refer to Note 3, Investments, Note 6, Fair Value, and Note 15, Related
Parties
Critical Audit Matter Description
Investments in certain structured Level 3 asset-backed securities are reported at fair value in the consolidated financial statements. These
investments without readily determinable market values, are valued using significant unobservable inputs that involve considerable judgment by
management. The Company uses internal modeling techniques based on projected cash flows and certain other unobservable inputs to value its
structured Level 3 asset-backed securities. The significant unobservable inputs may include discount rates, issue specific credit adjustments,
material non-public financial information, estimation of future earnings and cash flows, default rate assumptions, and liquidity assumptions.
Given that the Company utilizes valuation models and significant unobservable inputs to estimate the fair value for certain of its structured
Level 3 asset-backed securities, performing audit procedures to evaluate these inputs required a high degree of auditor judgment and an
increased extent of effort, including the involvement of our fair value specialists.
Table of Contents
115
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation models and significant unobservable inputs utilized by the Company to estimate the fair value of
investments in certain structured Level 3 asset-backed securities included the following, among others:
•
We involved senior, more experienced audit team members in the performance of our audit procedures.
•
We tested the design and operating effectiveness of controls over management’s determination of the fair value of these securities.
•
With the assistance of our fair value specialists, we:
–
Evaluated the models and unobservable inputs used by the Company to estimate fair value for a sample of these securities.
–
Developed independent fair value estimates and compared our estimates to the Company’s estimates for a sample of these securities.
•
On a sample basis, we evaluated the Company’s historical ability to accurately estimate the fair value of these securities by comparing
previous estimates of fair value to market transactions with third parties adjusted for changes in market conditions.
Certain Assumptions Used in the Market Risk Benefits and Interest Sensitive Contract Liabilities - Refer to Note 1, Business, Basis of
Presentation and Significant Accounting Policies, Note 6, Fair Value, and Note 9, Long-duration Contracts
Critical Audit Matter Description
The Company determines estimated valuations of Market Risk Benefits and Interest Sensitive Contract Liabilities, which include embedded
derivatives. The Company’s valuations are based on actuarial methodologies and include significant unobservable inputs associated with
underlying economic and future policyholder behavior assumptions.
Significant judgment is applied by the Company in determining these assumptions. Specifically, the future policyholder behavior assumptions
related to lapses and the use of benefit riders, as well as the assumptions for the future equity option costs or option budget and risk margin
involve significant unobservable inputs and may materially impact the estimated valuation of Market Risk Benefits and Interest Sensitive
Contract Liabilities, which include embedded derivatives.
Given the significant judgment involved with determining these economic and policyholder behavior assumptions, auditing these estimates
required a high degree of auditor judgment and an increased extent of effort, including the involvement of our fair value and actuarial
specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to these economic and policyholder behavior assumptions determined by the Company included the following,
among others:
•
We involved senior, more experienced audit team members, including fair value and actuarial specialists, to plan and perform audit
procedures.
•
We tested the design and operating effectiveness of controls over management’s development of these assumptions, including those
controls over the underlying data.
•
With the assistance of our fair value and actuarial specialists, we:
–
Evaluated the methods, models, and judgments applied by the Company in determining these assumptions, including evaluating the
results of experience studies or other data used as a basis for setting those assumptions.
–
Evaluated the reasonableness of the Company’s assumptions by comparing those selected by management to those independently
developed by our fair value and actuarial specialists, drawing upon standard actuarial and industry practices.
/s/ Deloitte & Touche LLP
Des Moines, Iowa
February 24, 2025
We have served as the Company’s auditor since 2022.
Table of Contents
116
December 31,
(In millions)
2024
2023
Assets
Investments
Available-for-sale securities, at fair value (amortized cost: 2024 – $180,716 and 2023 – $147,561; allowance for
credit losses: 2024 – $708 and 2023 – $590)
$
165,364
$
134,338
Trading securities, at fair value
1,583
1,706
Equity securities (portion at fair value: 2024 – $1,290 and 2023 – $935)
1,290
1,293
Mortgage loans, at fair value
63,239
44,115
Investment funds
107
109
Policy loans
318
334
Funds withheld at interest (portion at fair value: 2024 – $(3,035) and 2023 – $(3,379))
18,866
24,359
Derivative assets
8,154
5,298
Short-term investments (portion at fair value: 2024 – $255 and 2023 – $341)
447
341
Other investments (portion at fair value: 2024 – $1,606 and 2023 – $943)
2,915
1,206
Total investments
262,283
213,099
Cash and cash equivalents
12,733
13,020
Restricted cash
943
1,761
Investments in related parties
Available-for-sale securities, at fair value (amortized cost: 2024 – $19,531 and 2023 – $14,455; allowance for
credit losses: 2024 – $1 and 2023 – $1)
19,127
14,009
Trading securities, at fair value
573
838
Equity securities, at fair value
234
318
Mortgage loans, at fair value
1,297
1,281
Investment funds (portion at fair value: 2024 – $1,139 and 2023 – $1,082)
1,853
1,632
Funds withheld at interest (portion at fair value: 2024 – $(615) and 2023 – $(721))
5,050
6,474
Short-term investments
743
947
Other investments, at fair value
331
343
Accrued investment income (related party: 2024 – $193 and 2023 – $166)
2,816
1,933
Reinsurance recoverable (related party: 2024 – $4,309 and 2023 – $0; portion at fair value: 2024 – $1,661 and 2023
– $1,367)
8,194
4,154
Deferred acquisition costs, deferred sales inducements and value of business acquired
7,173
5,979
Goodwill
4,063
4,065
Other assets (related party: 2024 – $203 and 2023 – $189)
11,253
10,179
Assets of consolidated variable interest entities
Investments
Trading securities, at fair value (related party: 2024 – $711 and 2023 – $644)
2,301
2,136
Mortgage loans, at fair value (related party: 2024 – $384 and 2023 – $358)
2,579
2,173
Investment funds, at fair value (related party: 2024 – $16,986 and 2023 – $15,425)
17,765
15,927
Other investments (related party: 2024 – $86 and 2023 – $80; portion at fair value: 2024 – $107 and 2023 –
$103)
884
103
Cash and cash equivalents (restricted cash: 2024 – $10 and 2023 – $0)
583
98
Other assets
565
110
Total assets
$
363,343
$
300,579
(Continued)
See accompanying notes to consolidated financial statements
Table of Contents
ATHENE HOLDING LTD.
Consolidated Balance Sheets
117
December 31,
(In millions, except per share data)
2024
2023
Liabilities and Equity
Liabilities
Interest sensitive contract liabilities (related party: 2024 – $6,678 and 2023 – $8,599; portion at fair value: 2024 –
$11,984 and 2023 – $9,893)
$
253,637
$
204,670
Future policy benefits (related party: 2024 – $25 and 2023 – $9; portion at fair value: 2024 – $1,640 and 2023 –
$1,700)
49,902
53,287
Market risk benefits (related party: 2024 – $239 and 2023 – $227)
4,028
3,751
Debt
6,309
4,209
Derivative liabilities
3,556
1,995
Payables for collateral on derivatives and securities to repurchase
11,652
7,536
Other liabilities (related party: 2024 – $4,707 and 2023 – $774)
6,745
2,781
Liabilities of consolidated variable interest entities (related party: 2024 – $374 and 2023 – $513)
1,640
1,115
Total liabilities
337,469
279,344
Commitments and Contingencies (Note 16)
Equity
Preferred stock
Series A – par value $1 per share; $863 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series B – par value $1 per share; $345 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series C – par value $1 per share; $600 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series D – par value $1 per share; $575 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series E – par value $1 per share; $500 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Common stock – par value $0.001 per share; authorized: 2024 and 2023 – 425.0 shares; issued and outstanding:
2024 and 2023 – 203.8 shares
—
—
Additional paid-in capital
19,588
19,499
Retained earnings (accumulated deficit)
2,237
(92)
Accumulated other comprehensive loss (related party: 2024 – $(245) and 2023 – $(357))
(5,465)
(5,569)
Total Athene Holding Ltd. stockholders’ equity
16,360
13,838
Noncontrolling interests
9,514
7,397
Total equity
25,874
21,235
Total liabilities and equity
$
363,343
$
300,579
(Concluded)
See accompanying notes to consolidated financial statements
Table of Contents
ATHENE HOLDING LTD.
Consolidated Balance Sheets
118
Years ended December 31,
(In millions)
2024
2023
2022
Revenues
Premiums (related party: 2024 – $20, 2023 – $17 and 2022 – $261)
$
1,318
$
12,749
$
11,638
Product charges (related party: 2024 – $29, 2023 – $40 and 2022 – $41)
1,016
848
718
Net investment income (related party investment income: 2024 – $1,648, 2023 – $1,636 and
2022 – $1,403; and related party investment expense: 2024 – $1,269, 2023 – $987 and 2022 –
$775)
14,481
11,130
7,571
Investment related gains (losses) (related party: 2024 – $20, 2023 – $18 and 2022 – $(1,670))
2,045
1,428
(12,706)
Other revenues (related party: 2024 – $15, 2023 – $569 and 2022 – $0)
19
591
(28)
Revenues of consolidated variable interest entities
Net investment income (related party: 2024 – $63, 2023 – $40 and 2022 – $19)
282
257
111
Investment related gains (losses) (related party: 2024 – $1,578, 2023 – $1,227 and 2022 –
$542)
1,528
1,191
319
Total revenues
20,689
28,194
7,623
Benefits and expenses
Interest sensitive contract benefits (related party: 2024 – $(62), 2023 – $171 and 2022 – $19)
8,949
6,229
538
Future policy and other policy benefits (related party: 2024 – $23, 2023 – $46 and 2022 –
$291; and remeasurement (gains) losses: 2024 – $(16), 2023 – $(53) and 2022 – $(15))
3,054
14,434
12,465
Market risk benefits remeasurement (gains) losses (related party: 2024 – $(22), 2023 – $32
and 2022 – $(122))
(102)
404
(1,657)
Amortization of deferred acquisition costs, deferred sales inducements and value of business
acquired
941
688
444
Policy and other operating expenses (related party: 2024 – $71, 2023 – $142 and 2022 –
$246)
2,213
1,848
1,495
Total benefits and expenses
15,055
23,603
13,285
Income (loss) before income taxes
5,634
4,591
(5,662)
Income tax expense (benefit)
730
(1,161)
(646)
Net income (loss)
4,904
5,752
(5,016)
Less: Net income (loss) attributable to noncontrolling interests
1,443
1,087
(2,106)
Net income (loss) attributable to Athene Holding Ltd. stockholders
3,461
4,665
(2,910)
Less: Preferred stock dividends
181
181
141
Net income (loss) available to Athene Holding Ltd. common stockholder
$
3,280
$
4,484
$
(3,051)
See accompanying notes to consolidated financial statements
Table of Contents
ATHENE HOLDING LTD.
Consolidated Statements of Income (Loss)
119
Years ended December 31,
(In millions)
2024
2023
2022
Net income (loss)
$
4,904
$
5,752
$
(5,016)
Other comprehensive income (loss), before tax
Unrealized investment gains (losses) on available-for-sale securities
(1,121)
5,284
(18,156)
Unrealized gains (losses) on hedging instruments
(51)
(199)
2
Remeasurement gains (losses) on future policy benefits related to discount rate
1,425
(2,236)
8,425
Remeasurement gains (losses) on market risk benefits related to credit risk
(149)
(374)
366
Foreign currency translation and other adjustments
(48)
40
(27)
Other comprehensive income (loss), before tax
56
2,515
(9,390)
Income tax expense (benefit) related to other comprehensive income (loss)
22
511
(1,933)
Other comprehensive income (loss)
34
2,004
(7,457)
Comprehensive income (loss)
4,938
7,756
(12,473)
Less: Comprehensive income (loss) attributable to noncontrolling interests
1,373
1,342
(2,242)
Comprehensive income (loss) attributable to Athene Holding Ltd. stockholders
$
3,565
$
6,414
$
(10,231)
See accompanying notes to consolidated financial statements
Table of Contents
ATHENE HOLDING LTD.
Consolidated Statements of Comprehensive Income (Loss)
120
(In millions)
Preferred
stock
Common
stock
Additional
paid-in
capital
Retained
earnings
(accumulated
deficit)
Accumulated
other
comprehensive
income (loss)
Total Athene
Holding Ltd.
stockholders’
equity
Noncontrolling
interests
Total
equity
Balance at January 1, 2022
$
—
$
—
$
20,270
$
—
$
—
$
20,270
$
2,276
$ 22,546
Net loss
—
—
—
(2,910)
—
(2,910)
(2,106)
(5,016)
Other comprehensive loss
—
—
—
—
(7,321)
(7,321)
(136)
(7,457)
Issuance of preferred shares, net of
expenses
—
—
487
—
—
487
—
487
Stock-based compensation allocation
from parent
—
—
50
—
—
50
—
50
Preferred stock dividends
—
—
—
(141)
—
(141)
—
(141)
Common stock dividends
—
—
—
(563)
—
(563)
—
(563)
Contributions from parent
—
—
38
—
—
38
—
38
Distributions to parent
—
—
(2,726)
(26)
—
(2,752)
—
(2,752)
Contributions from noncontrolling
interests
—
—
—
—
—
—
1,047
1,047
Distributions to noncontrolling
interests
—
—
—
—
—
—
(63)
(63)
Contributions from noncontrolling
interests of consolidated variable
interest entities and other
—
—
—
—
—
—
2,457
2,457
Other changes in equity of
noncontrolling interests
—
—
—
—
—
—
(84)
(84)
Balance at December 31, 2022
—
—
18,119
(3,640)
(7,321)
7,158
3,391
10,549
Net income
—
—
—
4,665
—
4,665
1,087
5,752
Other comprehensive income
—
—
—
—
1,749
1,749
255
2,004
Stock-based compensation allocation
from parent
—
—
79
—
—
79
—
79
Preferred stock dividends
—
—
—
(181)
—
(181)
—
(181)
Common stock dividends
—
—
—
(937)
—
(937)
—
(937)
Contributions from parent
—
—
1,290
—
—
1,290
—
1,290
Contributions from noncontrolling
interests
—
—
—
—
—
—
996
996
Distributions to noncontrolling
interests
—
—
—
—
—
—
(539)
(539)
Contributions from noncontrolling
interests of consolidated variable
interest entities and other
—
—
—
—
—
—
1,637
1,637
Subsidiary issuance of equity interests
and other
—
—
11
1
3
15
570
585
Balance at December 31, 2023
—
—
19,499
(92)
(5,569)
13,838
7,397
21,235
Net income
—
—
—
3,461
—
3,461
1,443
4,904
Other comprehensive income (loss)
—
—
—
—
104
104
(70)
34
Stock-based compensation allocation
from parent
—
—
43
—
—
43
—
43
Preferred stock dividends
—
—
—
(181)
—
(181)
—
(181)
Common stock dividends
—
—
—
(951)
—
(951)
—
(951)
Contributions from parent
—
—
52
—
—
52
—
52
Contributions from noncontrolling
interests
—
—
—
—
—
—
954
954
Distributions to noncontrolling
interests
—
—
—
—
—
—
(920)
(920)
Contributions from noncontrolling
interests of consolidated variable
interest entities, net of distributions
and other
—
—
—
—
—
—
698
698
Subsidiary issuance of equity interests
and other
—
—
(6)
—
—
(6)
12
6
Balance at December 31, 2024
$
—
$
—
$
19,588
$
2,237
$
(5,465) $
16,360
$
9,514
$ 25,874
See accompanying notes to consolidated financial statements
Table of Contents
ATHENE HOLDING LTD.
Consolidated Statements of Equity
121
Cash flows from operating activities
Net income (loss)
$
4,904
$
5,752
$
(5,016)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of deferred acquisition costs, deferred sales inducements and value of
business acquired
941
688
444
Net amortization (accretion) of net investment premiums, discounts and other
(123)
81
285
Gain on recapture of reinsurance agreements, net of cash received
—
(489)
—
Net investment income (related party: 2024 – $82, 2023 – $(104) and 2022 – $(294))
(54)
(108)
(506)
Net recognized (gains) losses on investments and derivatives (related party: 2024 –
$(1,380), 2023 – $(1,305) and 2022 – $(224))
(3,526)
(1,959)
5,949
Policy acquisition costs deferred
(1,507)
(1,570)
(1,127)
Changes in operating assets and liabilities:
Accrued investment income (related party: 2024 – $(27), 2023 – $(61) and 2022 –
$(51))
(883)
(575)
(370)
Interest sensitive contract liabilities (related party: 2024 – $80, 2023 – $131 and
2022 – $(24))
5,677
3,917
(1,337)
Future policy benefits, market risk benefits and reinsurance recoverable (related
party: 2024 – $(237), 2023 – $6 and 2022 – $41)
(1,969)
4,333
3,901
Funds withheld assets (related party: 2024 – $(230), 2023 – $(371) and 2022 –
$1,184)
(1,560)
(3,411)
5,229
Other assets and liabilities
(24)
(1,676)
(1,194)
Net cash provided by operating activities
1,876
4,983
6,258
Cash flows from investing activities
Sales, maturities and repayments of:
Available-for-sale securities (related party: 2024 – $6,937, 2023 – $2,081 and 2022 –
$4,197)
$
42,898
$
14,484
$
18,564
Trading securities (related party: 2024 – $346, 2023 – $156 and 2022 – $79)
1,013
390
217
Equity securities (related party: 2024 – $67, 2023 – $0 and 2022 – $6)
404
167
389
Mortgage loans (related party: 2024 – $87, 2023 – $30 and 2022 – $46)
7,983
4,569
3,562
Investment funds (related party: 2024 – $507, 2023 – $301 and 2022 – $1,543)
525
360
1,704
Derivative instruments and other investments (related party: 2024 – $0, 2023 – $0 and
2022 – $184)
3,876
4,324
3,123
Short-term investments (related party: 2024 – $1,482, 2023 – $1,178 and 2022 – $0)
2,670
3,507
604
Purchases of:
Available-for-sale securities (related party: 2024 – $(11,714), 2023 – $(4,817) and 2022
– $(4,035))
(80,212)
(37,263)
(36,684)
Trading securities (related party: 2024 – $(158), 2023 – $(866) and 2022 – $(156))
(895)
(2,718)
(915)
Equity securities (related party: 2024 – $0, 2023 – $0 and 2022 – $(208))
(644)
(116)
(441)
Mortgage loans (related party: 2024 – $(27), 2023 – $0 and 2022 – $(364))
(28,188)
(20,972)
(12,951)
Investment funds (related party: 2024 – $(2,397), 2023 – $(2,334) and 2022 – $(4,738))
(2,694)
(2,461)
(5,755)
Derivative instruments and other investments (related party: 2024 – $(16), 2023 – $(46)
and 2022 – $(266))
(5,032)
(5,637)
(3,008)
Short-term investments (related party: 2024 – $(1,277), 2023 – $(2,061) and 2022 –
$(33))
(2,555)
(2,612)
(2,632)
Consolidation of new variable interest entities
1
3
393
Deconsolidation of previously consolidated entities
(2)
(53)
(393)
Other investing activities, net
(1,066)
378
(152)
Net cash used in investing activities
(61,918)
(43,650)
(34,375)
(Continued)
See accompanying notes to consolidated financial statements
Years ended December 31,
(In millions)
2024
2023
2022
Table of Contents
ATHENE HOLDING LTD.
Consolidated Statements of Cash Flows
122
Cash flows from financing activities
Deposits on investment-type policies and contracts (related party: 2024 – $4, 2023 – $7 and
2022 – $68)
$
71,323
$
53,660
$
33,920
Withdrawals on investment-type policies and contracts (related party: 2024 – $(396), 2023 –
$(402) and 2022 – $(350))
(19,119)
(14,125)
(10,209)
Proceeds from debt
2,169
589
399
Capital contributions from parent
—
1,250
—
Capital contributions from noncontrolling interests
954
996
1,047
Capital contributions from noncontrolling interests of consolidated variable interest entities
1,897
1,809
2,214
Capital distributions to noncontrolling interests
(920)
(539)
(63)
Subsidiary issuance of equity interests to noncontrolling interests
—
632
—
Net change in cash collateral posted for derivative transactions and securities to repurchase
4,116
829
(330)
Issuance of preferred stock, net of expenses
—
—
487
Preferred stock dividends
(226)
(136)
(141)
Common stock dividends
(452)
(937)
(1,313)
Other financing activities, net
(317)
739
461
Net cash provided by financing activities
59,425
44,767
26,472
Effect of exchange rate changes on cash and cash equivalents
(3)
10
(15)
Net (decrease) increase in cash and cash equivalents
(620)
6,110
(1,660)
Cash and cash equivalents at beginning of year1
14,879
8,769
10,429
Cash and cash equivalents at end of year1
$
14,259
$
14,879
$
8,769
Supplementary information
Cash paid for taxes
$
930
$
216
$
821
Cash paid for interest
517
498
244
Non-cash transactions
Deposits on investment-type policies and contracts through reinsurance agreements, net
assumed (ceded) (related party: 2024 – $(4,119), 2023 – $20 and 2022 – $270)
(4,057)
99
878
Withdrawals on investment-type policies and contracts through reinsurance agreements,
net assumed (ceded) (related party: 2024 – $1,587, 2023 – $1,646 and 2022 – $1,493)
8,479
12,430
9,131
Investments received from settlements on reinsurance agreements (related party: 2024 –
$48, 2023 – $65 and 2022 – $0)
48
1,129
36
Investments received at inception of reinsurance agreements
—
2,158
—
Investments received from pension group annuity premiums
521
4,776
4,185
Reduction in investments and other assets and liabilities relating to recapture of
reinsurance agreement
—
482
—
Investments exchanged with third-party cedants
—
145
612
Borrowings of consolidated variable interest entities settled with investments
—
52
—
Assets contributed to consolidated variable interest entities
—
—
8,007
Investments distributed as common stock dividends
499
—
—
Distribution of investments to noncontrolling interests of consolidated variable interest
entities
1,107
—
—
Distributions to parent
—
—
2,145
1 Includes cash and cash equivalents, restricted cash and cash and cash equivalents of consolidated variable interest entities.
Years ended December 31,
(In millions)
2024
2023
2022
(Concluded)
See accompanying notes to consolidated financial statements
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ATHENE HOLDING LTD.
Consolidated Statements of Cash Flows
123
1. Business, Basis of Presentation and Significant Accounting Policies
Athene Holding Ltd. (AHL), together with its subsidiaries (collectively, Athene, we, our, us, or the Company), is a leading financial services
company that specializes in issuing, reinsuring and acquiring retirement savings products in the United States (US) and internationally.
We conduct business primarily through the following consolidated subsidiaries:
•
Our non-US reinsurance subsidiaries, to which AHL’s other insurance subsidiaries and third-party ceding companies directly and
indirectly reinsure a portion of their liabilities, including Athene Life Re Ltd. (ALRe), Athene Annuity Re Ltd. (AARe) and Athene
Life Re International Ltd. (ALReI); and
•
Athene USA Corporation, an Iowa corporation (together with its subsidiaries, AUSA).
Consolidation and Basis of Presentation—Our consolidated financial statements include our wholly owned subsidiaries and investees in
which we hold a controlling financial interest, including variable interest entities (VIEs). Investees in which we do not hold a controlling
financial interest but have the ability to exercise significant influence over operating and financing decisions, other than investments for which
we have elected the fair value option, are accounted for under the equity method. Intercompany balances and transactions have been eliminated.
For entities that are consolidated, but not wholly owned, we allocate a portion of the income or loss and corresponding equity to the owners
other than us. We include the aggregate of the income or loss and corresponding equity that is not owned by us in noncontrolling interests in the
consolidated financial statements.
We report investments in related parties separately, as further described in the accounting policies that follow.
We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America (US GAAP), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the period. Actual experience could materially differ from
these estimates and assumptions. Our principal estimates impact:
•
fair value of investments;
•
impairment of investments and allowances for expected credit losses;
•
derivatives valuation, including embedded derivatives;
•
future policy benefit reserves;
•
market risk benefit assets and liabilities; and
•
valuation allowances on deferred tax assets.
Additional details around these principal estimates and assumptions are discussed in the significant accounting policies that follow and the
related footnote disclosures.
Merger – On January 1, 2022, we completed our merger with Apollo Global Management, Inc. (AGM, and together with its subsidiaries other
than us or our subsidiaries, Apollo) and are now a direct subsidiary of AGM. We elected pushdown accounting in which we use AGM’s basis of
accounting, which reflects the fair market value of our assets and liabilities at the time of the merger, unless otherwise prescribed by US GAAP.
See Note 2 – Business Combination for further information on the merger.
Summary of Significant Accounting Policies
Investments
Fixed Maturity Securities – Fixed maturity securities include bonds, collateralized loan obligations (CLO), asset-backed securities (ABS),
residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and redeemable preferred stock. We classify
fixed maturity securities as available-for-sale (AFS) or trading at the time of purchase and subsequently carry them at fair value. Fair value
hierarchy and valuation methodologies are discussed in Note 6 – Fair Value. Classification is dependent on a variety of factors including our
expected holding period, election of the fair value option and asset and liability matching.
AFS Securities – AFS securities are held at fair value on the consolidated balance sheets, with unrealized gains and losses, exclusive of
allowances for expected credit losses, generally reflected in accumulated other comprehensive income (loss) (AOCI) on the consolidated
balance sheets. Unrealized gains or losses relating to identified risks within AFS securities in fair value hedging relationships are reflected in
investment related gains (losses) on the consolidated statements of income (loss).
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
124
Trading Securities – We elected the fair value option for certain fixed maturity securities. These fixed maturity securities are classified as
trading, with changes to fair value included in investment related gains (losses) on the consolidated statements of income (loss). Although the
securities are classified as trading, the trading activity related to these investments is primarily focused on asset and liability matching activities
and is not intended to be an income strategy based on active trading. As such, the activity related to these investments on the consolidated
statements of cash flows is classified as investing activities.
We generally record security transactions on a trade date basis, with any unsettled trades recorded in other assets or other liabilities on the
consolidated balance sheets. Bank loans, private placements and investment funds are recorded on a settlement date basis.
Equity Securities – Equity securities include common stock, mutual funds and non-redeemable preferred stock. Equity securities with readily
determinable fair values are carried at fair value with subsequent changes in fair value recognized in net income. We elected to account for
certain equity securities without readily determinable fair values that did not qualify for the practical expedient to estimate fair values based on
net asset value (NAV) per share (or its equivalent) at cost less impairment, subject to adjustments based on observable price changes in orderly
transactions for identical or similar investments of the same issuer.
Purchased Credit Deteriorated (PCD) Investments – We purchase certain structured securities, primarily RMBS, which upon our assessment
have been determined to meet the definition of PCD investments. Additionally, structured securities classified as beneficial interests follow the
initial measurement guidance for PCD investments if there is a significant difference between contractual cash flows adjusted for expected
prepayments and expected cash flows at the date of recognition. The initial allowance for credit losses for PCD investments is recorded through
a gross-up adjustment to the initial amortized cost. For structured securities classified as beneficial interests, the initial allowance is calculated as
the present value of the difference between contractual cash flows adjusted for expected prepayments and expected cash flows at the date of
recognition. The non-credit purchase discount or premium is amortized into investment income using the effective interest method. The credit
discount, represented by the allowance for expected credit losses, is remeasured each period following the policies for measuring credit losses
described in the Credit Losses – Available-for-Sale Securities section below.
Mortgage Loans – We elected the fair value option on our mortgage loan portfolio. Interest income is accrued on the principal amount of the
loan based on its contractual interest rate. We accrue interest on loans until it is probable we will not receive interest, or the loan is 90 days past
due unless guaranteed by US government-sponsored agencies. Interest income and prepayment fees are reported in net investment income on
the consolidated statements of income (loss). Changes in the fair value of the mortgage loan portfolio are reported in investment related gains
(losses) on the consolidated statements of income (loss).
Investment Funds – We invest in certain non-fixed income, alternative investments in the form of limited partnerships or similar legal structures
(investment funds). For investment funds in which we do not hold a controlling financial interest, and therefore are not required to consolidate,
we typically account for these investments using the equity method, where the cost is recorded as an investment in the fund, or we have elected
the fair value option. Adjustments to the carrying amount reflect our pro rata ownership percentage of the operating results as indicated by NAV
in the investment fund financial statements, which can be on a lag of up to three months when investee information is not received in a timely
manner.
We record our proportionate share of investment fund income within net investment income, or, for consolidated VIEs, investment related gains
(losses), on the consolidated statements of income (loss). Contributions paid or distributions received by us are recorded directly to the
investment fund balance as an increase to carrying value or as a return of capital, respectively.
Policy Loans – Policy loans are funds provided to policyholders in return for a claim on the policyholder’s account balance. The funds provided
are limited to a specified percentage of the account balance. The majority of policy loans do not have a stated maturity and the balances and
accrued interest are repaid with proceeds from the policyholder’s account balance. Policy loans are reported at the unpaid principal balance.
Interest income is recorded as earned using the contract interest rate and is reported in net investment income on the consolidated statements of
income (loss).
Funds Withheld at Interest – Funds withheld at interest represents a receivable for amounts contractually withheld by ceding companies in
accordance with funds withheld coinsurance (funds withheld) and modified coinsurance (modco) reinsurance agreements in which we are the
reinsurer. Generally, assets equal to statutory reserves are withheld and legally owned by the ceding company, and any excess or shortfall is
settled periodically. The underlying agreements contain embedded derivatives as discussed below.
Short-term Investments – Short-term investments consist of financial instruments with maturities of greater than three months but less than
twelve months when purchased. Short-term debt securities are accounted for as trading or AFS consistent with our policies for those
investments. Short-term loans are carried at amortized cost. Fair values are determined consistently with methodologies described in Note 6 –
Fair Value for the respective investment type.
Other Investments – Other investments include, but are not limited to, term loans collateralized by mortgages on residential and commercial real
estate, other uncollateralized loans, investments in real estate and corporate owned life insurance. We elected the fair value option on the term
loans and other uncollateralized loans. Investments in real estate are held at cost less accumulated depreciation and impairments. Corporate
owned life insurance is held at cash surrender value.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
125
Interest income is accrued on the principal amount of the loan based on its contractual interest rate. We accrue interest on loans until it is
probable we will not receive interest or the loan is 90 days past due. Changes in the cash surrender value of corporate owned life insurance,
interest income, amortization of premiums and discounts, and prepayment and other fees are included in net investment income on the
consolidated statements of income (loss). Changes in fair value are included in investment related gains (losses) on the consolidated statements
of income (loss).
Securities Repurchase and Reverse Repurchase Agreements – Securities repurchase and reverse repurchase transactions involve the temporary
exchange of securities for cash or other collateral of equivalent value, with agreement to redeliver a like quantity of the same or similar
securities at a future date and at a fixed and determinable price. We evaluate transfers of securities under these agreements to repurchase or
resell to determine whether they satisfy the criteria for accounting treatment as secured borrowing or lending arrangements. Agreements not
meeting the criteria would require recognition of the transferred securities as sales or purchases, with related forward repurchase or resale
commitments. All of our securities repurchase transactions are accounted for as secured borrowings and are included in payables for collateral
on derivatives and securities to repurchase on the consolidated balance sheets. Earnings from investing activities related to the cash received
under our securities repurchase arrangements are included in net investment income on the consolidated statements of income (loss). The
associated borrowing cost is included in policy and other operating expenses on the consolidated statements of income (loss). The investments
purchased in reverse repurchase agreements, which represent collateral on a secured lending arrangement, are not reflected in our consolidated
balance sheets; however, the secured lending arrangement is recorded as a short-term investment for the principal amount loaned under the
agreement.
Investment Income – We recognize investment income as it accrues or is legally due, net of investment management and custody fees.
Investment income on fixed maturity securities includes coupon interest, as well as the amortization of any premium and the accretion of any
discount. Investment income on equity securities represents dividend income and preferred coupon interest. Realized gains and losses on sales of
investments are included in investment related gains (losses) on the consolidated statements of income (loss). Realized gains and losses on
investments sold are determined based on a first-in first-out method.
Credit Losses – Available-for-Sale Securities and Other – We evaluate AFS securities with a fair value that has declined below amortized cost
to determine how the decline in fair value should be recognized. If we determine, based on the facts and circumstances related to the specific
security, that we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its
amortized cost, any existing allowance for expected credit losses is reversed and the amortized cost of the security is written down to fair value.
If neither of these conditions exist, we evaluate whether the decline in fair value has resulted from a credit loss or other factors.
For non-structured AFS securities, we qualitatively consider relevant facts and circumstances in evaluating whether a decline below fair value is
credit-related. Relevant facts and circumstances include but are not limited to: (1) the extent to which the fair value is less than amortized cost;
(2) changes in agency credit ratings, (3) adverse conditions related to the security’s industry or geographical area, (4) failure to make scheduled
payments, and (5) other known changes in the financial condition of the issuer or quality of any underlying collateral or credit enhancements.
For structured AFS securities meeting the definition of beneficial interests, the qualitative assessment is bypassed, and any securities having
experienced a decline in fair value below amortized cost move directly to a quantitative analysis.
If upon completion of this analysis it is determined that a potential credit loss exists, an allowance for expected credit losses is established equal
to the amount by which the present value of expected cash flows is less than amortized cost, limited by the amount by which fair value is less
than amortized cost. A non-structured security’s cash flow estimates are derived from scenario-based outcomes of expected corporate
restructurings or the disposition of assets using security-specific facts and circumstances including timing, security interests and loss severity. A
structured security’s cash flow estimates are based on security-specific facts and circumstances that may include collateral characteristics,
expectations of delinquency and default rates, loss severity, prepayments and structural support, including subordination and guarantees. The
expected cash flows are discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete a
structured security. For securities with a contractual interest rate that varies based on changes in an independent factor, such as an index or rate,
the effective interest rate is calculated based on the factor as it changes over the life of the security. Inherently under the discounted cash flow
model, both the timing and amount of expected cash flows affect the measurement of the allowance for expected credit losses.
The allowance for expected credit losses is remeasured each period for the passage of time, any change in expected cash flows, and changes in
the fair value of the security. All impairments, whether intent or requirement to sell or credit-related, and all changes in the allowance for
expected credit losses are recorded through the provision for credit losses within investment related gains (losses) on the consolidated statements
of income (loss).
We also establish an allowance for expected credit losses for assets held at amortized cost at the time of purchase, which includes certain other
loans and reinsurance assets. The allowance for expected credit losses considers past events, current conditions, and reasonable and supportable
forecasts of future economic conditions or macroeconomic forecasts. We use a quantitative probability of default and loss given default
methodology to develop our estimate of expected credit loss. The provision for credit losses for reinsurance assets held at amortized cost is
recorded through policy and other operating expenses on the consolidated statements of income (loss).
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
126
We have elected to present accrued interest receivable separately in accrued investment income on the consolidated balance sheets. We have
also elected the practical expedient to exclude the accrued interest receivable from the amortized cost balance used to calculate the allowance for
expected credit losses, as we have a policy to write off such balances in a timely manner, when they become 90 days past due. Any write-off of
accrued interest is recorded through a reversal of net investment income on the consolidated statements of income (loss).
Upon determining that all or a portion of the amortized cost of an asset is uncollectible, which is generally when all efforts for collection are
exhausted, the amortized cost is written off against the existing allowance. Any write off in excess of the existing allowance is recorded through
the provision for credit losses within investment related gains (losses) on the consolidated statements of income (loss).
Derivative Instruments—We invest in derivatives to hedge the risks experienced in our ongoing operations, such as equity, interest rate,
foreign currency and market volatility, or for other risk management purposes, which primarily involve managing liability risks associated with
our indexed annuity products and reinsurance agreements. Derivatives are financial instruments with values that are derived from interest rates,
foreign exchange rates, financial indices or other combinations of an underlying and notional. Derivative assets and liabilities are carried at fair
value on the consolidated balance sheets. We elect to present any derivatives subject to master netting provisions as a gross asset or liability and
gross of collateral. Disclosures regarding balance sheet presentation of derivatives subject to master netting agreements are discussed in Note 4 –
Derivative Instruments. We may designate derivatives as cash flow, fair value or net investment hedges.
Hedge Documentation and Hedge Effectiveness – To qualify for hedge accounting, at the inception of the hedging relationship, we formally
document our designation of the hedge as a cash flow, fair value or net investment hedge and our risk management objective and strategy for
undertaking the hedging transaction. In this documentation, we identify how the hedging instrument is expected to hedge the designated risks
related to the hedged item and the method that will be used to retrospectively and prospectively assess the hedge effectiveness and the method
which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in
offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of
the hedge accounting relationship.
For a cash flow hedge, all changes in the fair value of the hedging derivative are reported within AOCI and the related gains or losses on the
derivative are reclassified into the consolidated statements of income (loss) when the cash flows of the hedged item affect earnings.
For a fair value hedge, changes in the fair value of the hedging derivative and changes in the fair value of the hedged item related to the
designated risk being hedged are reported on the consolidated statements of income (loss) according to the nature of the risk being hedged.
Additionally, changes in the fair value of amounts excluded from the assessment of effectiveness are recorded in AOCI and amortized into
income over the life of the hedge accounting relationship.
For a net investment hedge, changes in the fair value of the hedging derivative are reported within AOCI to offset the translation adjustments for
subsidiaries with functional currencies other than the US dollar.
We discontinue hedge accounting prospectively when: (1) we determine the derivative is no longer highly effective in offsetting changes in the
estimated cash flows or fair value of a hedged item; (2) the derivative expires, is sold, terminated, or exercised; or (3) the derivative is de-
designated as a hedging instrument. When hedge accounting is discontinued, the derivative continues to be carried on the consolidated balance
sheets at fair value, with changes in fair value recognized in investment related gains (losses) on the consolidated statements of income (loss).
For a derivative not designated as a hedge, changes in the derivative’s fair value and any income received or paid on derivatives at the settlement
date are included in investment related gains (losses) on the consolidated statements of income (loss).
Embedded Derivatives – We issue and reinsure products, primarily indexed annuity products, or purchase investments that contain embedded
derivatives. If we determine the embedded derivative has economic characteristics that are not clearly and closely related to the economic
characteristics of the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the embedded
derivative is bifurcated from the host contract and accounted for separately, unless the fair value option is elected on the host contract. Under the
fair value option, bifurcation of the embedded derivative is not necessary as the entire contract is carried at fair value with all related gains and
losses recognized in investment related gains (losses) on the consolidated statements of income (loss). Embedded derivatives are carried on the
consolidated balance sheets at fair value in the same line item as the host contract.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
127
Fixed indexed annuity, index-linked variable annuity and indexed universal life insurance contracts allow the policyholder to elect a fixed
interest rate return or an equity market component for which interest credited is based on the performance of certain equity market indices. The
equity market option is an embedded derivative. The benefit reserve is equal to the sum of the fair value of the embedded derivative and the host
(or guaranteed) component of the contracts. The fair value of the embedded derivatives represents the present value of cash flows attributable to
the indexed strategies. The embedded derivative cash flows are based on assumptions for future policy growth, which include assumptions for
expected index credits on the next policy anniversary date, future equity option costs, volatility, interest rates and policyholder behavior
assumptions including lapses and the use of benefit riders. The embedded derivative cash flows are discounted using a rate that reflects our own
credit rating. The host contract is established at contract inception as the initial account value less the initial fair value of the embedded
derivative and accreted over the policy’s life. Contracts acquired through a business combination which contain an embedded derivative are re-
bifurcated as of the acquisition date. Changes in the fair value of embedded derivatives associated with fixed indexed annuities, index-linked
variable annuities and indexed universal life insurance contracts are included in interest sensitive contract benefits on the consolidated
statements of income (loss).
Additionally, reinsurance agreements written on a funds withheld or modco basis contain embedded derivatives. We have determined that the
right to receive or obligation to pay the total return on the assets supporting the funds withheld at interest or funds withheld liability,
respectively, represents a total return swap with a floating rate leg. The fair value of embedded derivatives on funds withheld and modco
agreements is computed as the unrealized gain (loss) on the underlying assets and is included within funds withheld at interest for assumed
agreements, and for ceded agreements the funds withheld liability is included in other liabilities on the consolidated balance sheets. The change
in the fair value of the embedded derivatives is recorded in investment related gains (losses) on the consolidated statements of income (loss).
Assumed and ceded earnings from funds withheld at interest, funds withheld liability and changes in the fair value of embedded derivatives are
reported in operating activities on the consolidated statements of cash flows. Contributions to and withdrawals from funds withheld at interest
and funds withheld liability are reported in operating activities on the consolidated statements of cash flows.
Variable Interest Entities—An entity that does not have sufficient equity to finance its activities without additional financial support, or in
which the equity investors, as a group, do not have the characteristics typically afforded to common stockholders is a VIE. The determination as
to whether an entity qualifies as a VIE depends on the facts and circumstances surrounding each entity and may require significant judgment.
Our investment funds typically qualify as VIEs and are evaluated for consolidation under the VIE model.
We are required to consolidate a VIE if we are the primary beneficiary, defined as the variable interest holder with both the power to direct the
activities that most significantly impact the VIE’s economic performance and rights to receive benefits or obligations to absorb losses that could
be potentially significant to the VIE. We determine whether we are the primary beneficiary of an entity based on a qualitative assessment of the
VIE’s capital structure, contractual terms, nature of the VIE’s operations and purpose and our relative exposure to the related risks of the VIE.
Since affiliates of AGM, a related party under common control, are the decision makers in certain of the investment funds and securitization
vehicles, we and a member of our related party group may together have the characteristics of the primary beneficiary of an investment fund. In
this situation, we have concluded we consolidate the VIE when we have significant economic exposure to the entity. We reassess the VIE and
primary beneficiary determinations on an ongoing basis.
For entities that we do not consolidate but can exercise significant influence over the entities’ operating and financing decisions, we record our
investment under the equity method. If we do not consolidate and do not have significant influence, generally on investment funds in which we
own a less than 3% interest, we elect the fair value option.
See Note 5 – Variable Interest Entities for discussion of our interest in entities that meet the definition of a VIE.
Goodwill—Goodwill represents the excess of cost over the fair value of identifiable net assets of an acquired business. Goodwill is tested
annually for impairment or more frequently if circumstances indicate impairment may have occurred. The impairment test is performed at the
reporting unit level. Goodwill on the consolidated balance sheets includes the impacts of foreign currency translation.
We performed our annual goodwill impairment test as of October 1, 2024 and did not identify any impairment. See Note 2 – Business
Combination for disclosure regarding the goodwill recorded related to our merger with AGM.
Reinsurance—We assume or cede insurance and investment contracts under coinsurance, funds withheld, modco and yearly renewable term
bases. We follow reinsurance accounting for transactions that provide indemnification against loss or liability relating to insurance risk (risk
transfer). To meet risk transfer requirements, a reinsurance agreement must transfer insurance risk arising from uncertainties about both
underwriting and timing risks. Cessions under reinsurance do not discharge our obligations as the primary insurer, unless the requirements of
assumption reinsurance have been met. We generally have the right of offset on reinsurance contracts but have elected to present reinsurance
settlement amounts due to and from us on a gross basis.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
128
For assets and liabilities ceded under reinsurance agreements, we generally apply the same measurement guidance for our directly issued or
assumed contracts. Ceded amounts are recorded within reinsurance recoverable on the consolidated balance sheets. For reinsurance of in-force
contracts that pass risk transfer, the issue year used for the purpose of measuring the reinsurance recoverable is dependent on the effective date
of the reinsurance agreement, which may differ from the issue year for the direct or assumed contract. The issue year informs the locked-in
discount rate used for the purposes of interest accretion. This may result in different discount rates used for the direct or assumed reserves and
ceded reserves when reinsuring an in-force block of insurance contracts. For flow reinsurance of insurance contracts that pass risk transfer, the
contracts have the same cash flow assumptions as the direct or assumed contracts when the terms are consistent between those respective
contracts and the ceded reinsurance agreement. When we recognize an immediate loss due to the present value of future benefits and expenses
exceeding the present value of future gross premiums, a gain is recognized on the corresponding reinsurance recoverable to the extent it does not
result in gain recognition at treaty inception. Likewise, where the direct or assumed reserve has been floored to zero, the corresponding
reinsurance recoverable will be consistently set to zero. See Future Policy Benefits below for further information.
Accounting for reinsurance requires the use of assumptions, particularly related to the future performance of the underlying business and the
potential impact of counterparty credit risks. We attempt to minimize our counterparty credit risk through the structuring of the terms of our
reinsurance agreements, including the use of trusts, and monitor credit ratings of counterparties for signs of declining credit quality. When a
ceding company does not report information on a timely basis, we record accruals based on the best available information at the time, which
includes the reinsurance agreement terms and historical experience. We periodically compare actual and anticipated experience to the
assumptions used to establish reinsurance assets and liabilities. See Note 7 – Reinsurance for more information.
Assets and liabilities assumed or ceded under coinsurance, funds withheld, modco or yearly renewable term are presented gross on the
consolidated balance sheets. For investment contracts, the change in the direct or assumed and ceded reserves are presented net in interest
sensitive contract benefits on the consolidated statements of income (loss). For insurance contracts, the change in the direct or assumed and
ceded reserves and benefits are presented net in future policy and other policy benefits on the consolidated statements of income (loss), except
any changes related to the discount rate are presented net in other comprehensive income (loss) (OCI) on the consolidated statements of
comprehensive income (loss). For market risk benefits, the change in the direct or assumed and ceded reserves are presented net in market risk
benefits remeasurement (gains) losses on the consolidated statements of income (loss), except for changes related to instrument-specific credit
risk on direct and assumed contracts which are presented net in OCI on the consolidated statements of comprehensive income (loss).
For the reinsurance of existing in-force blocks that transfer significant insurance risk, the difference between the assets received or paid and the
liabilities assumed or ceded represents the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is
amortized on a basis consistent with the methodologies and assumptions used to amortize deferred acquisition costs (DAC) and deferred sales
inducements (DSI), or on a consistent basis with deferred profit liability dependent upon the nature of the underlying contract.
Cash and Cash Equivalents—Cash and cash equivalents include deposits and short-term highly liquid investments with an original maturity of
less than 90 days from the date of acquisition. Amounts included are readily convertible to known amounts of cash and are subject to an
insignificant risk of change in value.
Restricted Cash—Restricted cash primarily consists of cash and cash equivalents held in funds in trust as part of certain coinsurance
agreements to secure statutory reserves and liabilities of the coinsured parties. Restricted cash is reported separately on the consolidated balance
sheets but is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the
consolidated statements of cash flows.
Investments in Related Parties—Investments in related parties and associated earnings, other comprehensive income and cash flows are
separately identified on the consolidated financial statements and accounted for consistently with the policies described above for each category
of investment. Investments in related parties are primarily comprised of investments over which Apollo can exercise significant influence.
Deferred Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired
Deferred Acquisition Costs and Deferred Sales Inducements – Costs related directly to the successful acquisition of new, or the renewal of
existing, insurance or investment contracts are deferred. These costs consist of commissions and policy issuance costs, as well as sales
inducements credited to policyholder account balances, and are included in deferred acquisition costs, deferred sales inducements and value of
business acquired on the consolidated balance sheets. These costs are not capitalized until they are incurred.
Deferred costs related to universal life-type policies and investment contracts with significant revenue streams from sources other than
investment of the policyholder funds are grouped into cohorts based on issue year and contract type and amortized on a constant level basis over
the expected term of the related contracts. The cohorts and assumptions used for the amortization of deferred costs are consistent with those used
in estimating the related liabilities for these contracts. The constant level basis generally is the initial premium or deposit and is projected based
on assumptions related to policyholder behavior, including lapses and mortality, over the expected term of the contracts. Each reporting period,
we replace expected experience with actual experience to determine the related amortization expense. Changes to projected experience are
recognized in amortization expense prospectively over the remaining contract term. Amortization of DAC and DSI is included in amortization
of deferred acquisition costs, deferred sales inducements and value of business acquired on the consolidated statements of income (loss).
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
129
Deferred costs related to investment contracts without significant revenue streams from sources other than investment of the policyholder funds
are amortized using the effective interest method. The effective interest method amortizes the deferred costs by discounting the future liability
cash flows at a break-even rate. The break-even rate is solved for such that the present value of future liability cash flows is equal to the net
liability at the inception of the contract. The deferred costs represent the difference between the net and gross liability and the change relates to
amortization for the period.
Value of Business Acquired – We establish VOBA for blocks of insurance contracts acquired through the acquisition of insurance entities and
through application of pushdown accounting. We record the fair value of the liabilities assumed in two components: reserves and VOBA.
Reserves are established using our best estimate assumptions as of the business combination date. VOBA is the difference between the fair value
of the liabilities and the reserves. VOBA can be either positive or negative and is amortized in relation to respective policyholder liabilities.
Significant assumptions that impact VOBA amortization are consistent with those that impact the measurement of policyholder liabilities. We
perform periodic tests to determine if positive VOBA remains recoverable. If we determine that positive VOBA is not recoverable, we would
record a cumulative charge to the current period. Any negative VOBA is recorded to the same financial statement line on the consolidated
balance sheets as the associated reserves. Positive VOBA is recorded in deferred acquisition costs, deferred sales inducements and value of
business acquired on the consolidated balance sheets.
See Note 8 – Deferred Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired for further information.
Interest Sensitive Contract Liabilities—Universal life-type policies and investment contracts include traditional deferred annuities; indexed
annuities consisting of fixed indexed, index-linked variable annuities in the accumulation phase, and assumed indexed universal life without
significant mortality risk; funding agreements; immediate annuities without significant mortality risk (which include pension group annuities
without life contingencies); universal life insurance; and other investment contracts inclusive of assumed endowments without significant
mortality risk. We carry liabilities for traditional deferred annuities, indexed annuities, funding agreements and universal life insurance at the
account balances without reduction for potential surrender or withdrawal charges, except for a block of universal life business ceded to Global
Atlantic Financial Group Limited (together with its subsidiaries, Global Atlantic), which we carry at fair value. Liabilities for immediate
annuities without significant mortality risk are calculated as the present value of future liability cash flows and policy maintenance expenses
discounted at contractual interest rates. For a discussion regarding our indexed products, refer above to the embedded derivative discussion.
Certain of our contracts are offered with additional contract features that meet the definition of a market risk benefit. See –Market Risk Benefits
below for further information.
Unearned revenue liabilities are established when amounts are assessed against the policyholder for services to be provided in future periods.
These balances are amortized consistent with the methodologies and assumptions used to amortize DAC and DSI.
Changes in interest sensitive contract liabilities, excluding deposits and withdrawals, are recorded in interest sensitive contract benefits or
product charges on the consolidated statements of income (loss). Interest sensitive contract liabilities are not reduced for amounts ceded under
reinsurance agreements which are reported as reinsurance recoverable on the consolidated balance sheets. See the reinsurance accounting policy
discussed in –Reinsurance above and Note 7 – Reinsurance for more information on reinsurance.
Future Policy Benefits—We issue or reinsure contracts classified as long-duration, which include term and whole life, accident and health,
disability, and deferred and immediate annuities with life contingencies (which include pension group annuities with life contingencies).
Liabilities for nonparticipating long-duration contracts are established as the estimated present value of benefits we expect to pay to or on behalf
of the policyholder and related expenses less the present value of the net premiums to be collected, referred to as the net premium ratio. The
contracts are grouped into cohorts based on issue year and contract type, with an exception for pension group annuities, which are generally
assessed at the group annuity contract level. Contracts with different issuance years are not combined. Contracts acquired in a business
combination are grouped into a single cohort by contract type, except for pension group annuities, which follow the group annuity contract level.
Liabilities for nonparticipating long-duration contracts are established using accepted actuarial valuation methods which require the use of
assumptions related to discount rate, expenses, longevity, mortality, morbidity, persistency and other policyholder behavior. We base certain key
assumptions, such as longevity, mortality and morbidity, on industry standard data adjusted to align with actual company experience, if needed.
We have elected to use expense assumptions that are locked in at issuance for each cohort. All other cash flow assumptions are established at
contract issuance and reviewed annually or more frequently if actual experience suggests a revision is necessary. The effects of changes in cash
flow assumptions impacting the net premium ratio are recorded as remeasurement changes in the period in which they are made. As cash flow
assumptions are reviewed at least annually, there is no provision for adverse deviation included within the liability.
Actual experience is recognized in the period in which the experience arises. Actual experience is then incorporated into the net premium ratio
for all products and cohorts on a quarterly basis. When the net premium ratio is revised, whether to incorporate actual experience each reporting
period or for the review of cash flow assumptions, the liability is recalculated as of the beginning of the period, discounted at the original
contract issuance discount rate, and compared with the carrying amount of the liability as of the same date to determine the current period
change. The current period change in the liability is recognized as a remeasurement gain or loss.
To the extent the present value of future benefits and expenses exceeds the present value of gross premiums, we will cap the net premium ratio
at 100% by increasing the corresponding liability and recognizing an immediate loss through the consolidated statements of income (loss). The
liability is never recorded at an amount less than zero for the cohort.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
130
The liability for nonparticipating long-duration contracts is discounted using an upper-medium grade fixed income instrument yield aligned to
the characteristics of the liability, including the duration and currency of the underlying cash flows. In determining reference portfolio of
instruments, we have used a single A equivalent level rate and maximized the use of observable data to the extent possible for the duration of
our liabilities. The discount rate is required to be updated at the end of each reporting period for the remeasurement of the liability but is locked-
in for each cohort for the purpose of interest accretion expense.
Changes in the value of the liability for nonparticipating long-duration contracts due to changes in the discount rate are recognized as a
component of OCI on the consolidated statements of comprehensive income (loss). Changes in the liability for remeasurement gains or losses
and all other changes in the liability are recorded in future policy and other policy benefits on the consolidated statements of income (loss).
Future policy benefits include liabilities for no-lapse guarantees on universal life insurance and fixed indexed universal life insurance. We
establish future policy benefits for no-lapse guarantees by estimating the expected value of death benefits paid after policyholder account
balances have been exhausted. We recognize these benefits proportionally over the life of the contracts based on total actual and expected
assessments. The methods we use to estimate the liabilities have assumptions about policyholder behavior, mortality, expected yield on
investments supporting the liability and market conditions affecting policyholder account balance growth.
For the liabilities associated with no-lapse guarantees, each reporting period we update expected excess benefits and assessments with actual
excess benefits and assessments. We also periodically revise the key assumptions used in the calculation of the liabilities that result in revisions
to the expected excess benefits and assessments. The effects of changes in assumptions are recorded as unlocking in the period in which the
changes are made. Changes in the liabilities associated with no-lapse guarantees are recorded in future policy and other policy benefits on the
consolidated statements of income (loss).
Future policy benefits are not reduced for amounts ceded under reinsurance agreements, which are reported as reinsurance recoverable on the
consolidated balance sheets.
Market Risk Benefits—Market risk benefits represent contracts or contract features that both provide protection to the contract holder from,
and expose the insurance entity to, other-than-nominal capital market risk. Our deferred annuity contracts contain guaranteed lifetime
withdrawal benefit (GLWB) and guaranteed minimum death benefit (GMDB) riders that meet the criteria for, and are classified as, market risk
benefits.
Market risk benefits are measured at fair value at the contract level and may be recorded as a liability or an asset, which are included in market
risk benefits or other assets, respectively, on the consolidated balance sheets. Multiple market risk benefits on a contract are treated as a single,
compound market risk benefit. At contract inception, we assess the fees and assessments that are collectible from the policyholder and allocate
them to the extent they are attributable to the market risk benefit. These attributed fees are used in the valuation of the market risk benefits and
are never negative or exceed total explicit fees collectible from the policyholder. If the fees are sufficient to cover the projected benefits, a non-
option based valuation model is used. If the fees are insufficient to cover the projected benefits, an option-based valuation model is used to
compute the market risk benefit liability at contract inception, with an equal and offsetting adjustment recognized in interest sensitive contract
liabilities.
Changes in fair value of market risk benefits are recorded in market risk benefits remeasurement (gains) losses on the consolidated statements of
income (loss), excluding portions attributed to changes in instrument-specific credit risk, which are recorded in OCI on the consolidated
statements of comprehensive income (loss). Market risk benefits are not reduced for market risk benefits ceded under reinsurance agreements.
Ceded market risk benefits are measured at fair value and recorded within reinsurance recoverable on the consolidated balance sheets.
Upon annuitization of the contract or the extinguishment of the account balance, the market risk benefit, related annuity contract and
unamortized deferred costs are derecognized, including amounts within AOCI. A payout annuity is then established for GLWBs.
Closed Block Business—We established closed blocks of policies in connection with the reorganization of two predecessor subsidiaries from
mutual companies to stock companies, collectively referred to as the Closed Blocks, and individually referred to as the AmerUs Life Insurance
Company (AmerUs) closed block (AmerUs Closed Block) and the Indianapolis Life Insurance Company (ILICO) closed block (ILICO Closed
Block). Insurance policies which had a dividend scale in effect as of each closed block establishment date were included in the respective closed
block. The Closed Blocks were designed to give reasonable assurance to owners of insurance policies included therein that, after the
reorganization, assets would be available to maintain the dividend scales and interest credits in effect prior to the reorganization, if the
experience underlying such scales and crediting continued. The assets, including related revenue, allocated to the Closed Blocks will accrue
solely to the benefit of the policyholders included in the Closed Blocks until they no longer exist. A policyholder dividend obligation is required
to be established for earnings in the Closed Blocks that are not available to the stockholders. We elected the fair value option for the AmerUs
Closed Block and the ILICO Closed Block. See Note 10 – Closed Block for more information on the Closed Blocks.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
131
Foreign Currency—The accounts of foreign-based subsidiaries and equity method investments are measured using their functional currency.
Revenue and expenses of these subsidiaries are translated into US dollars at the average exchange rate for the period. Assets and liabilities are
translated at the exchange rate as of the end of the reporting period. For equity method investments, the proportionate share of the investee’s
income is translated into US dollars at the average exchange rate for the period and the investment is translated using the exchange rate as of the
end of the reporting period. The resulting translation adjustments are included in equity as a component of AOCI. Gains or losses arising from
transactions denominated in a currency other than the functional currency of the entity that is party to the transaction are included in net income.
The impacts of any non-US dollar denominated AFS securities are included in AOCI along with the change in its fair value unless in a fair value
hedging relationship.
Recognition of Revenues and Related Expenses—Revenues for universal life-type policies and investment contracts, including surrender and
market value adjustments, costs of insurance, policy administration, GMDB, GLWB and no-lapse guarantee charges, are earned when assessed
against policyholder account balances during the period. Interest credited to policyholder account balances and the change in fair value of
embedded derivatives within fixed indexed annuity contracts is included in interest sensitive contract benefits on the consolidated statements of
income (loss).
Premiums for long-duration contracts, including products with fixed and guaranteed premiums and benefits, are recognized as revenue when due
from policyholders. When premiums are due over a significantly shorter period than the period over which benefits are provided, a deferred
profit liability is established equal to the excess of the gross premium over the net premium. The deferred profit liability is recognized in future
policy benefits on the consolidated balance sheets and amortized into income in relation to either applicable policyholder liabilities for
immediate annuities with life contingencies (which includes pension group annuities) or insurance in-force for whole life products through
future policy and other policy benefits on the consolidated statements of income (loss).
When the net premium ratio for the corresponding future policy benefit is updated for actual experience and changes to projected cash flow
assumptions, the deferred profit liability is retrospectively recalculated from the contract issuance date through the beginning of the current
reporting period. The revised deferred profit liability is compared to the beginning of the period carrying amount to determine the change to be
recognized as a remeasurement gain or loss within future policy and other policy benefits on the consolidated statements of income (loss).
Unlike the related future policy benefit, the deferred profit liability will not be remeasured for changes in discount rates each reporting period.
Negative VOBA balances associated with payout contracts involving life contingencies, including pension group annuities, are accounted for in
a manner similar to the deferred profit liability.
All insurance-related revenue is reported net of reinsurance ceded.
Income Taxes—We compute income taxes using the asset and liability method, under which deferred income taxes are provided for the
temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities using estimated tax rates
expected to be in effect for the year in which the differences are expected to reverse. Such temporary differences are primarily due to the tax
basis of reserves, DAC, VOBA, unrealized investment gains/losses, reinsurance related differences, embedded derivatives and net operating loss
carryforwards. Changes in deferred income tax assets and liabilities associated with components of OCI are recorded directly to OCI.
Deferred income taxes related to investments in our corporate foreign subsidiaries are computed using an outside basis approach. We record
deferred taxes for those components of the outside basis difference, which are expected to reverse in the foreseeable future, without limitation to
the overall outside basis difference. We evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation
allowance if, based on all available evidence, we determine that it is more likely than not that some portion of the tax benefit will not be
realized. We adjust the valuation allowance if, based on our evaluation, there is a change in the amount of deferred income tax assets that are
deemed more-likely-than-not to be realized.
Changes in deferred tax assets and liabilities attributable to changes in enacted income tax rates are recorded through net income in the period of
enactment. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on
examination by the relevant taxing authorities, based on the technical merits of our position. For those tax positions that meet the more-likely-
than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate
settlement with the related tax authority. We recognize any income tax interest and penalties in income tax expense.
We and certain of our subsidiaries are included in certain foreign and state consolidated or other tax groups with our parent AGM and its
subsidiaries. We calculate the provision for income taxes by using a separate-return method. Under this method we are assumed to file a
separate return with the tax authority, thereby reporting our taxable income or loss and paying the applicable tax to or receiving the appropriate
refund from AGM. Our current provision is the amount of tax payable or refundable on the basis of a hypothetical current-year separate return.
We provide deferred taxes on temporary differences and on any carryforwards that we could claim on our hypothetical return and assess the
need for a valuation allowance on the basis of our projected separate-return results.
Any difference between the tax provision (or benefit) allocated to us under the separate-return method and payments to be made to (or received
from) AGM for tax expense is treated as either a dividend or a capital contribution. Accordingly, the amount by which our tax liability under the
separate-return method differs from the amount of tax liability ultimately settled as a result of using incremental expenses of AGM may be
periodically settled as a dividend or capital contribution between AGM and us.
See Note 13 – Income Taxes for discussion on withholding taxes for undistributed earnings of subsidiaries.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
132
Recently Issued Accounting Pronouncements
Compensation – Stock Compensation (Accounting Standards Update (ASU) 2024-01)
The amendments in this update clarify how an entity determines whether it is required to account for profits interest awards (and similar awards)
in accordance with Accounting Standards Codification (ASC) 718 Compensation – Stock Compensation or other guidance. The ASU provides
specific examples on when profits interest awards should be accounted for as a share-based payment arrangement under ASC 718 or in a manner
similar to a cash bonus or profit-sharing arrangement under ASC 710 Compensation – General or other ASC topics. The guidance is effective
for us on January 1, 2025. We expect the impact of the new pronouncement on our consolidated financial statements will be immaterial.
Income Taxes—Improvements to Income Tax Disclosures (ASU 2023-09)
The amendments in this update revise certain disclosures on income taxes including rate reconciliation, income taxes paid, and certain
amendments on disaggregation by federal, state and foreign taxes. The guidance is effective for us for annual periods beginning in 2025. Early
adoption is permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements.
Business Combinations – Joint Venture Formations (ASU 2023-05)
The amendments in this update address how a joint venture initially recognizes and measures contributions received at its formation date. The
amendments require a joint venture to apply a new basis of accounting upon formation and to initially recognize its assets and liabilities at fair
value. The guidance is effective prospectively for all joint ventures formed on or after January 1, 2025, while retrospective application may be
elected for a joint venture formed before the effective date. We expect the impact of this guidance on our consolidated financial statements will
be immaterial.
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (ASU 2024-03)
The amendments in this update require disaggregation of certain expense captions into specified categories in disclosures within the footnotes to
the financial statements. The ASU requires tabular presentation of each relevant expense caption on the face of the income statement including
employee compensation, depreciation, intangible asset amortization and certain other expenses, when applicable.
The guidance is effective for us for the 2027 annual period and in interim periods in 2028; early adoption is permitted. We are currently
evaluating the impact of this new guidance on our consolidated financial statements.
Adopted Accounting Pronouncements
Segment Reporting – Improvements to Reporting Segment Disclosures (ASU 2023-07)
The amendments in this update require disclosures of incremental segment information on an annual and interim basis for all public entities to
provide analyses useful to investors for decision making. The update requires public entities, including those with a single reportable segment, to
report significant segment expenses that are regularly provided to and used by the Chief Operating Decision Maker (CODM) in managing the
business. We adopted this guidance effective December 31, 2024 on a retrospective basis, and updated financial statement disclosures are
included in Note 17 – Segment Information.
Reference Rate Reform (Topic 848) (ASU 2022-06, ASU 2021-01, ASU 2020-04)
We adopted ASU 2020-04 and ASU 2021-01 and elected to apply certain of the practical expedients related to contract modifications, hedge
accounting relationships, and derivative modifications pertaining to discounting, margining, or contract price alignment. The main purpose of
the practical expedients is to ease the administrative burden of accounting for contracts impacted by reference rate reform, and these elections
did not have a material impact on the consolidated financial statements. ASU 2022-06 amended and deferred the sunset date of Topic 848 from
December 31, 2022 to December 31, 2024, after which we will no longer be permitted to apply the expedients provided in Topic 848.
2. Business Combination
On January 1, 2022, we completed our merger with Apollo and are a direct subsidiary of AGM. At the closing of the merger, each issued and
outstanding AHL Class A common share (other than shares held by Apollo, the Apollo Operating Group (AOG) or the respective direct or
indirect wholly owned subsidiaries of Athene or the AOG) was converted automatically into 1.149 shares of AGM common shares and any cash
paid in lieu of fractional AGM common shares. In connection with the merger, AGM issued to AHL Class A common shareholders
158.2 million AGM common shares in exchange for 137.6 million AHL Class A common shares that were issued and outstanding as of the
acquisition date, exclusive of the 54.6 million shares previously held by Apollo immediately before the acquisition date.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
133
The consideration was calculated based on historical AGM’s December 31, 2021 closing share price multiplied by the AGM common shares
issued in the share exchange, as well as the fair value of stock-based compensation awards replaced, fair value of warrants converted to AGM
common shares and other equity consideration, and effective settlement of pre-existing relationships and other consideration.
The following represents the calculation of consideration:
(In millions, except exchange ratio and share price data)
Consideration
AHL common shares purchased
138
Exchange ratio
1.149
Shares of common stock issued in exchange
158
AGM Class A shares closing price
$
72.43
Total merger consideration at closing
$
11,455
Fair value of estimated RSUs, options and warrants assumed and other equity consideration
699
Effective settlement of pre-existing relationships
896
Total merger consideration
13,050
Fair value of AHL common shares previously held by Apollo and other adjustments
4,554
Total AHL equity value held by AGM
17,604
Fair value of preferred stock
2,666
Noncontrolling interests
2,276
Total AHL equity value
$
22,546
The following represents the calculation of goodwill and fair value amounts recognized:
(In millions)
Fair value and goodwill calculation
Merger consideration
$
13,050
Fair value of AHL common shares previously held by Apollo and other adjustments
4,554
Total AHL equity value held by AGM
17,604
Assets
Investments
$
176,015
Cash and cash equivalents
9,479
Restricted cash
796
Investment in related parties
33,863
Reinsurance recoverable
4,977
VOBA
3,372
Other assets
6,115
Assets of consolidated variable interest entities
3,635
Estimated fair value of total assets acquired by AGM
238,252
Liabilities
Interest sensitive contract liabilities
160,241
Future policy benefits
41,482
Market risk benefits
4,813
Debt
3,295
Payables for collateral on derivatives and securities to repurchase
7,044
Other liabilities
2,443
Liabilities of consolidated variable interest entities
461
Estimated fair value of total liabilities assumed by AGM
219,779
Identifiable net assets
18,473
Less: Fair value of preferred stock
2,666
Less: Fair value of noncontrolling interests
2,276
Estimated fair value of net assets acquired by AGM, excluding goodwill
13,531
Goodwill attributable to AHL
$
4,073
During the fourth quarter of 2022, we finalized pushdown accounting. Adjustments to provisional amounts were made prospectively as data
became available based on facts and circumstances that existed as of the merger date. The income effects from changes to provisional amounts
were recorded in the period the adjustment was made, as if the adjustment had been recorded on the merger date. During the year ended
December 31, 2022, we made adjustments which decreased provisional goodwill by $108 million. The adjustments were comprised of
$25 million for measurement period adjustments and $83 million to adjust a valuation of an investment. The measurement period adjustments
were primarily related to decreases in interest sensitive contract liabilities, future policy benefits and VOBA, and the income statement effects
were immaterial to those periods.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
134
As part of pushdown accounting, we recorded the calculated goodwill based on the amount that our AHL equity value to be held by AGM
exceeded the fair value of identifiable net assets less the amounts attributable to fair values of preferred stock and noncontrolling interests.
Goodwill is primarily attributable to the scale, skill sets, operations, and synergies that can be achieved subsequent to the merger. The goodwill
recorded is not expected to be deductible for tax purposes. Goodwill on the consolidated balance sheets includes the impacts of foreign currency
translation.
We also recorded VOBA and other identifiable intangible assets. Other identifiable intangible assets are included in other assets on the
consolidated balance sheets, as follows:
Distribution channels
These assets are valued using the excess earnings method, which derives value based on the present value of the cash flow attributable
to the distribution channels, less returns for contributory assets. Amortization of these assets is on a straight-line basis.
Trade name
This represents the Athene trade name and was valued using the relief-from-royalty method considering publicly available third-party
trade name royalty rates as well as expected premiums generated by the use of the trade name over its anticipated life. Amortization of
this asset is on a straight-line basis.
Insurance licenses
Licenses are protected through registration and were valued using the market approach based on third-party market transactions from
which the prices paid for state insurance licenses could be derived. These are not amortized.
The fair value and weighted average estimated useful life of identifiable intangible assets consists of the following:
Fair value
(in millions)
Weighted average useful life
(in years)
VOBA
$
3,372
7
Distribution channels
1,870
18
Trade name
160
20
Insurance licenses
26
Indefinite
Total
$
5,428
3. Investments
AFS Securities—The following table represents the amortized cost, allowance for credit losses, gross unrealized gains and losses and fair value
of our AFS investments by asset type:
December 31, 2024
(In millions)
Amortized Cost
Allowance for
Credit Losses
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
AFS securities
US government and agencies
$
8,413
$
—
$
8
$
(1,270) $
7,151
US state, municipal and political subdivisions
1,167
—
—
(246)
921
Foreign governments
2,082
—
—
(514)
1,568
Corporate
95,006
(175)
485
(11,731)
83,585
CLO
29,524
—
266
(608)
29,182
ABS
24,779
(76)
138
(640)
24,201
CMBS
11,158
(60)
75
(432)
10,741
RMBS
8,587
(397)
228
(403)
8,015
Total AFS securities
180,716
(708)
1,200
(15,844)
165,364
AFS securities – related parties
Corporate
2,502
—
18
(59)
2,461
CLO
6,130
—
18
(113)
6,035
ABS
10,899
(1)
21
(288)
10,631
Total AFS securities – related parties
19,531
(1)
57
(460)
19,127
Total AFS securities, including related parties
$
200,247
$
(709) $
1,257
$
(16,304) $
184,491
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
135
December 31, 2023
(In millions)
Amortized Cost
Allowance for
Credit Losses
Gross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
AFS securities
US government and agencies
$
6,161
$
—
$
67
$
(829) $
5,399
US state, municipal and political subdivisions
1,296
—
—
(250)
1,046
Foreign governments
2,083
—
71
(255)
1,899
Corporate
88,343
(129)
830
(10,798)
78,246
CLO
20,506
(2)
261
(558)
20,207
ABS
13,942
(49)
120
(630)
13,383
CMBS
7,070
(29)
52
(502)
6,591
RMBS
8,160
(381)
252
(464)
7,567
Total AFS securities
147,561
(590)
1,653
(14,286)
134,338
AFS securities – related parties
Corporate
1,423
—
1
(72)
1,352
CLO
4,367
—
21
(120)
4,268
ABS
8,665
(1)
34
(309)
8,389
Total AFS securities – related parties
14,455
(1)
56
(501)
14,009
Total AFS securities, including related parties
$
162,016
$
(591) $
1,709
$
(14,787) $
148,347
The amortized cost and fair value of AFS securities, including related parties, are shown by contractual maturity below:
December 31, 2024
(In millions)
Amortized Cost
Fair Value
AFS securities
Due in one year or less
$
2,576
$
2,544
Due after one year through five years
19,949
19,418
Due after five years through ten years
27,734
25,442
Due after ten years
56,409
45,821
CLO, ABS, CMBS and RMBS
74,048
72,139
Total AFS securities
180,716
165,364
AFS securities – related parties
Due after one year through five years
1,080
1,071
Due after five years through ten years
847
861
Due after ten years
575
529
CLO and ABS
17,029
16,666
Total AFS securities – related parties
19,531
19,127
Total AFS securities, including related parties
$
200,247
$
184,491
Actual maturities can differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or
prepayment penalties.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
136
Unrealized Losses on AFS Securities—The following summarizes the fair value and gross unrealized losses for AFS securities, including
related parties, for which an allowance for credit losses has not been recorded, aggregated by asset type and length of time the fair value has
remained below amortized cost:
December 31, 2024
Less than 12 months
12 months or more
Total
(In millions)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
AFS securities
US government and agencies
$
3,010
$
(114)
$
3,462
$
(1,156)
$
6,472
$
(1,270)
US state, municipal and political subdivisions
67
(3)
842
(243)
909
(246)
Foreign governments
830
(205)
738
(309)
1,568
(514)
Corporate
19,530
(673)
44,051
(10,997)
63,581
(11,670)
CLO
2,675
(48)
2,325
(215)
5,000
(263)
ABS
9,361
(155)
4,070
(309)
13,431
(464)
CMBS
1,868
(56)
1,773
(315)
3,641
(371)
RMBS
825
(13)
1,261
(157)
2,086
(170)
Total AFS securities
38,166
(1,267)
58,522
(13,701)
96,688
(14,968)
AFS securities – related parties
Corporate
499
(9)
446
(47)
945
(56)
CLO
586
(10)
544
(56)
1,130
(66)
ABS
2,533
(43)
3,355
(235)
5,888
(278)
Total AFS securities – related parties
3,618
(62)
4,345
(338)
7,963
(400)
Total AFS securities, including related parties
$
41,784
$
(1,329)
$
62,867
$
(14,039)
$
104,651
$
(15,368)
December 31, 2023
Less than 12 months
12 months or more
Total
(In millions)
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
AFS securities
US government and agencies
$
2,013
$
(94)
$
2,389
$
(735)
$
4,402
$
(829)
US state, municipal and political subdivisions
123
(5)
888
(245)
1,011
(250)
Foreign governments
690
(13)
760
(242)
1,450
(255)
Corporate
7,752
(474)
50,028
(10,311)
57,780
(10,785)
CLO
689
(2)
11,579
(543)
12,268
(545)
ABS
2,129
(75)
4,378
(458)
6,507
(533)
CMBS
859
(12)
1,967
(406)
2,826
(418)
RMBS
467
(9)
2,057
(263)
2,524
(272)
Total AFS securities
14,722
(684)
74,046
(13,203)
88,768
(13,887)
AFS securities – related parties
Corporate
548
(35)
382
(37)
930
(72)
CLO
397
(16)
2,592
(102)
2,989
(118)
ABS
2,008
(66)
2,793
(225)
4,801
(291)
Total AFS securities – related parties
2,953
(117)
5,767
(364)
8,720
(481)
Total AFS securities, including related parties
$
17,675
$
(801)
$
79,813
$
(13,567)
$
97,488
$
(14,368)
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
137
The following summarizes the number of AFS securities that were in an unrealized loss position, including related parties, for which an
allowance for credit losses has not been recorded:
December 31, 2024
Unrealized loss position
Unrealized loss position 12
months or more
AFS securities
7,745
6,087
AFS securities – related parties
144
60
The unrealized losses on AFS securities can primarily be attributed to changes in market interest rates since the application of pushdown
accounting or acquisition. We did not recognize the unrealized losses in income, unless as required for hedge accounting, as we intend to hold
these securities and it is not more likely than not we will be required to sell a security before the recovery of its amortized cost.
Allowance for Credit Losses—The following table summarizes the activity in the allowance for credit losses for AFS securities by asset type:
Year ended December 31, 2024
Additions
Reductions
(In millions)
Beginning
balance
Initial credit
losses
Initial credit
losses on
PCD
securities
Securities
sold during
the period
Securities
intended to
be sold prior
to recovery
of amortized
cost basis
Additions
(reductions)
to
previously
impaired
securities
Ending
balance
AFS securities
Corporate
$
129
$
48
$
—
$
(8) $
—
$
6
$
175
CLO
2
1
—
—
—
(3)
—
ABS
49
25
—
(16)
—
18
76
CMBS
29
27
—
—
—
4
60
RMBS
381
17
—
(17)
—
16
397
Total AFS securities
590
118
—
(41)
—
41
708
AFS securities – related parties, ABS
1
—
—
—
—
—
1
Total AFS securities, including related parties
$
591
$
118
$
—
$
(41) $
—
$
41
$
709
Year ended December 31, 2023
Additions
Reductions
(In millions)
Beginning
balance
Initial credit
losses
Initial credit
losses on
PCD
securities
Securities
sold during
the period
Securities
intended to
be sold prior
to recovery
of amortized
cost basis
Additions
(reductions)
to
previously
impaired
securities
Ending
balance
AFS securities
Foreign governments
$
27
$
—
$
—
$
(27) $
—
$
—
$
—
Corporate
61
88
—
(8)
(15)
3
129
CLO
7
1
—
—
—
(6)
2
ABS
29
23
—
(4)
—
1
49
CMBS
5
26
—
—
—
(2)
29
RMBS
329
16
53
(16)
—
(1)
381
Total AFS securities
458
154
53
(55)
(15)
(5)
590
AFS securities – related parties
CLO
1
—
—
—
—
(1)
—
ABS
—
1
—
—
—
—
1
Total AFS securities – related parties
1
1
—
—
—
(1)
1
Total AFS securities, including related parties
$
459
$
155
$
53
$
(55) $
(15) $
(6) $
591
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
138
Net Investment Income—Net investment income by asset class consists of the following:
Years ended December 31,
(In millions)
2024
2023
2022
AFS securities
$
9,698
$
6,901
$
4,190
Trading securities
161
182
194
Equity securities
90
76
64
Mortgage loans
3,767
2,360
1,261
Investment funds
(35)
105
550
Funds withheld at interest
1,318
1,752
1,844
Other
834
820
270
Investment revenue
15,833
12,196
8,373
Investment expenses
(1,352)
(1,066)
(802)
Net investment income
$
14,481
$
11,130
$
7,571
Investment Related Gains (Losses)—Investment related gains (losses) by asset class consists of the following:
Years ended December 31,
(In millions)
2024
2023
2022
AFS securities1
Gross realized gains on investment activity
$
977
$
926
$
1,337
Gross realized losses on investment activity
(1,979)
(779)
(2,151)
Net realized investment gains (losses) on AFS securities
(1,002)
147
(814)
Net recognized investment gains (losses) on trading securities
(170)
66
(424)
Net recognized investment gains (losses) on equity securities
22
13
(150)
Net recognized investment gains (losses) on mortgage loans
(132)
207
(2,974)
Derivative gains (losses)
2,205
2,135
(9,173)
Provision for credit losses
(181)
(335)
(227)
Other gains (losses)
1,303
(805)
1,056
Investment related gains (losses)
$
2,045
$
1,428
$
(12,706)
1 Includes the effects of recognized gains or losses on AFS securities associated with designated hedges.
Proceeds from sales of AFS securities were $21,689 million, $6,464 million and $9,421 million for the years ended December 31, 2024, 2023
and 2022, respectively.
The following table summarizes the change in unrealized gains (losses) on trading and equity securities, including related parties, we held as of
the respective year end:
Years ended December 31,
(In millions)
2024
2023
2022
Trading securities
$
(42) $
93
$
(414)
Equity securities
12
49
(146)
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
139
Repurchase Agreements—The following table summarizes the remaining contractual maturities of our repurchase agreements:
December 31,
(In millions)
2024
2023
Less than 30 days
$
2,752
$
686
30–90 days
300
—
91 days to 1 year
1,095
—
Greater than 1 year
1,569
3,167
Payables for repurchase agreements
$
5,716
$
3,853
The following table summarizes the securities pledged as collateral for repurchase agreements:
December 31,
2024
2023
(In millions)
Amortized Cost
Fair Value
Amortized Cost
Fair Value
AFS securities
US government and agencies
$
3,253
$
2,693
$
—
$
—
Foreign governments
159
107
137
99
Corporate
1,877
1,573
2,735
2,307
CLO
587
588
580
579
ABS
596
552
1,207
1,086
RMBS
369
365
—
—
Total securities pledged under repurchase agreements
$
6,841
$
5,878
$
4,659
$
4,071
Reverse Repurchase Agreements—As of December 31, 2024 and 2023, amounts loaned under reverse repurchase agreements were $935
million and $947 million, respectively, and the fair value of the collateral, comprised primarily of asset-backed securities and commercial
mortgage loans, was $2,208 million and $1,504 million, respectively.
Mortgage Loans, including related parties and consolidated VIEs—Mortgage loans include both commercial and residential loans. We have
elected the fair value option on our mortgage loan portfolio. See Note 6 – Fair Value for further fair value option information. The following
represents the mortgage loan portfolio, with fair value option loans presented at unpaid principal balance:
December 31,
(In millions)
2024
2023
Commercial mortgage loans
$
32,544
$
27,630
Commercial mortgage loans under development
1,987
1,228
Total commercial mortgage loans
34,531
28,858
Mark to fair value
(2,099)
(2,246)
Commercial mortgage loans
32,432
26,612
Residential mortgage loans
35,223
21,894
Mark to fair value
(540)
(937)
Residential mortgage loans
34,683
20,957
Mortgage loans
$
67,115
$
47,569
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
140
We invest in commercial mortgage loans, primarily on income producing properties including office and retail buildings, apartments, hotels and
industrial properties. We diversify the commercial mortgage loan portfolio by geographic region and property type to reduce concentration risk.
We evaluate mortgage loans based on relevant current information to confirm whether properties are performing at a consistent and acceptable
level to secure the related debt.
The distribution of commercial mortgage loans, including those under development, by property type and geographic region, is as follows:
December 31,
2024
2023
(In millions, except percentages)
Fair Value
Percentage of
Total
Fair Value
Percentage of
Total
Property type
Apartment
$
11,746
36.2 % $
9,591
36.0 %
Industrial
6,793
21.0 %
4,143
15.6 %
Office building
4,162
12.8 %
4,455
16.7 %
Hotels
2,786
8.6 %
2,913
11.0 %
Retail
2,269
7.0 %
2,158
8.1 %
Other commercial
4,676
14.4 %
3,352
12.6 %
Total commercial mortgage loans
$
32,432
100.0 % $
26,612
100.0 %
US region
East North Central
$
1,546
4.8 % $
1,517
5.7 %
East South Central
438
1.3 %
523
2.0 %
Middle Atlantic
8,386
25.9 %
7,147
26.9 %
Mountain
1,322
4.1 %
1,196
4.5 %
New England
1,118
3.4 %
1,295
4.9 %
Pacific
5,768
17.8 %
4,860
18.3 %
South Atlantic
6,198
19.1 %
4,583
17.2 %
West North Central
221
0.7 %
249
0.9 %
West South Central
1,971
6.1 %
1,228
4.6 %
Total US region
26,968
83.2 %
22,598
85.0 %
International region
United Kingdom
2,281
7.0 %
2,343
8.7 %
Other international1
3,183
9.8 %
1,671
6.3 %
Total international region
5,464
16.8 %
4,014
15.0 %
Total commercial mortgage loans
$
32,432
100.0 % $
26,612
100.0 %
1 Represents all other countries, with each individual country comprising less than 5% of the portfolio.
Our residential mortgage loan portfolio primarily consists of first lien residential mortgage loans collateralized by properties in various
geographic locations and is summarized by proportion of the portfolio in the following table:
December 31,
2024
2023
US States
California
25.6 %
27.6 %
Florida
12.4 %
12.0 %
Texas
7.4 %
6.1 %
New York
4.7 %
5.9 %
Other1
40.8 %
39.4 %
Total US residential mortgage loan percentage
90.9 %
91.0 %
International
United Kingdom
4.4 %
4.0 %
Other1
4.7 %
5.0 %
Total international residential mortgage loan percentage
9.1 %
9.0 %
Total residential mortgage loan percentage
100.0 %
100.0 %
1 Represents all other states or countries, with each individual state or country comprising less than 5% of the portfolio.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
141
Investment Funds—Our investment fund portfolio strategy primarily focuses on core holdings of strategic origination and retirement services
platforms, equity and credit, and other funds. Strategic origination platforms include investments sourced by affiliated platforms that originate
loans to third parties and in which we gain exposure directly to the loan or indirectly through our ownership of the origination platform and/or
securitizations of assets originated by the origination platform. Retirement services platforms include investments in equity of financial services
companies. Our credit strategy comprises direct origination, asset-backed, multi-credit and opportunistic credit funds focused on generating
excess returns through high-quality credit underwriting and origination. Our equity strategy comprises private equity, hybrid value, secondaries
equity, real estate equity, impact investing, infrastructure and clean transition equity funds that raise capital from investors to pursue control-
oriented investments across the universe of private assets. Our investment funds can meet the definition of a VIE, which are discussed further in
Note 5 – Variable Interest Entities. Our investment funds do not specify timing of distributions on the funds’ underlying assets.
The following summarizes our investment funds, including related parties and consolidated VIEs:
December 31,
2024
20231
(In millions, except percentages)
Carrying
value
Percentage of
total
Carrying
value
Percentage of
total
Investment funds
Equity
$
107
0.5 %
$
109
0.6 %
Investment funds – related parties
Strategic origination platforms
29
0.2 %
32
0.2 %
Retirement services platforms
1,317
6.7 %
1,300
7.3 %
Equity
244
1.2 %
267
1.5 %
Credit
253
1.3 %
20
0.1 %
Other
10
0.1 %
13
0.1 %
Total investment funds – related parties
1,853
9.5 %
1,632
9.2 %
Investment funds – consolidated VIEs
Strategic origination platforms
6,347
32.2 %
4,987
28.2 %
Retirement services platforms
—
— %
483
2.7 %
Equity
7,702
39.0 %
7,032
39.8 %
Credit
3,062
15.5 %
2,852
16.2 %
Other
654
3.3 %
573
3.3 %
Total investment funds – consolidated VIEs
17,765
90.0 %
15,927
90.2 %
Total investment funds, including related parties and consolidated VIEs
$
19,725
100.0 %
$
17,668
100.0 %
1 Prior year amounts have been reclassified to conform with the current year presentation as a result of aligning our investment fund categories to reflect our
updated investment strategies.
Non-Consolidated Securities and Investment Funds
Fixed maturity securities – We invest in securitization entities as a debt holder or an investor in the residual interest of the securitization vehicle.
These entities are deemed VIEs due to insufficient equity within the structure and lack of control by the equity investors over the activities that
significantly impact the economics of the entity. In general, we are a debt investor within these entities and, as such, hold a variable interest;
however, due to the debt holders’ lack of ability to control the decisions within the structure that significantly impact the entity, and the fact the
debt holders are protected from losses due to the subordination of the equity tranche, the debt holders are not deemed the primary beneficiary.
Securitization vehicles in which we hold the residual tranche are not consolidated because we do not unilaterally have substantive rights to
remove the general partner, or when assessing related party interests, we are not under common control, as defined by US GAAP, with the
related parties, nor are substantially all of the activities conducted on our behalf; therefore, we are not deemed the primary beneficiary. Debt
investments and investments in the residual tranche of securitization entities are considered debt instruments and are held at fair value and
classified as AFS or trading securities on the consolidated balance sheets.
Investment funds – Investment funds include non-fixed income, alternative investments in the form of limited partnerships or similar legal
structures.
Equity securities – We invest in preferred equity securities issued by entities deemed to be VIEs due to insufficient equity within the structure.
Our risk of loss associated with our non-consolidated investments depends on the investment. Investment funds, equity securities and trading
securities are limited to the carrying value plus unfunded commitments. AFS securities are limited to amortized cost plus unfunded
commitments.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
142
The following summarizes the carrying value and maximum loss exposure of these non-consolidated investments:
December 31,
2024
2023
(In millions)
Carrying Value
Maximum Loss
Exposure
Carrying Value
Maximum Loss
Exposure
Investment funds
$
107
$
987
$
109
$
876
Investment in related parties – investment funds
1,853
3,226
1,632
2,377
Assets of consolidated VIEs – investment funds
17,765
23,597
15,927
22,240
Investment in fixed maturity securities
72,523
74,797
48,155
50,623
Investment in related parties – fixed maturity securities
17,239
21,793
13,495
15,608
Investment in related parties – equity securities
234
234
318
318
Total non-consolidated investments
$
109,721
$
124,634
$
79,636
$
92,042
Concentrations—The following table represents our investment concentrations in excess of 10% of AHL stockholders’ equity:
(In millions)
December 31, 2024
AP Grange Holdings, LLC
$
4,661
Atlas Securitized Products Holdings LP (Atlas)1
3,172
Fox Hedge L.P.
2,924
December 31, 2023
Wheels, Inc. (Wheels)1
$
1,591
AT&T Inc.
1,526
1 Related party amounts are representative of single issuer risk and may only include a portion of the total investments associated with a related party. See
further discussion of these related parties in Note 15 – Related Parties.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
143
4. Derivative Instruments
We use a variety of derivative instruments to manage risks, primarily equity, interest rate, foreign currency and market volatility. See Note 1 –
Business, Basis of Presentation and Significant Accounting Policies for a description of our accounting policies for derivatives and Note 6 –
Fair Value for information about the fair value hierarchy for derivatives.
The following table presents the notional amount and fair value of derivative instruments:
December 31,
2024
2023
Notional
Amount
Fair Value
Notional
Amount
Fair Value
(In millions)
Assets
Liabilities
Assets
Liabilities
Derivatives designated as hedges
Foreign currency hedges
Swaps
15,669
$
938
$
211
9,034
$
477
$
230
Forwards
3,139
331
5
6,294
275
102
Interest rate swaps
4,506
—
654
4,468
—
521
Forwards on net investments
218
11
—
219
—
6
Interest rate swaps
24,885
55
138
10,031
29
95
Total derivatives designated as hedges
1,335
1,008
781
954
Derivatives not designated as hedges
Equity options
85,452
5,002
126
73,881
3,809
102
Futures
37
93
11
35
72
—
Foreign currency swaps
14,908
600
199
8,072
230
244
Interest rate swaps and forwards
3,255
67
124
3,499
81
9
Other swaps
2,644
3
5
2,588
39
1
Foreign currency forwards
39,598
1,054
2,083
28,236
286
685
Embedded derivatives
Funds withheld including related parties
(3,650)
4
(4,100)
(64)
Interest sensitive contract liabilities
—
11,242
—
9,059
Total derivatives not designated as hedges
3,169
13,794
417
10,036
Total derivatives
$
4,504
$
14,802
$
1,198
$
10,990
Derivatives Designated as Hedges
Cash Flow Hedges – We use interest rate swaps to convert floating-rate interest payments to fixed-rate interest payments to reduce exposure to
interest rate changes. The interest rate swaps will expire by July 2031. During the years ended December 31, 2024, 2023 and 2022 we
recognized gains of $1 million and $33 million, and losses of $106 million, respectively, in OCI associated with these hedges. There were no
amounts deemed ineffective during the years ended December 31, 2024, 2023 and 2022. As of December 31, 2024, no amounts were expected
to be reclassified to income within the next 12 months.
Fair Value Hedges – We use foreign currency forward contracts, foreign currency swaps, foreign currency interest rate swaps and interest rate
swaps that are designated and accounted for as fair value hedges to hedge certain exposures to foreign currency risk and interest rate risk. The
foreign currency forward price is agreed upon at the time of the contract and payment is made at a specified future date.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
144
The following represents the carrying amount and the cumulative fair value hedging adjustments included in the hedged assets or liabilities:
December 31,
2024
2023
(In millions)
Carrying amount of the
hedged assets or
liabilities1
Cumulative amount of
fair value hedging
gains (losses)
Carrying amount of the
hedged assets or
liabilities1
Cumulative amount of
fair value hedging
gains (losses)
AFS securities
Foreign currency forwards
$
3,790
$
(258) $
4,883
$
(15)
Foreign currency swaps
12,517
(842)
6,820
(141)
Interest sensitive contract liabilities
Foreign currency swaps
2,426
130
1,438
19
Foreign currency interest rate swaps
3,946
488
4,010
363
Interest rate swaps
17,873
130
6,910
189
1 The carrying amount disclosed for AFS securities is amortized cost.
The following is a summary of the gains (losses) related to the derivatives and related hedged items in fair value hedge relationships:
Amounts excluded
(In millions)
Derivatives
Hedged items
Net
Recognized in
income
through
amortization
approach
Recognized in
income
through
changes in fair
value
Year ended December 31, 2024
Investment related gains (losses)
Foreign currency forwards
$
220
$
(238) $
(18) $
43
$
19
Foreign currency swaps
513
(520)
(7)
—
—
Foreign currency interest rate swaps
(160)
148
(12)
—
—
Interest rate swaps
6
(58)
(52)
—
—
Interest sensitive contract benefits
Foreign currency interest rate swaps
87
(85)
2
—
—
Year ended December 31, 2023
Investment related gains (losses)
Foreign currency forwards
(169)
167
(2)
82
20
Foreign currency swaps
(159)
169
10
—
—
Foreign currency interest rate swaps
282
(269)
13
—
—
Interest rate swaps
111
(118)
(7)
—
—
Interest sensitive contract benefits
Foreign currency interest rate swaps
57
(60)
(3)
—
—
Year ended December 31, 2022
Investment related gains (losses)
Foreign currency forwards
183
(190)
(7)
67
9
Foreign currency swaps
286
(310)
(24)
—
—
Foreign currency interest rate swaps
(622)
632
10
—
—
Interest rate swaps
(332)
323
(9)
—
—
Interest sensitive contract benefits
Foreign currency interest rate swaps
52
(53)
(1)
—
—
The following is a summary of the gains (losses) excluded from the assessment of hedge effectiveness that were recognized in OCI:
Years ended December 31,
(In millions)
2024
2023
2022
Foreign currency forwards
$
(23) $
(45) $
20
Foreign currency swaps
(29)
(187)
88
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
145
Net Investment Hedges – We use foreign currency forwards to hedge the foreign currency exchange rate risk of our investments in subsidiaries
that have a reporting currency other than the US dollar. We assess hedge effectiveness based on the changes in forward rates. During the years
ended December 31, 2024, 2023 and 2022, these derivatives had gains of $3 million, losses of $4 million and gains of $30 million, respectively.
These derivatives are included in foreign currency translation and other adjustments on the consolidated statements of comprehensive income
(loss). As of December 31, 2024 and 2023, the cumulative foreign currency translations recorded in AOCI related to these net investment
hedges were gains of $29 million and $26 million, respectively. During the years ended December 31, 2024, 2023 and 2022, there were no
amounts deemed ineffective.
Derivatives Not Designated as Hedges
Equity options – We use equity indexed options to economically hedge fixed indexed annuity products that guarantee the return of principal to
the policyholder and credit interest based on a percentage of the gain in a specified market index, including the S&P 500 and other bespoke
indices. To hedge against adverse changes in equity indices, we enter into contracts to buy equity indexed options. The contracts are net settled
in cash based on differentials in the indices at the time of exercise and the strike price.
Futures – Futures contracts are purchased to hedge the growth in interest credited to the customer as a direct result of increases in the related
indices. We enter into exchange-traded futures with regulated futures commission clearing brokers who are members of a trading exchange.
Under exchange-traded futures contracts, we agree to purchase a specified number of contracts with other parties and to post variation margin on
a daily basis in an amount equal to the difference in the daily fair values of those contracts.
Interest rate swaps and forwards – We use interest rate swaps and forwards to reduce market risks from interest rate changes and to alter interest
rate exposure arising from duration mismatches between assets and liabilities. With an interest rate swap, we agree with another party to
exchange the difference between fixed-rate and floating-rate interest amounts tied to an agreed-upon notional principal amount at specified
intervals.
Other swaps – Other swaps include total return swaps, credit default swaps and swaptions. We purchase total rate of return swaps to gain
exposure and benefit from a reference asset or index without ownership. Credit default swaps provide a measure of protection against the default
of an issuer or allow us to gain credit exposure to an issuer or traded index. We use credit default swaps coupled with a bond to synthetically
create the characteristics of a reference bond. Swaptions provide an option to enter into an interest rate swap and are used to hedge against
interest rate exposure.
Embedded derivatives – We have embedded derivatives which are required to be separated from their host contracts and reported as derivatives.
Host contracts include reinsurance agreements structured on a modco or funds withheld basis and indexed annuity products.
The following is a summary of the gains (losses) related to derivatives not designated as hedges:
Years ended December 31,
(In millions)
2024
2023
2022
Equity options
$
1,921
$
1,564
$
(2,647)
Futures
72
73
(144)
Interest rate swaps and forwards and other swaps
344
(108)
56
Foreign currency forwards
(775)
(495)
505
Embedded derivatives on funds withheld
2
934
(6,534)
Amounts recognized in investment related gains (losses)
1,564
1,968
(8,764)
Embedded derivatives in indexed annuity products1
(174)
(1,443)
2,768
Total gains (losses) on derivatives not designated as hedges
$
1,390
$
525
$
(5,996)
1 Included in interest sensitive contract benefits on the consolidated statements of income (loss).
Credit Risk—We may be exposed to credit-related losses in the event of counterparty nonperformance on derivative financial instruments.
Generally, the current credit exposure of our derivative contracts is the fair value at the reporting date less any collateral received from the
counterparty.
We manage credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties. Where possible, we
maintain collateral arrangements and use master netting agreements that provide for a single net payment from one counterparty to another at
each due date and upon termination. We have also established counterparty exposure limits, where possible, in order to evaluate if there is
sufficient collateral to support the net exposure.
Collateral arrangements typically require the posting of collateral in connection with its derivative instruments. Collateral agreements often
contain posting thresholds, some of which may vary depending on the posting party’s financial strength ratings. Additionally, a decrease in our
financial strength rating to a specified level can result in settlement of the derivative position.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
146
The estimated fair value of our net derivative and other financial assets and liabilities after the application of master netting agreements and
collateral were as follows:
Gross amounts not offset on the
consolidated balance sheets
(In millions)
Gross amount
recognized1
Financial
instruments2
Collateral
(received)/
pledged
Net amount
Off-balance
sheet securities
collateral3
Net amount after
securities
collateral
December 31, 2024
Derivative assets
$
8,154
$
(2,209) $
(5,922) $
23
$
—
$
23
Derivative liabilities
(3,556)
2,209
1,333
(14)
2
(12)
December 31, 2023
Derivative assets
$
5,298
$
(1,497) $
(3,676) $
125
$
—
$
125
Derivative liabilities
(1,995)
1,497
848
350
—
350
1 The gross amounts of recognized derivative assets and derivative liabilities are reported on the consolidated balance sheets. As of December 31, 2024 and
2023, amounts not subject to master netting or similar agreements were immaterial.
2 Represents amounts offsetting derivative assets and derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that
are not netted against the gross derivative assets or gross derivative liabilities for presentation on the consolidated balance sheets.
3 For non-cash collateral received, we do not recognize the collateral on our balance sheet unless the obligor (transferor) has defaulted under the terms of the
secured contract and is no longer entitled to redeem the pledged asset. Amounts do not include any excess of collateral pledged or received.
5. Variable Interest Entities
We determined that we are required to consolidate certain Apollo-managed investment funds and other Apollo-managed structures. Since the
criteria for the primary beneficiary are satisfied by our related party group, we are deemed the primary beneficiary. In addition, we consolidate
certain securitization entities where we are deemed the primary beneficiary. No arrangement exists requiring us to provide additional funding in
excess of our committed capital investment, liquidity, or the funding of losses or an increase to our loss exposure in excess of our investment in
any of the consolidated VIEs.
The following summarizes the income statement activity of the consolidated VIEs:
Years ended December 31,
(In millions)
2024
2023
2022
Trading securities
$
152
$
116
$
34
Mortgage loans
128
110
88
Investment funds
46
41
9
Other
(44)
(10)
(20)
Net investment income
$
282
$
257
$
111
Net recognized investment gains (losses) on trading securities
$
17
$
10
$
(66)
Net recognized investment losses on mortgage loans
(35)
(22)
(250)
Net recognized investment gains on investment funds
1,552
1,232
552
Other gains (losses)
(6)
(29)
83
Investment related gains (losses)
$
1,528
$
1,191
$
319
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
147
6. Fair Value
Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market
participants. We determine fair value based on the following fair value hierarchy:
Level 1 – Unadjusted quoted prices for identical assets or liabilities in an active market.
Level 2 – Quoted prices for inactive markets or valuation techniques that require observable direct or indirect inputs for substantially the
full term of the asset or liability. Level 2 inputs include the following:
•
Quoted prices for similar assets or liabilities in active markets,
•
Observable inputs other than quoted market prices, and
•
Observable inputs derived principally from market data through correlation or other means.
Level 3 – Prices or valuation techniques with unobservable inputs significant to the overall fair value estimate. These valuations use
critical assumptions not readily available to market participants. Level 3 valuations are based on market standard valuation methodologies,
including discounted cash flows, matrix pricing or other similar techniques.
Net Asset Value (NAV) – Investment funds are typically measured using NAV as a practical expedient in determining fair value and are
not classified in the fair value hierarchy. Our carrying value reflects our pro rata ownership percentage as indicated by NAV in the
investment fund financial statements, which we may adjust if we determine NAV is not calculated consistent with investment company
fair value principles. The underlying investments of the investment funds may have significant unobservable inputs, which may include
but are not limited to, comparable multiples and weighted average cost of capital rates applied in valuation models or a discounted cash
flow model.
The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest
priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level
is based on the lowest priority level input that is significant to the instrument’s fair value measurement.
We use a number of valuation sources to determine fair values. Valuation sources can include quoted market prices; third-party commercial
pricing services; third-party brokers; industry-standard, vendor modeling software that uses market observable inputs; and other internal
modeling techniques based on projected cash flows. We periodically review the assumptions and inputs of third-party commercial pricing
services through internal valuation price variance reviews, comparisons to internal pricing models, back testing to recent trades, or monitoring
trading volumes.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
148
The following represents the hierarchy for our assets and liabilities measured at fair value on a recurring basis:
Assets
AFS securities
US government and agencies
$
7,151
$
—
$
7,149
$
2
$
—
US state, municipal and political subdivisions
921
—
—
921
—
Foreign governments
1,568
—
658
881
29
Corporate
83,585
—
11
79,253
4,321
CLO
29,182
—
—
29,182
—
ABS
24,201
—
—
7,672
16,529
CMBS
10,741
—
—
10,741
—
RMBS
8,015
—
—
7,759
256
Total AFS securities
165,364
—
7,818
136,411
21,135
Trading securities
1,583
—
22
1,539
22
Equity securities
1,290
—
190
1,073
27
Mortgage loans
63,239
—
—
—
63,239
Funds withheld at interest – embedded derivative
(3,035)
—
—
—
(3,035)
Derivative assets
8,154
—
121
8,032
1
Short-term investments
255
—
—
86
169
Other investments
1,606
—
—
711
895
Cash and cash equivalents
12,733
—
12,733
—
—
Restricted cash
943
—
943
—
—
Investments in related parties
AFS securities
Corporate
2,461
—
—
1,029
1,432
CLO
6,035
—
—
5,339
696
ABS
10,631
—
—
890
9,741
Total AFS securities – related parties
19,127
—
—
7,258
11,869
Trading securities
573
—
—
—
573
Equity securities
234
—
—
—
234
Mortgage loans
1,297
—
—
—
1,297
Investment funds
1,139
—
—
—
1,139
Funds withheld at interest – embedded derivative
(615)
—
—
—
(615)
Other investments
331
—
—
—
331
Reinsurance recoverable
1,661
—
—
—
1,661
Other assets
313
—
—
—
313
Assets of consolidated VIEs
Trading securities
2,301
—
—
347
1,954
Mortgage loans
2,579
—
—
—
2,579
Investment funds
17,765
16,995
—
—
770
Other investments
107
—
4
—
103
Cash and cash equivalents
583
—
583
—
—
Total assets measured at fair value
$
299,527
$
16,995
$
22,414
$
155,457
$
104,661
Liabilities
Interest sensitive contract liabilities
Embedded derivative
$
11,242
$
—
$
—
$
—
$
11,242
Universal life benefits
742
—
—
—
742
Future policy benefits
AmerUs Closed Block
1,102
—
—
—
1,102
ILICO Closed Block and life benefits
538
—
—
—
538
Market risk benefits
4,028
—
—
—
4,028
Derivative liabilities
3,556
—
19
3,536
1
Other liabilities
225
—
—
—
225
Total liabilities measured at fair value
$
21,433
$
—
$
19
$
3,536
$
17,878
December 31, 2024
(In millions)
Total
NAV
Level 1
Level 2
Level 3
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
149
Assets
AFS securities
US government and agencies
$
5,399
$
—
$
5,392
$
7
$
—
US state, municipal and political subdivisions
1,046
—
—
1,046
—
Foreign governments
1,899
—
895
964
40
Corporate
78,246
—
10
75,711
2,525
CLO
20,207
—
—
20,207
—
ABS
13,383
—
—
6,440
6,943
CMBS
6,591
—
—
6,570
21
RMBS
7,567
—
—
7,302
265
Total AFS securities
134,338
—
6,297
118,247
9,794
Trading securities
1,706
—
24
1,654
28
Equity securities
935
—
210
699
26
Mortgage loans
44,115
—
—
—
44,115
Funds withheld at interest – embedded derivative
(3,379)
—
—
—
(3,379)
Derivative assets
5,298
—
108
5,190
—
Short-term investments
341
—
—
236
105
Other investments
943
—
—
313
630
Cash and cash equivalents
13,020
—
13,020
—
—
Restricted cash
1,761
—
1,761
—
—
Investments in related parties
AFS securities
Corporate
1,352
—
—
181
1,171
CLO
4,268
—
—
3,762
506
ABS
8,389
—
—
563
7,826
Total AFS securities – related parties
14,009
—
—
4,506
9,503
Trading securities
838
—
—
—
838
Equity securities
318
—
63
—
255
Mortgage loans
1,281
—
—
—
1,281
Investment funds
1,082
—
—
—
1,082
Funds withheld at interest – embedded derivative
(721)
—
—
—
(721)
Other investments
343
—
—
—
343
Reinsurance recoverable
1,367
—
—
—
1,367
Other assets
378
—
—
—
378
Assets of consolidated VIEs
Trading securities
2,136
—
—
284
1,852
Mortgage loans
2,173
—
—
—
2,173
Investment funds
15,927
14,950
—
—
977
Other investments
103
—
—
2
101
Cash and cash equivalents
98
—
98
—
—
Total assets measured at fair value
$
238,410
$
14,950
$
21,581
$
131,131
$
70,748
Liabilities
Interest sensitive contract liabilities
Embedded derivative
$
9,059
$
—
$
—
$
—
$
9,059
Universal life benefits
834
—
—
—
834
Future policy benefits
AmerUs Closed Block
1,178
—
—
—
1,178
ILICO Closed Block and life benefits
522
—
—
—
522
Market risk benefits
3,751
—
—
—
3,751
Derivative liabilities
1,995
—
17
1,977
1
Other liabilities
266
—
—
(64)
330
Total liabilities measured at fair value
$
17,605
$
—
$
17
$
1,913
$
15,675
December 31, 2023
(In millions)
Total
NAV
Level 1
Level 2
Level 3
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
150
Fair Value Valuation Methods—We used the following valuation methods and assumptions to estimate fair value:
AFS and trading securities – We obtain the fair value for most marketable securities without an active market from several commercial pricing
services. These are classified as Level 2 assets. The pricing services incorporate a variety of market observable information in their valuation
techniques, including benchmark yields, trading activity, credit quality, issuer spreads, bids, offers and other reference data. This category
typically includes US and non-US corporate bonds, US agency and government guaranteed securities, CLO, ABS, CMBS and RMBS.
We also have fixed maturity securities priced based on indicative broker quotes or by employing market accepted valuation models. For certain
fixed maturity securities, the valuation model uses significant unobservable inputs and these are included in Level 3 in our fair value hierarchy.
Significant unobservable inputs used include: discount rates, issue specific credit adjustments, material non-public financial information,
estimation of future earnings and cash flows, default rate assumptions, liquidity assumptions and indicative quotes from market makers.
We value privately placed fixed maturity securities based on the credit quality and duration of comparable marketable securities, which may be
securities of another issuer with similar characteristics. In some instances, we use a matrix-based pricing model. These models consider the
current level of risk-free interest rates, corporate spreads, credit quality of the issuer and cash flow characteristics of the security. We also
consider additional factors such as net worth of the borrower, value of collateral, capital structure of the borrower, presence of guarantees and
our evaluation of the borrower’s ability to compete in its relevant market. Privately placed fixed maturity securities are classified as Level 2 or 3.
Equity securities – Fair values of publicly traded equity securities are based on quoted market prices and classified as Level 1. Other equity
securities, typically private equities or equity securities not traded on an exchange, we value based on other sources, such as commercial pricing
services or brokers, and are classified as Level 2 or 3.
Mortgage loans – We estimate fair value on a monthly basis using discounted cash flow analysis and rates being offered for similar loans to
borrowers with similar credit ratings. Loans with similar characteristics are aggregated for purposes of the calculations. The discounted cash
flow model uses unobservable inputs, including estimates of discount rates and loan prepayments. Mortgage loans are classified as Level 3.
Investment funds – Certain investment funds for which we elected the fair value option are included in Level 3 and are priced based on market
accepted valuation models. The valuation models use significant unobservable inputs, which include material non-public financial information,
estimation of future distributable earnings and demographic assumptions.
Other investments – The fair values of other investments are primarily determined using a discounted cash flow model using discount rates for
similar investments.
Funds withheld at interest embedded derivatives – Funds withheld at interest embedded derivatives represent the right to receive or obligation to
pay the total return on the assets supporting the funds withheld at interest or funds withheld liability, respectively, and are analogous to a total
return swap with a floating rate leg. The fair value of embedded derivatives on funds withheld and modco agreements is measured as the
unrealized gain (loss) on the underlying assets and classified as Level 3.
Derivatives – Derivative contracts can be exchange traded or over-the-counter. Exchange-traded derivatives typically fall within Level 1 of the
fair value hierarchy depending on trading activity. Over-the-counter derivatives are valued using valuation models or an income approach using
third-party broker valuations. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit
curves, measures of volatility, prepayment rates and correlation of the inputs. We consider and incorporate counterparty credit risk in the
valuation process through counterparty credit rating requirements and monitoring of overall exposure. We also evaluate and include our own
nonperformance risk in valuing derivatives. The majority of our derivatives trade in liquid markets; therefore, we can verify model inputs and
model selection does not involve significant management judgment. These are typically classified within Level 2 of the fair value hierarchy.
Cash and cash equivalents, including restricted cash – The carrying amount for cash equals fair value. We estimate the fair value for cash
equivalents based on quoted market prices. These assets are classified as Level 1.
Other assets and market risk benefits liability – Other assets at fair value consist of market risk benefit assets. See Note 9 – Long-duration
Contracts for additional information on market risk benefits valuation methodology and additional fair value disclosures. Market risk benefits
are classified as Level 3.
Interest sensitive contract liabilities embedded derivatives – Embedded derivatives related to interest sensitive contract liabilities with fixed
indexed annuity products are classified as Level 3. The valuations include significant unobservable inputs associated with economic
assumptions and actuarial assumptions for policyholder behavior.
AmerUs Closed Block – We elected the fair value option for the future policy benefits liability in the AmerUs Closed Block. Our valuation
technique is to set the fair value of policyholder liabilities equal to the fair value of assets. There is an additional component which captures the
fair value of the open block’s obligations to the closed block business. This component is the present value of the projected release of required
capital and future earnings before income taxes on required capital supporting the AmerUs Closed Block, discounted at a rate which represents a
market participant’s required rate of return, less the initial required capital. Unobservable inputs include estimates for these items. The AmerUs
Closed Block policyholder liabilities and any corresponding reinsurance recoverable are classified as Level 3.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
151
ILICO Closed Block – We elected the fair value option for the ILICO Closed Block. Our valuation technique is to set the fair value of
policyholder liabilities equal to the fair value of assets. There is an additional component which captures the fair value of the open block’s
obligations to the closed block business. This component uses the present value of future cash flows which include commissions, administrative
expenses, reinsurance premiums and benefits, and an explicit cost of capital. The discount rate includes a margin to reflect the business and
nonperformance risk. Unobservable inputs include estimates for these items. The ILICO Closed Block policyholder liabilities and corresponding
reinsurance recoverable are classified as Level 3.
Universal life liabilities and other life benefits – We elected the fair value option for certain blocks of universal and other life business ceded to
Global Atlantic. We use a present value of liability cash flows. Unobservable inputs include estimates of mortality, persistency, expenses,
premium payments and a risk margin used in the discount rates that reflect the riskiness of the business. These universal life policyholder
liabilities and corresponding reinsurance recoverable are classified as Level 3.
Other liabilities – Other liabilities include funds withheld liability embedded derivatives, as described above in funds withheld at interest
embedded derivatives, and a ceded modco agreement of certain inforce funding agreement contracts for which we elected the fair value option.
We estimate the fair value of the ceded modco agreement by discounting projected cash flows for net settlements and certain periodic and non-
periodic payments. Unobservable inputs include estimates for asset portfolio returns and economic inputs used in the discount rate, including
risk margin. Depending on the projected cash flows and other assumptions, the contract may be recorded as an asset or liability. The estimate is
classified as Level 3.
Fair Value Option—The following represents the gains (losses) recorded for instruments for which we have elected the fair value option,
including related parties and consolidated VIEs:
Years ended December 31,
(In millions)
2024
2023
2022
Trading securities
$
(156) $
66
$
(424)
Mortgage loans
(237)
183
(3,213)
Investment funds
(49)
81
114
Future policy benefits
76
(14)
356
Other
28
(113)
(37)
Total gains (losses)
$
(338) $
203
$
(3,204)
Gains and losses on trading securities, mortgage loans, investments of consolidated VIEs, and other are recorded in investment related gains
(losses) on the consolidated statements of income (loss). Gains and losses related to investment funds are recorded in net investment income on
the consolidated statements of income (loss). We record the change in fair value of future policy benefits to future policy and other policy
benefits on the consolidated statements of income (loss).
The following summarizes information for fair value option mortgage loans, including related parties and consolidated VIEs:
December 31,
(In millions)
2024
2023
Unpaid principal balance
$
69,754
$
50,752
Mark to fair value
(2,639)
(3,183)
Fair value
$
67,115
$
47,569
The following represents our commercial mortgage loan portfolio 90 days or more past due and/or in non-accrual status:
December 31,
(In millions)
2024
2023
Unpaid principal balance of commercial mortgage loans 90 days or more past due and/or in non-accrual status
$
195
$
221
Mark to fair value of commercial mortgage loans 90 days or more past due and/or in non-accrual status
(102)
(74)
Fair value of commercial mortgage loans 90 days or more past due and/or in non-accrual status
$
93
$
147
Fair value of commercial mortgage loans 90 days or more past due
$
31
$
64
Fair value of commercial mortgage loans in non-accrual status
93
147
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
152
The following represents our residential mortgage loan portfolio 90 days or more past due and/or in non-accrual status:
December 31,
(In millions)
2024
2023
Unpaid principal balance of residential mortgage loans 90 days or more past due and/or in non-accrual status
$
898
$
528
Mark to fair value of residential mortgage loans 90 days or more past due and/or in non-accrual status
(51)
(49)
Fair value of residential mortgage loans 90 days or more past due and/or in non-accrual status
$
847
$
479
Fair value of residential mortgage loans 90 days or more past due1
$
847
$
479
Fair value of residential mortgage loans in non-accrual status
765
355
1 As of December 31, 2024 and 2023, includes $82 million and $124 million, respectively, of residential mortgage loans that are guaranteed by US government-
sponsored agencies.
The following is the estimated amount of gains (losses) included in earnings during the period attributable to changes in instrument-specific
credit risk on our mortgage loan portfolio:
Years ended December 31,
(In millions)
2024
2023
2022
Mortgage loans
$
(58) $
(53) $
(41)
We estimated the portion of gains and losses attributable to changes in instrument-specific credit risk by identifying commercial mortgage loans
with loan-to-value ratios meeting credit quality criteria, and residential mortgage loans with delinquency status meeting credit quality criteria.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
153
Level 3 Financial Instruments—The following are reconciliations for Level 3 assets and liabilities measured at fair value on a recurring basis.
Transfers in and out of Level 3 are primarily based on changes in the availability of pricing sources, as described in the valuation methods
above.
Year ended December 31, 2024
Total realized and
unrealized gains (losses)
(In millions)
Beginning
balance
Included in
income
Included in
OCI
Net purchases,
issuances,
sales and
settlements
Net
transfers in
(out)
Ending
balance
Total gains
(losses)
included in
earnings1
Total gains
(losses)
included in
OCI1
Assets
AFS securities
Foreign governments
$
40
$
—
$
1
$
(12) $
—
$
29
$
—
$
1
Corporate
2,525
(20)
36
2,815
(1,035)
4,321
(18)
38
ABS
6,943
47
(128)
9,812
(145)
16,529
(3)
(130)
CMBS
21
3
(5)
—
(19)
—
—
—
RMBS
265
8
—
83
(100)
256
—
(1)
Trading securities
28
1
—
(21)
14
22
(1)
—
Equity securities
26
—
—
1
—
27
—
—
Mortgage loans
44,115
(192)
—
19,316
—
63,239
(145)
—
Funds withheld at interest –
embedded derivative
(3,379)
344
—
—
—
(3,035)
—
—
Derivative assets
—
—
—
—
1
1
—
—
Short-term investments
105
(1)
(1)
145
(79)
169
—
(1)
Other investments
630
(24)
—
289
—
895
(6)
—
Investments in related parties
AFS securities
Corporate
1,171
(2)
24
38
201
1,432
—
21
CLO
506
—
13
177
—
696
—
14
ABS
7,826
48
(12)
1,879
—
9,741
—
(14)
Trading securities
838
(1)
—
(264)
—
573
(3)
—
Equity securities
255
(16)
—
(5)
—
234
(15)
—
Mortgage loans
1,281
17
—
(1)
—
1,297
17
—
Investment funds
1,082
(49)
—
106
—
1,139
(49)
—
Funds withheld at interest –
embedded derivative
(721)
106
—
—
—
(615)
—
—
Other investments
343
(12)
—
—
—
331
(12)
—
Reinsurance recoverable
1,367
(61)
—
355
—
1,661
—
—
Assets of consolidated VIEs
Trading securities
1,852
(80)
—
209
(27)
1,954
(87)
—
Mortgage loans
2,173
(62)
—
468
—
2,579
(64)
—
Investment funds
977
(68)
—
331
(470)
770
(16)
—
Other investments
101
(10)
—
32
(20)
103
(9)
—
Total Level 3 assets
$
70,370
$
(24) $
(72) $
35,753
$
(1,679) $
104,348
$
(411) $
(72)
Liabilities
Interest sensitive contract liabilities
Embedded derivative
$
(9,059) $
(174) $
—
$
(2,009) $
—
$
(11,242) $
—
$
—
Universal life benefits
(834)
92
—
—
—
(742)
—
—
Future policy benefits
AmerUs Closed Block
(1,178)
76
—
—
—
(1,102)
—
—
ILICO Closed Block and life
benefits
(522)
(16)
—
—
—
(538)
—
—
Derivative liabilities
(1)
—
—
—
—
(1)
—
—
Other liabilities
(330)
(13)
—
54
64
(225)
—
—
Total Level 3 liabilities
$
(11,924) $
(35) $
—
$
(1,955) $
64
$
(13,850) $
—
$
—
1 Related to instruments held at end of year.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
154
Year ended December 31, 2023
Total realized and
unrealized gains (losses)
(In millions)
Beginning
balance
Included in
income
Included in
OCI
Net purchases,
issuances,
sales and
settlements
Net
transfers in
(out)
Ending
balance
Total gains
(losses)
included in
earnings1
Total gains
(losses)
included in
OCI1
Assets
AFS securities
Foreign governments
$
1
$
—
$
(2) $
41
$
—
$
40
$
—
$
(2)
Corporate
1,665
(21)
45
1,298
(462)
2,525
—
21
ABS
4,867
(9)
61
3,241
(1,217)
6,943
—
45
CMBS
—
—
1
—
20
21
—
3
RMBS
232
8
4
256
(235)
265
—
2
Trading securities
53
2
—
(16)
(11)
28
—
—
Equity securities
92
(8)
—
(45)
(13)
26
—
—
Mortgage loans
27,454
183
—
16,478
—
44,115
184
—
Funds withheld at interest – embedded
derivative
(4,847)
1,468
—
—
—
(3,379)
—
—
Short-term investments
36
—
(3)
69
3
105
—
—
Other investments
441
—
—
189
—
630
(3)
—
Investments in related parties
AFS securities
Corporate
812
3
(32)
173
215
1,171
—
(32)
CLO
303
—
18
185
—
506
—
18
ABS
5,542
19
103
1,878
284
7,826
6
96
Trading securities
878
12
—
(52)
—
838
8
—
Equity securities
279
8
—
(32)
—
255
7
—
Mortgage loans
1,302
9
—
(30)
—
1,281
8
—
Investment funds
959
91
—
32
—
1,082
91
—
Funds withheld at interest –
embedded derivative
(1,425)
704
—
—
—
(721)
—
—
Other investments
303
(2)
—
42
—
343
(3)
—
Reinsurance recoverable
1,388
(21)
—
—
—
1,367
—
—
Assets of consolidated VIEs
Trading securities
622
47
—
(148)
1,331
1,852
47
—
Mortgage loans
2,055
(9)
—
127
—
2,173
(9)
—
Investment funds
2,471
(30)
—
73
(1,537)
977
(31)
—
Other investments
99
9
—
(7)
—
101
9
—
Total Level 3 assets
$
45,582
$
2,463
$
195
$
23,752
$
(1,622) $
70,370
$
314
$
151
Liabilities
Interest sensitive contract liabilities
Embedded derivative
$
(5,841) $
(1,443) $
—
$
(1,775) $
—
$
(9,059) $
—
$
—
Universal life benefits
(829)
(5)
—
—
—
(834)
—
—
Future policy benefits
AmerUs Closed Block
(1,164)
(14)
—
—
—
(1,178)
—
—
ILICO Closed Block and life
benefits
(548)
26
—
—
—
(522)
—
—
Derivative liabilities
(1)
—
—
—
—
(1)
—
—
Other liabilities
(142)
(113)
—
(75)
—
(330)
—
—
Total Level 3 liabilities
$
(8,525) $
(1,549) $
—
$
(1,850) $
—
$
(11,924) $
—
$
—
1 Related to instruments held at end of year.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
155
The following represents the gross components of purchases, issuances, sales and settlements, net, and net transfers in (out) shown above:
Year ended December 31, 2024
(In millions)
Purchases
Issuances
Sales
Settlements
Net purchases,
issuances,
sales and
settlements
Transfers in
Transfers
out
Net
transfers in
(out)
Assets
AFS securities
Foreign governments
$
—
$
—
$
—
$
(12) $
(12) $
—
$
—
$
—
Corporate
3,146
—
(41)
(290)
2,815
166
(1,201)
(1,035)
ABS
11,886
—
(423)
(1,651)
9,812
769
(914)
(145)
CMBS
—
—
—
—
—
—
(19)
(19)
RMBS
99
—
—
(16)
83
—
(100)
(100)
Trading securities
—
—
—
(21)
(21)
14
—
14
Equity securities
2
—
(1)
—
1
9
(9)
—
Mortgage loans
27,596
—
(106)
(8,174)
19,316
—
—
—
Derivative assets
—
—
—
—
—
1
—
1
Short-term investments
172
—
(6)
(21)
145
—
(79)
(79)
Other investments
289
—
—
—
289
—
—
—
Investments in related parties
AFS securities
Corporate
113
—
(66)
(9)
38
201
—
201
CLO
177
—
—
—
177
—
—
—
ABS
7,197
—
(504)
(4,814)
1,879
—
—
—
Trading securities
4
—
—
(268)
(264)
—
—
—
Equity securities
—
—
(5)
—
(5)
—
—
—
Mortgage loans
87
—
—
(88)
(1)
—
—
—
Investment funds
106
—
—
—
106
—
—
—
Reinsurance recoverable
—
359
—
(4)
355
—
—
—
Assets of consolidated VIEs
Trading securities
394
—
(178)
(7)
209
61
(88)
(27)
Mortgage loans
579
—
—
(111)
468
—
—
—
Investment funds
341
—
(10)
—
331
—
(470)
(470)
Other investments
56
—
(24)
—
32
—
(20)
(20)
Total Level 3 assets
$
52,244
$
359
$
(1,364) $
(15,486) $
35,753
$
1,221
$
(2,900) $
(1,679)
Liabilities
Interest sensitive contract liabilities –
embedded derivative
$
—
$
(3,010) $
—
$
1,001
$
(2,009) $
—
$
—
$
—
Other liabilities
—
—
—
54
54
64
—
64
Total Level 3 liabilities
$
—
$
(3,010) $
—
$
1,055
$
(1,955) $
64
$
—
$
64
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
156
Year ended December 31, 2023
(In millions)
Purchases
Issuances
Sales
Settlements
Net purchases,
issuances,
sales and
settlements
Transfers in
Transfers
out
Net
transfers in
(out)
Assets
AFS securities
Foreign governments
$
53
$
—
$
—
$
(12) $
41
$
—
$
—
$
—
Corporate
1,704
—
(177)
(229)
1,298
29
(491)
(462)
ABS
4,221
—
(33)
(947)
3,241
828
(2,045)
(1,217)
CMBS
—
—
—
—
—
20
—
20
RMBS
262
—
—
(6)
256
5
(240)
(235)
Trading securities
8
—
—
(24)
(16)
5
(16)
(11)
Equity securities
—
—
(45)
—
(45)
—
(13)
(13)
Mortgage loans
21,018
—
(529)
(4,011)
16,478
—
—
—
Short term investments
100
—
—
(31)
69
26
(23)
3
Other investments
620
—
—
(431)
189
—
—
—
Investments in related parties
AFS securities
Corporate
184
—
—
(11)
173
215
—
215
CLO
185
—
—
—
185
—
—
—
ABS
3,751
—
(162)
(1,711)
1,878
284
—
284
Trading securities
66
—
(38)
(80)
(52)
—
—
—
Equity securities
—
—
—
(32)
(32)
—
—
—
Mortgage loans
—
—
—
(30)
(30)
—
—
—
Investment funds
32
—
—
—
32
—
—
—
Other investments
42
—
—
—
42
—
—
—
Assets of consolidated VIEs
Trading securities
40
—
(188)
—
(148)
1,362
(31)
1,331
Mortgage loans
203
—
—
(76)
127
—
—
—
Investment funds
113
—
(40)
—
73
475
(2,012)
(1,537)
Other investments
14
—
(21)
—
(7)
—
—
—
Total Level 3 assets
$
32,616
$
—
$
(1,233) $
(7,631) $
23,752
$
3,249
$
(4,871) $
(1,622)
Liabilities
Interest sensitive contract liabilities –
embedded derivative
$
—
$
(2,431) $
—
$
656
$
(1,775) $
—
$
—
$
—
Other liabilities
—
—
—
(75)
(75)
—
—
—
Total Level 3 liabilities
$
—
$
(2,431) $
—
$
581
$
(1,850) $
—
$
—
$
—
Significant Unobservable Inputs—Significant unobservable inputs occur when we cannot obtain or corroborate the quantitative detail of the
inputs. This applies to fixed maturity securities, equity securities, mortgage loans and certain investment funds, as well as embedded derivatives
in liabilities. Additional significant unobservable inputs are described below.
AFS, trading and equity securities – We use discounted cash flow models to calculate the fair value for certain fixed maturity and equity
securities. The discount rate is a significant unobservable input because the credit spread includes adjustments made to the base rate. The base
rate represents a market comparable rate for securities with similar characteristics. This excludes assets for which fair value is provided by
independent broker quotes but includes assets for which fair value is provided by affiliated quotes.
Mortgage loans – We use discounted cash flow models from independent commercial pricing services to calculate the fair value of our
mortgage loan portfolio. The discount rate is a significant unobservable input. This approach uses market transaction information and client
portfolio-oriented information, such as prepayments or defaults, to support the valuations.
Investment funds – We use various methods of valuing our investment funds from both independent pricing services and affiliated modeling.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
157
Interest sensitive contract liabilities – embedded derivative – Significant unobservable inputs we use in the fixed indexed annuities embedded
derivative of the interest sensitive contract liabilities valuation include:
1.
Nonperformance risk – For contracts we issue, we use the credit spread, relative to the US Department of the Treasury (US Treasury)
curve based on our public credit rating as of the valuation date. This represents our credit risk for use in the estimate of the fair value
of embedded derivatives.
2.
Option budget – We assume future hedge costs in the derivative’s fair value estimate. The level of option budgets determines the
future costs of the options and impacts future policyholder account value growth.
3.
Policyholder behavior – We regularly review the full withdrawal (surrender rate) assumptions. These are based on our initial pricing
assumptions updated for actual experience. Actual experience may be limited for recently issued products.
The following summarizes the unobservable inputs for AFS, trading and equity securities, mortgage loans, investment funds and the embedded
derivatives of fixed indexed annuities, including those of consolidated VIEs:
December 31, 2024
(In millions, except percentages and
multiples)
Fair value
Valuation technique
Unobservable
inputs
Minimum
Maximum
Weighted
average
Impact of an
increase in the
input on fair
value
AFS, trading and equity securities
$ 28,774
Discounted cash flow
Discount rate
4.7 %
20.0 %
7.1 % 1
Decrease
Mortgage loans
67,115
Discounted cash flow
Discount rate
1.8 %
43.1 %
6.7 % 1
Decrease
Investment funds
1,909
Discounted cash flow
Discount rate
6.6 %
14.0 %
10.8 % 1
Decrease
Interest sensitive contract liabilities –
fixed indexed annuities embedded
derivatives
11,242
Discounted cash flow
Nonperformance
risk
0.4 %
1.1 %
0.7 %
2
Decrease
Option budget
0.5 %
6.0 %
2.8 % 3
Increase
Surrender rate
6.0 %
14.2 %
9.0 % 3
Decrease
December 31, 2023
(In millions, except percentages and
multiples)
Fair value
Valuation technique
Unobservable
inputs
Minimum
Maximum
Weighted
average
Impact of an
increase in the
input on fair
value
AFS, trading and equity securities
$ 14,247
Discounted cash flow
Discount rate
2.3 %
18.1 %
7.0 % 1
Decrease
Mortgage loans
47,569
Discounted cash flow
Discount rate
2.5 %
20.6 %
6.8 % 1
Decrease
Investment funds
1,574
Discounted cash flow
Discount rate
6.3 %
13.5 %
11.2 % 1
Decrease
483
Net tangible asset
values
Implied multiple
1.14x
1.14x
1.14x
Increase
Interest sensitive contract liabilities –
fixed indexed annuities embedded
derivatives
9,059
Discounted cash flow
Nonperformance
risk
0.4 %
1.4 %
0.9 %
2
Decrease
Option budget
0.5 %
6.0 %
2.3 % 3
Increase
Surrender rate
6.0 %
13.4 %
8.7 % 3
Decrease
1 The discount rate weighted average is calculated based on the relative fair values of the investments.
2 The nonperformance risk weighted average is based on the projected cash flows attributable to the embedded derivative.
3 The option budget and surrender rate weighted averages are calculated based on projected account values.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
158
Financial Instruments Without Readily Determinable Fair Values—We elected the measurement alternative for certain equity securities that
did not have a readily determinable fair value. The equity securities were held at cost less any impairment. During the third quarter of 2024, the
equity securities of FWD Group Holdings Limited were distributed as a dividend to AGM. As of December 31, 2023, the carrying amount of the
equity securities was $358 million, net of an impairment of $42 million. As a result of slower than expected growth of the investee, we recorded
an impairment of $42 million in the fourth quarter of 2023.
Fair Value of Financial Instruments Not Carried at Fair Value—The following represents our financial instruments not carried at fair value
on the consolidated balance sheets:
December 31, 2024
(In millions)
Carrying
Value
Fair Value
NAV
Level 1
Level 2
Level 3
Financial assets
Investment funds
$
107
$
107
$
107
$
—
$
—
$
—
Policy loans
318
318
—
—
318
—
Funds withheld at interest
21,901
21,901
—
—
—
21,901
Short-term investments
192
192
—
—
—
192
Other investments
93
101
—
—
—
101
Investments in related parties
Investment funds
714
714
714
—
—
—
Funds withheld at interest
5,665
5,665
—
—
—
5,665
Short-term investments
743
743
—
—
743
—
Total financial assets not carried at fair value
$
29,733
$
29,741
$
821
$
—
$
1,061
$
27,859
Financial liabilities
Interest sensitive contract liabilities
$
200,278
$
192,025
$
—
$
—
$
—
$
192,025
Debt
6,309
5,844
—
581
5,263
—
Securities to repurchase
5,716
5,716
—
—
5,716
—
Funds withheld liability
4,331
4,331
—
—
—
4,331
Total financial liabilities not carried at fair value
$
216,634
$
207,916
$
—
$
581
$
10,979
$
196,356
December 31, 2023
(In millions)
Carrying
Value
Fair Value
NAV
Level 1
Level 2
Level 3
Financial assets
Investment funds
$
109
$
109
$
109
$
—
$
—
$
—
Policy loans
334
334
—
—
334
—
Funds withheld at interest
27,738
27,738
—
—
—
27,738
Other investments
46
52
—
—
—
52
Investments in related parties
Investment funds
550
550
550
—
—
—
Funds withheld at interest
7,195
7,195
—
—
—
7,195
Short-term investments
947
947
—
—
947
—
Total financial assets not carried at fair value
$
36,919
$
36,925
$
659
$
—
$
1,281
$
34,985
Financial liabilities
Interest sensitive contract liabilities
$
154,095
$
146,038
$
—
$
—
$
—
$
146,038
Debt
4,209
3,660
—
—
3,660
—
Securities to repurchase
3,853
3,853
—
—
3,853
—
Funds withheld liability
350
350
—
—
350
—
Total financial liabilities not carried at fair value
$
162,507
$
153,901
$
—
$
—
$
7,863
$
146,038
We estimate the fair value for financial instruments not carried at fair value using the same methods and assumptions as those we carry at fair
value. The financial instruments presented above are reported at carrying value on the consolidated balance sheets; however, in the case of
policy loans, funds withheld at interest and liability, short-term investments and securities to repurchase, the carrying amount approximates fair
value.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
159
Interest sensitive contract liabilities – The carrying and fair value of interest sensitive contract liabilities above includes fixed indexed and
traditional fixed annuities without mortality or morbidity risks, funding agreements and payout annuities without life contingencies. The
embedded derivatives within fixed indexed annuities without mortality or morbidity risks are excluded, as they are carried at fair value. The
valuation of these investment contracts is based on discounted cash flow methodologies using significant unobservable inputs. The estimated
fair value is determined using current market risk-free interest rates, adding a spread to reflect our nonperformance risk and subtracting a risk
margin to reflect uncertainty inherent in the projected cash flows.
Debt – We obtain the fair value of debt from commercial pricing services. These are classified as Level 1 or Level 2. The pricing services use
quoted market prices, if available, or incorporate a variety of market observable information in their valuation techniques, including benchmark
yields, trading activity, credit quality, issuer spreads, bids, offers and other reference data.
7. Reinsurance
The following summarizes the effect of reinsurance on premiums and future policy and other policy benefits on the consolidated statements of
income (loss):
Years ended December 31,
(In millions)
2024
2023
2022
Premiums
Direct
$
1,089
$
10,525
$
11,373
Reinsurance assumed
313
2,313
377
Reinsurance ceded
(84)
(89)
(112)
Total premiums
$
1,318
$
12,749
$
11,638
Future policy and other policy benefits
Direct
$
2,779
$
12,321
$
12,142
Reinsurance assumed
550
2,389
416
Reinsurance ceded
(275)
(276)
(93)
Total future policy and other policy benefits
$
3,054
$
14,434
$
12,465
Reinsurance typically provides for recapture rights on the part of the ceding company for certain events of default. Additionally, some
agreements require us to place assets in trust accounts for the benefit of the ceding entity. The required minimum assets are equal to or greater
than statutory reserves, as defined by the agreement, and were $26.1 billion and $21.6 billion as of December 31, 2024 and 2023, respectively.
Although we own the assets placed in trust, their use is restricted based on the trust agreement terms. If the statutory book value of the assets, or
in certain cases fair value, in a trust declines because of impairments or other reasons, we may be required to contribute additional assets to the
trust. In addition, the assets within a trust may be subject to a pledge in favor of the applicable reinsurance company.
Reinsurance transactions
We entered into a coinsurance agreement to assume a block of whole life policies during the fourth quarter of 2023. We did not have any block
reinsurance transactions during the years ended December 31, 2024 and 2022. The following summarizes our block reinsurance agreement at
inception:
(In millions)
Year ended
December 31, 2023
Liabilities assumed
$
1,975
Less: Assets received
2,158
Deferred profit liability1
$
(183)
1 Included within future policy benefits on the consolidated balance sheets.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
160
Catalina – We have reinsurance agreements with certain affiliates of Catalina Holdings (Bermuda) Ltd. (together with its subsidiaries, Catalina).
See Note 15 – Related Parties for further information on these reinsurance agreements.
Global Atlantic – We have a coinsurance and assumption agreement with Global Atlantic. The agreement ceded all existing open block life
insurance business issued by Athene Annuity and Life Company (AAIA), with the exception of enhanced guarantee universal life insurance
products. We also entered into a coinsurance agreement with Global Atlantic to cede all policy liabilities of the ILICO Closed Block. The ILICO
Closed Block consists primarily of participating whole life insurance policies. We also have an excess of loss arrangement with Global Atlantic
to reimburse us for any payments required from our general assets to meet the contractual obligations of the AmerUs Closed Block not covered
by existing reinsurance through Athene Re USA IV. The AmerUs Closed Block consists primarily of participating whole life insurance policies.
Since all liabilities were covered by the existing reinsurance at close, no reinsurance premiums were ceded. The assets backing the AmerUs
Closed Block are managed, on AAIA’s behalf, by Goldman Sachs Asset Management.
As of December 31, 2024 and 2023, Global Atlantic maintained a series of trust and custody accounts under the terms of these agreements with
assets equal to or greater than a required aggregate statutory balance of $2,502 million and $2,542 million, respectively.
Protective Life Insurance Company (Protective) – We reinsured certain of our life and health business to Protective under a coinsurance
agreement. As of December 31, 2024 and 2023, Protective maintained a trust for our benefit with assets having a fair value of $1,107 million
and $1,213 million, respectively.
Reinsurance Recoverables—The following summarizes our reinsurance recoverable:
December 31,
(In millions)
2024
2023
Catalina
$
4,309
$
—
Global Atlantic
2,328
2,435
Protective
1,435
1,559
Other1
122
160
Reinsurance recoverable
$
8,194
$
4,154
1 Represents all other reinsurers, with no single reinsurer having a carrying value in excess of 5% of the total recoverable.
8. Deferred Acquisition Costs, Deferred Sales Inducements and Value of Business Acquired
The following represents a rollforward of DAC and DSI by product, and a rollforward of VOBA. See Note 9 – Long-duration Contracts for
more information on our products.
DAC
DSI
VOBA
Total DAC,
DSI and VOBA
(In millions)
Traditional
deferred
annuities
Indexed
annuities
Funding
agreements
Other
investment-type
Indexed
annuities
Balance at January 1, 2022
$
—
$
—
$
—
$
—
$
—
$
3,372
$
3,372
Additions
320
784
14
9
411
—
1,538
Amortization
(16)
(29)
(3)
—
(12)
(384)
(444)
Balance at December 31, 2022
304
755
11
9
399
2,988
4,466
Additions
701
863
3
3
634
—
2,204
Amortization
(115)
(101)
(4)
(1)
(63)
(404)
(688)
Other
—
—
—
—
—
(3)
(3)
Balance at December 31, 2023
890
1,517
10
11
970
2,581
5,979
Additions
519
945
42
1
630
—
2,137
Amortization
(249)
(184)
(12)
(1)
(124)
(371)
(941)
Other
(2)
—
—
—
—
—
(2)
Balance at December 31, 2024
$
1,158
$
2,278
$
40
$
11
$
1,476
$
2,210
$
7,173
Deferred costs related to universal life-type policies and investment contracts with significant revenue streams from sources other than
investment of the policyholder funds, including traditional deferred annuities and indexed annuities, are amortized on a constant-level basis for a
cohort of contracts using initial premium or deposit. Significant inputs and assumptions are required for determining the expected duration of the
cohort and involves using accepted actuarial methods to determine decrement rates related to policyholder behavior for lapses, withdrawals
(surrenders) and mortality. The assumptions used to determine the amortization of DAC and DSI are consistent with those used to estimate the
related liability balance.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
161
Deferred costs related to investment contracts without significant revenue streams from sources other than investment of policyholder funds are
amortized using the effective interest method, which primarily includes funding agreements. The effective interest method requires inputs to
project future cash flows, which for funding agreements includes contractual terms of notional value, periodic interest payments based on either
fixed or floating interest rates, and duration. For other investment-type contracts which include immediate annuities and assumed endowments
without significant mortality risks, assumptions are required related to policyholder behavior for lapses and withdrawals (surrenders).
The expected amortization of VOBA for the next five years is as follows:
(In millions)
Expected Amortization
2025
$
295
2026
261
2027
227
2028
194
2029
167
9. Long-duration Contracts
Interest sensitive contract liabilities – Interest sensitive contract liabilities primarily include:
▪
traditional deferred annuities;
▪
indexed annuities consisting of fixed indexed, index-linked variable annuities, and assumed indexed universal life without significant
mortality risk;
▪
funding agreements; and
▪
other investment-type contracts comprising of immediate annuities without significant mortality risk (which includes pension group
annuities without life contingencies) and assumed endowments without significant mortality risks.
The following represents a rollforward of the policyholder account balance by product within interest sensitive contract liabilities. Where
explicit policyholder account balances do not exist, the disaggregated rollforward represents the recorded reserve.
Year ended December 31, 2024
(In millions, except percentages)
Traditional deferred
annuities
Indexed annuities
Funding
agreements
Other investment-
type
Total
Balance at December 31, 2023
$
64,763
$
93,147
$
32,350
$
7,629
$
197,889
Deposits
25,459
16,230
29,249
1,088
72,026
Policy charges
(2)
(709)
—
—
(711)
Surrenders and withdrawals
(5,389)
(12,744)
—
(84)
(18,217)
Benefit payments
(1,108)
(1,580)
(8,304)
(212)
(11,204)
Interest credited
3,256
3,524
1,707
205
8,692
Foreign exchange
(318)
(7)
(414)
(498)
(1,237)
Other
—
—
180
(98)
82
Balance at December 31, 2024
$
86,661
$
97,861
$
54,768
$
8,030
$
247,320
Weighted average crediting rate
4.3 %
2.7 %
4.4 %
2.7 %
Net amount at risk
$
425
$
15,441
$
—
$
51
Cash surrender value
81,243
89,511
—
6,784
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
162
Year ended December 31, 2023
(In millions, except percentages)
Traditional deferred
annuities
Indexed annuities
Funding
agreements
Other investment-
type
Total
Balance at December 31, 2022
$
43,518
$
92,660
$
27,439
$
4,722
$
168,339
Deposits
30,175
12,639
6,893
4,597
54,304
Policy charges
(2)
(651)
—
—
(653)
Surrenders and withdrawals
(9,929)
(11,253)
(110)
(40)
(21,332)
Benefit payments
(984)
(1,609)
(3,273)
(275)
(6,141)
Interest credited
1,858
1,279
883
155
4,175
Foreign exchange
52
1
260
(95)
218
Other1
75
81
258
(1,435)
(1,021)
Balance at December 31, 2023
$
64,763
$
93,147
$
32,350
$
7,629
$
197,889
Weighted average crediting rate
4.0 %
2.4 %
3.4 %
2.7 %
Net amount at risk
$
425
$
14,716
$
—
$
103
Cash surrender value
61,345
85,381
—
6,375
1 Other includes a $1,371 million reduction of reserves related to the Venerable Insurance and Annuity Company (VIAC) recapture agreement. See Note 15 –
Related Parties for further information.
Year ended December 31, 2022
(In millions, except percentages)
Traditional deferred
annuities
Indexed annuities
Funding
agreements
Other investment-
type
Total
Balance at January 1, 2022
$
35,599
$
89,755
$
23,623
$
2,413
$
151,390
Deposits
13,246
11,544
7,970
2,581
35,341
Policy charges
(3)
(600)
—
—
(603)
Surrenders and withdrawals
(5,419)
(8,057)
(880)
(17)
(14,373)
Benefit payments
(937)
(1,620)
(2,819)
(322)
(5,698)
Interest credited
1,032
1,638
677
95
3,442
Foreign exchange
—
—
(440)
(6)
(446)
Other
—
—
(692)
(22)
(714)
Balance at December 31, 2022
$
43,518
$
92,660
$
27,439
$
4,722
$
168,339
Weighted average crediting rate
3.2 %
2.2 %
2.5 %
3.1 %
Net amount at risk
$
422
$
13,581
$
—
$
47
Cash surrender value
41,273
84,724
—
2,213
The following is a reconciliation of interest sensitive contract liabilities to the consolidated balance sheets:
December 31,
(In millions)
2024
2023
2022
Traditional deferred annuities
$
86,661
$
64,763
$
43,518
Indexed annuities
97,861
93,147
92,660
Funding agreements
54,768
32,350
27,439
Other investment-type
8,030
7,629
4,722
Reconciling items1
6,317
6,781
5,277
Interest sensitive contract liabilities
$
253,637
$
204,670
$
173,616
1 Reconciling items primarily include embedded derivatives in indexed annuities, unaccreted host contract adjustments on indexed annuities, negative VOBA,
sales inducement liabilities, and wholly ceded universal life insurance contracts.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
163
The following represents policyholder account balances by range of guaranteed minimum crediting rates, as well as the related range of the
difference between rates being credited to policyholders and the respective guaranteed minimums:
December 31, 2024
(In millions)
At guaranteed
minimum
1 basis point – 100
basis points above
guaranteed minimum
Greater than 100 basis
points above
guaranteed minimum
Total
< 2.0%
$
26,818
$
14,141
$
134,121
$
175,080
2.0% – < 4.0%
24,356
1,529
2,067
27,952
4.0% – < 6.0%
37,626
58
1
37,685
6.0% and greater
6,603
—
—
6,603
Total
$
95,403
$
15,728
$
136,189
$
247,320
December 31, 2023
(In millions)
At guaranteed
minimum
1 basis point – 100
basis points above
guaranteed minimum
Greater than 100 basis
points above
guaranteed minimum
Total
< 2.0%
$
30,339
$
18,954
$
100,609
$
149,902
2.0% – < 4.0%
27,792
2,074
1,389
31,255
4.0% – < 6.0%
11,532
17
1
11,550
6.0% and greater
5,182
—
—
5,182
Total
$
74,845
$
21,045
$
101,999
$
197,889
December 31, 2022
(In millions)
At guaranteed
minimum
1 basis point – 100
basis points above
guaranteed minimum
Greater than 100 basis
points above
guaranteed minimum
Total
< 2.0%
$
25,031
$
26,020
$
72,776
$
123,827
2.0% – < 4.0%
33,325
1,408
284
35,017
4.0% – < 6.0%
8,277
10
6
8,293
6.0% and greater
1,202
—
—
1,202
Total
$
67,835
$
27,438
$
73,066
$
168,339
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
164
Future policy benefits – Future policy benefits consist primarily of payout annuities, including single premium immediate annuities with life
contingencies (which include pension group annuities with life contingencies), and whole life insurance contracts.
The following is a rollforward by product within future policy benefits:
Year ended December 31, 2024
(In millions, except percentages and years)
Payout annuities with
life contingencies
Whole life
Total
Present value of expected net premiums
Beginning balance
$
—
$
1,182
$
1,182
Effect of changes in discount rate assumptions
—
(45)
(45)
Effect of foreign exchange on the change in discount rate assumptions
—
(2)
(2)
Beginning balance at original discount rate
—
1,135
1,135
Effect of actual to expected experience
—
(4)
(4)
Adjusted balance
—
1,131
1,131
Interest accrual
—
22
22
Net premium collected
—
(190)
(190)
Foreign exchange
—
(111)
(111)
Ending balance at original discount rate
—
852
852
Effect of changes in discount rate assumptions
—
30
30
Effect of foreign exchange on the change in discount rate assumptions
—
(2)
(2)
Ending balance, present value of expected net premiums
$
—
$
880
$
880
Present value of expected future policy benefits
Beginning balance
$
45,001
$
3,371
$
48,372
Effect of changes in discount rate assumptions
6,233
(89)
6,144
Effect of foreign exchange on the change in discount rate assumptions
1
(6)
(5)
Beginning balance at original discount rate
51,235
3,276
54,511
Effect of changes in cash flow assumptions
(104)
—
(104)
Effect of actual to expected experience
78
(4)
74
Adjusted balance
51,209
3,272
54,481
Issuances
1,115
—
1,115
Interest accrual
1,802
69
1,871
Benefit payments
(4,476)
(85)
(4,561)
Foreign exchange
(16)
(340)
(356)
Ending balance at original discount rate
49,634
2,916
52,550
Effect of changes in discount rate assumptions
(7,378)
(206)
(7,584)
Effect of foreign exchange on the change in discount rate assumptions
5
1
6
Ending balance, present value of expected future policy benefits
42,261
2,711
44,972
Less: Present value of expected net premiums
—
880
880
Net future policy benefits
$
42,261
$
1,831
$
44,092
Weighted-average liability duration (in years)
9.4
30.7
Weighted-average interest accretion rate
3.7 %
4.8 %
Weighted-average current discount rate
5.6 %
4.8 %
Expected future gross premiums, undiscounted
$
—
$
1,107
Expected future gross premiums, discounted1
—
929
Expected future benefit payments, undiscounted
72,793
10,618
1 Discounted at the original discount rate.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
165
Year ended December 31, 2023
(In millions, except percentages and years)
Payout annuities with
life contingencies
Whole life
Total
Present value of expected net premiums
Beginning balance
$
—
$
—
$
—
Issuances
—
3,091
3,091
Interest accrual
—
6
6
Net premium collected
—
(2,027)
(2,027)
Foreign exchange
—
65
65
Ending balance at original discount rate
—
1,135
1,135
Effect of changes in discount rate assumptions
—
45
45
Effect of foreign exchange on the change in discount rate assumptions
—
2
2
Ending balance, present value of expected net premiums
$
—
$
1,182
$
1,182
Present value of expected future policy benefits
Beginning balance
$
36,422
$
—
$
36,422
Effect of changes in discount rate assumptions
8,425
—
8,425
Effect of foreign exchange on the change in discount rate assumptions
(13)
—
(13)
Beginning balance at original discount rate
44,834
—
44,834
Effect of changes in cash flow assumptions
(297)
—
(297)
Effect of actual to expected experience
(67)
—
(67)
Adjusted balance
44,470
—
44,470
Issuances
10,427
3,091
13,518
Interest accrual
1,646
18
1,664
Benefit payments
(3,834)
(18)
(3,852)
Foreign exchange
35
185
220
Other1
(1,509)
—
(1,509)
Ending balance at original discount rate
51,235
3,276
54,511
Effect of changes in discount rate assumptions
(6,233)
89
(6,144)
Effect of foreign exchange on the change in discount rate assumptions
(1)
6
5
Ending balance, present value of expected future policy benefits
45,001
3,371
48,372
Less: Present value of expected net premiums
—
1,182
1,182
Net future policy benefits
$
45,001
$
2,189
$
47,190
Weighted-average liability duration (in years)
9.5
33.5
Weighted-average interest accretion rate
3.6 %
4.8 %
Weighted-average current discount rate
5.1 %
4.1 %
Expected future gross premiums, undiscounted
$
—
$
1,497
Expected future gross premiums, discounted2
—
1,239
Expected future benefit payments, undiscounted
75,261
11,344
1 Other includes a $1,509 million reduction of reserves related to the VIAC recapture agreement. See Note 15 – Related Parties for further information.
2 Discounted at the original discount rate.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
166
Year ended December 31, 2022
(In millions, except percentages and years)
Payout annuities with
life contingencies
Whole life
Total
Present value of expected future policy benefits
Beginning balance
$
35,278
$
—
$
35,278
Effect of changes in discount rate assumptions
—
—
—
Beginning balance at original discount rate
35,278
—
35,278
Effect of actual to expected experience
(120)
—
(120)
Adjusted balance
35,158
—
35,158
Issuances
11,528
—
11,528
Interest accrual
1,146
—
1,146
Benefit payments
(2,921)
—
(2,921)
Foreign exchange
(77)
—
(77)
Ending balance at original discount rate
44,834
—
44,834
Effect of changes in discount rate assumptions
(8,425)
—
(8,425)
Effect of foreign exchange on the change in discount rate assumptions
13
—
13
Ending balance, present value of expected future policy benefits
$
36,422
$
—
$
36,422
Weighted-average liability duration (in years)
10.2
0.0
Weighted-average interest accretion rate
3.2 %
— %
Weighted-average current discount rate
5.5 %
— %
Expected future benefit payments, undiscounted
$
64,754
$
—
The following is a reconciliation of future policy benefits to the consolidated balance sheets:
December 31,
(In millions)
2024
2023
2022
Payout annuities with life contingencies
$
42,261
$
45,001
$
36,422
Whole life
1,831
2,189
—
Reconciling items1
5,810
6,097
5,688
Future policy benefits
$
49,902
$
53,287
$
42,110
1 Reconciling items primarily include the deferred profit liability and negative VOBA associated with our liabilities for future policy benefits. Additionally, it
includes term life reserves, fully ceded whole life reserves, and reserves for our immaterial lines of business including accident and health and disability, as well
as other insurance benefit reserves for our no-lapse guarantees with universal life contracts, all of which are fully ceded.
The following is a reconciliation of premiums and interest expense relating to future policy benefits to the consolidated statements of income
(loss):
Premiums
Years ended December 31,
(In millions)
2024
2023
2022
Payout annuities with life contingencies
$
1,085
$
10,504
$
11,606
Whole life
204
2,214
—
Reconciling items1
29
31
32
Total premiums
$
1,318
$
12,749
$
11,638
Interest expense
Years ended December 31,
(In millions)
2024
2023
2022
Payout annuities with life contingencies
$
1,802
$
1,646
$
1,146
Whole life
47
12
—
Total interest expense
$
1,849
$
1,658
$
1,146
1 Reconciling items primarily relate to immaterial lines of business including term life, fully ceded whole life, and accident and health and disability.
Significant assumptions and inputs to the calculation of future policy benefits for payout annuities with life contingencies include policyholder
demographic data, assumptions for policyholder longevity and policyholder utilization for contracts with deferred lives, and discount rates. For
whole life products, significant assumptions and inputs include policyholder demographic data, assumptions for mortality, morbidity, and lapse
and discount rates.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
167
We base certain key assumptions related to policyholder behavior on industry standard data adjusted to align with actual company experience, if
necessary. At least annually, we review all significant cash flow assumptions and update as necessary, unless emerging experience indicates a
more frequent review is necessary. The discount rate reflects market observable inputs from upper-medium grade fixed income instrument
yields and is interpolated, where necessary, to conform to the duration of our liabilities.
During the year ended December 31, 2024, the present value of expected future policy benefits decreased by $3,400 million, which was driven
by $4,561 million of benefit payments, a $1,440 million change in discount rate assumptions due to an increase in rates, and a $356 million
change in foreign exchange, partially offset by $1,871 million of interest accrual and $1,115 million of issuances, primarily pension group
annuities.
During the year ended December 31, 2023, the present value of expected future policy benefits increased by $11,950 million, which was driven
by $13,518 million of issuances, primarily pension group annuities, a $2,236 million change in discount rate assumptions related to a decrease in
rates, and $1,664 million of interest accrual, partially offset by $3,852 million of benefit payments, a $1,509 million reduction in reserve related
to recapture, and $297 million resulting from favorable unlocking of assumptions, primarily related to higher interest rates and favorable
mortality experience lowering future benefit payments.
During the year ended December 31, 2022, the present value of expected future policy benefits increased by $1,144 million, which was driven
by $11,528 million of issuances, primarily pension group annuities, and $1,146 million of interest accrual, partially offset by an $8,425 million
change in discount rate assumptions related to an increase in rates and $2,921 million of benefit payments.
The following is a summary of remeasurement gains (losses) included within future policy and other policy benefits on the consolidated
statements of income (loss):
Years ended December 31,
(In millions)
2024
2023
2022
Reserves
$
25
$
364
$
120
Deferred profit liability
(48)
(246)
(126)
Negative VOBA
39
(65)
21
Total remeasurement gains (losses)
$
16
$
53
$
15
During the years ended December 31, 2024, 2023 and 2022, we recorded reserve increases of $15 million, $136 million and $50 million,
respectively, on the consolidated statements of income (loss) as a result of the present value of benefits and expenses exceeding the present
value of gross premiums.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
168
Market risk benefits – We issue and reinsure traditional deferred and indexed annuity products that contain GLWB and GMDB riders that meet
the criteria to be classified as market risk benefits.
The following is a rollforward of net market risk benefit liabilities by product:
Year ended December 31, 2024
(In millions, except years)
Traditional
deferred annuities
Indexed annuities
Total
Balance at December 31, 2023
$
192
$
3,181
$
3,373
Effect of changes in instrument-specific credit risk
2
(10)
(8)
Balance, beginning of period, before changes in instrument-specific credit risk
194
3,171
3,365
Issuances
—
295
295
Interest accrual
10
191
201
Attributed fees collected
2
358
360
Benefit payments
(4)
(52)
(56)
Effect of changes in interest rates
(18)
(640)
(658)
Effect of changes in equity
—
(94)
(94)
Effect of actual policyholder behavior compared to expected behavior
6
73
79
Effect of changes in future expected policyholder behavior
(3)
88
85
Effect of changes in other future expected assumptions
—
(19)
(19)
Balance, end of period, before changes in instrument-specific credit risk
187
3,371
3,558
Effect of changes in instrument-specific credit risk
3
154
157
Balance at December 31, 2024
190
3,525
3,715
Less: Reinsurance recoverable
—
37
37
Balance at December 31, 2024, net of reinsurance
$
190
$
3,488
$
3,678
Net amount at risk
$
425
$
15,441
Weighted-average attained age of contract holders (in years)
76
69
Year ended December 31, 2023
(In millions, except years)
Traditional
deferred annuities
Indexed annuities
Total
Balance at December 31, 2022
$
170
$
2,319
$
2,489
Effect of changes in instrument-specific credit risk
13
353
366
Balance, beginning of period, before changes in instrument-specific credit risk
183
2,672
2,855
Issuances
—
106
106
Interest accrual
10
147
157
Attributed fees collected
2
336
338
Benefit payments
(2)
(32)
(34)
Effect of changes in interest rates
(1)
(90)
(91)
Effect of changes in equity
—
(119)
(119)
Effect of actual policyholder behavior compared to expected behavior
5
67
72
Effect of changes in future expected policyholder behavior
(3)
78
75
Effect of changes in other future expected assumptions
—
6
6
Balance, end of period, before changes in instrument-specific credit risk
194
3,171
3,365
Effect of changes in instrument-specific credit risk
(2)
10
8
Balance at December 31, 2023
$
192
$
3,181
$
3,373
Net amount at risk
$
425
$
14,716
Weighted-average attained age of contract holders (in years)
75
69
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
169
Year ended December 31, 2022
(In millions, except years)
Traditional
deferred annuities
Indexed annuities
Total
Balance at January 1, 2022
$
253
$
4,194
$
4,447
Issuances
—
60
60
Interest accrual
4
52
56
Attributed fees collected
3
330
333
Benefit payments
(4)
(49)
(53)
Effect of changes in interest rates
(77)
(2,092)
(2,169)
Effect of changes in equity
—
176
176
Effect of actual policyholder behavior compared to expected behavior
6
42
48
Effect of changes in other future expected assumptions
(2)
(41)
(43)
Balance, end of period, before changes in instrument-specific credit risk
183
2,672
2,855
Effect of changes in instrument-specific credit risk
(13)
(353)
(366)
Balance at December 31, 2022
$
170
$
2,319
$
2,489
Net amount at risk
$
422
$
13,581
Weighted-average attained age of contract holders (in years)
74
68
The following is a reconciliation of market risk benefits to the consolidated balance sheets. Market risk benefit assets are included in other assets
on the consolidated balance sheets.
December 31, 2024
(In millions)
Asset
Liability
Net liability
Traditional deferred annuities
$
—
$
190
$
190
Indexed annuities
313
3,838
3,525
Total
$
313
$
4,028
$
3,715
December 31, 2023
(In millions)
Asset
Liability
Net liability
Traditional deferred annuities
$
—
$
192
$
192
Indexed annuities
378
3,559
3,181
Total
$
378
$
3,751
$
3,373
December 31, 2022
(In millions)
Asset
Liability
Net liability
Traditional deferred annuities
$
—
$
170
$
170
Indexed annuities
481
2,800
2,319
Total
$
481
$
2,970
$
2,489
During the year ended December 31, 2024, net market risk benefit liabilities increased by $342 million, which was primarily driven by $360
million in fees collected from policyholders, issuances of $295 million, $201 million of interest accrual, and a $149 million change in
instrument-specific credit risk related to tightening of credit spreads, partially offset by a decrease of $658 million related to changes in the risk-
free discount rate across the curve.
During the year ended December 31, 2023, net market risk benefit liabilities increased by $884 million, which was primarily driven by $338
million in fees collected from policyholders, a $374 million change in instrument-specific credit risk related to tightening of credit spreads, $157
million of interest accrual, and issuances of $106 million, partially offset by $119 million of changes related to equity market performance and a
decrease of $91 million related to changes in the risk-free discount rate across the curve.
During the year ended December 31, 2022, net market risk benefit liabilities decreased by $1,958 million, which was primarily driven by a
decrease of $2,169 million related to changes in the risk-free discount rate across the curve and a $366 million change in instrument-specific
credit risk related to widening of credit spreads, partially offset by $333 million of fees collected from policyholders and $176 million of
changes related to equity market performance.
The determination of the fair value of market risk benefits requires the use of inputs related to fees and assessments and assumptions in
determining the projected benefits in excess of the projected account balance. Judgment is required for both economic and actuarial
assumptions, which can be either observable or unobservable, that impact future policyholder account growth.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
170
Economic assumptions include interest rates and implied volatilities throughout the duration of the liability. For indexed annuities, assumptions
also include projected equity returns which impact cash flows attributable to indexed strategies, implied equity volatilities, expected index
credits on the next policy anniversary date and future equity option costs. Assumptions related to the level of option budgets used for
determining the future equity option costs and the impact on future policyholder account value growth are considered unobservable inputs.
Policyholder behavior assumptions are unobservable inputs and are established using accepted actuarial valuation methods to estimate
withdrawals (surrender rate) and income rider utilization. Assumptions are generally based on industry data and pricing assumptions which are
updated for actual experience, if necessary. Actual experience may be limited for recently issued products.
All inputs are used to project excess benefits and fees over a range of risk-neutral, stochastic interest rate scenarios. For indexed annuities,
stochastic equity return scenarios are also included within the range. A risk margin is incorporated within the discount rate to reflect uncertainty
in the projected cash flows such as variations in policyholder behavior, as well as a credit spread to reflect nonperformance risk, which is
considered an unobservable input. We use our public credit rating relative to the US Treasury curve as of the valuation date to reflect our
nonperformance risk in the fair value estimate of market risk benefits.
The following summarizes the unobservable inputs for market risk benefits:
December 31, 2024
(In millions, except percentages)
Fair value
Valuation
technique
Unobservable
inputs
Minimum
Maximum
Weighted
average
Impact of an increase
in the input on fair
value
Market risk benefits, net
$
3,715
Discounted
cash flow
Nonperformance
risk
0.4 %
1.1 %
1.0 %
1
Decrease
Option budget
0.5 %
6.0 %
2.3 % 2
Decrease
Surrender rate
3.3 %
7.2 %
4.6 % 2
Decrease
Utilization rate
28.6 %
95.0 %
84.9 % 3
Increase
December 31, 2023
(In millions, except percentages)
Fair value
Valuation
technique
Unobservable
inputs
Minimum
Maximum
Weighted
average
Impact of an increase
in the input on fair
value
Market risk benefits, net
$
3,373
Discounted
cash flow
Nonperformance
risk
0.4 %
1.4 %
1.2 %
1
Decrease
Option budget
0.5 %
6.0 %
1.9 % 2
Decrease
Surrender rate
3.2 %
6.4 %
4.5 % 2
Decrease
Utilization rate
28.6 %
95.0 %
83.6 % 3
Increase
December 31, 2022
(In millions, except percentages)
Fair value
Valuation
technique
Unobservable
inputs
Minimum
Maximum
Weighted
average
Impact of an increase
in the input on fair
value
Market risk benefits, net
$
2,489
Discounted
cash flow
Nonperformance
risk
0.2 %
1.6 %
1.4 %
1
Decrease
Option budget
0.5 %
5.3 %
1.7 % 2
Decrease
Surrender rate
3.3 %
6.7 %
4.4 % 2
Decrease
Utilization rate
28.6 %
95.0 %
82.3 % 3
Increase
1 The nonperformance risk weighted average is based on the cash flows underlying the market risk benefit reserve.
2 The option budget and surrender rate weighted averages are calculated based on projected account values.
3 The utilization of GLWB withdrawals represents the estimated percentage of policyholders that are expected to use their income rider over the duration of the
contract, with the weighted average based on current account values.
10. Closed Block
We pay guaranteed benefits under all policies included in the Closed Blocks. In the event the performance of the Closed Blocks’ assets is
insufficient to maintain dividend scales and interest credits, we may reduce the policyholder dividend scales. In the event dividends have been
reduced to zero and the Closed Blocks’ assets remain insufficient to fund the Closed Blocks’ guaranteed benefits, we would use assets
supporting open block policies or surplus to meet the contractual benefits of the Closed Blocks’ policyholders. The ILICO Closed Block has
been ceded to Global Atlantic. Therefore, Global Atlantic would be required to provide funding for any asset insufficiency related to the ILICO
Closed Block. Additionally, the AmerUs Closed Block has a letter of credit and tail risk reinsurance agreement in place that limits our exposure
to potential asset insufficiency.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
171
We elected the fair value option for the AmerUs Closed Block. The fair value of liabilities of the AmerUs Closed Block was derived at election
as the sum of the fair value of the AmerUs Closed Block assets plus our cost of capital in the AmerUs Closed Block. The cost of capital was
then determined to be the present value of the projected release of required capital and future after tax earnings on required capital supporting
the AmerUs Closed Block, discounted at a rate which represents a market participant’s required rate of return, less the initial required capital. At
each reporting period, we record the fair value of the AmerUs Closed Block by adjusting the change in liabilities, exclusive of the cost of
capital, to equal the change in assets. We do not record additional policyholder dividend obligations, as there are no future US GAAP earnings
available to the policyholders.
The excess of the fair value of the liabilities over the fair value of the assets represents our cost of capital in the AmerUs Closed Block. The
maximum amount of future earnings from the assets and liabilities of the AmerUs Closed Block is represented by the reduction in the cost of
capital in future years based on the operations of the AmerUs Closed Block and recalculation of the cost of capital each reporting period.
Summarized financial information of the AmerUs Closed Block is presented below.
December 31,
(In millions)
2024
2023
Liabilities
Future policy benefits
$
1,102
$
1,178
Other policy claims and benefits
21
12
Dividends payable to policyholders
68
70
Other liabilities
9
7
Total liabilities
1,200
1,267
Assets
Trading securities
939
989
Mortgage loans
7
11
Policy loans
122
128
Total investments
1,068
1,128
Cash and cash equivalents
77
88
Accrued investment income
13
14
Reinsurance recoverable
18
12
Other assets
5
1
Total assets
1,181
1,243
Maximum future earnings to be recognized from AmerUs Closed Block
$
19
$
24
The following represents the contribution from and to AmerUs Closed Block.
Years ended December 31,
(In millions)
2024
2023
2022
Revenues
Premiums
$
26
$
29
$
29
Net investment income
67
68
67
Investment related gains (losses)
(44)
40
(310)
Total revenues
49
137
(214)
Benefits and expenses
Future policy and other policy benefits
24
111
(242)
Dividends to policyholders
20
21
22
Total benefits and expenses
44
132
(220)
Contribution from AmerUs Closed Block before income taxes
5
5
6
Income tax expense
—
2
1
Contribution from AmerUs Closed Block, net of income taxes
$
5
$
3
$
5
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
172
11. Debt
Credit Facility—On June 30, 2023, AHL, ALRe, AUSA and AARe entered into a five-year revolving credit agreement with a syndicate of
banks and Citibank, N.A. as administrative agent (Credit Facility). The Credit Facility is unsecured and has a commitment termination date of
June 30, 2028, subject to up to two one-year extensions, in accordance with the terms of the Credit Facility. In connection with the Credit
Facility, AHL and AUSA guaranteed all of the obligations of AHL, ALRe, AARe and AUSA under the Credit Facility and the related loan
documents, and ALRe and AARe guaranteed certain of the obligations of AHL, ALRe, AARe and AUSA under the Credit Facility and the
related loan documents. The borrowing capacity under the Credit Facility is $1.25 billion, subject to being increased up to $1.75 billion in total
on the terms described in the Credit Facility. The Credit Facility contains various standard covenants with which we must comply, including the
following:
1.
Consolidated debt-to-capitalization ratio of not greater than 35%;
2.
Minimum consolidated net worth of no less than $14.8 billion; and
3.
Restrictions on our ability to incur liens, with certain exceptions.
Interest accrues on outstanding borrowings at either the adjusted term secured overnight financing rate plus a margin or the base rate plus a
margin, with the applicable margin varying based on AHL’s debt rating. Rates and terms are as defined in the Credit Facility. As of
December 31, 2024 and 2023, we had no amounts outstanding under the credit facility and were in compliance with all financial covenants
under the facility.
Liquidity Facility—On June 28, 2024, AHL and ALRe entered into a new revolving credit agreement with a syndicate of banks and Wells
Fargo Bank, National Association, as administrative agent (Liquidity Facility), which replaced our previous revolving credit agreement dated as
of June 30, 2023. The previous credit agreement, and the commitments under it, expired on June 28, 2024. The Liquidity Facility is unsecured
and has a commitment termination date of June 27, 2025, subject to any extensions of additional 364-day periods with consent of extending
lenders and/or “term-out” of outstanding loans (by which, at our election, the outstanding loans may be converted to term loans which shall have
a maturity of up to one year after the original maturity date), in each case in accordance with the terms of the Liquidity Facility. In connection
with the Liquidity Facility, ALRe guaranteed all of the obligations of AHL under the Liquidity Facility and the related loan documents. The
Liquidity Facility will be used for liquidity and working capital needs to meet short-term cash flow and investment timing differences. The
borrowing capacity under the Liquidity Facility is $2.6 billion, subject to being increased up to $3.1 billion in total on the terms described in the
Liquidity Facility. The Liquidity Facility contains various standard covenants with which we must comply, including the following:
1.
ALRe minimum consolidated net worth of no less than $10.2 billion; and
2.
Restrictions on our ability to incur liens, with certain exceptions.
Interest accrues on outstanding borrowings at either the adjusted term secured overnight financing rate plus a margin or the base rate plus a
margin, with applicable margin varying based on ALRe’s financial strength rating. Rates and terms are as defined in the Liquidity Facility.
As of December 31, 2024 and 2023, we had no amounts outstanding under the current or previous liquidity facilities and were in compliance
with all financial covenants under the facilities.
Senior Notes—During the first quarter of 2024, we issued $1.0 billion of 6.250% Senior Notes due April 1, 2054 (2054 Senior Notes). We will
pay interest on the 2054 Senior Notes semi-annually, commencing on October 1, 2024.
Subordinated Notes—During the first quarter of 2024, we issued $575 million of 7.250% Fixed-Rate Reset Junior Subordinated Debentures
due March 30, 2064 (2064 Subordinated Notes). We will pay interest at an annual fixed rate of 7.250% on the 2064 Subordinated Notes
quarterly, commencing on June 30, 2024 until March 30, 2029. On March 30, 2029, and every fifth annual anniversary thereafter, the interest
rate will reset to the Five-Year US Treasury Rate (as defined in the applicable prospectus supplement) plus 2.986%. We may defer interest
payments for up to five consecutive years.
During the fourth quarter of 2024, we issued $600 million of 6.625% Fixed-Rate Reset Junior Subordinated Debentures due October 15, 2054
(2054 Subordinated Notes). We will pay interest at an annual fixed rate of 6.625% on the 2054 Subordinated Notes semi-annually, commencing
on April 15, 2025 until October 15, 2034. On October 15, 2034, and every fifth annual anniversary thereafter, the interest rate will reset to the
Five-Year US Treasury Rate (as defined in the applicable prospectus supplement) plus 2.607%. We may defer interest payments for up to five
consecutive years.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
173
The following is a summary of our debt:
Outstanding Balance
December 31,
(In millions, except percentages)
Issue Date
Maturity Date
Principal Balance
2024
2023
4.125% 2028 Senior Notes
January 12, 2018
January 12, 2028
$
1,000
$
1,050
$
1,066
6.150% 2030 Senior Notes
April 3, 2020
April 3, 2030
500
579
593
3.500% 2031 Senior Notes
October 8, 2020
January 15, 2031
500
520
523
6.650% 2033 Senior Notes
November 21, 2022
February 1, 2033
400
395
395
5.875% 2034 Senior Notes
December 12, 2023
January 15, 2034
600
584
583
3.950% 2051 Senior Notes
May 25, 2021
May 25, 2051
500
544
545
3.450% 2052 Senior Notes
December 13, 2021
May 15, 2052
500
504
504
6.250% 2054 Senior Notes
March 22, 2024
April 1, 2054
1,000
983
—
6.625% 2054 Subordinated Notes
October 10, 2024
October 15, 2054
600
592
—
7.250% 2064 Subordinated Notes
March 7, 2024
March 30, 2064
575
558
—
Total debt
$
6,175
$
6,309
$
4,209
The senior unsecured notes are callable by AHL at any time. If called prior to three months before the scheduled maturity date, the price is equal
to the greater of (1) 100% of the principal and any accrued and unpaid interest and (2) an amount equal to the sum of the present values of
remaining scheduled payments, discounted from the scheduled payment date to the redemption date at the treasury rate plus a spread as defined
in the applicable prospectus supplement and any accrued and unpaid interest.
Interest expense on long-term debt was $248 million, $123 million and $98 million for the years ended December 31, 2024, 2023 and 2022,
respectively.
Unsecured Revolving Promissory Note Payable with AGM—We have an unsecured revolving promissory note payable with AGM. See
Note 15 – Related Parties for further information.
12. Equity
Preferred Stock—We have the following series of preferred stock issuances:
Issue date
Authorized, issued
and outstanding
Liquidation
preference per
share
6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A (Series A)
June 10, 2019
34,500
$
25,000
5.625% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series B (Series B)
September 19, 2019
13,800
$
25,000
6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C (Series C)
June 11, 2020
24,000
$
25,000
4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D (Series D)
December 18, 2020
23,000
$
25,000
7.75% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E (Series E)
December 12, 2022
20,000
$
25,000
The following summarizes dividends declared per preferred stock share by series:
Years ended December 31,
(Per share)
2024
2023
2022
Series A
$
1,587.50
$
1,590.20
$
1,587.50
Series B
1,406.25
1,406.25
1,406.25
Series C
1,593.75
1,593.75
1,593.75
Series D
1,218.75
1,218.75
1,218.75
Series E
1,937.50
2,034.38
—
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
174
The following summarizes dividends declared in the aggregate on the preferred stock by series:
Years ended December 31,
(In millions)
2024
2023
2022
Series A
$
55
$
55
$
55
Series B
19
19
19
Series C
38
38
38
Series D
28
28
29
Series E
41
41
—
Total dividends declared
$
181
$
181
$
141
Preferred stock dividends are payable on a non-cumulative basis only when, as and if declared, quarterly in arrears on the 30th day of March,
June, September and December of each year. Preferred stock ranks senior to our common stock with respect to dividends, to the extent declared,
and in liquidation, to the extent of the liquidation preference.
Common Stock—All of our common stock is owned by AGM. Our board of directors declared common stock cash dividends of $750 million
on December 31, 2021, payable to holders of the Company’s Class A shares with a record date and payment date following the completion of
our merger with AGM. The dividend was paid on January 4, 2022. During the year ended December 31, 2022, our board of directors declared
and we paid additional common stock dividends of $563 million. During the year ended December 31, 2023, our board of directors declared and
we paid common stock dividends of $937 million. During the year ended December 31, 2024, our board of directors declared and we paid or
distributed common stock dividends of $951 million, of which $499 million were provided to AGM in the form of assets in kind.
Distributions to Parent—In the first quarter of 2022, we distributed our investment in AOG units to AGM. The AOG units represented our
historical strategic investment in Apollo. The AOG distribution resulted in a reduction of additional paid-in capital of $1,916 million and an
increase in accumulated deficit of $26 million. In connection with the AOG distribution to AGM, we also issued a stock dividend of
11.6 million shares to the Apollo Group stockholders other than AGM. Additionally, we recorded a reestablishment of the liabilities that were
considered effectively settled upon merger of $810 million, as these liabilities were settled during the first quarter of 2022 in the normal course
of business as intercompany payables to AGM.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
175
Accumulated Other Comprehensive Income (Loss)—The following provides the details and changes in AOCI:
(In millions)
Unrealized
investment
gains (losses)
on AFS
securities
without a credit
allowance
Unrealized
investment
gains (losses)
on AFS
securities with
a credit
allowance
Unrealized
gains (losses)
on hedging
instruments
Remeasurement
gains (losses)
on future policy
benefits related
to discount rate
Remeasurement
gains (losses)
on market risk
benefits related
to credit risk
Foreign
currency
translation and
other
adjustments
Accumulated
other
comprehensive
income (loss)
Balance at January 1, 2022
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Other comprehensive income
(loss) before reclassifications
(17,929)
(463)
69
8,425
366
(27)
(9,559)
Less: Reclassification adjustments
for gains (losses) realized in net
income1
(218)
(18)
67
—
—
—
(169)
Less: Income tax expense
(benefit)
(3,154)
(86)
12
1,223
77
(5)
(1,933)
Less: Other comprehensive
income (loss) attributable to
noncontrolling interests, net of
tax
(1,992)
(25)
(57)
1,946
4
(12)
(136)
Balance at December 31, 2022
(12,565)
(334)
47
5,256
285
(10)
(7,321)
Other comprehensive income
(loss) before reclassifications
5,067
51
(117)
(2,236)
(374)
40
2,431
Less: Reclassification adjustments
for gains (losses) realized in net
income1
(163)
(3)
82
—
—
—
(84)
Less: Income tax expense
(benefit)
588
6
(51)
38
(78)
8
511
Less: Other comprehensive
income (loss) attributable to
noncontrolling interests, net of
subsidiary issuance of equity
interests and tax
749
3
(19)
(476)
(14)
9
252
Balance at December 31, 2023
(8,672)
(289)
(82)
3,458
3
13
(5,569)
Other comprehensive income
(loss) before reclassifications
(1,354)
(5)
(8)
1,425
(149)
(48)
(139)
Less: Reclassification adjustments
for gains (losses) realized in net
income1
(223)
(15)
43
—
—
—
(195)
Less: Income tax expense
(benefit)
(219)
3
(8)
287
(31)
(10)
22
Less: Other comprehensive
income (loss) attributable to
noncontrolling interests, net of
tax
(413)
2
(5)
361
(12)
(3)
(70)
Balance at December 31, 2024
$
(9,171) $
(284) $
(120) $
4,235
$
(103) $
(22) $
(5,465)
1 Recognized in investment related gains (losses) on the consolidated statements of income (loss).
13. Income Taxes
Income tax expense (benefit) consists of the following:
Years ended December 31,
(In millions)
2024
2023
2022
Current1
$
975
$
720
$
373
Deferred
(245)
(1,881)
(1,019)
Income tax expense (benefit)
$
730
$
(1,161) $
(646)
1 For the years ended December 31, 2024, 2023 and 2022, current includes proportional amortization of $56 million, $49 million and $0 million, respectively;
tax credits of $(332) million, $(164) million and $0 million, respectively; and transaction costs relating to low-income housing and transferable energy tax
credits of $238 million, $103 million and $0 million, respectively.
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
176
Income tax expense (benefit) was calculated based on the following income (loss) before income taxes by jurisdiction:
Years ended December 31,
(In millions)
2024
2023
2022
Bermuda
$
2,146
$
2,652
$
(3,400)
US
3,526
2,179
(2,084)
United Kingdom
(36)
(240)
(178)
Japan
(2)
—
—
Income (loss) before income taxes
$
5,634
$
4,591
$
(5,662)
Our expected tax provision computed on pre-tax income is based upon the statutory US tax rate of 21%. A reconciliation of the difference
between the expected tax provision at the statutory US tax rate and income tax expense (benefit) is as follows:
Years ended December 31,
(In millions, except percentages)
2024
2023
2022
Expected tax provision computed on pre-tax income (loss)
$
1,183
$
964
$
(1,189)
Increase (decrease) in income taxes resulting from:
Deferred tax valuation allowance
23
(80)
39
Non-deductible expenses
12
11
1
Prior year true-up
(22)
(38)
48
Stock compensation expense
(11)
(1)
9
Noncontrolling interests
(241)
(245)
446
Other
11
73
—
Bermuda tax
(195)
(1,764)
—
Interest expense attribute
8
(68)
—
Tax credits
(38)
(13)
—
Income tax expense (benefit)
$
730
$
(1,161)
$
(646)
Effective tax rate
13 %
(25) %
11 %
On December 27, 2023, the Government of Bermuda enacted the Corporate Income Tax Act 2023 (Bermuda CIT). Commencing on January 1,
2025, the Bermuda CIT generally imposes a 15% corporate income tax on entities that are tax residents in Bermuda or have a Bermuda
permanent establishment, without regard to any assurances that have been given pursuant to the Exempted Undertakings Tax Protection Act
1966. Our results as of December 31, 2024 include material deferred tax assets resulting from the passage of the Bermuda CIT, primarily related
to an opening tax loss carryforward.
Total income taxes were as follows:
Years ended December 31,
(In millions)
2024
2023
2022
Income tax expense (benefit)
$
730
$
(1,161) $
(646)
Income tax expense (benefit) from OCI
22
511
(1,933)
Total income tax expense (benefit)
$
752
$
(650) $
(2,579)
Current income tax recoverable and deferred tax assets are included in other assets on the consolidated balance sheets, and current income tax
payable and deferred tax liabilities are included in other liabilities on the consolidated balance sheets. Current and deferred income tax assets
and liabilities were as follows:
December 31,
(In millions)
2024
2023
Current income tax recoverable
$
364
$
—
Current income tax payable
199
67
Net current income tax recoverable (payable)
$
165
$
(67)
Deferred tax assets
$
6,259
$
5,754
Deferred tax liabilities
282
11
Net deferred tax assets
$
5,977
$
5,743
Table of Contents
ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
177
Deferred income tax assets and liabilities consisted of the following:
December 31,
(In millions)
2024
2023
Deferred tax assets
Insurance liabilities
$
2,383
$
1,742
Net operating and capital loss carryforwards
253
284
Investments, including derivatives and unrealized losses on AFS
2,360
1,899
Employee benefits
10
8
Investment in foreign subsidiaries
552
1,176
Bermuda tax
1,959
1,764
Other
—
284
Total deferred tax assets
7,517
7,157
Valuation allowance
(48)
(25)
Deferred tax assets, net of valuation allowance
7,469
7,132
Deferred tax liabilities
Intangible assets
362
386
DAC, DSI and VOBA
1,120
954
Other
10
49
Total deferred tax liabilities
1,492
1,389
Net deferred tax assets
$
5,977
$
5,743
As of December 31, 2024, we have US federal net operating losses of $842 million, which will begin to expire by 2026; US state net operating
losses of $258 million, which will begin to expire by 2031; UK net operating losses of $180 million, which do not expire; and a Bermuda tax
loss carryforward, as of January 1, 2025 (the effective date), of $7,797 million, which does not expire.
The valuation allowance consists of the following:
December 31,
(In millions)
2024
2023
US federal and state net operating losses and other deferred tax assets
$
3
$
—
UK net operating losses and other deferred tax assets
45
25
Total valuation allowance
$
48
$
25
The primary jurisdictions in which we operate and incur income taxes are the US, UK and, beginning January 1, 2025, Bermuda. We have
accumulated undistributed earnings generated by certain foreign subsidiaries, which we intend to indefinitely reinvest. As such, we have not
recorded deferred taxes related to the accumulated undistributed earnings. We determined that estimating the unrecognized tax liability is not
practicable.
The UK enacted legislation in July 2023 implementing certain provisions of the Organisation for Economic Cooperation and Development’s
“Pillar Two” global minimum tax initiative (Pillar Two) that applies to multinational enterprises for accounting periods beginning on or after
December 31, 2023. On February 22, 2024, the UK enacted certain amendments to its Pillar Two legislation which similarly took effect for
accounting periods beginning on or after December 31, 2024. We are continuing to evaluate the potential impact on future periods of Pillar Two,
pending legislative adoption by individual countries, as such legislative changes could result in changes to our effective tax rate. We evaluated
the enacted legislation and concluded there was no material impact to the effective tax rate for the year ended December 31, 2024.
AHL changed its domicile from Bermuda to the US, causing AHL to become a US-domiciled corporation and a US taxpayer effective
December 31, 2023 (Redomicile) and is subject to US corporate income tax for 2024 and future years. AHL’s Bermuda subsidiaries (and AHL
for pre-Redomicile periods) file protective US income tax returns. AHL’s US subsidiaries file, and AHL for post-Redomicile periods will file,
income tax returns with the US federal government and various US state governments.
On August 16, 2022, the US government enacted the Inflation Reduction Act of 2022 (IRA). The IRA contains a number of tax-related
provisions, including a 15% minimum corporate income tax on certain large corporations (CAMT) as well as an excise tax on stock repurchases.
Based on interpretations and assumptions we have made regarding the CAMT provisions of the IRA, which may change once further regulatory
guidance is issued, CAMT as well as the excise tax on stock repurchases had no impact on our consolidated financial statements.
AHL and its subsidiaries are not subject to US federal and state examinations by tax authorities for years prior to 2021. AHL and its subsidiaries
are not currently under audit by the IRS or any state taxing authority.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
178
14. Statutory Requirements
Our insurance and reinsurance subsidiaries are subject to insurance laws and regulations in the jurisdictions in which they operate including
Bermuda and the US. Certain regulations include restrictions that limit the dividends or other distributions, such as loans or cash advances,
available to stockholders without prior approval of the insurance regulatory authorities. The differences between financial statements prepared
for insurance regulatory authorities and US GAAP financial statements vary by jurisdiction.
Bermuda statutory requirements—ALRe, AARe, Athene Co-Invest Reinsurance Affiliate 1A Ltd. (ACRA 1A) and Athene Co-Invest
Reinsurance Affiliate 2A Ltd. (ACRA 2A) are each licensed by the Bermuda Monetary Authority (BMA) as long-term insurers and are subject
to the Insurance Act 1978, as amended (Bermuda Insurance Act) and regulations promulgated thereunder. The BMA implemented the Economic
Balance Sheet (EBS) framework into the Bermuda Solvency Capital Requirement (BSCR), which was granted equivalence to the European
Union’s Directive (2009/138/EC) (Solvency II). Amounts reported for Bermuda entities within these statutory disclosures exclude the impact of
any deferred taxes on the EBS or statutory bases resulting from the enactment of Bermuda CIT.
Under the Bermuda Insurance Act, long-term insurers are required to maintain minimum statutory capital and surplus to meet the minimum
margin of solvency (MMS) and minimum economic statutory capital and surplus (EBS capital and surplus) to meet the Enhanced Capital
Requirement (ECR). For our Class C reinsurers, ACRA 1A and ACRA 2A, MMS is equal to the greater of $500,000, 1.5% of the total statutory
assets or 25% of ECR. For our Class E reinsurers, ALRe and AARe, MMS is equal to the greater of $8 million, 2% of the first $500 million of
statutory assets plus 1.5% of statutory assets above $500 million or 25% of ECR. For each class, the ECR is calculated based on a risk-based
capital model where risk factor charges are applied to the EBS. The ECR is floored at the MMS. As of December 31, 2024, our Bermuda
subsidiaries were in excess of the minimum levels required. For our Bermuda reinsurance subsidiaries, the ECR is the binding regulatory
constraint.
The following represents the EBS capital and surplus and BSCR ratios:
December 31,
2024
2023
(In millions, except percentages)
EBS capital &
surplus
BSCR ratio
EBS capital &
surplus
BSCR ratio
ALRe
$
23,547
420 %
$
18,245
233 %
AARe
27,693
238 %
26,647
291 %
ACRA 1A
3,866
165 %
5,296
219 %
ACRA 2A
4,277
176 %
3,717
353 %
Under the Bermuda statutory framework, statutory financial statements are generally equivalent to US GAAP financial statements, with the
exception of prudential filters and permitted practices granted by the BMA. Our Bermuda subsidiaries have permission in the statutory financial
statements to use amortized cost instead of fair value as the basis for certain investments. Additionally, our Bermuda subsidiaries use US
statutory reserving principles for the calculation of insurance reserves instead of US GAAP, subject to the reserves being proved adequate based
on cash flow testing. The following represents the effect of the permitted practices to the statutory financial statements:
December 31, 2024
(In millions)
ALRe
AARe
ACRA 1A
ACRA 2A
Increase (decrease) to capital and surplus due to permitted practices
$
(5) $
6,119
$
3,768
$
51
Increase (decrease) to statutory net income due to permitted practices
973
(2,695)
54
515
Under the Bermuda Insurance Act, our Bermuda subsidiaries are prohibited from paying a dividend in an amount exceeding 25% of the prior
year’s statutory capital and surplus, unless at least two members of the companies’ respective board of directors and its principal representative
in Bermuda sign and submit to the BMA an affidavit attesting that a dividend in excess of this amount would not cause the subsidiary to fail to
meet its relevant margins. In certain instances, the Bermuda subsidiary would also be required to provide prior notice to the BMA in advance of
the payment of dividends. In the event that such an affidavit is submitted to the BMA, and further subject to meeting the MMS and ECR
requirements, a Bermuda subsidiary is permitted to distribute up to the sum of 100% of statutory surplus and an amount less than 15% of
statutory capital. Distributions in excess of this amount require the approval of the BMA. The following represents the maximum distribution
our Bermuda subsidiaries would be permitted to remit to its parent without the need for prior approval:
December 31,
(In millions)
2024
2023
ALRe
$
10,112
$
7,023
AARe
10,207
8,012
ACRA 1A
1,044
1,614
ACRA 2A
877
30
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
179
US statutory requirements—Our primary regulated US subsidiaries and the corresponding insurance regulatory authorities are as follows:
Subsidiary
Regulatory Authority
AAIA
Iowa Insurance Division
AANY
New York Department of Financial Services
Athene Re USA IV
State of Vermont Department of Financial Regulation
On October 11, 2024, Athene Annuity & Life Assurance Company (AADE) merged with and into AAIA, with AAIA as the surviving entity
following the receipt of all required regulatory approvals. Prior year amounts relating to AAIA below have been restated to reflect the effect of
the merger.
Each entity’s statutory statements are presented on the basis of accounting practices determined by the respective regulatory authority. The
regulatory authority recognizes only statutory accounting practices prescribed or permitted by the corresponding state for determining and
reporting the financial condition and results of operations of an insurance company and for determining its solvency under insurance law.
The maximum dividend these subsidiaries can pay to stockholders, without prior approval of the respective state insurance department, is
subject to restrictions relating to statutory surplus or net gain from operations. The maximum dividend payment over a twelve-month period may
not, without prior approval, be paid from a source other than earned surplus and may not exceed the greater of (1) the prior year’s net gain from
operations or (2) 10% of prior year’s policyholders’ surplus. Based on these restrictions, the maximum dividend AAIA, and its predecessor by
merger AADE, could pay to its parent absent regulatory approval was $0 million as of each of December 31, 2024 and 2023. Any dividends
from AHL’s other US statutory entities in excess of the amounts allowed for AAIA would not be able to be remitted to its parent without
regulatory approval from the Iowa Insurance Division.
As of December 31, 2024, our US subsidiaries’ solvency, liquidity and risk-based capital amounts were significantly in excess of the minimum
levels required.
In some instances, the states of domicile of our US subsidiaries have adopted prescribed accounting practices that differ from the required
accounting outlined in NAIC Statutory Accounting Principles (SAP). These subsidiaries also have certain accounting practices permitted by the
states of domicile that differ from those found in NAIC SAP. These prescribed and permitted practices are described as follows:
AAIA – Among the products issued by AAIA are indexed universal life insurance and fixed indexed annuities. These products allow a portion of
the premium to earn interest based on certain indices, including the S&P 500 and other bespoke indices. We purchase call options, futures and
variance swaps to hedge the growth in interest credited to the customer as a direct result of increases in the related index. The Iowa Insurance
Division allows an insurer to elect (1) to use an amortized cost method to account for certain derivative instruments, such as call options,
purchased to hedge the growth in interest credited to the customer on indexed insurance products and (2) to use an indexed annuity reserve
calculation methodology under which call options associated with the current index interest crediting term are valued at zero. AAIA has elected
to apply this option to its over-the-counter call options and reserve liabilities. As a result, AAIA’s statutory surplus increased by $38 million and
decreased by $2 million as of December 31, 2024 and 2023, respectively.
Athene Re USA IV – AAIA has ceded the AmerUs Closed Block to Athene Re USA IV on a 100% funds withheld basis. A permitted practice in
the State of Vermont allows Athene Re USA IV to include as admitted assets the face amount of all issued and outstanding letters of credit used
to fund its reinsurance obligations to AAIA in its statutory financial statements. If Athene Re USA IV had not followed this permitted practice,
then it would not have exceeded authorized control level risk based capital requirements. As of December 31, 2024 and 2023, Athene Re USA
IV included as admitted assets $86 million and $96 million, respectively, related to the outstanding letters of credit.
Statutory capital and surplus and net income (loss)—The following table presents, for each of our primary insurance subsidiaries, the
statutory capital and surplus and the statutory net income (loss), based on the most recent statutory financial statements to be filed with
insurance regulators:
Statutory capital & surplus
Statutory net income (loss)
December 31,
Years ended December 31,
(In millions)
2024
2023
2024
2023
2022
ALRe
$
17,623
$
14,474
$
3,140
$
832
$
937
AARe
21,049
17,773
2,910
408
1,329
ACRA 1A
4,521
5,092
841
297
(87)
ACRA 2A
4,569
1,952
877
(759)
(2)
AAIA
3,899
3,306
949
(79)
(486)
AANY
318
290
25
(3)
(23)
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
180
15. Related Parties
Apollo
Fee structure – Substantially all of our investments are managed by Apollo. Apollo provides us with a full suite of services for our investment
portfolio, including direct investment management, asset allocation, mergers and acquisitions asset diligence, and certain operational support
services including investment compliance, tax, legal and risk management support.
Apollo has extensive experience managing our investment portfolio and its knowledge of our liability profile enables it to tailor an asset
management strategy to fit our specific needs. This strategy has proven responsive to changing market conditions and focuses on earning
incremental yield by taking measured liquidity risk and complexity risk, rather than assuming incremental credit risk. Our partnership has
enabled us to take advantage of investment opportunities that would likely not otherwise have been available to us.
Under our fee agreement with Apollo, we pay Apollo a base management fee of (1) 0.225% per year on a monthly basis equal to the lesser of
(A) $103.4 billion, which represents the aggregate fair market value of substantially all of the assets in substantially all of the accounts of or
relating to us (collectively, the Accounts) as of December 31, 2018 (Backbook Value), and (B) the aggregate book value of substantially all of
the assets in the Accounts at the end of the respective month, plus (2) 0.15% per year of the amount, if any, by which the aggregate book value
of substantially all of the assets in the Accounts at the end of the respective month exceeds the Backbook Value, subject to certain adjustments.
Additionally, we pay a sub-allocation fee based on specified asset class tiers ranging from 0.065% to 0.70% of the book value of such assets,
with the higher percentages in this range for asset classes that are designed to have more alpha generating abilities. Effective December 31,
2023, in addition to the base and sub-allocation fees specified above, we pay Apollo a target annual performance fee of $37.5 million, with the
amount of the annual performance fee ranging from between 0% and 200% of such target amount, based on our spread related earnings for the
year relative to our targets, beginning with the performance period for the second half of 2023.
During the years ended December 31, 2024, 2023 and 2022, we incurred management fees, inclusive of the base, sub-allocation and
performance fees, of $1,269 million, $987 million and $775 million, respectively. Management fees are included within net investment income
on the consolidated statements of income (loss). As of December 31, 2024 and 2023, management fees payable were $127 million and $101
million, respectively, and are included in other liabilities on the consolidated balance sheets. Such amounts include fees incurred attributable to
Athene Co-Invest Reinsurance Affiliate Holding Ltd. (together with its subsidiaries, ACRA 1) and Athene Co-Invest Reinsurance Affiliate
Holding 2 Ltd. (together with its subsidiaries, ACRA 2) including any noncontrolling interests associated with ACRA 1 and ACRA 2
(collectively, ACRA).
In addition to the assets on our consolidated balance sheets managed by Apollo, Apollo manages the assets underlying our funds withheld
receivable. For these assets, the third-party cedants pay Apollo fees based upon the same fee construct we have with Apollo. Such fees directly
reduce the settlement payments that we receive from the third-party cedant and, as such, we indirectly pay those fees. Finally, Apollo charges
management fees and carried interest on Apollo-managed funds and other entities in which we invest. Neither the fees paid by such third-party
cedants nor the fees or carried interest paid by such Apollo-managed funds or other entities are included in the investment management fee
amounts noted above.
Governance – We have an investment and asset liability committee, which includes members of our senior management and reports to the risk
committee of our board of directors. The committee focuses on strategic decisions involving our investment portfolio, such as approving
investment limits, new asset classes and our allocation strategy, reviewing large asset transactions, as well as monitoring our credit risk, and the
management of our assets and liabilities.
AGM owns all of our common stock and James Belardi, our Chief Executive Officer (CEO), serves as a member of the board of directors and an
executive officer of AGM, and CEO of ISG, which is also a subsidiary of AGM. Mr. Belardi also owns a profit interest in ISG and in connection
with such interest receives quarterly distributions equal to 3.35% of base management fees and 4.5% of subadvisory fees, as such fees are
defined in our fee agreement with Apollo. Additionally, six of the twelve members of our board of directors (including Mr. Belardi) are
employees of or consultants to Apollo. In order to protect against potential conflicts of interest resulting from transactions into which we have
entered and will continue to enter into with the Apollo Group, our bylaws require us to maintain a conflicts committee comprised solely of
directors who are not general partners, directors (other than independent directors of AGM), managers, officers or employees of any member of
the Apollo Group. The conflicts committee reviews and approves material transactions between us and the Apollo Group, subject to certain
exceptions.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
181
Other related party transactions
Apollo Aligned Alternatives Aggregator, L.P. (AAA) – We consolidate AAA as a VIE and AAA holds the majority of our alternative investment
portfolio. Apollo established AAA to provide a single vehicle through which investors may participate in a portfolio of alternative investments,
including those managed by Apollo. Additionally, we believe AAA enhances Apollo’s ability to increase alternative assets under management
(AUM) by raising capital from third parties, which allows us to achieve greater scale and diversification for alternatives. During the third quarter
of 2024, AAA underwent a restructuring which resulted in a change in consolidation that reduced our noncontrolling interests by $1,107 million
and does not represent a withdrawal from AAA.
Athora Holding Ltd. (Athora) – We have a cooperation agreement with Athora, pursuant to which, among other things, (1) for a period of 30
days from the receipt of notice of a cession, we have the right of first refusal to reinsure (i) up to 50% of the liabilities ceded from Athora’s
reinsurance subsidiaries to Athora Life Re Ltd. and (ii) up to 20% of the liabilities ceded from a third party to any of Athora’s insurance
subsidiaries, subject to a limitation in the aggregate of 20% of Athora’s liabilities, (2) Athora agreed to cause its insurance subsidiaries to
consider the purchase of certain funding agreements and/or other spread instruments issued by our insurance subsidiaries, subject to a limitation
that the fair market value of such funding agreements purchased by any of Athora’s insurance subsidiaries may generally not exceed 3% of the
fair market value of such subsidiary’s total assets, and (3) we provide Athora with a right of first refusal to pursue acquisition and reinsurance
transactions in Europe (other than the UK). Notwithstanding the foregoing, pursuant to the cooperation agreement, Athora is only required to
use its reasonable best efforts to cause its subsidiaries to adhere to the provisions set forth in the cooperation agreement and therefore Athora’s
ability to cause its subsidiaries to act pursuant to the cooperation agreement may be limited by, among other things, legal prohibitions or the
inability to obtain the approval of the board of directors or other applicable governing body of the applicable subsidiary, which approval is
solely at the discretion of such governing body. As of December 31, 2024, we have not exercised our right of first refusal to reinsure liabilities
ceded to Athora’s insurance or reinsurance subsidiaries.
We have investments in Athora’s equity, which we hold as a related party investment fund on the consolidated balance sheets, and non-
redeemable preferred equity and corporate debt securities. The following table summarizes our investments in Athora:
December 31,
(In millions)
2024
2023
Investment fund
$
1,033
$
1,082
Non-redeemable preferred equity and corporate debt securities
277
249
Total investment in Athora
$
1,310
$
1,331
Additionally, as of December 31, 2024 and 2023, we had $57 million and $61 million, respectively, of funding agreements outstanding to
Athora. We also have commitments to make additional investments in Athora of $502 million as of December 31, 2024.
Atlas – We have an equity investment in Atlas, an asset-backed specialty lender, through our investment in AAA. As of December 31, 2024 and
2023, we held $3,245 million and $1,008 million, respectively, of related party AFS securities issued by Atlas. Additionally, we held $724
million and $921 million of reverse repurchase agreements issued by Atlas as of December 31, 2024 and 2023, respectively, which are held as
related party short-term investments on the consolidated balance sheets. As of December 31, 2024, we have commitments to make additional
investments in Atlas of $2,977 million. See Note 16 – Commitments and Contingencies for further information on assurance letters issued in
support of Atlas.
Catalina – We have an investment in Apollo Rose II (B) (Apollo Rose). Apollo Rose holds common and preferred equity interests in Catalina.
During the third quarter of 2024, we distributed $141 million of our investment in Apollo Rose representing Catalina common equity interests to
AGM as a dividend. This distribution resulted in our deconsolidation of Apollo Rose as a VIE. As of December 31, 2024, we held $205 million
of redeemable preferred equity securities issued by Apollo Rose, which are held as related party AFS securities on the consolidated balance
sheets.
We have a strategic modco reinsurance agreement with Catalina to cede certain inforce funding agreements. We elected the fair value option on
this agreement and had a liability of $221 million and $330 million as of December 31, 2024 and 2023, respectively, which is included in other
liabilities on the consolidated balance sheets. During the first quarter of 2024, we also entered into a modco reinsurance agreement with Catalina
to cede a quota share of retail deferred annuity products. As of December 31, 2024, we had a reinsurance recoverable balance of $4,309 million
related to this agreement.
MidCap FinCo Designated Activity Company (MidCap Financial) – We have various investments in MidCap Financial including an investment
through AAA, senior unsecured notes and redeemable preferred stock. We previously directly held MidCap Financial profit participating notes
until contribution to AAA during the second quarter of 2022. We also hold structured securities issued by MidCap Financial affiliates. As of
December 31, 2024 and 2023, we held securities issued by MidCap Financial and its affiliates of $1,938 million and $1,844 million,
respectively, which are included in related party AFS securities on the consolidated balance sheets.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
182
Skylign Aviation Holdings, L.P. (together with its subsidiaries, Skylign) – We have investments in Skylign, a leading aviation finance group
focused on aviation lending and leasing, both directly through notes issued by PK AirFinance, a subsidiary of Skylign, and indirectly through
AAA, as we contributed certain of our investments in PK AirFinance to AAA during the second quarter of 2022. We had direct investments in
Skylign notes of $1,616 million and $1,617 million as of December 31, 2024 and 2023, respectively, which are included in related party AFS
securities on the consolidated balance sheets. We also have commitments to make additional investments in Skylign of $40 million as of
December 31, 2024.
Strategic Partnership – We have an agreement pursuant to which we may invest up to $2.875 billion in funds managed by Apollo entities
(Strategic Partnership). This arrangement is intended to permit us to invest across the Apollo alternatives platform into credit-oriented, strategic
and other alternative investments in a manner and size that is consistent with our existing investment strategy. Fees for such investments payable
by us to Apollo would be more favorable to us than market rates, and consistent with our existing alternative investments, investments made
under the Strategic Partnership require approval of ISG and remain subject to our existing governance processes, including approval by our
conflicts committee where applicable. During the second quarter of 2022, we contributed the majority of our Strategic Partnership investments
to AAA. As of December 31, 2024 and 2023, we had $1,994 million and $1,725 million, respectively, of investments under the Strategic
Partnership and these investments are typically included as investments of consolidated VIEs or related party investment funds on the
consolidated balance sheets.
Venerable – VA Capital Company LLC (VA Capital) is owned by a consortium of investors, led by affiliates of Apollo, Crestview Partners III
Management, LLC and Reverence Capital Partners L.P., and is the parent of Venerable Holdings, Inc. (together with its subsidiaries,
Venerable). We have a minority equity investment in VA Capital, which was $178 million and $181 million as of December 31, 2024 and 2023,
respectively, that is included in related party investment funds on the consolidated balance sheets and accounted for as an equity method
investment. Additionally, during the year ended December 31, 2024, we purchased an interest in AP Violet ATH Holdings, LP from Athora. We
consolidated AP Violet ATH Holdings, L.P. as of December 31, 2024 and its investment fund of $106 million primarily represents an interest in
VA Capital.
We also have coinsurance and modco agreements with VIAC, which is a subsidiary of Venerable. VIAC is a related party due to our investment
in VA Capital. Effective July 1, 2023, VIAC recaptured $2.7 billion of reserves, which represents a portion of their business that was subject to
those coinsurance and modco agreements. We recognized a gain of $555 million, which is included in other revenues on the consolidated
statements of income (loss), in the third quarter of 2023 as a result of the settlement of the recapture agreement. As a result of our intent to
transfer the assets supporting this business to VIAC in connection with the recapture, we were required by US GAAP to recognize the
unrealized losses on these assets of $104 million as intent-to-sell impairments in the second quarter of 2023.
We also have term loans receivable from Venerable due in 2033, which are included in related party other investments on the consolidated
balance sheets. The loans are held at fair value and were $331 million and $343 million as of December 31, 2024 and 2023, respectively. While
management views the overall transactions with Venerable as favorable to us, the stated interest rate of 6.257% on the initial term loan to
Venerable represented a below-market interest rate, and management considered such rate as part of its evaluation and pricing of the reinsurance
transactions.
Wheels – We invest in Wheels indirectly through our investment in AAA. We also own securities issued by Wheels of $984 million and $981
million as of December 31, 2024 and 2023, respectively, which are included in related party AFS securities on the consolidated balance sheets.
During the second quarter 2022, we received redemptions on Wheels securities of $1,479 million. We also have commitments to make
additional investments in Wheels of $100 million as of December 31, 2024.
ACRA and Apollo/Athene Dedicated Investment Programs I and II (collectively, ADIP) – ACRA 1 is partially owned by Apollo/Athene
Dedicated Investment Program (ADIP I), a series of funds managed by Apollo. ALRe currently directly holds 37% of the economic interests in
ACRA 1 and all of ACRA 1’s voting interests, with ADIP I holding the remaining 63% of the economic interests. ACRA 2 is partially owned by
Apollo/Athene Dedicated Investment Program II (ADIP II), a fund managed by Apollo. ADIP II owns 63% of the economic interests in ACRA
2, with ALRe directly owning the remaining 37% of the economic interests. ALRe holds all of ACRA 2’s voting interests.
We received capital contributions and paid distributions relating to ACRA of the following:
Years ended December 31,
(In millions)
2024
2023
2022
Contributions from ADIP
$
954
$
996
$
1,047
Distributions to ADIP
(920)
(539)
(63)
Additionally, as of December 31, 2024 and 2023, we had $289 million and $213 million, respectively, of related party payables for contingent
investment fees payable by ACRA to Apollo. ACRA is obligated to pay the contingent investment fees on behalf of ADIP and, as such, the
balance is attributable to the noncontrolling interests.
During the fourth quarter of 2024, we purchased investments in ADIP I and ADIP II, of which $65 million was acquired from Apollo. As of
December 31, 2024, we held investments in ADIP of $238 million, which are accounted for as equity method investments and included in
related party investment funds on the consolidated balance sheets. As of December 31, 2024, we also have commitments to make additional
investments in ADIP of $324 million.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
183
Unsecured Revolving Promissory Note Receivable with AGM – AHL has an unsecured revolving promissory note with AGM which allows
AGM to borrow funds from AHL. The note has a borrowing capacity of $500 million. Interest accrues at the US mid-term applicable federal
rate per year and has a maturity date of December 13, 2025, or earlier at AHL’s request. The note receivable had an outstanding balance of $142
million and $109 million as of December 31, 2024 and 2023, respectively.
Unsecured Revolving Promissory Note Payable with AGM – AHL has an unsecured revolving promissory note with AGM which allows AHL to
borrow funds from AGM. The note has a borrowing capacity of $500 million. Interest accrues at the US mid-term applicable federal rate per
year and has a maturity date of December 13, 2025, or earlier at AGM’s request. There was no outstanding balance on the note payable as of
December 31, 2024 and 2023.
16. Commitments and Contingencies
Contingent Commitments—We had commitments to make investments, inclusive of related party commitments discussed previously and
those of consolidated VIEs, of $24.0 billion as of December 31, 2024. These commitments primarily include capital contributions to investment
funds and mortgage loan commitments. We expect most of our current commitments will be invested over the next five years; however, these
commitments could become due any time upon counterparty request.
Funding Agreements—We are a member of the Federal Home Loan Bank of Des Moines (FHLB) and, through membership, we have issued
funding agreements to the FHLB in exchange for cash advances. As of December 31, 2024 and 2023, we had $15.6 billion and $6.5 billion,
respectively, of FHLB funding agreements outstanding. We are required to provide collateral in excess of the funding agreement amounts
outstanding, considering any discounts to the securities posted and prepayment penalties.
We have a funding agreement backed notes (FABN) program, which allows Athene Global Funding, a special-purpose, unaffiliated statutory
trust, to offer its senior secured medium-term notes. Athene Global Funding uses the net proceeds from each sale to purchase one or more
funding agreements from us. As of December 31, 2024 and 2023, we had $24.1 billion and $19.9 billion, respectively, of FABN funding
agreements outstanding. We had $10.2 billion of board-authorized FABN capacity remaining as of December 31, 2024.
We also issue secured and other funding agreements. Secured funding agreements involve special-purpose, unaffiliated entities entering into
repurchase agreements with a third party, the proceeds of which are used by the special-purpose entities to purchase funding agreements from
us. As of December 31, 2024 and 2023, we had $14.8 billion and $6.0 billion, respectively, of secured and other funding agreements
outstanding.
Pledged Assets and Funds in Trust (Restricted Assets)—The total restricted assets included on the consolidated balance sheets are as follows:
December 31,
(In millions)
2024
2023
AFS securities
$
46,337
$
32,458
Trading securities
1,665
139
Equity securities
286
80
Mortgage loans
27,883
14,257
Investment funds
777
409
Derivative assets
91
73
Short-term investments
2
153
Other investments
1,507
313
Restricted cash
953
1,761
Total restricted assets
$
79,501
$
49,643
The restricted assets are primarily related to reinsurance trusts established in accordance with coinsurance agreements and the FHLB and
secured funding agreements described above.
Letters of Credit—We have undrawn letters of credit totaling $1,300 million as of December 31, 2024. These letters of credit were issued for
our reinsurance program and have expirations through May 22, 2028.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
184
Assurance Letter—In connection with our, Apollo and Credit Suisse AG’s (CS) previously announced transaction, Atlas acquired certain
assets of the CS Securitized Products Group and agreed to pay CS $3.3 billion, of which $0.4 billion is deferred until February 8, 2026, and
$2.9 billion is deferred until February 8, 2028. In March 2024, in connection with Atlas concluding its investment management agreement with
CS, the deferred purchase obligation amount was reduced to $2.5 billion. In addition, certain strategic investors have made equity commitments
to Atlas which therefore obligates these investors for a portion of the deferred purchase obligation. This deferred purchase price is an obligation
first of Atlas, and (as a result of additional guarantees provided by AAA, Apollo Asset Management, Inc. (AAM) and AHL) second of AAA,
third of AAM, fourth of AHL and fifth of AARe. AARe and AAM each issued an assurance letter to CS to guarantee the full amount. Our
guarantees are not probable of payment; therefore, no liabilities have been recorded for the guarantees on the consolidated financial statements.
Guaranty Association Assessments— Guaranty associations may subject member insurers, including us, to assessments that require the
insurers to pay funds to cover contractual obligations under insurance policies issued by insurance companies that become impaired or insolvent.
The assessments are based on an insurer’s proportionate share of premiums written in that state during a specified one-year or three-year period
for lines of business in which the impaired or insolvent insurer engaged, subject to prescribed limits. On December 30, 2022, the North Carolina
Wake County Superior Court entered an Order of Liquidation (Liquidation Order) against Bankers Life Insurance Company (BLIC) and
Colorado Bankers Life Insurance Company (CBLIC), which was affirmed by the North Carolina Court of Appeals on March 5, 2024. On
April 9, 2024, GBIG Holdings, LLC (GBIG), the sole shareholder of BLIC and CBLIC, filed a Petition for Discretionary Review requesting the
North Carolina Supreme Court review the decision by the North Carolina Court of Appeals to affirm the Liquidation Order. On July 11, 2024,
GBIG filed a Motion to Withdraw its Petition for Discretionary Review. We are not a party to this litigation. The North Carolina Supreme Court
granted the Motion to Withdraw on August 23, 2024, which made the Liquidation Order effective on November 30, 2024. Guaranty associations
began levying assessments and we expect those assessments to continue for the foreseeable future. During the year ended December 31, 2024,
we recorded guaranty association expenses related to the BLIC and CBLIC insolvencies of $152 million, which is net of $11 million that we
expect to recover through future premium tax credits. As of December 31, 2024, our consolidated balance sheets included a liability of $18
million based on our current best estimate of assessments we expect to receive related to these insolvencies. The actual amount of assessments
levied against us in connection with the BLIC and CBLIC insolvencies may vary from this estimate.
17. Segment Information
We operate our core business strategies through one reportable segment. We conduct our retirement services business through entities domiciled
in the US and Bermuda and our revenues are similarly generated primarily in the US and Bermuda. Our CEO is the CODM, who is also solely
responsible for decisions related to the allocation of resources on a company-wide basis. For determining the allocation of resources, the CODM
reviews the Company’s performance based on its key measure of consolidated net income to evaluate income generated and determine
allocation of resources, among other measures.
Measures that the CODM reviews also include the significant expenses of cost of funds, other operating expenses, and interest and other
financing costs that each exclude the proportionate share associated with noncontrolling interests. Cost of funds reflect the cost of crediting on
both deferred annuities and institutional products, as well as other liability costs, net of premium from life and life-contingent products and other
revenues. Certain expenses within cost of funds, notably future policy and other policy benefits, are partially or fully offset in the presentation of
cost of funds with inflows of premium and other fee-related revenues; as a result, other liability costs equal to the amount of premium from life
and life-contingent products are added back in the reconciliation below to reflect the expense amount excluded from cost of funds. Other
operating expenses consist primarily of employee compensation and general operating costs of the business. Interest and other financing costs
consist primarily of preferred stock dividends and interest expense on our debt issuances, as well as other financing.
Additionally, total consolidated assets is the only measure of segment assets that the CODM uses to determine allocation of resources.
The reconciliation of total consolidated revenue to total consolidated net income is as follows:
Years ended December 31,
(In millions)
2024
2023
2022
Revenues
$
20,689
$
28,194
$
7,623
Less:
Cost of funds
7,702
5,650
3,755
Other operating expenses
467
487
466
Interest and other financing costs
465
436
279
Other liability costs equal to the amount of premium
1,318
12,749
11,638
Other segment items1
5,103
4,281
(2,853)
Income (loss) before income taxes
5,634
4,591
(5,662)
Income tax expense (benefit)
730
(1,161)
(646)
Net income (loss)
$
4,904
$
5,752
$
(5,016)
1 Other segment items reflect the difference between revenues and significant segment expenses and include the impact of fair value accounting for market risk
benefits, embedded derivative remeasurement, the amortization of purchased options on fixed indexed annuities and noncontrolling interests.
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ATHENE HOLDING LTD.
Notes to Consolidated Financial Statements
185
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures as such term is defined under Exchange Act Rule 13a-15(e), that are designed to provide
reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In
designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management necessarily
is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an
evaluation, as of the end of the period covered by this report, under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
were effective at attaining the level of reasonable assurance noted above as of December 31, 2024.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act). A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US
GAAP. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Under the supervision and with the participation of management, we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 Framework). Based on our evaluation, management has concluded that our internal control
over financial reporting was effective as of December 31, 2024.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting during the three months ended December 31, 2024 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
During the three months ended December 31, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of AHL adopted
or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of
Regulation S-K with respect to any of AHL’s securities.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
MANAGEMENT
Below is a list of the names and ages of our directors and executive officers as of February 24, 2025, and a description of the business
experience of each of them.
Name
Age
Position
James R. Belardi
67
Chairman of the Board, Chief Executive Officer, and Chief Investment Officer
Grant Kvalheim
68
President—Athene, Chief Executive Officer and President—Athene USA
Martin P. Klein**
65
Executive Vice President and Chief Financial Officer
Michael S. Downing
54
Executive Vice President and Chief Operating Officer
Douglas Niemann
55
Executive Vice President and Chief Risk Officer
Marc Beilinson
66
Director*
Mitra Hormozi
55
Director*
Bogdan Ignaschenko
35
Director
Brian Leach
65
Director*
Joseph Manchin III
77
Director
Dr. Manfred Puffer
61
Director
Marc Rowan
61
Director
Lawrence J. Ruisi
76
Director*
Vishal Sheth
42
Director
Lynn Swann
72
Director*
Hope Schefler Taitz
60
Director*
* Independent director for purposes of the NYSE corporate governance listing requirements.
** In October 2024, Mr. Klein notified the Company of his decision to retire from the role of Chief Financial Officer of the Company effective upon the
appointment of his successor, which is expected to occur in 2025, at which time Mr. Klein will assume the role of Senior Advisor to the Company.
Executive Officers
James R. Belardi is our co-founder, and has served as our Chairman, Chief Executive Officer, and Chief Investment Officer since May 2009. In
addition, Mr. Belardi is a member of the board of directors, a member of the executive committee, and an executive officer of AGM and is the
founder, Chairman and Chief Executive Officer of ISG, our investment manager. He is a member of our executive committee and ISG’s
executive committee. Mr. Belardi is responsible for our overall strategic direction and the day-to-day management of our investment portfolio.
Prior to founding our Company and ISG, Mr. Belardi was President of SunAmerica Life Insurance Company and was also Executive Vice
President and Chief Investment Officer of AIG Retirement Services, Inc., where he had responsibility for an invested-asset portfolio of
$250 billion. Mr. Belardi has a Bachelor of Arts degree in economics from Stanford University and a Master of Business Administration from
the University of California, Los Angeles. He currently serves on the board of directors of ISG, Paulist Productions, where he chairs the
investment committee, and Southern California Aquatics. Mr. Belardi swam in the 1976 and 1980 Olympic Swimming Trials and is a nine-time
Masters Swimming World Record Holder. Mr. Belardi was selected to serve on our board of directors as a result of his demonstrated track
record in and deep knowledge of the financial services business, including having founded both our Company and ISG, and his extensive
experience in the insurance industry.
Grant Kvalheim has served as our President since April 2022. Mr. Kvalheim also serves as the Chief Executive Officer and President of Athene
USA Corporation. Prior to assuming his current roles, he served as our President from January 2011 until September 2015, as our Chief
Financial Officer from January 2011 until April 2013, and a director from January 2012 until February 2014. In addition, Mr. Kvalheim is a
Partner at Apollo and serves as an observer on the executive committee of AGM. Mr. Kvalheim is responsible for leading our operating
companies with a focus on growth initiatives. Prior to joining our Company, Mr. Kvalheim was a senior executive of Barclays Capital
(Barclays) from early 2001 to the end of 2007, becoming Co-President in September 2005. During his time at Barclays, he converted a European
investment grade credit business into a leading global credit franchise business across both securitized and non-securitized credit products, and
significantly expanded Barclays’ investment banking platform. Prior to joining Barclays, Mr. Kvalheim held senior executive positions in the
investment banks of Deutsche Bank and Merrill Lynch. Mr. Kvalheim has a Bachelor of Arts degree in economics from Claremont McKenna
College and a Master of Business Administration in finance from the University of Chicago. He currently serves on the board of directors of the
Great Outdoors Foundation, Solhealth Corp, and Mottahedeh & Co., Inc. He served on the board of directors of the Permal Silk Road Fund from
June 2008 to November 2012, LL Global (LIMRA/LOMA) from 2019 to 2021, the Greater Des Moines Partnership in 2021, and the United
Way of Central Iowa from 2017 to 2023.
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Martin P. Klein has served as our Executive Vice President and Chief Financial Officer since November 2015. Mr. Klein is responsible for
overseeing our financial management, including our enterprise finance, reporting, tax, actuarial, internal audit, and risk functions. He also helps
develop and execute strategic operating decisions across our Company. Prior to joining our Company, Mr. Klein was employed by Genworth
Financial, Inc. (Genworth), joining in 2011 as Executive Vice President & Chief Financial Officer, and also served as Genworth’s Acting
President & Chief Executive Officer during most of 2012. Prior to Genworth, Mr. Klein served as a Managing Director at Barclays, after its
acquisition of the US operations of Lehman Brothers Holdings, Inc., where he served as a Managing Director and head of the Insurance &
Pension Solutions Group. Previously, Mr. Klein had been with Zurich Insurance Group from 1994 to 1998 as Managing Director of Zurich
Investment Management, and worked in finance and actuarial roles in other insurance organizations earlier in his career. Mr. Klein is a director
of several of our insurance subsidiaries, as well as Athora. He also serves on the board of Caritas, a non-profit organization in Richmond,
Virginia. Mr. Klein is a Fellow of the Society of Actuaries and a Chartered Financial Analyst. He received his Bachelor of Arts in mathematics
and business administration from Hope College and a Master of Science in statistics and actuarial science from the University of Iowa, where he
now serves on the College of Liberal Arts & Science’s Dean’s Advisory Council.
Michael S. Downing has served as our Executive Vice President and Chief Operating Officer since January 2022. He is responsible for the day-
to-day operations of the Company, including information technology, operations, product management, marketing, and Athene’s Bermuda
operations. Prior to assuming his current role, Mr. Downing served as our Executive Vice President and Chief Actuary from 2015 to 2022, and
was responsible for global actuarial valuation, modeling, pricing, product development, and product go-to-market. Prior to joining the Company,
Mr. Downing spent seven years at The Allstate Corporation, with increasing responsibility over time. His final role included responsibility for
product, actuarial, asset liability management, marketing, and finance. Prior to Allstate, Mr. Downing was a Senior Partner at Aon Hewitt,
leading the International Consulting practice following assignments in the UK and Switzerland. Mr. Downing holds a Bachelor of Arts degree in
mathematics from Gustavus Adolphus College in St. Peter, Minnesota. He is a Fellow of the Society of Actuaries (FSA). Mr. Downing serves
on the board of directors of the Greater Des Moines Partnership.
Douglas Niemann has served as our Executive Vice President and Chief Risk Officer since May 2020. Mr. Niemann is responsible for
overseeing our enterprise risk management functions, as well as providing key support in connection with strategic operating decisions across
our Company. Mr. Niemann brings over 25 years of experience and expertise in risk management related to insurance. Prior to joining our
Company, Mr. Niemann was the Senior Managing Director of Investment Management and Chief Investment Risk Officer for Guardian Life
Insurance Company. Before joining Guardian Life Insurance Company, he was the Managing Director and Chief Investment Strategist of
Global Insurance Solutions at JP Morgan Asset Management and served as the Managing Director and Head of Asset Liability Management at
AIG Asset Management. He also held the positions of Head of Investment and Financial Risk and Head of Group Risk Modeling at Zurich
Financial Services. Mr. Niemann has a Master of Business Administration in risk management and insurance as well as finance, investments and
banking from the University of Wisconsin Madison School of Business and a Bachelor of Arts degree in economics from Northwestern
University in Evanston, Illinois.
Directors
We believe our board of directors should be composed of a diverse group of individuals with sophistication and experience in many substantive
areas that impact our business. We believe experience, qualifications and skills in the following areas are most important: insurance industry;
accounting, finance and capital structure; strategic planning and leadership of complex organizations; legal/regulatory and government affairs;
personnel management; and board practices of other major corporations. We believe that all of our current board members possess the
professional and personal qualifications necessary for service on our board, and have highlighted particularly noteworthy attributes for each
board member in the individual biographies below, or above in the case of our Chairman and Chief Executive Officer.
Marc Beilinson has served as a director of our Company since 2013, and is the lead independent director and a member of our conflicts
committee and legal and regulatory committee. Since August 2011, Mr. Beilinson has been the Managing Director of Beilinson Advisory
Group, a financial restructuring and hospitality advisory group that specializes in assisting distressed companies. Most recently, Mr. Beilinson
served as Chief Restructuring Officer of Newbury Common Associates LLC (and certain affiliates) from December 2016 to June 2017.
Mr. Beilinson previously served as Chief Restructuring Officer of Fisker Automotive from November 2013 to August 2014 and as Chief
Restructuring Officer and Chief Executive Officer of Eagle Hospitality Properties Trust, Inc. from August 2011 to December 2014 and
Innkeepers USA Trust from November 2008 to March 2012. Mr. Beilinson oversaw the Chapter 11 reorganization of Innkeepers USA, Fisker
Automotive and Newbury Common Associates in his interim management roles as the Chief Restructuring Officer of those companies.
Mr. Beilinson currently serves on the boards of directors of AGM and Playtika as well as several privately held companies. Mr. Beilinson has
previously served on the boards of directors and audit committees of several public and privately held companies, including Westinghouse
Electric, Caesars Acquisition Company, Wyndham International, Inc., Apollo Commercial Real Estate Finance, Inc., Innkeepers USA Trust,
Gastar Inc., and Exela Technologies. Mr. Beilinson has a Bachelor of Arts in political science from the University of California, Los Angeles
and a Juris Doctor from the University of California, Davis School of Law. Mr. Beilinson was selected to serve on our board of directors as a
result of having over thirty years of service to the boards of both public and private companies, and his extensive knowledge of legal and
compliance issues, including the Sarbanes-Oxley Act of 2002.
Mitra Hormozi has served as a director of our Company since 2018, and is the chair of our legal and regulatory committee. Ms. Hormozi has
also served on the board of directors for our subsidiary, ALRe, since 2023 and is also a director of several of our US insurance subsidiaries.
Ms. Hormozi was Executive Vice President and General Counsel of Revlon, Inc. from April 2015 to July 2019, where she was responsible for
overseeing Revlon’s legal affairs worldwide. Ms. Hormozi has extensive experience in both the public and private sectors of the legal field.
Prior to joining Revlon in April 2015, she was a litigation partner at two major law firms from 2011 to 2015 and served as Deputy Chief of Staff
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188
to then New York State Attorney General, Andrew Cuomo. She also served as an Assistant US Attorney prosecuting high-profile complex
racketeering cases in the Eastern District of New York. Ms. Hormozi has served on the board of directors of AGM since 2022 serving various
committees including sustainability and corporate responsibility, compensation, nominating and governance, and demand review. She has also
previously served on the board of directors of Revlon. Ms. Hormozi received a Bachelor of Arts in history from the University of Michigan and
a Juris Doctor from the New York University School of Law. Ms. Hormozi was selected to serve on our board of directors as a result of her
extensive legal counsel experience.
Bogdan Ignaschenko has served as a director of our Company since 2024 and our subsidiary, Athene Life Re Ltd., since 2023. Mr. Ignaschenko
is Partner at Apollo. Prior to joining Apollo in 2011, Mr. Ignaschenko was with Credit Suisse in the Investment Banking Division from 2009 to
2011. Mr. Ignaschenko has also served on the board of directors of Freedom TopCo LLC (parent of Donlen LLC) since 2021, Grupo
Aeroméxico, S.A.B. de C.V. since 2022, and Clydesdale Parent GP, LLC (parent of Flex Acquisition Holdings, Inc., parent of Novolex
Holdings, LLC) since 2022. Mr. Ignaschenko previously served as a member of the board of directors of Seguradoras Unidas S.A. (n/k/a
Generali Seguros, S.A.) between 2017 and 2020. Mr. Ignaschenko graduated from the University of Pennsylvania’s Wharton School of Business
with a Bachelor of Science degree in economics. Mr. Ignaschenko was selected to serve on our board of directors as a result of his extensive
experience in the financial services sector.
Brian Leach has served as a director of our Company since 2016, and is a member of our risk and audit committees. Mr. Leach also serves as a
director of AGM. From 2013 to 2015, Mr. Leach served as Head of Franchise Risk & Strategy at Citigroup with responsibility for managing all
of Citibank’s global risk, audit, compliance and strategy. From 2008 to 2012, Mr. Leach served as the Chief Risk Officer of Citibank. In 2005,
Mr. Leach, together with several former colleagues from Morgan Stanley, formed Old Lane and from 2005 to 2008, Mr. Leach served as Old
Lane’s co-Chief Operating Officer and Chief Risk Officer. Prior to that, Mr. Leach worked his entire post-graduate career at Morgan Stanley
encompassing running a successful proprietary trading business and culminating as the Risk Manager of the Institutional Securities Business
reporting directly to its President. During his time with Morgan Stanley, Mr. Leach was seconded to Long-Term Capital Management (LTCM)
for approximately one year. During that time, he was one of six managers selected by a consortium of 14 global financial institutions to manage
the liquidation of LTCM. Mr. Leach serves on the Advisor Investment Committee of Mountain Capital. Mr. Leach has a Bachelor of Arts
degree in economics from Brown University and a Master of Business Administration from Harvard Business School. Mr. Leach has been
awarded Risk Manager of the Year on two separate occasions: the first by Risk Magazine for his work in restructuring the hedge fund LTCM
and the second by the Global Association of Risk Professionals for his work in restructuring Citigroup after the global financial crisis.
Mr. Leach was selected to serve on our board of directors as a result of his extensive experience in risk management.
Joseph Manchin III has served as a director of our Company since February 2025 and is a member of our legal and regulatory committee.
Senator Manchin has served as an adviser to Apollo since February 2025. From 2005 to 2025, Senator Manchin served as a US Senator for West
Virginia. During his time in the Senate, Senator Manchin was a member of the Senate Energy and Natural Resources Committee, where he
served as Chair, as well as the Appropriations, Armed Services, and Veterans’ Affairs Committees. Before his tenure in the Senate, Senator
Manchin served as the 34th Governor of West Virginia from 2005 to 2010 and as West Virginia Secretary of State from 2001 to 2005. Senator
Manchin is known for his bipartisan approach, focusing on energy policy, economic development, and national security. He has been a vocal
advocate for an “all-of-the-above” energy strategy that aims to utilize a diverse mix of energy sources to ensure energy security, economic
growth, and environmental sustainability, emphasizing the importance of innovation in coal, natural gas, and renewable energy. In addition to
his work in public policy, Senator Manchin is dedicated to supporting his home state of West Virginia through various philanthropic initiatives,
including education and workforce development programs. He is actively involved in promoting civic engagement and fostering collaboration
between the public and private sectors. Senator Manchin graduated from West Virginia University with a Bachelor of Arts degree in business
administration. Senator Manchin was selected to serve on our board of directors as a result of his extensive experience in governance, his deep
understanding of energy policy, and his commitment to economic development and public service.
Dr. Manfred Puffer has served as a director of our Company since 2012, and is the chair of our risk committee. Dr. Puffer has served as a Senior
Advisor to Apollo since 2008. From 2006 to 2008, Dr. Puffer was a senior managing director in the Financial Institutions Group of Bear Stearns
International, Head of Germany, Austria and Eastern Europe and a Member of the European Executive Committee. From 2002 to 2005,
Dr. Puffer was a member of the managing board of WestLB AG and Head of the Investment Bank, Fixed Income, Equities and Structured
Finance. Currently, Dr. Puffer is a member of the supervisory board of Infineon Technologies AG and a board of director of Autodoc SE.
Dr. Puffer holds a Ph.D. and a Master of Business Administration from the University of Vienna. Dr. Puffer was selected to serve on our board
of directors as a result of his extensive experience in the financial services sector.
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Marc Rowan has served as a director of our Company since 2009, and is a member of our executive committee. Mr. Rowan has served as a
director of the general partner of ISG, our investment manager, since 2009. Mr. Rowan is a Co-Founder and the Chief Executive Officer of
AGM and a member of its board of directors and a member of its executive committee. Currently, Mr. Rowan is Chair of the Board of Advisors
of The Wharton School of the University of Pennsylvania. In addition, he is involved in public policy and is an initial funder and contributor to
the development of the Penn Wharton Budget Model, a nonpartisan research initiative which provides analysis of public policy’s fiscal impact.
An active philanthropist and civically engaged, Mr. Rowan is Chair of the Board of Directors of UJA-Federation of New York, the world’s
largest local philanthropy helping 4.5 million people annually while funding a network of nonprofits in New York, Israel, and 70 countries. He
is also a founding member and Chair of Youth Renewal Fund and Vice Chair of Darca, Israel’s top educational network operating 47 schools
with over 27,000 students throughout Israel’s most diverse and underserved communities. He is an Executive Committee member of the Civil
Society Fellowship, a partnership of ADL and the Aspen Institute, designed to empower the next generation of community leaders and problem
solvers. Mr. Rowan graduated summa cum laude from the University of Pennsylvania’s Wharton School of Business with a Bachelor of Science
and Master of Business Administration in finance. Mr. Rowan was selected to serve on our board of directors as a result of his service on the
boards of numerous public and private companies and his demonstrated track record of success and extensive experience in the financial
services sector.
Lawrence J. Ruisi has served as a director of our Company since 2013, and is the chair of our audit committee and is a member of our risk and
conflicts committees. Mr. Ruisi is also a director of several of our US insurance subsidiaries. As an operating executive, Mr. Ruisi held various
senior level positions in the entertainment business, including President & Chief Executive Officer of Loews Cineplex Entertainment
Corporation, a movie theater operator with 400 locations worldwide, and as Executive Vice President and Chief Financial Officer of Columbia
Pictures Entertainment. As a non-executive, Mr. Ruisi served on numerous boards including Hughes Communications Inc., UST Inc.,
InnKeepers USA Trust, Wyndham International, Inc. and Adaptec, Inc. During his tenure on these boards, Mr. Ruisi was Chairman of various
audit committees, named designated financial expert and served on both compensation and nominating and corporate governance committees.
Mr. Ruisi was Chairman of the Independent Committee of the board of InnKeepers, which oversaw its restructuring, and was Chairman of
Special Committees at both Wyndham and Adaptec. Mr. Ruisi began his career at Price Waterhouse & Co., where he was a Senior Manager. He
is a Certified Public Accountant and received a Bachelor of Science degree in accounting and a Master of Business Administration in finance
from St. John’s University. Mr. Ruisi was selected to serve on our board of directors as a result of his extensive leadership experience in various
sectors, his expertise in accounting and financial reporting matters and his experience serving on the boards of numerous public and private
companies.
Vishal Sheth has served as a director of our Company since 2023 and certain of our subsidiaries since 2019, and is a member of our executive,
risk, and legal and regulatory committees. Mr. Sheth is Partner and Co-Head of Global Financial Institutions Group (FIG) at Apollo, with focus
on financial services and insurance-related opportunities. Mr. Sheth is also a member of Apollo’s Leadership Team. Prior to joining Apollo in
2018, Mr. Sheth was Managing Director in the Financial Institutions Group at Barclays, and, prior to his time at Barclays, a corporate lawyer in
the Financial Institutions Group at Skadden Arps Slate Meagher & Flom LLP. Mr. Sheth graduated magna cum laude from the Honors Program
at the Stern School of Business at New York University with a Bachelor of Science degree in finance and economics. Mr. Sheth received his
Juris Doctor from New York University School of Law, where he served as a Staff Editor on the Review of Law and Social Change. Mr. Sheth
was selected to serve on our board of directors as a result of his extensive experience in the financial services sector.
Lynn Swann has served as a director of our company since 2020 and is a member of our legal and regulatory committee. Mr. Swann is president
of Swann, Inc., a marketing and consulting firm he founded in 1976. From 2016 to 2019, Mr. Swann served as the Athletic Director of the
University of Southern California (USC), where he was responsible for overall administration of 21 women’s and men’s Division I athletic
programs at the university. Prior to his role at USC, he worked on-air as a host, reporter and analyst for the American Broadcast Company
(ABC-TV) for nearly 30 years and served for two years as chairman of the national board of Big Brothers Big Sisters of America, overseeing
management of more than 400 agencies across the US and establishing Big Brothers Big Sisters as a premier mentoring group. Mr. Swann was
the Republican party nominee for Pennsylvania governor in 2006 and was appointed by President George W. Bush as the Chairman of the
President’s Council on Fitness, Sports and Nutrition, where he served from 2002 to 2005. Mr. Swann currently serves on the board of directors
of AGM and American Homes 4 Rent, and has previously served on the boards of a number of publicly traded, privately-held and non-profit
entities, such as Fluor Corporation, Caesar’s Entertainment Corp., Hershey Entertainment and Resorts, H.J. Heinz Company and the
Professional Golfers’ Association of America and Xylem Inc. Mr. Swann received a Bachelor of Arts in public relations from the University of
Southern California. He is a Hall of Fame athlete and former wide receiver for the Pittsburgh Steelers football team. He has also held Series 7
and 63 registrations for securities industry professionals. Mr. Swann was selected to serve on our board of directors as a result of his expertise in
business, marketing and community involvement in addition to his public company board experience.
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Hope Schefler Taitz has served as a director of our Company since 2011, and is a member of our audit, risk, legal and regulatory, and conflicts
committees. Ms. Taitz has also served on the board of directors of our subsidiary, ALRe, since 2011 and is a director of several of our US
insurance subsidiaries. Ms. Taitz has served as the CEO of ELY Capital since 2004. Now acting as an investor and advisor with expertise in
media, technology and the consumer, she helps innovative enterprises grow through financial leadership and connections to established
corporations. Ms. Taitz, a strong advocate of women on boards, also currently serves on the board of MidCap Finco Holdings Limited and
Summit Hotel Properties, Inc. She has previously served on the boards of Apollo Residential Mortgage, Inc., Greenlight Capital Re, Ltd.,
Diamond International Resorts, Inc., as well as Lumenis Ltd. From 1995 to 2003, Ms. Taitz was Managing Partner of Catalyst Partners, L.P., a
money management firm. From 1990 to 1992, Ms. Taitz was a Vice President at The Argosy Group (now part of the Canadian Imperial Bank of
Commerce (NYSE: CM)), specializing in financial restructuring before becoming a Managing Director at Crystal Asset Management, from
1992 to 1995. From 1986 to 1990, Ms. Taitz was at Drexel Burnham Lambert, first as a mergers and acquisitions analyst and then as an
associate in the leveraged buyout group. On the not for profit side, Ms. Taitz focuses on education and is an advocate for STEM. She is a
founding executive member of YRF Darca, an emeritus board member of Pencils of Promise, and a member of the undergraduate executive
board of The Wharton School of the University of Pennsylvania. Ms. Taitz is a former board member of Girls Who Code. Ms. Taitz graduated
with honors from the University of Pennsylvania with a Bachelor of Arts degree in economics. Ms. Taitz was selected to serve on our board of
directors as a result of her extensive experience in the financial services sector as well as her experience serving on the governance committees
of other public companies.
Robert Borden previously served as a director of our Company until his resignation on March 31, 2024.
CORPORATE GOVERNANCE
Corporate Governance
Our business and affairs are managed under the direction of our board of directors. Our board of directors currently consists of 12 members. Six
of our directors are employees of or consultants to Apollo or its affiliates including Mr. Belardi, our Chairman, Chief Executive Officer and
Chief Investment Officer, who is also a member of the board of directors and an executive officer of AGM and a member of AGM’s executive
committee and the Chairman and Chief Executive Officer of ISG. We believe that it is appropriate, given Mr. Belardi’s in-depth knowledge of
the Company and our business and industry and his ability to formulate and implement strategic initiatives, that the offices of Chief Executive
Officer and Chairman have been vested in Mr. Belardi.
Under our certificate of incorporation, our board of directors or the holders of our common stock may from time to time set the size of the board
of directors. Our board size is currently set at 12 members. If there is a vacancy on our board of directors due to the death, disability,
disqualification, removal or resignation of a director, the board of directors may appoint any person as a member of the board of directors.
Director Independence
Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning
his or her background, employment and affiliations, our board of directors has determined that Messrs. Beilinson, Leach, Ruisi, Swann, and
Mses. Hormozi and Taitz do not have a relationship that would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and that each of these directors meets the independence requirements of the NYSE listing rules. In making these
determinations, our board of directors considered the current and prior relationships that each non-employee director and non-Apollo director
has with our Company and all other facts and circumstances our board of directors deemed relevant in determining their independence,
including any transactions involving them described under —Item 13. Certain Relationships and Related Transactions, and Director
Independence.
Lead Independent Director
Mr. Beilinson is our Lead Independent Director. In this role, the Lead Independent Director, among other things, presides at executive sessions
of the independent directors, serves as liaison between the chairman and the independent directors, reviews board meeting schedules and
agendas, reviews information sent to the board and is authorized to call meetings of the independent directors.
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Committees of the Board of Directors
Our board of directors has the authority to appoint committees to perform certain management and administration functions. Our board of
directors has five standing committees: audit, legal and regulatory, conflicts, executive and risk. The table below shows the membership for each
of the current standing committees of the board of directors.
Audit Committee
Conflicts Committee
Legal and Regulatory Committee
Lawrence J. Ruisi (Chair)*
Marc Beilinson*
Mitra Hormozi (Chair)*
Brian Leach*
Hope Schefler Taitz*
Marc Beilinson*
Hope Schefler Taitz*
Lawrence J. Ruisi*
Hope Schefler Taitz*
Vishal Sheth
Lynn Swann*
Executive Committee
Risk Committee
Senator Joseph Manchin III
James R. Belardi
Manfred Puffer (Chair)
Marc Rowan
Brian Leach*
Vishal Sheth
Lawrence J. Ruisi*
Hope Schefler Taitz*
Vishal Sheth
* Independent director for purposes of the NYSE corporate governance listing requirements.
Audit Committee
The audit committee’s duties include, but are not limited to, assisting the board of directors with its oversight and monitoring responsibilities
regarding:
•
the integrity of our consolidated financial statements and financial and accounting processes;
•
compliance with the audit, legal, accounting, and internal controls requirements by AHL and its subsidiaries;
•
the independent auditor’s qualifications, independence and performance;
•
related party transactions other than transactions between AHL and its subsidiaries, on the one hand, and Apollo and its affiliates
(other than AHL and its subsidiaries), on the other hand, and other related party transactions ancillary thereto that are required to be
reviewed by the conflicts committee or by the disinterested directors on our board of directors as described under –Conflicts
Committee below, or are expressly exempt from such review under our internal policies;
•
the performance of our internal control over financial reporting and its subsidiaries’ internal control over financial reporting (including
monitoring and reporting by subsidiaries) and the function of our internal audit department;
•
our legal and regulatory compliance and ethical standards;
•
procedures to receive, retain and treat complaints regarding accounting, internal controls over financial reporting or auditing matters
and to receive confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing
matters; and
•
the review of our periodic financial disclosure and related public filings.
Our audit committee is currently comprised of Messrs. Leach, Ruisi, and Ms. Taitz. Mr. Ruisi is the chair of the audit committee. The board of
directors has determined that each of Messrs. Leach, Ruisi, and Ms. Taitz meet the independence requirements of the NYSE rules and the
criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act of 1934, as amended. The board of directors has determined that
each member of our audit committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and the
NYSE. The chair of our audit committee, Mr. Ruisi, is an independent director and an “audit committee financial expert” as that term is defined
in the rules and regulations of the SEC. Our board of directors has approved a written charter under which the audit committee will operate. A
copy of the charter of our audit committee is available on our principal corporate website at www.athene.com. Information contained on our
website or connected thereto does not constitute a part of, and is not incorporated by reference into, this report.
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Pre-Approval Policies and Procedures of the Audit Committee
The audit committee has adopted procedures for pre-approving all audit and permissible non-audit services provided by our independent auditor.
The audit committee will, on an annual basis, review and pre-approve the audit, review, attestation and permitted non-audit services to be
provided during the next audit cycle by our independent auditor. To the extent practicable, the audit committee will also review and approve a
budget for such services. Services proposed to be provided by the independent auditor that have not been pre-approved during the annual review
and the fees for such proposed services must be approved by the audit committee. All requests or applications for the independent auditor to
provide services to us over certain thresholds shall be submitted to the audit committee or the chairperson thereof. The audit committee
considered whether the provision of non-audit services performed by our independent auditor was compatible with maintaining the independent
auditor’s independence during 2024. The audit committee concluded in 2024 that the provision of these services was compatible with the
maintenance of the independent auditor’s independence in the performance of its auditing functions during 2024. All services were approved by
the audit committee or were pre-approved under the audit committee’s pre-approval policy.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following Report of the Audit Committee of the Board of Directors of the Company does not constitute soliciting material and
should not be deemed filed or incorporated by reference into any future filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act, except to the extent the Company specifically incorporates this Report by reference.
The audit committee has reviewed and discussed the audited consolidated financial statements of the Company for the year ended
December 31, 2024 with management and the independent auditors. The independent auditors have discussed with the audit committee the
matters required to be discussed by the independent auditors under the rules adopted by the Public Company Accounting Oversight Board and
the SEC. The independent auditors have also provided to the audit committee the written disclosures and the letter required by the applicable
rules of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the audit committee
concerning independence, and the audit committee has discussed with the independent auditors their independence from the Company. The
independent auditors and the Company’s internal auditors had full access to the audit committee, including meetings without management
present as needed.
Based on the audit committee’s review and discussions referred to above, the audit committee recommended to the board of directors that
the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2024.
AUDIT COMMITTEE
Lawrence J. Ruisi, Chairman
Brian Leach
Hope Schefler Taitz
Legal and Regulatory Committee
The purposes of the legal and regulatory committee are generally to provide oversight and monitoring of:
•
material litigation and other disputes;
•
material regulatory matters, including investigations, enforcement actions and other inquiries;
•
compliance with material laws and regulations;
•
material compliance, legal and regulatory programs, policies and procedures; and
•
environmental, governance and corporate social responsibility matters.
The committee’s oversight responsibilities complement those of the audit committee with respect to our compliance with legal and regulatory
requirements. Our legal and regulatory committee is comprised of Messrs. Beilinson, Sheth and Swann, and Mses. Hormozi and Taitz, and
Senator Manchin. Ms. Hormozi is the chair of the legal and regulatory committee.
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Conflicts Committee
Because the Apollo Group has a significant voting interest in AHL, and because AHL and its subsidiaries have entered into, and will continue in
the future to enter into, transactions with Apollo and its affiliates, our bylaws require us to maintain a conflicts committee designated by our
board of directors, comprised solely of directors who are not general partners, directors, managers, officers or employees of the Apollo Group.
The conflicts committee meets at least quarterly and consists of Messrs. Beilinson and Ruisi and Ms. Taitz. The conflicts committee reviews and
approves material transactions by and between AHL and its subsidiaries, on the one hand, and members of the Apollo Group, on the other hand,
including any modification or waiver of the IMAs (as defined herein) with ISG, subject to certain exceptions. The conflicts committee is also
responsible for the review and approval of related party transactions that are incidental or ancillary to the foregoing transactions and other
related party transactions relating to or involving, directly or indirectly, Apollo or any member of the Apollo Group. For a description of the
functions of the conflicts committee and such exceptions, see Item 13. Certain Relationships and Related Transactions, and Director
Independence.
Executive Committee
The executive committee is responsible for facilitating the approval of certain actions that do not require consideration by the full board of
directors or that are specifically delegated by the board of directors to the executive committee. The executive committee possesses and may
exercise all powers of the board of directors in the management and direction of our business consistent with our certificate of incorporation, our
bylaws, applicable law (including any applicable rule of any stock exchange or quotation system on which our preferred shares are listed) and
our executive committee charter, except that the executive committee shall not perform such functions that are expressly delegated to other
committees of the board of directors. The executive committee does not have the power to:
•
declare dividends on or distributions of or in respect of shares of the Company that, in each case, is not within the scope of authority
previously delegated to the executive committee by action of the board of directors;
•
issue shares or authorize or approve the issuance or sale, or contract for sale, of shares or determine the designation and relative rights,
preferences and limitations of a series or class of shares unless specifically delegated by action of the board of directors to the
executive committee or a subcommittee of the executive committee;
•
recommend to stockholders any action that requires stockholder approval;
•
recommend to stockholders a dissolution or winding up of the Company or a revocation of a dissolution or winding up of the
Company;
•
amend or repeal any provision of our certificate of incorporation or bylaws;
•
agree to the settlement of any litigation, dispute, investigation or other similar matter with respect to the Company that is not within
the scope of authority previously delegated to the executive committee by the board of directors;
•
approve the sale or lease of real or personal property assets with a fair value greater than a threshold amount specifically delegated to
the executive committee by the board of directors;
•
authorize mergers (other than a merger of any wholly owned subsidiary with the Company), acquisitions, joint ventures,
consolidations or dispositions of assets or any business of the Company or any investment in any business or Company by the
Company with a fair value in excess of a threshold amount specifically delegated to the executive committee by the board of directors;
or approve the sale, lease, exchange or encumbrance of any material asset of the Company that, in each case, is not within the scope of
authority previously delegated to the executive committee by action of the board of directors; or
•
amend, alter or repeal, or take any action inconsistent with any resolution or action of the board of directors.
Our executive committee is comprised of Messrs. Belardi, Rowan, and Sheth.
The board of directors has delegated to the executive committee the authority to provide the report of the compensation committee regarding the
compensation discussion and analysis that is required by paragraph (e)(5) of Item 407 of Regulation S-K.
REPORT OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
The executive committee has reviewed and discussed the section entitled “Compensation Discussion and Analysis” with management.
Based on this review and discussion, the executive committee recommended to the board of directors that the section entitled “Compensation
Discussion and Analysis” be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
EXECUTIVE COMMITTEE
James R. Belardi
Marc Rowan
Vishal Sheth
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Risk Committee
The risk committee’s duties are to oversee the development and implementation of systems and processes designed to identify, manage and
mitigate reasonably foreseeable material risks to the Company; assist our board of directors and our board committees in fulfilling their
oversight responsibilities for the risk management function of the Company; approve the stress test assumption and limits utilized in our stress
test scenario analyses and engage in such activities as it deems necessary or appropriate in connection with the foregoing; review with
management the adequacy and effectiveness of the Company’s policies and internal controls regarding information security and cybersecurity.
In assessing risk, the risk committee assesses the risk of the Company and its subsidiaries as a whole. The risk committee’s role is one of
oversight. Management of the Company is responsible for developing and implementing the systems and processes designed to identify, manage
and mitigate risk. Members of the risk committee are selected for their experience in managing risks in financial and/or insurance enterprises.
Our risk committee meets quarterly and is comprised of Messrs. Leach, Ruisi, Sheth, and Ms. Taitz, and Dr. Puffer. Dr. Puffer is the chair of the
risk committee.
Management Committees
An integral component of our corporate governance structure is our management committees. Management committees report to our senior
officers, including our Chief Executive Officer, President, Chief Financial Officer, and Chief Risk Officer and to committees of our board of
directors. Management committees are comprised of members of senior management and are designed to oversee business initiatives and to
manage business risk and processes, with each committee focused on a discrete area of our business. The following is a description of certain of
our management committees:
•
Executive Committee: oversees all of our strategic initiatives and our overall financial condition.
•
Risk Committee: oversees overall corporate risk, including credit risk, interest rate risk, equity risk, business risk, operational risk and
other risks we confront. The committee reports to the board risk committee.
•
Operational Risk Committee: a subcommittee of the Risk Committee which oversees operational risk, including information security,
disaster recovery, trading activities and operational management of our annuity portfolio.
•
Investment and Asset Liability Committee: focuses on strategic decisions involving our investment portfolio and asset allocation, such
as approving investment limits, new asset classes and our allocation strategy, reviewing large asset transactions as well as monitoring
investment, credit, liquidity and asset/liability risks. The committee reports to the board risk committee.
•
Balance Sheet Committee: a subcommittee of the Executive Committee which operates as a forum for senior management to oversee
and provide guidance on sources and uses of the Company’s capital, review transactions above certain thresholds and provide
recommendations to our board of directors, review balance sheet structure and review other matters having material impacts to
financial statements.
Compensation Committee Interlocks and Insider Participation
We do not have a compensation committee. Mr. Belardi serves on the board of directors of AGM and two executive officers of AGM, Messrs.
Belardi and Rowan, serve on our board of directors. Except for the foregoing, none of our executive officers currently serves, or has served
during the last completed fiscal year, as a member of the board of directors or compensation committee of any entity that has an executive
officer serving as a member of our compensation committee or as a director on our board of directors.
Insider Trading Policy
Our parent, Apollo, has adopted insider trading policies and procedures applicable to us governing the purchase, sale, and/or other dispositions
of our securities by directors, officers, employees, and other covered persons that are reasonably designed to promote compliance with insider
trading laws, rules and regulations, and the listing requirements of the New York Stock Exchange. A copy of Apollo’s insider trading policy is
filed as Exhibit 19.1 to this Annual Report on Form 10-K.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
We have adopted corporate governance guidelines and a code of business conduct and ethics that applies to all of our directors, officers and
employees. These documents are available at www.athene.com. Information contained on our website or connected thereto does not constitute a
part of, and is not incorporated by reference into, this report. We intend to satisfy our disclosure obligations under Item 5.05 of Form 8-K by
posting information about an amendment to, or a waiver from, a provision of our code of business conduct and ethics that apply to our Chief
Executive Officer, Chief Financial Officer or Senior Vice President and Corporate Controller on our website at the address given above.
Communications with the Board of Directors
Stockholders and other interested parties may communicate with members of the board of directors (either individually or as a body) by
addressing correspondence to that individual or body to Athene Holding Ltd., 7700 Mills Civic Pkwy, West Des Moines, IA 50266.
Stockholders and other interested parties may specifically direct their communications to any of the independent directors, including the
Committee Chairs and the Lead Independent Director, by addressing correspondence to that individual or body to Athene Holding Ltd., 7700
Mills Civic Pkwy, West Des Moines, IA 50266.
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Risk Management Oversight
We have implemented an enterprise-wide approach to risk management and have specifically established a risk committee of the board of
directors charged with the oversight of the development and implementation of systems and processes designed to identify, manage and mitigate
reasonably foreseeable material risks, including risks from cybersecurity threats, and with the duty to assist the board of directors and other
board committees with fulfilling their oversight responsibilities for the Company’s risk management function. See Item 1C. Cybersecurity for
additional information about risk management oversight of cybersecurity.
As noted above in –Management Committees, management committees oversee business initiatives and manage business risk and processes.
The audit committee assists the risk committee in its responsibility for oversight of risk management. In particular, the audit committee focuses
on major financial risk exposures and the steps management has taken to monitor and control such risks, and discusses with our independent
auditor the policies governing the process by which senior management and the various units of the Company assess and manage our financial
risk exposure and operational/strategic risk. The legal and regulatory committee assists in risk management by overseeing (1) material litigation
and regulatory matters, (2) compliance with material laws and regulations, and (3) material legal, regulatory, and compliance programs, policies
and procedures. As mentioned above, the legal and regulatory committee’s oversight responsibilities complement those of the audit committee.
Corporate Social Responsibility
We are committed to giving back to the communities in which we live and work. We strive to operate in ways that honor our values and respect
our communities as we seek to make a positive contribution to society as a whole. We recognize that our social, economic and environmental
responsibilities are important for our relationships with customers, employees, agents and our communities, and we aim to demonstrate these
responsibilities through our actions and within our corporate policies. A review of our corporate social responsibility practices, along with a
copy of Apollo’s Corporate Social Responsibility Report, can be found in the corporate social responsibility section of our corporate website
available at www.athene.com/corporate-social-responsibility. Information contained on our website or connected thereto does not constitute a
part of, and is not incorporated by reference into, this report.
Item 11. Executive Compensation
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation Discussion and Analysis (CD&A)
Named Executive Officers (NEOs)
Our NEOs, comprised of our principal executive and financial officers and our three highest paid executive officers serving as executive officers
as of December 31, 2024 other than our principal executive and financial officers, are as follows:
Executive
Title
James R. Belardi
Chairman, Chief Executive Officer and Chief Investment Officer
Grant Kvalheim
President
Martin P. Klein*
Executive Vice President and Chief Financial Officer
Michael S. Downing
Executive Vice President and Chief Operating Officer
Douglas Niemann
Executive Vice President and Chief Risk Officer
* In October 2024, Mr. Klein notified the Company of his decision to retire from the role of Chief Financial Officer of the Company effective upon the
appointment of his successor, which is expected to occur in 2025, at which time Mr. Klein will assume the role of Senior Advisor to the Company.
Compensation Framework
Goals, Principles and Process
Our 2024 executive compensation program was designed to:
•
attract, retain and motivate high-performing talent;
•
reward outstanding performance;
•
align executive compensation elements with company performance; and
•
align the interests of our executives with those of our stakeholders.
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Following the closing of our merger with AGM, we became a “controlled company” for purposes of the NYSE listing standards and, as a result,
we are no longer required to have a compensation committee comprised solely of independent directors or to have the compensation of our
executive officers determined by such a committee. Accordingly, compensation decisions with respect to Mr. Belardi, who is an executive
officer of AGM, are made by the compensation committee of AGM’s board of directors (the “AGM Compensation Committee”), which is
composed solely of independent directors of AGM, and compensation decisions with respect to our other NEOs are made by the executive
committee of our board of directors.
For 2024, the executive committee, upon recommendations by Mr. Belardi and after consulting with AGM, determined the compensation of all
of our executive officers other than Mr. Belardi. The executive committee made compensation decisions after considering performance of the
Company and each individual as well as the Company’s historical compensation practices. In addition, consistent with prior practice, in
determining the compensation of our NEOs, other than Mr. Belardi, Mr. Belardi’s recommendations to the executive committee also considered
industry-specific survey data provided by Willis Towers Watson. None of our NEOs participated in the determination of their own
compensation.
2024 Compensation Elements
Base Salary
Except as may otherwise be specified in an NEO’s employment agreement, base salaries for our NEOs are determined annually, based on a
number of factors, including the size, scope and impact of their role, the market value associated with their role, leadership skills, length of
service, and individual performance and contributions.
Annual Incentive Awards
As further discussed below in –2024 Compensation Decisions, in 2024, we granted annual incentive awards to our NEOs, other than Mr.
Kvalheim (paid in the form of AGM RSUs with respect to Mr. Belardi and in cash to the other NEOs), based on the achievement of financial,
operational and personal objectives, established by the executive committee of our board of directors based on our internal business plan for the
year. The executive committee determined the amount of the awards for the participating NEOs, other than Mr. Belardi, and the AGM
Compensation Committee determined the amount of Mr. Belardi’s award, in each case, based on performance against the pre-established
objectives. The annual incentive award payout for each participating NEO, other than Mr. Belardi, was also subject to adjustment by our
executive committee or Mr. Belardi based on a review of the NEO’s individual performance in 2024. In addition, the portion of the annual
incentive award payout could have been overridden to 0% for the NEOs at the discretion of our executive committee in the event of a material
breach of a risk threshold, but only to the extent such breach was not approved in advance or waived by our executive committee.
Long-Term Incentive Awards
As further discussed below in –2024 Compensation Decisions, in early 2024, AGM granted to each of the NEOs other than Mr. Kvalheim an
annual AGM RSU award in respect of their 2024 service, one-third of which vested on December 31, 2024 and the remaining two-thirds of
which is scheduled to vest in equal installments on December 31 of each of 2025 and 2026, subject to the NEO’s continued employment through
each applicable vesting date.
Performance Fee Programs
Performance fee entitlements with respect to investment funds managed by AGM and its subsidiaries confer rights to participate in distributions
made to investors following the realization of an investment or receipt of operating profit from an investment by the fund, provided the fund has
attained a specified performance return. Since 2020, each of the NEOs has been entitled to participate in certain performance fee income
received from a series of funds managed by affiliates of AGM. In addition, in 2024, the NEOs, other than Mr. Belardi, received additional rights
to participate in performance fee income under an AGM program in which they began participating in 2022. Under the program, performance
fees that accrue may be notionally invested by participants in a fund AGM manages until paid. Rights to payments under this program vest after
three years, subject to continued employment, with the first payment with respect to the rights granted in 2022 and 2024 scheduled to be made in
2025 and 2027, respectively. As with other amounts distributed in respect of performance fees, our financial statements characterize
performance fee income allocated to participating professionals in respect of their performance fee rights as compensation. None of the NEOs
received payments under the performance fee programs in 2024.
Partner Benefits Stipend
AGM provides each NEO, other than Mr. Belardi, with an annual partner benefits stipend of $250,000 that may be used by the NEOs for
benefits or other purposes.
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Partnership Interest Revenue Sharing
Mr. Belardi, who was a founder of ISG, continues to hold a partnership interest in ISG (the “ISG partnership interest”). Mr. Belardi’s ISG
partnership interest provides quarterly distributions equal to 3.35% of base management fees and 4.5% of subadvisory fees, as such terms are
defined in the fee agreement by and between ISG and the Company, and the fee agreements by and between ISG and ACRA, each as in effect
from time to time. In addition, pursuant to the terms of his employment agreement, Mr. Belardi is entitled to receive an additional annual
amount equal to 3% of the profits of Apollo’s Insurance Solutions Group International, the international arm of ISG (ISGI), subject to Mr.
Belardi’s continued employment with the Company through the date it pays its annual bonuses for the applicable year. Mr. Belardi’s ISG
partnership interest and ISGI profits entitlement result in distributions which, unlike dividends on common stock, are reported in the All Other
Compensation column of the 2024 Summary Compensation Table.
Pre-Retirement Death Benefit
In addition to certain life insurance benefits provided by the Company for its employees generally, in October 2024, the Company adopted an
Executive Pre-Retirement Death Benefit Plan, pursuant to which $100,000 will be paid in a lump sum to the designated beneficiary of each
NEO, other than Mr. Belardi, in the event of such NEO’s death prior to his termination of employment.
Other Compensation Practices
Employment Agreements
We have entered into employment agreements with certain of our NEOs, as follows:
Belardi Agreement
Pursuant to Mr. Belardi’s employment agreement, Mr. Belardi serves as the Chief Executive Officer of the Company and ISG. The current term
of Mr. Belardi’s employment agreement is scheduled to expire on December 31, 2025, and will automatically extend for subsequent one-year
terms unless Mr. Belardi or AGM gives written notice of nonrenewal prior to the expiration of the then-current term. Mr. Belardi’s employment
agreement provides for an annual base salary of $1,875,000 and target annual incentive bonus opportunity of $1,850,000. Any annual incentive
bonus may be paid in the form of cash or publicly tradeable securities that vest in annual installments, and such amount was paid in the form of
AGM RSUs for services performed in 2024.
Under Mr. Belardi’s employment agreement, severance is payable to Mr. Belardi on a termination of employment by the Company without
cause or by reason of nonrenewal of the term of the agreement, by Mr. Belardi for good reason, or due to Mr. Belardi’s death or disability (an
“Involuntary Termination”), equal to his annual base salary (payable at the AGM Compensation Committee’s discretion in cash, fully-vested
shares of AGM common stock, or any combination thereof) and a pro rata bonus for the year of termination based, in part, on the bonus and
annual salary paid to him in the year preceding his termination. Upon an Involuntary Termination other than due to death or disability, Mr.
Belardi is also entitled to additional severance equal to his target annual incentive bonus multiplied by a fraction, the numerator of which is his
annual incentive bonus for the previous fiscal year and the denominator of which is his annual base salary for the previous fiscal year. In
addition, upon an Involuntary Termination, (i) Mr. Belardi will be entitled to the reimbursement of the cost of continued medical coverage at
active employee rates for up to 18 months, (ii) any outstanding and unvested time-vesting profits units that are scheduled to vest during the one-
year period immediately following the termination date will immediately vest, and (iii) any outstanding and unvested equity awards granted as a
component of an annual incentive bonus will immediately vest, based on target performance with respect to any performance-vesting awards.
Severance payments and benefits are conditioned on Mr. Belardi’s execution of a general release of claims in favor of the Company and its
affiliates. Mr. Belardi’s employment agreement contains customary restrictive covenants, including confidentiality and nondisclosure covenants,
covenants not to compete or solicit customers for 12 months following the date on which he ceases to own or control his ISG partnership
interest, and a covenant not to solicit employees for 24 months following termination.
To the extent that any payment, benefit or distribution of any type to or for the benefit of Mr. Belardi would be subject to the excise tax imposed
under Section 4999 of the Internal Revenue Code of 1986, as amended (Internal Revenue Code), then such payments, benefits or distributions
will be reduced (but not below zero) so that the maximum amount of such payments, benefits or distributions will be one dollar less than the
amount which would cause them to be subject to such excise tax, unless Mr. Belardi makes AGM and its affiliates whole on an after-tax basis
for any adverse tax consequences imposed on AGM and its affiliates under Section 280G of the Internal Revenue Code as a result of not
reducing such payments, benefits or distributions.
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198
Klein Agreements
Pursuant to his employment agreement, Mr. Klein is entitled to receive a minimum base salary of $550,000 and is eligible to receive an annual
incentive award each fiscal year he is employed. His employment is at will and may be terminated by him or by the Company at any time by
giving three months’ notice.
In addition, the Company has the right, in its discretion, to terminate the agreement with a payment in lieu of notice. The Company may also
terminate the agreement without notice or payment in lieu of notice if Mr. Klein is guilty of any gross default or misconduct, or any repeated
misconduct after due warning, in connection with the Company or in the event of any serious or repeated breach or non-observance with any of
the provisions in the agreement. The employment agreement contains customary restrictive covenants, including confidentiality and
nondisclosure covenants and covenants not to solicit customers or employees of the Company or any affiliate of the Company for 12 months
following termination.
In October 2024, Mr. Klein notified the Company of his decision to retire from the role of Chief Financial Officer of the Company effective
upon the appointment of his successor, which is expected to occur in 2025 (the “Klein Transition Date”), at which time he will assume the role
of Senior Advisor to the Company. In this role, Mr. Klein will provide strategic advice to the Company’s senior management as the Company
executes its plan for future growth. In connection with the announcement of his retirement, Mr. Klein and the Company entered into a letter
agreement (the “Klein Letter Agreement”) memorializing the terms of his transition from the Company. Under the Klein Letter Agreement, for
service through December 31, 2025, (i) Mr. Klein’s base salary and benefits arrangements will continue at the same level as prior to the Klein
Transition Date; (ii) he will remain eligible for an annual bonus with respect to the 2024 calendar year (with a target bonus opportunity equal to
$1,222,000); (iii) he will receive his 2025 long-term incentive award granted in the first quarter of 2025, with a grant date fair value of $975,000
and granted in the same vehicles as granted to other similarly situated executive officers of the Company; and (iv) he will be entitled to receive a
partner stipend for 2025 in the amount of $250,000. Beginning January 1, 2026, and subject to his continued service with the Company, Mr.
Klein’s target direct compensation will be $1,000,000, consisting of a base salary of $650,000 and a bonus opportunity equal to $350,000. While
serving as a Senior Advisor, (i) Mr. Klein’s (A) outstanding equity awards and (B) outstanding rights related to performance fees will continue
to vest in accordance with, and subject to, their terms and the underlying plans; (ii) Mr. Klein will remain eligible to receive severance benefits
in accordance with the terms of the Company’s severance policy upon a qualifying separation, subject to any required notice period under his
existing employment agreement; (iii) Mr. Klein will continue to be entitled to receive an annual partner stipend of $250,000; and (iv) he will
continue to participate in the Company’s benefit plans and programs, subject to the terms of such plans. Mr. Klein will also remain eligible for
an annual bonus with respect to the 2025 calendar year, with a target bonus equal to $961,000, subject to his continued service through
December 31, 2025 and the achievement of the applicable performance goals, which will be determined in the sole discretion of the executive
committee of the board of directors of the Company.
The Klein Letter Agreement also provides that, subject to his continued service with the Company through December 31, 2025 and his
execution and non-revocation of the Company’s standard release of claims in favor of the Company and its affiliates, and his continued
compliance with the terms of the awards and restrictive covenants in favor of the Company, Mr. Klein will be eligible for continued vesting and
settlement of his outstanding performance fee program awards for the 2024 and 2025 performance years and his outstanding equity awards, as if
he had remained employed with the Company through the last scheduled vesting date for each applicable award, with his outstanding equity
awards to be settled in shares of AGM.
Review of Compensation Policies and Practices Related to Risk Management
Effective risk management is central to our success, and compensation is carefully designed to be consistent with our risk management
framework and controls. If our performance is obtained in a manner inconsistent with this framework or these controls, our executive committee
has the discretion, with input from the risk committee, if necessary, to decrease or not award any bonuses to our NEOs and other executive
officers. In addition, the performance objectives for our Chief Risk Officer and the other employees in our risk management function are based
in part on the effectiveness of our risk management policies and procedures. We have determined that the risks arising from our compensation
policies and practices are not reasonably likely to have a material adverse effect on the Company. This compensation risk assessment was
conducted with the assistance of Semler Brossy Consulting Group, LLC, our Chief Risk Officer and other employees in our risk management
function.
2024 Compensation Decisions
Base Salary
Our NEOs’ base salaries in 2024 remain unchanged from 2023, except Mr. Niemann’s base salary increased from $500,000 to $550,000 and, as
previously disclosed, Mr. Kvalheim’s base salary was reduced from $1 million to $100,000 in connection with the redesign of his compensation.
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199
Annual Incentive Awards
The NEO annual incentive awards in 2024 were based on a combination of six overall corporate financial and operational goals for the NEOs,
other than Mr. Belardi and Mr. Kvalheim. For Mr. Belardi, the AGM Compensation Committee established that 25% of his target annual
incentive RSU award would be based on a combination of such goals, while the remaining portion was based 25% on absolute and relative
investment portfolio total return goals and 50% on the AGM Compensation Committee’s review of overall Company performance, as discussed
in further detail below. Mr. Kvalheim was not eligible for an annual incentive award for 2024 following the redesign of his compensation, as
previously disclosed. The annual incentive awards for the participating NEOs, other than Mr. Belardi, were also subject to adjustment by our
executive committee or Mr. Belardi based on a review of the NEOs’ individual performance in 2024.
For 2024, the executive committee, in consultation with Mr. Belardi and AGM, established target incentive award opportunities of
approximately 188%, 175%, and 150% of base salary for Mr. Klein, Mr. Downing and Mr. Niemann, respectively, and the AGM Compensation
Committee established a target incentive award opportunity of $1,850,000 for Mr. Belardi, consistent with his employment agreement, which
was unchanged from his 2023 award opportunity. Each participating NEO, other than Mr. Belardi, was eligible for a total annual incentive
award payout ranging from 0% to 200% of such NEO’s target award opportunity. Mr. Belardi was eligible for a total annual incentive award
payout ranging from 0% to 148% with respect to the portions of his target award opportunity that were subject to corporate objectives and
absolute and relative investment portfolio total return performance goals, as described below.
The six Company corporate performance measurements, their respective weightings and 2024 performance and achievement with respect to
these measurements as of the December 2024 performance determination date, are set forth below. For 2024, a new talent strategy objective,
based on the executive committee’s qualitative assessment of the delivery on key talent and strategic initiatives, was added to incentivize the
NEOs to focus their efforts on actions that may not have immediate financial results but which are aligned with the Company’s operational and
strategic goals. The targets for the corporate financial and operational measures were determined in relation to the Company’s internal business
plan for the year.
Objectives
Weight
Measurement
Target7
2024 Performance
(Estimate)
Overall profitability
20%
Adjusted spread related earnings1
$3.726B
$3.558B
Expense management
5%
Operating expenses2
—
Exceeded
Inflows
10%
Inflows3
$70.0B
$71.9B
New business profitability
20%
Underwritten returns4
—
Exceeded
Capital
15%
Excess equity capital generation5
—
Exceeded
Talent and strategy
30%
Strategic focus areas6
—
Below Target
1 Adjusted spread related earnings (SRE) is a pre-tax non-GAAP measure used to evaluate our financial performance excluding market volatility (other than with
respect to alternative investments) as well as certain other expenses which are not part of our underlying profitability drivers. SRE equals net income (loss)
available to AHL’s common stockholder, eliminating the impact of investment gains (losses), net of offsets; non-operating change in insurance liabilities and
related derivatives; integration, restructuring, and other non-operating expenses; stock compensation expenses; and income tax (expense) benefit. For the
purpose of measuring “adjusted spread related earnings” under this scorecard, SRE will be adjusted for the impact of certain material transactions undertaken
including, but not limited to, any variance to the Company’s 2024 financial plan for the size or timing of capital transfers, allocated Apollo/ISG costs, and
certain other items.
2 Represents consolidated operating expenses included in operating income, including the impact of ACRA’s noncontrolling interest, taking into account
allocated Apollo/ISG costs, bonus accrual, and certain other items.
3 Inflows includes all organic and inorganic inflows on a gross basis, including any inflows reinsured to ACRA or others. No credit will be given, or negative
credit may be assigned, if underwritten return is below specified amounts.
4 Underwritten returns on retail, funding agreements, pension group annuities, and flow reinsurance on a gross basis, using an internal capital model. No credit
will be given if underwritten return is below a specified amount or statutory internal rate of return is below a specified amount at the portfolio level.
5 Change in excess equity capital, with adjustments for, including, but not limited to, any variance to the Company’s 2024 financial plan for the impact of any
inorganic transactions, capital transfers, debt issuances, preferred stock issuances, floating rate hedging associated with reducing our net floating rate position,
and certain other items. The measure will reflect the change in excess equity capital between year-end 2023 and 2024.
6 Represents the executive committee’s qualitative assessment of the delivery on key talent and strategic initiatives related to, among other things, the
development of a robust business plan, progress in new product developments and execution on a financial planning and analysis modernization initiative.
7 The targets were designed to be reasonably achievable with strong management performance and the coordinated cross-functional focus and effort of the
NEOs.
The Company’s 2024 performance based on the six corporate objectives described above resulted in a payout level equal to 118% of the
applicable target opportunity. Following a review of the individual performance of the NEOs, other than Mr. Belardi, the executive committee
approved payouts equal to 82%, 118%, and 115% of target for Messrs. Klein, Downing, and Niemann, respectively.
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200
Mr. Belardi
In December 2024, following a review of performance in 2024, the AGM Compensation Committee approved a payout of Mr. Belardi’s annual
incentive award, resulting in the grant to Mr. Belardi of RSUs representing a target award level equal to 57% of target. The six corporate
objectives discussed above collectively comprised 25% of Mr. Belardi’s target annual incentive AGM RSU award, while the remaining portion
was based 25% on absolute and relative investment portfolio total return performance goals and 50% on the AGM Compensation Committee’s
review of overall Company performance. The first investment portfolio total return objective, weighted at 12.5%, compared the Company’s non-
alternative investment performance to the Barclays US Aggregate Bond Index over a trailing 33-month period. The second investment portfolio
total return performance objective, also weighted at 12.5%, compared the Company’s alternative investment performance relative to a 50-50
blended index of the S&P 500 and the BofA Merrill Lynch US High Yield Index over a 33-month period, subject to maintaining a minimum
return on alternative investment performance since the inception of the Company.
The investment portfolio total return performance objectives are assessed based on a prescribed formula. For the investment portfolio total
return performance objective based on the Company’s non-alternative investment performance, the AGM Compensation Committee compared
the Company’s results of -0.93% for the 33-month period ending September 30, 2024 to -2.16% for the Barclays US Aggregate Bond Index,
which pursuant to the formula resulted in a payout of 100% of the award for this objective. For the investment portfolio total return performance
objective based on the Company’s alternative investment performance, the AGM Compensation Committee compared the Company’s results of
8.03% for the 33-month period ending September 30, 2024 to 6.75% for the 50-50 blended index described above, which pursuant to the
formula resulted in a payout of 119% of the award for this objective.
Following a review of the Company’s estimated performance for 2024, the AGM Compensation Committee determined not to approve a payout
with respect to the portion of Mr. Belardi’s annual incentive award that was based on its review of overall Company performance given Mr.
Belardi’s role as Chief Executive Officer of the Company and the Company’s overall performance in 2024, including its adjusted SRE
performance relative to the target level.
These annual incentive RSUs were granted in February 2025 and vest in two equal annual installments, consistent with past practice for Mr.
Belardi.
Equity and Long-Term Incentive Awards
In February 2024, AGM granted to each of the NEOs, other than Mr. Kvalheim, annual AGM RSU awards with the grant date fair values set
forth in the table below, one-third of which vested on December 31, 2024 and the remaining two-thirds of which are scheduled to vest in equal
installments on December 31 of each of 2025 and 2026, subject to the NEO’s continued employment through each applicable vesting date. Mr.
Kvalheim was not eligible for a long-term incentive award for 2024 following the redesign of his compensation, as previously disclosed. The
grant date fair value of the AGM RSUs granted to the participating NEOs in 2024 was unchanged from 2023. The value of the 2024 AGM
RSUs for the participating NEOs, other than Mr. Belardi, was based on the Company’s internal compensation practices. The AGM
Compensation Committee determined the value of the 2024 AGM RSU award for Mr. Belardi. The value of the 2024 annual AGM RSU award
for Mr. Belardi was based on competitive market data, input from the AGM Compensation Committee’s compensation consultant, and AGM’s
overall compensation philosophy. Mr. Belardi’s AGM RSU awards were approved by the AGM Compensation Committee.
Named Executive Officer
Grant Date Fair Value of AGM RSUs
James R. Belardi
$
5,225,298
Martin P. Klein
$
2,037,789
Michael S. Downing
$
1,044,995
Douglas Niemann
$
783,773
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201
2024 Summary Compensation Table
The following table provides information concerning compensation earned by our NEOs for 2024 and 2023 and, to the extent required by
applicable SEC compensation disclosure rules, 2022.
Name and Principal Position
Year
Salary
Bonus
Stock
Awards1
Option
Awards
Non-Equity
Incentive Plan
Compensation2
All Other
Compensation3
Total
James R. Belardi4
Chairman, Chief Executive
Officer and Chief Investment
Officer
2024
$ 1,875,000 $
—
$ 7,327,830
$
—
$
—
$
52,964,779
$
62,167,609
2023
$ 1,875,000 $
—
$ 6,690,787
$
—
$
—
$
42,216,981
$
50,782,768
2022
$ 1,741,141 $
209,326
$ 6,428,865
$
—
$
—
$
36,316,113
$
44,695,445
Grant Kvalheim
President
2024
$ 100,000
$
—
$
—
$
—
$
—
$
427,115
$
527,115
2023
$ 1,000,000 $
—
$ 33,423,922
$
—
$
3,750,000
$
343,053
$
38,516,975
2022
$ 1,000,000 $
71,166
$ 7,388,423
$
—
$
3,200,000
$
362,063
$
12,021,652
Martin P. Klein
Executive Vice President and
Chief Financial Officer
2024
$ 650,000
$ 2,037,789
$
—
$
1,000,000
$
305,500
$
3,993,289
2023
$ 650,000
$
—
$ 1,854,610
$
—
$
1,800,000
$
324,352
$
4,628,962
2022
$ 650,000
$
83,726
$ 5,443,470
$
—
$
1,700,000
$
362,811
$
8,240,007
Michael S. Downing
Executive Vice President and
Chief Operating Officer
2024
$ 625,000
$ 1,044,995
$
—
$
1,290,625
$
270,700
$
3,231,320
2023
$ 625,000
$
—
$
951,049
$
—
$
1,450,000
$
269,800
$
3,295,849
2022
$ 600,000
$
—
$ 2,947,582
$
—
$
1,310,000
$
268,300
$
5,125,882
Douglas Niemann5
Executive Vice President and
Chief Risk Officer
2024
$ 550,000
$
783,773
$
—
$
950,000
$
270,700
$
2,554,473
2023
$ 500,000
$
—
$
713,270
$
—
$
1,000,000
$
269,800
$
2,483,070
1 This column includes the grant date fair value of the time-based AGM RSUs granted to our NEOs, other than Mr. Kvalheim, in 2024, calculated in accordance
with FASB ASC Topic 718. The grant date fair value is calculated by multiplying the number of AGM RSUs by the closing share price of a share of AGM
common stock on the date of grant for accounting purposes. With respect to Mr. Belardi, this amount includes $2,102,532 representing the AGM RSUs granted
to him in February 2024 in respect of his 2023 annual incentive award. The RSUs granted to Mr. Belardi in February 2025 in respect of his 2024 annual
incentive award will appear in the 2025 Summary Compensation Table.
2 The amounts in this column represent annual cash incentive awards paid to the NEOs, other than Mr. Belardi, and, with respect to 2024, Mr. Kvalheim. Such
amounts were determined by our executive committee after the end of applicable year and were based on the achievement of financial and operational objectives
described in the CD&A. For Mr. Belardi, his annual incentive award was paid in the form of AGM RSUs in February 2025 and will be reflected in the Stock
Awards column of the 2025 Summary Compensation Table.
3 For 2024, these amounts include: (i) the Company’s 401(k) matching amount of $20,700 for each of our NEOs other than Mr. Kvalheim, whose 401(k) match
amount was $19,321; (ii) a partner benefits stipend of $250,000 for each NEO other than Mr. Belardi; (iii) taxable travel amounts of $49,802 for Mr. Kvalheim;
(iv) $34,800 for Mr. Klein for his residence in Iowa; (v) $51,350,951 for Mr. Belardi representing distributions on his ISG partnership interest and $1,561,742
for Mr. Belardi representing amounts in respect of his ISGI profits entitlement; (vi) $31,386 for Mr. Belardi representing fees paid by the Company for tax
preparation services; (vii) $105,000 filing fee paid by the Company on Mr. Kvalheim’s behalf under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
and (viii) $2,992 for Mr. Kvalheim representing fees paid by the Company for tax preparation services. Each of these amounts represent the cost paid directly to
or on behalf of the NEO or service provider, as applicable.
The Company maintains a corporate aircraft for efficiency and business planning purposes. Mr. Belardi used the corporate aircraft for two personal flights in
2024 and fully reimbursed the Company for this personal use. Accordingly, no amount is reflected for such use. Personal use of the Company corporate aircraft
is subject to a formal policy that was approved by the AGM compensation committee in 2022 that sets forth the criteria and procedures applicable to its use. Mr.
Belardi and the Company have entered into a time-sharing agreement, pursuant to which Mr. Belardi may use the corporate aircraft for up to 25 flight hours per
year, provided that the number of flight hours and other incidentals under such agreement shall be further limited so that the amount of payments from Mr.
Belardi pursuant to such agreement (including such tax payments) shall not exceed $120,000 in any Company fiscal year. Occasionally, a guest may accompany
Mr. Belardi on the Company corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In
those cases, there is no additional aggregate incremental cost to the Company and, as a result, no amount would be reflected in the Summary Compensation
Table for the applicable year.
4 The amount reported in the Salary column for Mr. Belardi for 2024 represents his annualized base salary of $1,875,000.
5 Mr. Niemann was not an NEO prior to 2023.
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202
2024 Grants of Plan-Based Awards Table
The following table provides information about awards granted to the participating NEOs in 2024: (1) the grant date; (2) the threshold, target
and maximum estimated future payouts under annual incentive plan awards; (3) the number of AGM RSUs granted to the NEOs under AGM’s
2019 Omnibus Equity Incentive Plan or AGM’s 2019 Omnibus Equity Incentive Plan for Estate Planning Vehicles (together, the “2019
Omnibus Equity Incentive Plans”); and (4) the grant date fair value of the share awards, computed in accordance with applicable SEC rules. As
described above, Mr. Kvalheim did not receive any annual incentive plan awards or equity awards under the 2019 Omnibus Equity Incentive
Plans in 2024 and is excluded from the table below.
Name of Executive
Grant Date
Estimated Future Payouts Under
Annual Incentive Plan Awards1
All Other Stock Awards:
Number of Shares or Units
Grant Date Fair Value of Share
and Option Awards2
Threshold
Target
Maximum
James R. Belardi
2/9/2024
3
48,748
$5,225,298
2/9/2024
4
19,615
$2,102,532
Martin P. Klein
2/9/2024
3
19,011
$2,037,789
$—
$1,222,000
$2,444,000
Michael S. Downing
2/9/2024
3
9,749
$1,044,995
$—
$1,093,750
$2,187,500
Douglas Niemann
2/9/2024
3
7,312
$783,773
$—
$825,000
$1,650,000
1
The 2024 annual cash incentive awards for our NEOs other than Mr. Belardi and Mr. Kvalheim were based on a combination of six overall corporate
financial and operational goals, and were subject to adjustment by our executive committee or Mr. Belardi based on a review of the applicable NEO’s
individual performance in 2024. The overall payout range of the awards is between 0% and 200% of the target amount. As described in the CD&A, the 2024
annual incentive award for Mr. Belardi was payable in the form of AGM RSUs that were granted in February 2025 and will be reported in the 2025 Grants
of Plan-Based Awards Table of next year’s Annual Report on Form 10-K in accordance with FASB ASC Topic 718.
2
For valuation methodology, see notes 1 and 2 to the 2024 Summary Compensation Table.
3
These time-based AGM RSUs vest in three equal installments, one-third of which vested on December 31, 2024, and the remaining two-thirds of which are
scheduled to vest on December 31 of 2025 and 2026, provided the recipient remains employed through the applicable vesting date.
4
The award to Mr. Belardi of 19,615 AGM RSUs granted on February 9, 2024 represents a 2023 annual incentive award that was dollar-denominated, but by
its terms was payable in AGM RSUs with a target value of $2,011,875, which vest ratably over a two-year period provided that Mr. Belardi remains
employed through the applicable vesting dates. Mr. Belardi’s annual incentive award was issued with a target value of $1,850,000, with 25% based on a
combination of five overall corporate financial and operational goals, while the remaining portion was based 25% on absolute and relative investment
portfolio total return performance goals and 50% on the AGM Compensation Committee’s review of overall Company performance. The corporate
performance component of the award had a payout range between 0% and 200% of the corporate performance component. The overall payout range of the
award, including both the corporate performance component and the personal performance component of the award, was between 0% and 148% with respect
to the portions of his target award opportunity that were subject to corporate objectives and absolute and relative investment portfolio total return
performance goals. The RSUs granted to Mr. Belardi in February 2025 in respect of his 2024 annual incentive award will appear in the 2025 Grants of Plan-
Based Awards Table.
2024 Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information on the holdings of the Company’s equity awards by the NEOs as of December 31, 2024. This table
includes unexercised AGM Options and unvested AGM RSUs granted under AGM’s 2019 Omnibus Equity Incentive Plans. Each equity grant
is shown separately for each NEO. The vesting schedule for each outstanding award is shown in the notes to this table.
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203
Option Awards
Stock Awards
Name of Executive
Grant
Date
Grant Type
Number of
Securities
Underlying
Unexercised
Options (#)
(Exercisable)
Number of
Securities
Underlying
Unexercised
Options (#)
(Unexercisable)
Option
Exercise
Price ($)
Option
Expiration
Date1
Number of
Shares of
Stock or
Units of
Stock that
Have Not
Vested (#)
Market Value
of Shares of
Stock or
Units of
Stock That
Have Not
Vested ($)2
Equity Incentive
Plan Awards:
Number of
Unearned
Shares of Stock
or Units of
Stock that Have
Not Vested (#)
Equity Incentive
Plan Awards:
Market Value of
Unearned
Shares of Stock
or Units of
Stock that Have
Not Vested ($)
James R. Belardi3
6/6/2016
Options
147,813
$
29.55
6/6/2026
3/21/2017
Options
76,153
$
44.61
3/21/2027
2/27/2018
Options
76,153
$
41.82
2/27/2028
4/3/2019
Options
74,033
$
36.94
4/3/2029
2/21/2020
Options
66,990
$
43.27
2/21/2030
2/22/2021
Options
67,430
$
40.60
2/22/2031
2/10/2023
RSU 4
23,366
$ 3,859,129
2/9/2024
RSU 5
32,499
$ 5,367,535
2/9/2024
RSU 6
9,808
$ 1,619,889
Grant Kvalheim
2/21/2020
Options
46,892
$
43.27
2/21/2030
2/22/2021
Options
56,641
$
40.60
2/22/2031
2/10/2023
RSU
4
11,683
$ 1,929,564
Martin P. Klein
6/6/2016
Options
1,954
$
29.55
6/6/2026
3/21/2017
Options
30,462
$
44.61
3/21/2027
2/27/2018
Options
30,462
$
41.82
2/27/2028
4/3/2019
Options
50,343
$
36.94
4/3/2029
2/21/2020
Options
45,553
$
43.27
2/21/2030
2/22/2021
Options
52,595
$
40.60
2/22/2031
2/10/2023
RSU
4
9,113
$ 1,505,103
2/9/2024
RSU
5
12,674
$ 2,093,238
Michael S. Downing
2/27/2018
Options
4,185
$
41.82
2/27/2028
4/3/2019
Options
14,807
$
36.94
4/3/2029
2/21/2020
Options
16,077
$
43.27
2/21/2030
2/22/2021
Options
16,183
$
40.60
2/22/2031
2/10/2023
RSU
4
4,673
$
771,793
2/9/2024
RSU
5
6,500
$ 1,073,540
Douglas Niemann
2/21/2020
Options
15,852
$
43.27
2/21/2030
2/22/2021
Options
17,532
$
40.60
2/22/2031
8/16/2022
RSU
7
5,653
$
933,649
2/10/2023
RSU
4
3,505
$
578,886
2/9/2024
RSU
5
4,875
$
805,155
1
This column reports the expiration date for stock options.
2
As of December 31, 2024, the fair market value of a share of AGM common stock was $165.16
3
Substantially all outstanding equity awards for Mr. Belardi have been transferred to trusts, other than for value, for estate planning purposes.
4
This row shows the number of time-based AGM RSUs, which vest in three equal installments, two-thirds of which vested on December 31 of 2023 and
2024, and one-third of which is scheduled to vest on December 31, 2025.
5
This row shows the number of time-based AGM RSUs, which vest in three equal installments, one-third of which vested on December 31, 2024, and the
remaining two-thirds of which are scheduled to vest on December 31 of 2025 and 2026.
6
This award to Mr. Belardi represents a 2023 annual incentive award that is dollar-denominated but by its terms is payable in AGM RSUs. Such AGM
RSUs were granted to Mr. Belardi on February 9, 2024 and vest ratably over a two-year period provided that Mr. Belardi remains employed through the
applicable vesting date.
7
This row shows the number of time-based AGM RSUs, two-thirds of which vested on June 30 of 2023 and 2024, and one-third of which is scheduled to
vest on June 30, 2025.
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204
2024 Option Exercises and Stock Vested Table
The following table provides information for the NEOs on the number of shares of AGM common stock acquired upon exercise of stock options
and vesting of stock awards in 2024 and the value realized at such time, calculated based on the closing trading price of a share of AGM
common stock on the first trading day prior to the applicable vesting date.
Option Awards
Stock Awards
Name
Number of Shares
Acquired on
Conversion (#)
Value Realized on
Conversion ($)
Number of Shares
Acquired on
Vesting (#)
Value Realized on
Vesting ($)
James R. Belardi
—
$
—
93,150 1
$
15,134,055
Grant Kvalheim
—
$
—
35,809 2
$
5,014,236
Martin P. Klein
35,000
$
4,832,825
36,949 3
$
5,271,805
Michael S. Downing
8,000
$
1,054,762
21,413 4
$
3,063,397
Douglas Niemann
—
$
—
24,100 5
$
3,195,243
1
Comprised of (1) AGM RSUs issued as part of annual incentive awards in 2021, which vested on January 1, 2024 with a market value of $93.19 per share,
and (2) AGM RSUs granted in each of 2022, 2023 and 2024 that vested on December 31, 2024 with a market value of $166.51 per share.
2
Comprised of (1) AGM RSUs that vested on January 1, 2024 with a market value of $93.19 per share and (2) AGM RSUs that vested on December 31, 2024
with a market value of $166.51 per share.
3
Comprised of (1) AGM RSUs that vested on January 1, 2024 with a market value of $93.19 per share and (2) AGM RSUs that vested on December 31, 2024
with a market value of $166.51 per share.
4
Comprised of (1) AGM RSUs that vested on January 1, 2024 with a market value of $93.19 per share, (2) AGM RSUs that vested on February 28, 2024 with
a market value of $110.82 per share and (3) AGM RSUs that vested on December 31, 2024 with a market value of $166.51 per share.
5
Comprised of (1) AGM RSUs that vested on January 1, 2024 with a market value of $93.19 per share, (2) AGM RSUs that vested on February 28, 2024 with
a market value of $110.82 per share, (3) AGM RSUs that vested on June 30, 2024 with a market value of $118.08 per share and (4) AGM RSUs that vested
on December 31, 2024 with a market value of $166.51 per share
2024 Nonqualified Deferred Compensation Table
Name
Executive Contributions
in Last Fiscal Year
($)
Registrant Contributions
in Last Fiscal Year
($)
Aggregate Earnings in
Last Fiscal Year
($)1
Aggregate Withdrawals/
Distributions
($)2
Aggregate Balance at
Last Fiscal Year-End
($)3
James R. Belardi
$—
$—
$—
$—
$—
Grant Kvalheim
$—
$—
$2,848,491
$3,476,866
$80,658,443
Martin P. Klein
$—
$—
$1,972,044
$2,407,137
$3,646,069
Michael S. Downing
$—
$—
$1,095,580
$1,337,298
$2,025,594
Douglas Niemann
$—
$—
$959,753
$1,171,414
$1,774,497
1
Reflects increase in value of AGM RSUs with a delayed settlement due to the increase in stock price as compared to the grant date of these awards.
2
Amounts in this column represent the value of fully vested AGM RSUs that were settled in February 2024, subject to the NEO’s employment through the
settlement date.
3
Amounts in this column represent the value of fully vested AGM RSUs that were settled in February 2025, and were subject to the NEO’s continued
employment through the applicable settlement date. In the event that an NEO’s employment had terminated for any reason prior to the settlement of his
AGM RSUs, the unsettled portion would have instead been settled in February 2032, subject to the NEO’s execution and non-revocation of a release of
claims in favor of AGM and the NEO’s continued compliance with any applicable restrictive covenants. For Mr. Kvalheim, the amount in this column also
reflects the value of fully vested AGM RSUs that are scheduled to settle in early 2029, subject to Mr. Kvalheim’s continued employment through the
applicable settlement date. In the event that Mr. Kvalheim resigns or retires prior to the settlement of these AGM RSUs, the unsettled portion will instead be
settled in 2034, subject to his execution and non-revocation of a release of claims in favor of AGM and his continued compliance with any applicable
restrictive covenants.
2024 Potential Payments Upon Termination or Change-in-Control at Fiscal Year-End
The information below describes and quantifies certain compensation that would have become payable under existing plans and arrangements if
the NEO’s employment had terminated on December 31, 2024. These benefits are in addition to benefits available generally to salaried
employees, such as distributions under our 401(k) Plan, disability benefits and accrued vacation pay. Due to the number of factors that affect the
nature and amount of any benefits provided upon the events discussed below, any amounts actually paid or distributed may be different. Factors
that could affect these amounts include the time during the year of any such event and the executive’s age.
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205
Equity Awards
Pursuant to Mr. Belardi’s employment agreement, in the event that Mr. Belardi experiences an Involuntary Termination, (i) any outstanding and
unvested profits units that are held by Mr. Belardi that are subject to time-vesting and scheduled to vest during the one-year period following his
termination will immediately vest, and (ii) any outstanding and unvested equity awards granted to Mr. Belardi as a component of an incentive
bonus (Bonus Equity Awards) will immediately vest (based on target performance with respect to any performance-vesting awards). Under the
terms of Mr. Belardi’s employment agreement, the value of the accelerated vesting of his Bonus Equity Awards in accordance with the
foregoing would equal $1,619,889, assuming a December 31, 2024 termination of employment. Mr. Belardi did not have any outstanding and
unvested profits units as of December 31, 2024.
The following table provides the cumulative intrinsic value (that is, the value based upon the share price of AGM common stock as of December
31, 2024 which was $165.16, less the exercise price of any option awards) of all equity awards that would vest if (1) the NEO terminated
employment as a result of death or disability as of December 31, 2024, (2) the NEO was terminated without cause or terminated employment for
good reason as of December 31, 2024, (3) the NEO was terminated without cause or terminated employment for good reason within 18 months
following a change in control of the Company as of December 31, 2024, or (4) there was a sale of the Company or change in control as of
December 31, 2024.
2024 Potential Equity Benefits Upon Change in Control and Termination Table1
Name
Death or
Disability
Termination by
the Company Without Cause or by
the NEO for Good Reason
Change in
Control
James R. Belardi
$
10,846,553
$
—
$
—
Grant Kvalheim
$
1,929,564
$
—
$
—
Martin P. Klein
$
3,598,341
$
—
$
—
Michael S. Downing
$
1,845,333
$
—
$
—
Douglas Niemann
$
2,317,690
$
—
$
—
1
For purposes of this table only, all amounts reported in this table were calculated in accordance with the terms of applicable individual award agreements and
do not take into account the potential treatment of certain equity awards under Mr. Belardi’s employment agreement, as described above.
Termination Payments and Benefits
Our NEOs would be eligible for benefits under the Athene USA Corporation Severance Pay Plan, which covers our US full-time employees, if
they are involuntarily terminated without cause, and provided they release the Company from any and all claims and, in some instances, agree to
non-compete/non-solicit covenants. In general, eligible employees receive two weeks of their annual base salary for each completed year of
service. The minimum benefits payable under this plan are four weeks of annual base salary; and the maximum benefits payable under this plan
are 26 weeks of annual base salary. In the event that an NEO is notified by us that he is required to comply with a post-separation non-compete
covenant for a period longer than the number of weeks of annual base salary to which the NEO is entitled based on his years of service, then the
amount of the NEO’s severance benefit will be increased to an amount equal to annual base salary for the same number of weeks as the duration
of the non-compete covenant. However, except for Mr. Belardi, in accordance with his employment agreement, in no event will an NEO receive
more than two times his annual base salary received during the year immediately preceding the year of termination. In its sole discretion, the
Company may determine to pay a pro-rated bonus to the involuntarily terminated executive, as approved by our executive committee. The
amount reflected in the table below for Mr. Belardi represents payments and benefits to which he may become entitled pursuant to his
arrangements with Athene. As described in footnote 2 below, Mr. Belardi is also entitled to an amount in redemption of his ISG partnership
interest in connection with certain terminations of his employment.
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206
Name of Executive
Termination Scenario1
Athene Severance Pay
James R. Belardi
Voluntary Separation
$
—
Involuntary Separation
$
5,905,293 2
Termination For Cause
$
—
Grant Kvalheim
Voluntary Separation
$
—
Involuntary Separation
$
100,000 3
Termination For Cause
$
—
Termination Due to Death
$
100,000 4
Martin P. Klein
Voluntary Separation
$
—
Involuntary Separation
$
650,000 3
Termination For Cause
$
—
Termination Due to Death
$
100,000 4
Michael S. Downing
Voluntary Separation
$
—
Involuntary Separation
$
625,000 3
Termination For Cause
$
—
Termination Due to Death
$
100,000 4
Douglas Niemann
Voluntary Separation
$
—
Involuntary Separation
$
550,000 3
Termination For Cause
$
—
Termination Due to Death
$
100,000 4
1.
Voluntary separation does not automatically trigger severance payments. For NEOs other than Mr. Belardi, voluntary separation triggers a severance
payment only if the Company decides to enforce any non-compete provision, in which case the NEO would be entitled to an amount of severance benefits up
to the amount set forth in the table above for the involuntary separation scenario. Involuntary separation provides for severance to coincide with a 12-month
non-compete clause. Severance is not payable where an employee is terminated for cause.
2.
The total amount reported here represents the Company’s portion of the severance payable to Mr. Belardi in the event of a termination of employment by the
Company without cause, by the Company by reason of non-renewal, by Mr. Belardi for good reason, or due to Mr. Belardi’s death or disability, each of
which is defined as an involuntary termination under Mr. Belardi’s employment agreement. In each of these scenarios, Mr. Belardi is entitled to receive
severance payments in an amount equal to the sum of his then-annual base salary and a pro rata bonus for the year of termination based, in part, on the bonus
and annual salary paid to him in the year preceding his termination. In addition, Mr. Belardi would be entitled to reimbursement in an amount equal to
$60,193 for the cost of continued medical coverage at active employee rates for up to 18 months. In the event of an involuntary termination other than due to
death or disability, Mr. Belardi is entitled to receive an additional severance payment equal to his then-annual base salary multiplied by a bonus percentage,
calculated based on the bonus paid to him in the year preceding his termination and divided by his annual base salary in the year preceding his termination.
The amount reported here includes such additional severance payment, which would only be payable in the event of an involuntary termination other than
due to death or disability. Under the ISG partnership agreement, on an involuntary termination or a resignation that satisfies the partnership agreement's
notice and other requirements, Mr. Belardi's ISG partnership interest will be redeemable for an amount equal to five times the average annual distributions
on the ISG partnership interest for the preceding two years. Any redemption of the ISG partnership interest is subject to Mr. Belardi's continued compliance
with all applicable restrictive covenants, and may be settled in cash or stock at our option. Mr. Belardi would have been eligible to receive an amount equal
to $230,851,045 upon an involuntary termination on December 31, 2024 in redemption of his ISG partnership interest, which may be payable in cash or in
shares of common stock in the Company’s discretion. Mr. Belardi is obligated to protect our confidential information both during and after employment. He
is also obligated to refrain from competing or soliciting customers until 12 months after he ceases to own or control his ISG partnership interest, and from
soliciting employees until 24 months after such cessation.
3.
Severance does not include any pro-rata bonus payable at the discretion of the Company.
4.
The amounts reported reflect amounts payable to the NEO’s designated beneficiary under the Company’s Executive Pre-Retirement Death Benefit Plan in
the event of the NEO’s death prior to his termination of employment.
CEO Pay Ratio
We believe our CEO to median employee pay ratio is a reasonable estimate calculated in accordance with Item 402(u) of Regulation S-K and
applicable SEC guidance. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various
methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other
companies.
We identified the median employee in 2024 by examining the total cash compensation for all employees, excluding our CEO, for the period
from January 1, 2024 to December 31, 2024, who were employed by us as of December 31, 2024. We included all employees, whether
employed on a full-time, part-time, or seasonal basis. In the US, we distinguished employees versus independent contractors based on the
methodology we use for payroll purposes, which is based on IRS guidance. For non-US employees, we classified persons as our employees if
we were the employer of record. Employees on leave of absence were included in the employee headcount. In identifying the median employee,
we used total cash compensation, consisting of base salary plus target level bonus or variable sales-related compensation, as the consistently
applied compensation measure. We believe the use of total cash compensation as the consistently applied compensation measure is reasonable
because cash compensation represents the principal form of compensation that we use as we do not widely distribute annual equity awards to
employees.
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207
We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, except that for any employee as of
December 31, 2024 who was employed by us for only a portion of the period from January 1, 2024 to December 31, 2024, we adjusted their
compensation as if the employee was employed for the entire period. We applied a US dollar exchange rate as of December 31, 2024 to any
compensation paid in non-US currency.
In accordance with Item 402(u) of Regulation S-K, after identifying the median employee, we calculated annual total compensation for such
employee using the same methodology we use for our NEOs as set forth in the 2024 Summary Compensation Table. However, we used a
different measurement of compensation to identify the median employee than we did for calculating the total compensation set forth in the 2024
Summary Compensation Table. Among other things, the 2024 Summary Compensation Table includes in compensation the value of equity
awards.
For 2024,
•
The annual total compensation of the median employee of the Company (other than Mr. Belardi) (the Median Employee) was
$97,044.
•
Mr. Belardi’s annual total compensation, as reported in the Total column of the 2024 Summary Compensation Table, was
$62,167,609.
•
Based on this information, the ratio of the annual total compensation of Mr. Belardi to the annual total compensation of the Median
Employee is estimated to be 641 to 1.
Director Compensation
Neither Mr. Belardi nor any Apollo director, other than Dr. Puffer, who is not an employee of Apollo but acts as a consultant to Apollo and its
affiliates, receive any additional compensation for serving as a director. For 2024, each of our other directors was eligible to receive annual
compensation, all of which was paid in cash. No fees were paid specifically for attending regular board or committee meetings. In light of the
workload and broad responsibilities of the lead director, the lead director received additional annual compensation, payable in cash. Further, the
chairpersons and non-chair members of the standing committees of the board of directors were entitled to receive additional cash retainers each
year. A member of a committee who was also the chair of that committee received only the committee chair fee.
Element of Compensation
2024 fees
Annual retainer
$
270,000
Lead director fees
36,750
Audit committee chair
36,500
Legal and regulatory committee chair
21,000
Risk committee chair
21,000
Audit committee members (non-chairperson)
15,750
Conflicts committee members (non-chairperson)
10,500
Legal and regulatory committee members (non-chairperson)
10,500
Risk committee members (non-chairperson)
10,500
In addition, Mses. Taitz and Hormozi and Messrs. Borden and Ruisi each served as a director on the boards of one or more of our subsidiaries,
for which they each received separate compensation.
Furthermore, Mr. Beilinson served on a special committee, for which he received separate compensation. The board of directors forms special
committees from time to time to evaluate and provide recommendations to the board on potential significant transactions, including transactions
involving Apollo that are outside the ordinary responsibilities of the conflicts committee. Due to the extensive demands on special committee
members as a result of the conflicts involved and the complexity of the underlying transactions, the board has approved certain fixed fees to
compensate special committee members for their additional service to the Company.
Robert L. Borden previously served on our board of directors. On March 11, 2024, Mr. Borden and the Company entered into a services
agreement, pursuant to which Mr. Borden was paid a consulting fee of $250,000 in exchange for providing certain services to the Company
through March 31, 2024 relating to consulting and advising senior management regarding the Company’s corporate strategy, investment
portfolio and potential investment transactions. Mr. Borden resigned from our board of directors, effective March 31, 2024.
None of our non-employee directors held any outstanding equity awards as of December 31, 2024.
The table below indicates the elements and total value of cash compensation granted to each eligible director for services performed in 2024.
Bogdan Ignaschenko, Marc Rowan, and Vishal Sheth did not receive any additional compensation for their service on the board of directors in
2024. Mr. Beilinson, Ms. Hormozi and Mr. Swann also serve on the AGM board of directors and received additional compensation for such
service in 2024. As these services were not performed for Athene, the compensation for such services has been excluded from the table below.
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208
2024 Director Compensation Table
Name
Fees Earned or
Paid in Cash1
All Other
Compensation2
Total
Marc Beilinson
$
417,752
4
$
—
$
417,752
Robert L. Borden3
76,688
257,500
334,188
Mitra Hormozi
291,000
99,375
390,375
Brian Leach
312,659
—
312,659
Dr. Manfred Puffer
291,000
—
291,000
Lawrence J. Ruisi
317,000
75,000
392,000
Lynn Swann
280,500
—
280,500
Hope Schefler Taitz
322,252
108,750
431,002
1 This column reflects the retainer and fees earned in 2024 for service on the board of directors and committees.
2 This column reflects (i) fees earned in 2024 for serving as a director of a subsidiary/subsidiaries of the Company, and (ii) for Mr. Borden, a consulting fee of
$250,000.
3 Mr. Borden resigned from the board of directors, effective March 31, 2024.
4 Includes $90,000 received for serving on a special board committee.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Stockholders
AGM, our parent company, owns all of our outstanding common stock (including any securities convertible or exchangeable within 60 days into
shares of our common stock). As a result, other than AGM, there are no beneficial owners of more than five percent of any class of our voting
securities and our management does not hold any of our shares of common stock. The address of AGM is 9 West 57th Street, 42nd Floor, New
York, New York 10019.
The following table sets forth information regarding the beneficial ownership of AGM’s common stock as of February 1, 2025 by (i) each of our
directors, (ii) each person who is a named executive officer for 2024, and (iii) all directors and executive officers as a group. The percentages of
beneficial ownership are based on 565,738,933 shares of AGM common stock issued and outstanding as of February 1, 2025. The address of
each of our directors and executive officers listed in the table below is c/o Athene Holding Ltd., 7700 Mills Civic Pkwy, West Des Moines, IA
50266.
Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge, each person named in the table below has sole
voting and investment power with respect to all of the shares of AGM common stock shown as beneficially owned by such person, except as
otherwise set forth in the notes to the table and pursuant to applicable community property laws.
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209
Amount and Nature of Beneficial Ownership
Shares of AGM Common Stock
Beneficially Owned
Number of Shares1
Percent
Executive Officers and Directors
James R. Belardi
6,268,347 2
1.1 %
Grant Kvalheim
2,282,982 3
*
Martin P. Klein
421,888
*
Michael Downing
199,437
*
Douglas Niemann
58,798
*
Marc Beilinson
112,261
*
Mitra Hormozi
14,702 4
*
Bogdan Ignaschenko
37,642
*
Brian Leach
38,503 5
*
Dr. Manfred Puffer
37,722
*
Marc Rowan
34,332,816 6
6.1 %
Lawrence J. Ruisi
40,000
*
Vishal Sheth
29,494
*
Lynn Swann
5,510
*
Hope Schefler Taitz
75,700
*
All directors and executive officers as a group (15 persons)7
43,955,802
7.8 %
*
Represents less than 1%
1 The number of shares included in the table above includes the following underlying RSUs that will be delivered within 60 days of February 1, 2025: 88,017
shares for Mr. Belardi; 54,504 shares for Mr. Kvalheim; 46,836 shares for Mr. Klein; 24,953 shares for Mr. Downing; and 25,414 shares for Mr. Niemann.
2 Includes 508,572 vested options to acquire common stock. The number of shares presented are directly and indirectly held by vehicles over which the named
individual may be deemed to directly or indirectly exercise voting and investment control. The number of shares presented includes 303 shares held in an account
of the mother of the named individual, over which the named individual has a power of attorney.
3 452,777 shares underlying RSUs, which shares are deliverable to the individual in the future as part of a previously disclosed award, have been excluded from
the table above because the individual does not have the right to acquire voting or dispositive power over these shares within the next 60 days.
4 Includes shares held by a third-party independently managed account that belongs to an entity controlled by the named individual’s spouse and over which the
named individual’s spouse has a pecuniary interest.
5 The number of shares includes shares held by a trust for the benefit of the named individual for which the named individual acts as trustee.
6 The number of shares presented are directly and indirectly held by vehicles over which the named individual exercises voting and investment control. The
number of shares presented includes 2,500,000 AGM shares pledged by certain of Mr. Rowan’s affiliated entities in support of entering into prepaid variable
forward contracts, representing approximately 7% of the AGM shares beneficially owned by Mr. Rowan.
7 The number of directors and executive officers as a group includes directors and named executive officers for 2024.
Share Incentive Plan Information
The Company’s share incentive plans were assumed by AGM in connection with the Company’s merger with AGM. In accordance with the
merger agreement with AGM, all options, RSUs and RSAs granted under the Company’s share incentive plans were converted into options,
RSUs and RSAs of AGM. The Company’s share incentive plans were frozen; no additional awards may be granted under the share incentive
plans. As a result, there are currently no Company securities to be issued upon exercise of outstanding options, warrants or rights that were
granted under the former share incentive plans and there are no securities remaining available for future issuance under any of the former share
incentive plans.
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Item 13. Certain Relationships and Related Transactions, and Director Independence
The following is a description of certain relationships and transactions since January 1, 2024, for which the amount involved exceeds $120,000
and our directors, executive officers, or stockholders who are known to us to beneficially own more than five percent of our voting common
stock, including Apollo, have a direct or indirect material interest as well as certain other transactions.
Relationships and Related Party Transactions Involving Apollo or its Affiliates
AGM owns all of our outstanding common stock. Through our longstanding relationship with Apollo, which was a co-founder of the Company,
Apollo assists us in identifying and capitalizing on acquisition opportunities that have been critical to our ability to significantly grow our
business. James R. Belardi, our Chief Executive Officer, also serves as a member of the board of directors and an executive officer of AGM and
as Chief Executive Officer of ISG, which is also a subsidiary of AGM. Mr. Belardi also owns a profit interest in ISG and in connection with
such interest receives quarterly distributions equal to 3.35% of base management fees and 4.5% of subadvisory fees, as such fees are defined in
our fee agreement with Apollo. Mr. Belardi is also a director of the general partner of ISG. One of our other directors, Mr. Rowan, also serves as
a director of the general partner of ISG. Additionally, six of the twelve members of our board of directors (including Mr. Belardi) are employees
of or consultants to Apollo or its affiliates. Six members of our board of directors, James Belardi, Marc Rowan, Marc Beilinson, Mitra Hormozi,
Brian Leach, and Lynn Swann, also serve as directors of AGM.
Investment Management Relationships
We had total investments, including related parties and consolidated VIEs, of $315.0 billion as of December 31, 2024. Our investment strategy
seeks to achieve sustainable risk-adjusted returns through the disciplined management of our investment portfolio against our long-duration
liabilities, coupled with the diversification of risk. The investment strategies utilized by our investment manager focus primarily on a buy and
hold asset allocation strategy that may be adjusted periodically in response to changing market conditions and the nature of our liability profile.
Substantially all of our investment portfolio is managed by Apollo, which provides a full suite of services for our investment portfolio, including
direct investment management, asset allocation, mergers and acquisitions asset diligence and certain operational support services, including
investment compliance, tax, legal and risk management support. Our relationship with Apollo allows us to take advantage of our generally
persistent liability profile by identifying investment opportunities with an emphasis on earning incremental yield by taking measured liquidity
and complexity risk rather than assuming incremental credit risk. Apollo’s investment team and credit portfolio managers utilize their deep
experience to assist us in sourcing and underwriting complex asset classes. Apollo has selected a diverse array of primarily high-grade fixed
income assets including corporate bonds, structured securities and commercial and residential real estate loans, among others. We also maintain
holdings in floating rate and less rate-sensitive instruments, including CLOs, non-agency RMBS and various types of structured products. In
addition to our fixed income portfolio, we opportunistically allocate approximately 5% of our portfolio to alternative investments where we
primarily focus on fixed income-like, cash flow-based investments.
We believe that our relationship with Apollo has contributed to and will continue to contribute to our strong financial performance. For the year
ended December 31, 2024, we generated net investment income of $14.5 billion. Net of the aforementioned fees, we achieved a consolidated net
investment earned rate of 5.03% for the year ended December 31, 2024.
Fee Structure – Under the Fee Agreement, we pay Apollo a base management fee of (1) 0.225% per year of the lesser of (A) $103.4 billion,
which represents the aggregate market value of substantially all of the assets in the investment accounts and operating cash accounts of or
relating to us and/or our subsidiaries, whether or not managed by ISG (Accounts) as of December 31, 2018 (Backbook Value), and (B) the
aggregate book value of substantially all of the assets in the Accounts at the end of the respective month, plus (2) 0.15% per year of the amount,
if any, by which the aggregate book value of substantially all of the assets in the Accounts at the end of the respective month exceeds the
Backbook Value, subject to certain adjustments. We also pay a sub-allocation fee based on specified asset class tiers ranging from 0.065% to
0.70% of the book value, with the higher percentages in this range for asset classes that are designed to have more alpha generating abilities. In
addition to the base and sub-allocation fees specified above, we pay Apollo a target annual target performance fee of $37.5 million, with the
amount of the annual performance fee ranging from between 0% and 200% of such target amount, based on our performance against our spread
related earnings for the year relative to our targets. In connection with the adoption of the performance fee, ISG committed to implement service
level improvements with respect to certain investment management related services provided by it to AHL. For the year ended December 31,
2024, we incurred management fees, inclusive of base, sub-allocation and performance fees, of $1.3 billion.
The total amounts we incurred, directly and indirectly, from Apollo and its affiliates were $1.3 billion for the year ended December 31, 2024.
Such amounts include (1) fees associated with investment management agreements (excluding sub-advisory fees paid to ISG for the benefit of
third-party sub-advisors), which include fees charged by Apollo to third-party cedants with respect to assets supporting obligations reinsured to
us but exclude fees charged by Apollo to third-party reinsurers supporting ceded obligations, (2) fees associated with fund investments
(including those fund investments held by AAA), which include management fees, carried interest (including unrealized but accrued carried
interest fees) and other fees on Apollo-managed funds and our other alternative investments and (3) other fees resulting from shared services,
advisory and other agreements with Apollo or its affiliates; net of fees incurred directly and indirectly attributable to ACRA, based upon the
economic ownership of the noncontrolling interests in ACRA.
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From time to time, we participate in transactions in which one or more service providers affiliated with Apollo (each, an Apollo-Affiliated
Service Provider) provide certain advisory services, such as structuring, capital markets advisory, syndication and/or other related services, and
receive fees for such services (collectively, Apollo-ASP Fees). In 2024, we participated in 40 such transactions and bore the economic cost of
$200 million of Apollo-ASP Fees. From time to time, we may receive certain upfront fees and/or fee rebates, in respect of our participation in
such transactions. Affiliates of Apollo also earn additional fees paid by funds or other collective investment vehicles in which we are invested
for management and other services provided by such affiliates of Apollo to such funds and investment vehicles.
Termination of ACRA System Investment Management or Advisory Agreements with Apollo – The investment management or advisory
agreements between us and the applicable Apollo subsidiary have no stated term and may be terminated by either the applicable Apollo
subsidiary, us, or our relevant Company subsidiary, as applicable, upon notice at any time. However, the Fee Agreement provides that, with
respect to ACRA System IMAs, we may not, and will cause our subsidiaries not to, terminate any ACRA System IMA among us or any of our
subsidiaries, on the one hand, and the applicable Apollo subsidiary, on the other hand, other than on June 4, 2023 or any two year anniversary of
such date (each such date, an IMA Termination Election Date) and any termination on an IMA Termination Election Date requires (i) the
approval of two-thirds of our independent directors and (ii) prior written notice to ISG or the applicable Apollo subsidiary of such termination at
least 30 days, but not more than 90 days, prior to an IMA Termination Election Date. If our independent directors make such election to
terminate and notice of such termination is delivered, the termination will be effective no earlier than the second anniversary of the applicable
IMA Termination Election Date (IMA Termination Effective Date). Notwithstanding the foregoing, our board of directors may only terminate
an ACRA System IMA on an IMA Termination Election Date for “AHL Cause” as defined in the Fee Agreement and pursuant to the provisions
set forth therein.
The Fee Agreement gives our independent directors complete discretion, while acting in good faith, as to whether to determine if an AHL Cause
event has occurred with respect to any ACRA System IMA with the applicable Apollo subsidiary, and therefore our independent directors are
under no obligation to make, and accordingly may exercise their discretion never to make, such a determination.
The boards of directors of our subsidiaries may terminate an ACRA System IMA with the applicable Apollo subsidiary relating to the applicable
Company subsidiary if such subsidiary’s board of directors determines that such termination is required in the exercise of its fiduciary duties. If
our subsidiaries do elect to terminate any such agreement, other than as provided above, we may be in breach of the Fee Agreement, which
could subject us to regulatory scrutiny, expose us to stockholder lawsuits and could have a negative effect on our financial condition and results
of operations.
Apollo Fund Investments
Apollo invests certain of our assets in investment funds or other collective investment vehicles whose general partner, managing member,
investment manager or collateral manager is owned, directly or indirectly, by Apollo or by one or more of Apollo’s subsidiaries (Apollo Fund
Investments). Apollo Fund Investments comprised 98% of our net alternative investment portfolio as of December 31, 2024. Apollo’s
alternative investment strategy is inherently opportunistic and subject to concentration limits on specific risks. We opportunistically allocate
approximately 5% of the assets in the Accounts to alternative investments. Individual alternative investments are selected based on the
investment’s risk-reward profile, incremental effect on diversification and potential for attractive returns due to sector and/or market
dislocations. We have a strong preference for alternative investments that have some or all of the following characteristics, among others:
(1) investments with credit- or debt-like characteristics (for example, a stipulated maturity and par value), or alternatively, investments with
reduced volatility when compared to pure equity; or (2) investments that we believe have less downside risk. As of December 31, 2024, 5% of
our net invested assets were invested in Apollo Fund Investments. Fees related to such invested assets varied from 0% to 2% per year with
respect to management fees and 0 to 20% of profits for carried interest, subject in many cases to preferred return hurdles.
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Our Apollo Fund Investments, net of ACRA noncontrolling interests, consisted of the following:
December 31, 2024
(In millions, except percentages)
Invested Asset Value
Percentage of Total
Strategic origination platforms
Wheels
$
581
4.9 %
Redding Ridge
581
4.9 %
MidCap Financial
544
4.6 %
Aqua Finance
309
2.6 %
Skylign
300
2.5 %
Foundation Home Loans
184
1.6 %
Other
776
6.7 %
Strategic origination platforms
3,275
27.8 %
Apollo and other investments
Real assets
1,691
14.4 %
Private equity
1,107
9.4 %
Structured equity and other
522
4.4 %
Equity
3,320
28.2 %
Credit
1,481
12.6 %
Liquid assets and other
851
7.2 %
Apollo and other investments
5,652
48.0 %
Total AAA
8,927
75.8 %
Retirement Services
Athora
1,125
9.7 %
Venerable
273
2.3 %
Retirement Services
1,398
12.0 %
Apollo and other investments
Equity
908
7.7 %
Credit
523
4.4 %
Other
13
0.1 %
Apollo and other investments
1,444
12.2 %
Total Non AAA
2,842
24.2 %
Net alternative investments – related parties
$
11,769
100.0 %
As of December 31, 2024, 15.0% of our total investments, including related parties and consolidated VIEs, are comprised of securities,
including investment funds, in which Apollo, or an Apollo affiliate, has significant influence or control over the issuer of a security or the
sponsor of the investment fund, as well as funds withheld reinsurance assets relating to Venerable. The following table summarizes our cash
flow activity related to these investments for the period presented below:
(In millions)
Year ended December 31, 2024
Sales, maturities and repayments
$
9,426
Purchases
(15,589)
Certain members of our board of directors and certain of our executive officers may directly receive carried interest or may receive a portion of
the carried interest that Apollo receives from fund investments in which we are invested. Certain directors may invest in fund investments in
which we have invested. Additionally, Mr. Belardi also has interests in certain of these fund investments. Certain directors and officers from
time to time may invest in Apollo funds or co-investments in certain cases without being charged management fees or carried interest.
Apollo Aligned Alternatives
The majority of our alternative investments are held in AAA and we consolidate AAA as a VIE. Apollo established AAA to provide a single
vehicle through which investors may participate in a portfolio of alternative investments, including those managed by Apollo. Additionally, we
believe AAA enhances Apollo’s ability to increase alternative AUM by raising capital from third parties, which allows us to achieve greater
scale and diversification for alternatives.
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Athora
We have a direct investment in Athora’s equity which we hold as an investment fund and, as of December 31, 2024, represented 10% of the
aggregate voting power of and 16% of the economic interest in Athora. We have also directly invested in Athora’s non-redeemable preferred
equity and corporate debt securities. The following summarizes our net invested assets in Athora:
(In millions)
December 31, 2024
Investment fund
$
1,125
Non-redeemable preferred equity and corporate debt securities
277
Total Athora net invested assets
$
1,402
We also have a Cooperation Agreement (Cooperation Agreement), dated January 1, 2018, between us and Athora. Pursuant to the Cooperation
Agreement, among other things, (1) for a period of 30 days from the receipt of notice of a cession, we have the right of first refusal to reinsure
(a) up to 50% of the liabilities ceded from Athora’s reinsurance subsidiaries to Athora Life Re Ltd. and (b) up to 20% of the liabilities ceded
from a third party to any of Athora’s insurance subsidiaries, subject to a limitation in the aggregate of 20% of Athora’s liabilities, (2) Athora
agreed to cause its insurance subsidiaries to consider the purchase of certain funding agreements and/or other spread instruments issued by our
insurance subsidiaries, subject to a limitation that the fair market value of such funding agreements purchased by any of Athora’s insurance
subsidiaries may generally not exceed 3% of the fair market value of such subsidiary’s total assets, and (3) we provide Athora with a right of
first refusal to pursue acquisition and reinsurance transactions in Europe (other than the United Kingdom). Notwithstanding the foregoing,
pursuant to the Cooperation Agreement, Athora is only required to use its reasonable best efforts to cause its subsidiaries to adhere to the
provisions set forth in the Cooperation Agreement and therefore Athora’s ability to cause its subsidiaries to act pursuant to the Cooperation
Agreement may be limited by, among other things, legal prohibitions or the inability to obtain the approval of the board of directors or other
applicable governing body of the applicable subsidiary, which approval is solely at the discretion of such governing body. As of December 31,
2024, we have not exercised our right of first refusal to reinsure liabilities ceded to Athora’s insurance or reinsurance subsidiaries. We are
currently in discussions with Athora regarding the potential mutual termination of the Cooperation Agreement.
As of December 31, 2024, we had outstanding funding agreements in the aggregate principal amount of $57 million issued to Athora. We also
have commitments to make additional investments in Athora of $502 million as of December 31, 2024. Additionally, our Executive Vice
President and Chief Financial Officer, Mr. Klein, and one of our directors, Mr. Rowan, currently serve on the board of Athora, and certain of our
directors are also indirect investors in Athora.
Atlas
In connection with our, Apollo and CS’s previously announced transaction, certain subsidiaries of Atlas, which is owned by AAA, acquired
certain assets of the CS Securitized Products Group (the Transaction). Under the terms of the Transaction, Atlas agreed to pay CS $3.3 billion,
of which $0.4 billion is deferred until February 8, 2026, and $2.9 billion is deferred until February 8, 2028. In March 2024, in connection with
Atlas concluding its investment management agreement with CS, the deferred purchase obligation amount was reduced to $2.5 billion. In
addition, certain strategic investors have made equity commitments to Atlas which therefore obligates these investors for a portion of the
deferred purchase price obligation. This deferred purchase price is an obligation first of Atlas, and (as a result of additional guarantees provided
by AAA, AAM and AHL) second of AAA, third of AAM, fourth of AHL and fifth of AARe. AARe and AAM each issued an assurance letter to
CS to guarantee the full amount. Our guarantees are not probable of payment; therefore, no liabilities have been recorded for the guarantees on
the consolidated financial statements.
Certain affiliates of us (the Athene Lenders) have also entered into junior financing transactions with Atlas as part of the Transaction, pursuant
to which the Athene Lenders have agreed to make loans to certain affiliates of Atlas from time to time up to an aggregate of $800 million for a
specified revolving period. The Athene Lenders have also entered into junior financing transactions pursuant to repurchase arrangements with
Atlas as part of the Transaction, pursuant to which the Athene Lenders have agreed, on an uncommitted basis, to make loans to certain affiliates
of Atlas from time to time in connection with the financing of residential and commercial mortgage loans. In addition, the Athene Lenders have
entered into a financing transaction in which it extended a portion of two classes of rated loans to an affiliate of Atlas in connection with the
financing of certain warehouse loans. The Athene Lenders are also part of a syndicate of lenders of a swingline loan facility that is extended to
certain affiliates of Atlas.
We have an equity interest in Atlas through our investment in AAA, and additionally directly hold fixed income securities and reverse
repurchase agreements issued by Atlas. The following summarizes our net invested assets in Atlas:
(In millions)
December 31, 2024
Investment fund
$
21
Fixed income securities
1,546
Reverse repurchase agreement
439
Total Atlas net invested assets
$
2,006
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Catalina
We have an investment in Apollo Rose. Apollo Rose holds common and preferred equity interests in Catalina. In January 2024, we entered into
a reinsurance agreement with Catalina Re Archdale Life Insurance Company Ltd., a subsidiary of Catalina, to cede a quota share of certain of
our retail annuity business issued on or after January 1, 2024. During the third quarter of 2024, we distributed $141 million of our investment in
Apollo Rose representing Catalina common equity interests to AGM as a dividend. As of December 31, 2024, we held net invested assets of
$205 million relating to Catalina preferred interests. Additionally, one of our directors, Mr. Puffer, currently serves on the board of Catalina.
Challenger
During the third quarter of 2024, we sold $62 million of our direct interests in Challenger. We also sold $65 million of our interests in AP
Liberty, representing preferred interests in Challenger, to AGM. Additionally, we exchanged $33 million of AP Liberty interests, representing
common interests in Challenger, for preferred interests, and purchased an additional $12 million of preferred interests from AGM.
MidCap Financial
We hold equity investments in MidCap Financial through our investment in AAA and directly hold senior unsecured notes and fixed income
securities. In addition, one of our directors, Hope Taitz, currently serves on the board of MidCap Financial. The following summarizes our net
invested assets in MidCap Financial and its affiliates:
(In millions)
December 31, 2024
Investment fund
$
544
Senior unsecured notes
127
Fixed income securities
1,473
Total MidCap Financial net invested assets
$
2,144
MidCap Financial may also originate or source loans that we purchase directly, consisting of ABS and CLO securities issued by MidCap
Financial affiliates, which are included in the table above as fixed income securities. As is customary practice for loan originators, MidCap
Financial may retain a percentage of the origination fees on the loans we purchase that are paid by the borrowers and may also act as agent for
the lenders under the related loan agreements.
Skylign
We have investments in Skylign, a leading aviation finance group focused on aircraft lending and leasing. The group comprises two operating
businesses, namely PK Air, a provider and arranger of loans secured by commercial aircraft and aircraft engines, and Perseus, a global aircraft
leasing, management and finance company. We an equity investment through our investment in AAA and directly hold fixed income securities
issued by Skylign. We have commitments to make additional investments in Skylign of $40 million as of December 31, 2024. The following
summarizes our net invested assets in Skylign:
(In millions)
December 31, 2024
Investment fund
$
300
Fixed income securities
1,558
Total Skylign net invested assets
$
1,858
Venerable
VA Capital is owned by a consortium of investors, led by affiliates of Apollo, Crestview Partners III Management , LLC and Reverence Capital
Partners L.P., and is the parent of Venerable. We have direct a minority equity investment in VA Capital, and also have term loans receivable
from Venerable due in 2033. Additionally, during the year ended December 31, 2024, we purchased an interest in AP Violet ATH Holdings, LP
for $95 million from Athora. AP Violet ATH Holdings, LP owns an interest in VA Capital. The following summarizes our net invested assets
relating to Venerable:
(In millions)
December 31, 2024
Investment fund
$
273
Term loans receivable
265
Total Venerable net invested assets
$
538
Additionally, certain of our directors and executive officers are co-investors with us in our minority equity investment in VA Capital and the
term loans to Venerable.
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Wheels
We invest in Wheels indirectly through our investment with AAA. Additionally, we directly hold fixed income securities issued by Wheels. We
expect Wheels will continue to issue ABS securities going forward which may be appropriate for our investment portfolio. We also have
commitments to make additional investments in Wheels of $100 million as of December 31, 2024.The following summarizes our net invested
assets in Wheels:
(In millions)
December 31, 2024
Investment fund
$
581
Fixed income securities
684
Total Wheels net invested assets
$
1,265
ACRA
In order to support growth strategies and capital deployment opportunities, we established ACRA 1 as a long-duration, on-demand capital
vehicle. We own 37% of ACRA 1’s economic interests and all of ACRA 1’s voting interests, with the remaining 63% of the economic interests
being owned by ADIP I, a series of funds managed by Apollo. During the commitment period, ACRA 1 participated in certain transactions by
drawing a portion of the required capital for such transactions from third-party investors equal to ADIP I’s proportionate economic interests in
ACRA 1. The commitment period for ACRA 1 expired in August 2023.
To further support our growth and capital deployment opportunities following the deployment of capital by ACRA 1, we funded ACRA 2 in
December 2022 as another long-duration, on-demand capital vehicle. Effective July 1, 2023, ALRe sold 50% of its non-voting, economic
interests in ACRA 2 to ADIP II for $640 million, while maintaining all of ACRA 2’s voting interests. Effective December 31, 2023, ACRA 2
repurchased a portion of its shares held by ALRe, which increased ADIP II’s ownership of economic interests in ACRA 2 to 60%, with ALRe
owning the remaining 40% of the economic interests. Effective October 1, 2024, ACRA 2 repurchased a portion of its shares held by ALRe,
which increased ADIP II’s ownership of economic interests in ACRA 2 to 63%, with ALRe owning the remaining 37% of the economic
interests. ACRA 2 participates in certain transactions by drawing a portion of the required capital for such transactions from third-party investors
equal to ADIP II’s proportionate economic interests in ACRA 2. During the commitment period, ACRA 2 has the right to participate in
substantially all new inorganic transactions, pension group annuity transactions, funding agreement transactions and certain flow reinsurance
transactions executed by us. In addition, a quota share of certain of our retail annuity business issued on or after January 1, 2023 is currently
retroceded to a subsidiary of ACRA 2.
These strategic capital solutions allow us the flexibility to simultaneously deploy capital across multiple accretive avenues and sustain our
profitable growth strategy at scale in a capital efficient manner, while maintaining a strong financial position.
In connection with each transaction in which an ACRA entity elects to participate (each, a Participating Transaction), such ACRA entity will
generally pay ALRe a fee (Wrap Fee) on the reserves of the assumed or acquired business. The Wrap Fee is expected to be approximately 15
basis points per year, based on a scale which increases from 10 to 16 basis points as the portion of the reserves economically attributed to the
applicable ADIP fund increases.
In general, (a) on or about the 10th anniversary of the effective date of any Participating Transaction (other than a flow reinsurance transaction)
or (b) on or about the 10th anniversary of the date on which reinsurance is terminated as to new business under any Participating Transaction
that is a flow reinsurance transaction (which would occur no later than the end of the commitment period), ALRe or its applicable affiliate has
the right (Commutation Right) to terminate the applicable ACRA entity’s participation in such Participating Transaction based on a book value
pricing mechanism and subject to the ability of the applicable ADIP fund to reject the commutation if a minimum return with respect to such
Participating Transaction is not achieved. If ALRe does not exercise the Commutation Right with respect to a Participating Transaction, then the
applicable ACRA entity’s obligation to pay the Wrap Fee in connection with such Participating Transaction will terminate, and, subject to
certain exceptions (and the applicable terms and conditions of the applicable ACRA Framework Agreement and related transaction documents),
ALRe will be required to pay such ACRA entity a fee calculated in the same manner as the Wrap Fee. In addition, if the applicable ACRA entity
fails to satisfy minimum aggregate capital requirements, ALRe has the right to recapture or assign to another of our subsidiaries a portion of the
business retroceded to such ACRA entity (and/or any of its insurance or reinsurance subsidiaries) to the extent necessary to cure such failure.
As of December 31, 2024, ALRe, ALReI and AARe had retroceded to ACRA $114.2 billion of reserve liabilities. In connection with future
Participating Transactions, ACRA will draw from ADIP and ALRe their respective share of the amount of capital necessary to consummate
such Participating Transactions. The terms of any Participating Transaction may vary from the terms described above.
As of December 31, 2024, ADIP II had raised approximately $6.0 billion in capital commitments, of which $3.5 billion was available to deploy
into future transactions. As of December 31, 2024, there were no remaining ADIP I capital commitments available to deploy.
During the year ended December 31, 2024, we received capital contributions relating to ACRA of $954 million from ADIP and distributed $920
million to ADIP.
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Acquisition of ADIP limited partnership interests
Effective October 1, 2024, we consummated a tender offer for certain limited partnership interests in the funds that comprise ADIP I for an
aggregate purchase price of $232 million, of which $38 million was purchased from an affiliate of Apollo. The purpose of the tender offer was
to provide greater tax efficiency to US taxable investors in ADIP I who were adversely impacted following the merger between us and Apollo,
as well as liquidity for other investors. As part of the tender offer, we purchased ADIP I limited partnership interests held by Vishal Sheth and
an entity controlled by James Belardi for $587,151 and $4,193,938, respectively.
Also effective October 1, 2024, we purchased $27 million of limited partnership interests in ADIP II from an affiliate of Apollo. As of
December 31, 2024, we had remaining capital commitments to ADIP of $324 million.
Commercial Mortgage Loan Servicing Agreements
We have entered into commercial mortgage loan servicing agreements with Apollo. Pursuant to these agreements, we have engaged Apollo to
(1) assist with the origination of and provide servicing of, commercial loans that we own or in which we participate, which are secured by
mortgages, deeds of trust or documents of similar effect encumbering certain real property and commercial improvements thereon and
(2) provide for management and sale of real estate owned properties. During the year ended December 31, 2024, we incurred $0.3 million under
the commercial mortgage loan servicing agreements.
Dividends Declared and Other Contributions
During the year ended December 31, 2024, our board of directors declared and we paid common stock dividends of $951 million, of which $499
million were provided to AGM in the form of assets in kind, which included Catalina interests as discussed previously. Additionally, we
received contributions from AGM of $52 million during the year ended December 31, 2024.
Intercompany Notes
AHL and AGM entered into two unsecured revolving notes each dated as of December 13, 2022 which permit AHL and AGM to borrow up to
$500 million from each other with an interest rate equal to the mid-term applicable federal rate in effect each day on which there is a principal
balance and a maturity date of December 13, 2025. As of December 31, 2024, the revolving note receivable from AGM had an outstanding
principal balance of $142 million and there was no outstanding balance on the revolving note payable to AGM.
Investment Portfolio Trades with Affiliates
From time to time, Apollo executes cross trades which involve the purchase or sale of assets in a transaction between us, on the one hand, and a
third party or an Apollo affiliated entity, in either case, to which Apollo or its affiliate acts in an investment advisor, general partner, managing
member, collateral manager or other advisory or management capacity, on the other hand. In addition, from time to time, we may purchase or
sell securities from or to related parties, other than through a cross trade transaction. We believe that these transactions are undertaken at market
rates, and are executed based on third-party valuations where possible. For the year ended December 31, 2024, the aggregate value of such
transactions where we acquired investments from related parties amounted to $230 million. For the year ended December 31, 2024, we sold
$132 million of investments to related parties.
Services Agreement
We have entered into a services agreement (Services Agreement) with AGM and AAM, which provides a framework pursuant to which each of
the Company, AGM and AAM may, in its sole discretion, provide (or cause its direct or indirect subsidiaries to provide) services to one another
on a non-exclusive basis following completion of the Mergers. Pursuant to the Services Agreement, any party may request that another party
provide finance, investor relations, legal, compliance, consulting, investment professional, executive, administrative and other services to the
requesting party. The provision of any services pursuant to the Services Agreement will be subject to the mutual agreement of the service
recipient and the service provider, and the service recipient will be required to pay fees and expenses to the service provider as may be mutually
agreed by such service recipient and service provider. In addition, the service recipient will be required to indemnify the service provider against
any loss or liability arising out of the services provided by the service provider pursuant to the Services Agreement. For the year ended
December 31, 2024, we paid or reimbursed Apollo or its affiliates $42 million in fees and expenses pursuant to the Services Agreement.
Shared Service Agreements
We have entered into shared services agreements with ISG. Under these agreements, we and ISG make available to each other certain personnel
and services. Expenses for such services are based on the amount of time spent on the affairs of the other party in addition to actual expenses
incurred and cost reimbursements. These shared services agreements can be terminated for any reason upon thirty days’ notice. The shared
services agreements can also be terminated immediately with respect to a specific party in the event of the insolvency by another party to the
agreements, among other things. During the year ended December 31, 2024, we paid ISG $13 million under the shared services agreements.
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Strategic Partnership
We have an agreement pursuant to which we may invest up to $2.875 billion in funds managed by Apollo entities. This arrangement is intended
to permit us to invest across the Apollo alternatives platform into credit-oriented, strategic and other alternative investments in a manner and
size that is consistent with our existing investment strategy. Fees for such investments payable by us to Apollo are designed to be more
favorable to us than market rates, and consistent with our existing alternative investments, investments made under the Strategic Partnership
remain subject to our existing governance processes, including approval by our conflicts committee, where applicable. The majority of our
Strategic Partnership investments are held in AAA. During the year ended December 31, 2024, we invested a net $32 million under the Strategic
Partnership.
Rackspace Global Services Agreement
We have a global services agreement with Rackspace US, Inc. (Rackspace), a portfolio company of a fund managed by Apollo, pursuant to
which Rackspace provides us with certain information technology services. The term of the agreement is three years and during the year ended
December 31, 2024, we paid or accrued $0.7 million for services rendered.
Third Party Sub-Advisory Agreements
In the limited instances in which Apollo desires to invest in asset classes for which it does not possess the investment expertise or sourcing
abilities required to manage the assets, or in instances in which Apollo makes the determination that it is more effective or efficient to do so,
Apollo mandates third-party sub-advisors to invest in such asset classes, and we reimburse Apollo for fees paid to such sub-advisors. For the
year ended December 31, 2024, we reimbursed $10 million of sub-advisory fees to Apollo for the benefit of third-party sub-advisors.
Other Related Party Transactions and Relationships
We have established an employee annuity program, pursuant to which any eligible employees, including each of our named executive officers,
and directors (or estate planning vehicles respectively established or controlled by them or their immediate family members), may purchase
certain of the annuities that we sell through our retail channel. In certain instances, annuities purchased through the program are free of
commissions, and amounts that we would have otherwise paid as commissions are added to the value of the contract at the time of issuance. In
other instances, certain fees that are required to be paid in connection with the underlying Apollo fund investments are rebated to the
policyholder.
Under our certificate of incorporation, in most circumstances we will be obligated to indemnify the following persons, to the fullest extent
permitted by applicable law, from and against all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements or other amounts: any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the
fact that he or she, or a person for whom he or she is the legal representative, is or was our director or officer, while our director or officer, is or
was serving at our request as a director, officer, employee or agent of another entity, including service with respect to employee benefit plans
and any person that the Board in its sole discretion designate as an indemnified person as permitted by applicable law.
We have entered into indemnification agreements with our directors and officers which provide that we will indemnify our directors and officers
or any person appointed to any committee by the board of directors acting in their capacity as such for any loss arising or liability attaching to
them by virtue of any rule of law in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in
relation to us other than in respect of his own fraud or dishonesty. We are also required to indemnify our directors and officers in any proceeding
in which they are successful.
We also currently maintain liability insurance for our directors and officers.
Susy Gooding, who served as SVP Group Treasurer until her resignation effective March 18, 2024, is the spouse of a related person as defined
in our Related Party Transactions Policy. Ms. Gooding’s compensation in 2024 was approved by the Audit Committee as a related party
transaction because her compensation was in excess of $120,000. Ms. Gooding was not a named executive officer in 2024.
Related Party Transactions Policy
We have established a related party transactions policy which provides procedures for the review of transactions in excess of $120,000 in any
year between us and any covered person having a direct or indirect material interest with certain exceptions. Covered persons include any
director, executive officer, director nominee, stockholders known to us to beneficially own 5% or more of our common stock or any immediate
family members of the foregoing. Any such related party transaction requires advance approval by a majority of our independent directors or by
our conflicts committee to the extent that such transactions constitute Apollo Conflicts (as described below), related party transactions incidental
or ancillary thereto, or any other related party transaction relating to or involving, directly or indirectly, Apollo or any member of the Apollo
Group. To the extent that the related party transaction is other than either an Apollo Conflict or a related party transaction that is incidental or
ancillary thereto, or any other related party transaction relating to or involving, directly or indirectly, Apollo or any member of the Apollo
Group, our audit committee charter provides that the audit committee has the authority to review and approve all such transactions.
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218
Our bylaws require us to maintain a conflicts committee designated by our board of directors, consisting of directors who are not officers,
general partners, directors (other than independent directors of AGM), managers or employees of any member of the Apollo Group. The
conflicts committee consists of Messers. Beilinson and Ruisi, and Ms. Taitz. The conflicts committee reviews and approves material
transactions by and between the Company and its subsidiaries, on the one hand, and the Apollo Group, on the other hand, including any
modification or waiver of the IMAs with the applicable Apollo subsidiary, subject to certain exceptions.
An “Apollo Conflict” is:
•
the entering into or material amendment of any material agreement by and between us and any member of the Apollo Group;
•
the imposition of any new fee on or increase in the rate of fees charged to us or any of our subsidiaries by a member of the Apollo
Group, or the provision for any additional expense reimbursement to or offset by a member of the Apollo Group to be borne by us or
any of our subsidiaries, directly or indirectly, pursuant to any material agreement by and between us and any member of the Apollo
Group (except to the extent that any such material agreement sets forth the actual amount or formula for calculating the amount of any
new fee or increase in the rate at which such fee is charged and such material agreement has been approved or is exempt from
approval under the conflicts committee charter);
•
any acquisition or reinsurance transaction not contemplated by the definition of Qualifying Transaction (as defined in each applicable
ACRA Framework Agreement) to be offered to any ACRA entity except for transactions that expressly do not require approval by the
conflicts committee of or applicable to the applicable ACRA entities pursuant to the terms of the applicable ACRA Framework
Agreement; or
•
the exercise of ALRe’s commutation right under the terms of the applicable ACRA Reinsurance Program Agreements, in each case, as
recommended by management of the Company.
All Apollo Conflicts must be approved by the conflicts committee of our board of directors unless such conflict is:
•
specifically exempted from approval in accordance with such conflict committee’s charter and guidelines as they may be amended
from time to time;
•
fair and reasonable, taking into account the totality of the relationships between the parties involved (including other transactions that
may be or have been particularly favorable to us or any of our subsidiaries); or
•
entered into on an arms-length basis.
In connection with any matter submitted to the conflicts committee, materials are prepared by management summarizing the applicable conflict
and recommending the proposed transaction. The conflicts committee reviews market comparison data (to the extent available) relating to the
reasonableness of any proposed fees to be paid.
For operational and administrative ease, certain transactions that fall within the definition of an Apollo Conflict but do not pose a material risk to
us need not be approved by the conflicts committee. As described below, these exceptions include specific thresholds under which we may
engage Apollo or its affiliates in an investment management or advisory (or sub-management or sub-advisory) capacity without prior conflicts
committee review or approval. The following transactions, among others, are expressly excluded from the definition of Apollo Conflict and do
not require the consent or review of the conflicts committee:
1.
(i) transactions, rights or agreements specifically contemplated by existing agreements between the Company and Athora, (ii)
entering into new IMAs or MSAAs with members of the Apollo Group as long as the payment of additional total fees under such
new IMA or MSAA satisfies the requirements of (15) below or (iii) amendments to the agreements described in (i) or (ii) above,
or any other shared services agreement or cost sharing agreement with any member of the Apollo Group which is currently in
effect for the purpose of adding a subsidiary of the Company thereto;
2.
any (i) transfer of equity securities of the Company to or by any member of the Apollo Group, (ii) acquisition by any member of
the Apollo Group of any newly issued equity securities, (iii) issuance of securities to any employee or director of the Company or
ISG (including allocating blocks of incentive securities to ISG for allocation by ISG to its employees and directors) pursuant to
any stock incentive plan or similar equity based compensation plan approved by the board or the board of directors of AGM (the
AGM Board) or the compensation committee of the AGM Board;
3.
the provision of any insurance related products by or to the Company or any of its subsidiaries to or by the Apollo Group;
provided that the provision of such products is an ordinary course transaction entered into on an arms-length basis on terms no
less favorable to the Company or its subsidiaries than could be contemporaneously obtained from or provided to an unaffiliated
party;
4.
any transactions, rights or agreements between the Company or any of its subsidiaries and any portfolio company of the Apollo
Group that pertain to the ordinary course business of such portfolio company; provided, that any such transactions, rights or
agreements (taken as a whole) are no less favorable to the Company or the applicable subsidiary than could be obtained from or
provided to an unaffiliated party;
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219
5.
an investment by the Company or any subsidiary thereof in (i) an Apollo-sponsored vehicle or (ii) a person or entity that does not
constitute an Apollo-sponsored vehicle, but in connection with which a member of the Apollo Group is entitled to receive a
benefit such as via equity ownership, a fee or other compensation; provided, that such investment provides the Company or its
subsidiary, as applicable, with the same or better terms or a most favored nations clause (in all cases, taken as a whole with
respect to such Apollo-sponsored vehicle or other investee, as applicable, and without consideration of any Designated Terms (as
defined below)) as those applicable to other investors (excluding Designated Investors (as defined below)) in the same Apollo-
sponsored vehicle or other investee, as applicable, who invested an amount in such vehicle equal to or less than that invested by
the Company and its subsidiaries; and provided, further, that such investment represents no more than 80% of the outstanding or
expected equity interests of such Apollo-sponsored vehicle or other investee (based on prior record related to the strategy), as
applicable. Designed Investor and Designated Terms shall have the meanings set forth for such terms or other similar terms in
any customary side letter entered into by the applicable Apollo Group advisor or manager, Apollo-sponsored vehicle or other
Apollo Group entity, on the one hand, and investors, other than the Company or a subsidiary thereof, who have invested in the
same Apollo-sponsored vehicle or other investee, or entered into an investment management, sub-advisory or similar agreement
with the Apollo Group for the same asset class, on the other hand;
6.
the performance in accordance with their terms of any agreement validly entered into with the Apollo Group (i) in existence as of
the date of the procedures of the conflicts committee were adopted or (ii) after the date of the adoption of the Company’s bylaws
with the consent of the conflicts committee;
7.
a transaction that has been approved by a majority of the Company’s disinterested directors, provided that the disinterested
directors are notified that such transaction would otherwise constitute an Apollo Conflict prior to such approval;
8.
material amendments to contracts or transactions previously approved by the conflicts committee or a majority of the Company’s
disinterested directors, or which are not required to be approved by either, so long as, in each case, such amendments either (i)
are not materially adverse to the Company or any of its subsidiaries, or (ii) would not cause the relevant contract or transaction to
require approval by the conflicts committee or a majority of the Company’s disinterested directors under our bylaws after giving
effect to the relevant amendment;
9.
any modification, supplement, amendment or restatement of the bylaws that has been approved in accordance with the
Company’s bylaws;
10. the entry into any IMA with the Apollo Group or amending an MSAA currently in effect (or entering into a new MSAA), so long
as (i) such agreement is on terms in the aggregate (including expense reimbursement and indemnities) no less favorable to the
Company than customary market terms (excluding the fees charged under the IMA); and (ii) either (a) the rates on AUM under
such agreement (including any carried interest or similar profit allocation, but, for the avoidance of doubt, excluding the fees
charged under the IMA) do not exceed 60 basis points per annum for non-alternative assets; (b) the rates on AUM under such
agreement (including any carried interest or similar profit allocation, but, for the avoidance of doubt, excluding the fees charged
under the IMA) do not exceed 100 basis points per annum for alternative assets; or (c) such agreement provides the Company or
its subsidiary, as applicable, with the same or better terms or a most favored nations clause (in all cases, taken as a whole with
respect to such agreement and without consideration of any Designated Terms) with respect to other investors (excluding
Designated Investors) who have entered into an investment management agreement or sub-advisory or similar agreement with the
Apollo Group for the same asset class and whose AUM with respect to such agreement and asset class are all equal or less than
those subject to the agreement between the Company and the Apollo Group with respect to such asset class. In addition,
investments in (i) an Apollo sponsored vehicle or (ii) a person or entity that does not constitute an Apollo-sponsored vehicle, but
in connection with which a member of the Apollo Group is entitled to receive a benefit such as via equity ownership, a fee or
other compensation, in each case, shall be deemed not to be Apollo Conflicts as long as such Apollo-sponsored vehicle or such
person or entity charges fees in line with those discussed in (a) and (b) above (excluding fees payable to a broker-dealer that is a
member of the Apollo Group, which fees are subject to item (14) below);
11. allocations of costs or expenses between the Company or any of its subsidiaries and the Apollo Group not in excess of 10 basis
points per annum, calculated on the gross invested assets of the Company and its subsidiaries (including the ACRA entities and
accounts supporting reinsurance agreements for which the Company or a subsidiary thereof acts as reinsurer as of the effective
date of such allocation) (provided that any such allocation of costs or expenses may not be used to pay investment management
fees), including any cost-sharing, shared services or similar agreement with any member of the Apollo Group (and amendments
or modifications to any such agreements currently in effect) so long as the allocations of costs and expenses between the
Company and the Apollo Group on an annual basis do not exceed such amount;
12. one or more investments by the Company or any subsidiary thereof in (a) an Apollo-sponsored vehicle or (b) any person or entity
that does not constitute an Apollo-sponsored vehicle, but in connection with which a member of the Apollo Group is entitled to
receive a benefit such as via equity ownership, a fee or other compensation, in each case, including any upsize, renewal or
extension of an existing investment, up to and including an amount equal to 1% of the gross invested assets of the Company and
its subsidiaries (including the ACRA entities and accounts supporting reinsurance agreements for which the Company or a
subsidiary thereof acts as reinsurer as of the effective date of such investment) per investment (or series of related investments),
provided that (i) any such investment is on terms, including with respect to fees, which are in the aggregate no less favorable to
Athene or a subsidiary thereof than terms a similarly situated but unaffiliated person would receive in an arm’s length transaction,
(ii) the (a) management fees earned by the Apollo Group shall not exceed 2% of assets or commitment, as applicable, and (b)
carried interest or performance fees earned by the Apollo Group for any such investment shall not exceed 20% of the profits, and
(iii) any special fees or other fees earned by any member of the Apollo Group in connection with any such investment shall offset
management fees (to the extent of management fees) or if such fees do not offset management fees, they shall be arm’s length or
approved by the Apollo-sponsored vehicle’s or such other investee’s limited partner advisory board;
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220
13. the inclusion of (a) (i) new production from in-force flow reinsurance transactions and (ii) new funding agreements as Qualifying
Transactions to be offered to ACRA 1 pursuant to the terms of the ACRA 1 Framework Agreement; and (b) the inclusion of
transactions as Qualifying Transactions to be offered to an ACRA entity pursuant to the terms of any other applicable ACRA
Framework Agreement that expressly do not require approval by the applicable ACRA conflicts committee pursuant to the terms
of the applicable ACRA Framework Agreement;
14. any other class of transactions, rights, fees or agreements (i) approved by (a) the ACRA conflicts committee in accordance with
such committee’s charter and procedures in effect on such date, (b) any committee of independent or disinterested directors or
managers of the Company or its subsidiaries, as applicable, or any side car, joint venture or investment entity in which the
Company or its subsidiary, as applicable, maintains investments or (c) any other committee of independent or disinterested
members of the Company’s board of directors, or (ii) determined by approval of the conflicts committee to not (x) constitute an
Apollo Conflict a related party transaction incidental or ancillary thereto, or any other related party transaction relating to or
involving, directly or indirectly, Apollo or any member of the Apollo Group, or (y) require approval of the Company’s conflicts
committee; provided that any approval set forth in clause (i) will be disregarded to the extent that the applicable approving body
has a material adverse interest to the Company in the applicable transaction being approved;
15. any placement agent, underwriter or other agreement with a broker-dealer that is a member of the Apollo Group, so long as (i)
such agreement is on terms in the aggregate (including expense reimbursement and indemnities) no less favorable to the
Company than customary market terms (excluding the fee rates and/or fees charged thereunder), including the terms of similar
agreements with any unaffiliated broker-dealers providing similar services in connection with the same or a similar transaction,
and (ii) the fee rate and/or fees payable to such broker-dealer are in the aggregate no less favorable to the Company than the fee
rate and/or fees a similarly situated but unaffiliated broker-dealer would charge in a similar transaction negotiated on an arm’s -
length transaction, including the fee rate or fees payable to any unaffiliated broker-dealers providing similar services in
connection with the same or a similar transaction;
16. any increase in the fee rates on AUM charged to the Company, any of its subsidiaries or any funds withheld accounts or modified
coinsurance accounts established by reinsurance counterparties of the Company or its subsidiaries for the purpose of maintaining
assets supporting business ceded or retroceded to any such entity, in each case by a member of the Apollo Group with respect to
investment management, investment advisory or related services (whether under the IMA or any other investment management
agreement, any MSAA or otherwise) as long as such increase would not cause the aggregate blended fee rate on AUM charged to
the Company and its subsidiaries and such funds withheld accounts and modified coinsurance accounts to increase over any one-
year period by more than the greater of (x) 5% and (y) the then-current Consumer Price Index for All Urban Consumers;
17. any investment by the Company or any of its subsidiaries in any new side car, joint venture or other investment entity alongside a
member of the Apollo Group, including a new ACRA entity; provided, that such investment provides the Company or its
subsidiary, as applicable, with terms that are in the aggregate no less favorable to such entity than those that apply to the
Company’s existing investment in ACRA HoldCo or any similar investment that has been approved by the conflicts committee,
as well as any agreement entered into with any member of the Apollo Group in connection with such investment so long as the
terms thereof are in the aggregate no less favorable to Athene than the terms of similar agreements entered into in connection
with the Company’s existing investment in ACRA HoldCo or any similar investment that has been approved by the conflicts
committee;
18. any (i) payment by the Company of dividends or other distributions to its stockholders or (ii) receipt of capital contributions by
the Company from its stockholders, in each case, as long as such payments or capital contributions (as applicable) are made in
compliance with all applicable regulatory requirements; and
19. any transactions, rights, fees or other agreements with respect to investments to the extent held in any funds withheld accounts,
modified coinsurance accounts, reinsurance trust accounts or similar accounts established by the Company or any if its
subsidiaries to the extent supporting business ceded or retroceded to third-party reinsurance counterparties of the Company or any
of its subsidiaries.
Each strategy that is managed, advised or sub-advised for the Company or any of its subsidiaries by any member of the Apollo Group through a
managed account and was previously subject to conflicts committee approval (other than the existing IMA or new IMAs previously approved)
may be re-examined by the conflicts committee if such strategy underwent a material change in the amount of AUM in the immediately
preceding 12 months.
Our conflicts committee or applicable disinterested directors have previously approved the existing transactions described above that are
required to be approved by the terms of our conflicts committee charter.
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221
Item 14. Principal Accountant Fees and Services
Principal Accountant Fees and Services
Deloitte & Touche LLP serves as our principal accountant. The following summarizes the fees for services provided by Deloitte & Touche LLP:
Years ended December 31,
2024
2023
(In millions)
Athene
Consolidated VIEs
Total
Athene
Consolidated VIEs
Total
Audit fees1
$
18
$
3
$
21
$
18
$
3
$
21
Audit-related fees2
1
—
1
1
—
1
Tax fees
Tax compliance fees
1
—
1
1
—
1
Tax advisory fees
—
—
—
1
—
1
All other fees
—
—
—
—
—
—
Total
$
20
$
3
$
23
$
21
$
3
$
24
1 Audit fees include fees billed and expected to be billed associated with the audit of the annual consolidated financial statements included on Form 10-K, the
reviews of quarterly reports on Form 10-Q, internal control over financial reporting, annual audits of certain subsidiaries and audits required by regulatory
authorities, statutory audits, and attestation services required by regulation.
2 Audit-related fees include fees paid associated with the issuance of comfort letters, issuance of consents related to common stock offerings and registration
statements, the assistance with and review of documents filed with the SEC and other regulatory authorities, employee benefit plan audits, due diligence related
to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews not required by statute and
regulation, consultations on financial accounting and reporting standards, and other attest services related to financial reporting that are not required by
statute or regulation.
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222
PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this report:
1.
Financial Statements—Item 8. Financial Statements and Supplementary Data
114
2.
Financial Statement Schedules
Schedule I—Summary of Investments Other Than Investments in Related Parties as of December 31, 2024
224
Schedule II—Condensed Financial Information of Registrant (Parent Company Only)
225
Schedule II—Balance Sheets as of December 31, 2024 and 2023
225
Schedule II—Statements of Income (Loss) and Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022
226
Schedule II—Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
227
Schedule II—Notes to Condensed Financial Information of Registrant for the years ended December 31, 2024, 2023 and 2022
228
Schedule III—Supplementary Insurance Information for the years ended December 31, 2024, 2023 and 2022
229
Schedule IV—Reinsurance for the years ended December 31, 2024, 2023 and 2022
230
Schedule V—Valuation and Qualifying Accounts for the years ended December 31, 2024, 2023 and 2022
231
Any remaining schedules are omitted because they are inapplicable.
3.
Exhibits
See the accompanying Exhibit Index.
232
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223
December 31, 2024
(In millions)
Cost or Amortized
Cost
Fair Value
Amount Shown on
Consolidated
Balance Sheet
AFS securities
US government and agencies
$
8,413
$
7,151
$
7,151
US state, municipal and political subdivisions
1,167
921
921
Foreign governments
2,082
1,568
1,568
Public utilities
15,496
13,669
13,669
Redeemable preferred stock
1,115
1,115
1,115
Other corporate
78,375
68,774
68,774
Convertibles and bonds with warrants attached
20
27
27
CLO
29,524
29,182
29,182
ABS
24,779
24,201
24,201
CMBS
11,158
10,741
10,741
RMBS
8,587
8,015
8,015
Trading securities
1,935
1,583
1,583
Total fixed maturity securities
182,651
166,947
166,947
Equity securities
Public utilities
24
22
22
Banks, trust and insurance companies common stock
—
—
—
Industrial, miscellaneous and all other common stock
9
9
9
Nonredeemable preferred stocks
1,325
1,259
1,259
Total equity securities
1,358
1,290
1,290
Mortgage loans
65,474
63,239
Investment funds
107
107
Policy loans
318
318
Funds withheld at interest
18,866
18,866
Derivative assets
8,154
8,154
Short-term investments
456
447
Other investments
2,914
2,915
Total investments
$
280,298
$
262,283
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ATHENE HOLDING LTD.
Schedule I — Summary of Investments — Other Than Investments in Related Parties
224
December 31,
(In millions, except per share data)
2024
2023
Assets
Investments, at fair value
$
123
$
8
Cash and cash equivalents
807
326
Investments in related parties, at fair value
1,330
1,331
Other assets (related party: 2024 – $153 and 2023 – $121)
433
400
Notes and other receivables from subsidiaries
46
27
Investments in subsidiaries
21,750
16,577
Total assets
$
24,489
$
18,669
Liabilities and Equity
Liabilities
Debt
$
6,309
$
4,209
Other liabilities (related party: 2024 – $58 and 2023 – $14)
236
133
Notes and other payables to subsidiaries
1,584
489
Total liabilities
8,129
4,831
Equity
Preferred stock
Series A – par value $1 per share; $863 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series B – par value $1 per share; $345 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series C – par value $1 per share; $600 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series D – par value $1 per share; $575 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Series E – par value $1 per share; $500 aggregate liquidation preference; authorized, issued and outstanding:
2024 and 2023 – 0.0 shares
—
—
Common stock – par value $0.001 per share; authorized: 2024 and 2023 – 425.0 shares; issued and outstanding: 2024
and 2023 – 203.8 shares
—
—
Additional paid-in capital
19,588
19,499
Retained earnings (accumulated deficit)
2,237
(92)
Accumulated other comprehensive loss
(5,465)
(5,569)
Total Athene Holding Ltd. stockholders’ equity
16,360
13,838
Total liabilities and equity
$
24,489
$
18,669
See accompanying notes to condensed financial information of registrant (parent company only)
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ATHENE HOLDING LTD.
Schedule II — Condensed Financial Information of Registrant (Parent Company Only) — Balance Sheets
225
Years ended December 31,
(In millions)
2024
2023
2022
Revenue
Net investment income (loss) (related party: 2024 – $(80), 2023 – $85 and 2022 – $58)
$
(29) $
103
$
65
Investment related gains (losses)
69
—
31
Other revenues
1
2
—
Total revenues
41
105
96
Benefits and Expenses
Operating expenses (related party: 2024 – $127, 2023 – $106 and 2022 – $99)
459
345
304
Total benefits and expenses
459
345
304
Loss before income taxes and equity earnings in subsidiaries
(418)
(240)
(208)
Income tax expense (benefit)
(70)
(36)
1
Equity earnings (losses) in subsidiaries
3,809
4,869
(2,701)
Net income (loss) available to Athene Holding Ltd. stockholders
3,461
4,665
(2,910)
Less: Preferred stock dividends
181
181
141
Net income (loss) available to Athene Holding Ltd. common stockholder
$
3,280
$
4,484
$
(3,051)
Net income (loss) available to Athene Holding Ltd. stockholders
$
3,461
$
4,665
$
(2,910)
Other comprehensive income (loss) attributable to Athene Holding Ltd. stockholders
104
1,749
(7,321)
Comprehensive income (loss) attributable to Athene Holding Ltd. stockholders
$
3,565
$
6,414
$
(10,231)
See accompanying notes to condensed financial information of registrant (parent company only)
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ATHENE HOLDING LTD.
Schedule II — Condensed Financial Information of Registrant (Parent Company Only)
Statements of Income (Loss) and Comprehensive Income (Loss)
226
Years ended December 31,
(In millions)
2024
2023
2022
Net cash used in operating activities
$
(336) $
(326) $
(248)
Cash flows from investing activities
Sales, maturities and repayments of investments
42
3
21
Purchases of investments (related party: 2024 – $(205), 2023 – $(8) and 2022 – $(195))
(891)
(8)
(244)
Capital contributions to subsidiaries
(541)
(335)
(275)
Receipts on loans to subsidiaries and parent
8
24
333
Issuances of loans to subsidiaries and parent
(411)
(103)
(328)
Other investing activities, net
(2)
(19)
46
Net cash used in investing activities
(1,795)
(438)
(447)
Cash flows from financing activities
Proceeds from debt
2,169
589
399
Proceeds from notes payable to subsidiaries
1,551
1,135
1,085
Repayment of notes payable to subsidiaries
(475)
(1,545)
(265)
Capital contributions from parent
—
1,250
—
Issuance of preferred stock, net of expenses
—
—
487
Preferred stock dividends
(226)
(136)
(141)
Common stock dividends
(452)
(938)
(1,313)
Other financing activities, net
45
(6)
(2)
Net cash provided by financing activities
2,612
349
250
Net increase (decrease) in cash and cash equivalents
481
(415)
(445)
Cash and cash equivalents at beginning of year
326
741
1,186
Cash and cash equivalents at end of year
$
807
$
326
$
741
Supplementary information
Cash paid for interest
$
239
$
139
$
111
Non-cash transactions
Investments distributed as capital contributions to subsidiaries
693
—
—
Investments distributed as common stock dividends
499
—
—
Distributions to parent
—
—
2,145
Investments transferred to subsidiary for settlement of loans
429
—
82
See accompanying notes to condensed financial information of registrant (parent company only)
Table of Contents
ATHENE HOLDING LTD.
Schedule II — Condensed Financial Information of Registrant (Parent Company Only) — Statements of Cash Flows
227
1. Basis of Presentation
The accompanying condensed financial statements of Athene Holding Ltd. (AHL) should be read in conjunction with the consolidated financial
statements and notes of AHL and its subsidiaries (consolidated financial statements).
For purposes of these condensed financial statements, AHL’s wholly owned and majority owned subsidiaries are presented under the equity
method of accounting. Under this method, the assets and liabilities of subsidiaries are not consolidated. The investments in subsidiaries are
recorded on the condensed balance sheets. The income from subsidiaries is reported on a net basis as equity earnings of subsidiaries on the
condensed statements of income (loss).
2. Intercompany Transactions
Unsecured Revolving Notes Receivable—AHL has unsecured revolving notes receivable from subsidiaries Athene USA Corporation (AUSA),
Athene Life Re Ltd. (ALRe) and Athene Life Re International Ltd. (ALReI).
The unsecured revolving note receivable from AUSA has a borrowing capacity of $500 million and had an outstanding balance of $0 million
and $41 million as of December 31, 2024 and 2023, respectively. Interest accrues at a fixed rate of 4.08% per year, and the balance is due on
July 1, 2031, or earlier at AHL’s request.
The unsecured revolving note receivable from ALRe has a borrowing capacity of $4 billion and had no outstanding balance as of December 31,
2024 and 2023. Interest accrues at a fixed rate of 2.29% and has a maturity date of December 15, 2028, or earlier at AHL’s request.
The unsecured revolving note receivable from ALReI has a borrowing capacity of $100 million and had no outstanding balance as of
December 31, 2024 and 2023. Interest accrues at the US mid-term applicable federal rate per year and has a maturity date of July 1, 2028, or
earlier at AHL’s request.
Unsecured Revolving Notes Payable—In addition to the unsecured revolving notes receivable described above, AHL has unsecured revolving
notes payable with AUSA and ALRe.
The unsecured revolving note payable to AUSA permits AHL to borrow up to $500 million with a fixed interest rate of 4.08% and a maturity
date of July 1, 2031. As of December 31, 2024 and 2023, the revolving note payable had an outstanding balance of $18 million and $0 million,
respectively.
The unsecured revolving note payable to ALRe permits AHL to borrow up to $4 billion with a fixed interest rate of 2.29% and a maturity date of
December 15, 2028. As of December 31, 2024 and 2023, the revolving note payable had an outstanding balance of $1,562 million and $486
million, respectively.
3. Debt and Guarantees
AHL has entered into a capital maintenance agreement with Athene Annuity and Life Company (AAIA), pursuant to which AHL agrees to
provide capital to AAIA to the extent that its capital falls below a specified threshold as set with its domestic regulator. In addition, AHL entered
into a capital maintenance agreement with its indirect subsidiary Athene London Assignment Corporation (Athene London) pursuant to which
AHL agreed to contribute cash, cash equivalents, marketable securities or other liquid assets so as to maintain capital in Athene London to
ensure that it has the necessary funds to timely satisfy any obligations it has under any assumed settlement agreement. AHL does not anticipate
making any capital infusions in Athene London pursuant to the capital maintenance agreement.
See Note 11 – Debt and Note 16 – Commitments and Contingencies to the consolidated financial statements for additional information on AHL
debt and guarantees.
4. Dividends, Return of Capital and Capital Contributions
During the years ended December 31, 2024, 2023 and 2022, AHL received no dividends from subsidiaries. During the years ended December
31, 2024, 2023 and 2022, AHL contributed $1,234 million, $335 million and $275 million, respectively, to subsidiaries. See Note 14 – Statutory
Requirements to the consolidated financial statements for additional information on subsidiary dividend restrictions.
Table of Contents
ATHENE HOLDING LTD.
Schedule II — Condensed Financial Information of Registrant (Parent Company Only)
Notes to Condensed Financial Information of Registrant
228
(In millions)
DAC, DSI
and
VOBA
Future policy
benefits,
losses, claims
and loss
expenses1
Other policy
claims and
benefits
payable2
Premiums
Net
investment
income
Benefits,
claims, losses
and settlement
expenses3
Amortization
of DAC, DSI
and VOBA
Policy and
other
operating
expenses
2024
Total
$
7,173
$
307,567
$
107
$
1,318
$
14,481
$
11,901
$
941
$
2,213
2023
Total
$
5,979
$
261,708
$
98
$
12,749
$
11,130
$
21,067
$
688
$
1,848
2022
Total
$
4,466
$
218,696
$
129
$
11,638
$
7,571
$
11,346
$
444
$
1,495
1 Represents interest sensitive contract liabilities, future policy benefits and market risk benefits on the consolidated balance sheets.
2 Included in other liabilities on the consolidated balance sheets.
3 Represents interest sensitive contract benefits, future policy and other policy benefits and market risk benefits remeasurement (gains) losses on the
consolidated statements of income (loss).
Table of Contents
ATHENE HOLDING LTD.
Schedule III — Supplementary Insurance Information
229
(In millions, except percentages)
Gross amount
Ceded to other
companies
Assumed from
other companies
Net amount
Percentage of
amount assumed
to net
Year ended December 31, 2024
Life insurance in force at end of year
$
20,801
$
24,255
$
7,101
$
3,647
194.7 %
Premiums
1,089
84
313
1,318
23.7 %
Year ended December 31, 2023
Life insurance in force at end of year
22,708
27,107
8,242
3,843
214.5 %
Premiums
10,525
89
2,313
12,749
18.1 %
Year ended December 31, 2022
Life insurance in force at end of year
24,433
25,399
2,355
1,389
169.5 %
Premiums
11,373
112
377
11,638
3.2 %
Table of Contents
ATHENE HOLDING LTD.
Schedule IV — Reinsurance
230
(In millions)
Additions
Description
Balance at
beginning of
year
Charged to
costs and
expenses
Assumed
through
acquisitions
Deductions
Balance at end
of year
Reserves deducted from assets to which they apply
Year ended December 31, 2024
Valuation allowance on deferred tax assets
$
25
$
23
$
—
$
—
$
48
Year ended December 31, 2023
Valuation allowance on deferred tax assets
105
148
—
(228)
25
Year ended December 31, 2022
Valuation allowance on deferred tax assets
66
53
—
(14)
105
Table of Contents
ATHENE HOLDING LTD.
Schedule V — Valuation and Qualifying Accounts
231
EXHIBIT INDEX
3.1.1
Certificate of Incorporation of Athene Holding Ltd. (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on January 2, 2024).
3.1.2
Certificate of Change of Registered Agent and/or Registered Office, dated as of August 26, 2024 (incorporated by reference to Exhibit 3.1 to
the Form 8-K filed on September 6, 2024).
3.2
Bylaws of Athene Holding Ltd., effective December 31, 2023 (incorporated by reference to Exhibit 3.2 to the Form 8-K filed on January 2,
2024).
4.1.1
Indenture for Debt Securities, dated as of January 12, 2018, by and between Athene Holding Ltd. and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on January 12, 2018).
4.1.2.1
First Supplemental Indenture, dated January 12, 2018, by and between Athene Holding Ltd. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Form 8-K filed on January 12, 2018).
4.1.2.2
Form of 4.125% Senior Notes due 2018 (included in Exhibit 4.2 to the Form 8-K filed on January 12, 2018, which is incorporated by
reference).
4.1.3.1
Second Supplemental Indenture, dated April 3, 2020, between Athene Holding Ltd. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Form 8-K filed on April 6, 2020).
4.1.3.2
Form of 6.150% Senior Notes due 2030 (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on April 6, 2020).
4.1.4.1
Third Supplemental Indenture, dated October 8, 2020, by and between Athene Holding Ltd. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 of the Form 8-K filed on October 8, 2020).
4.1.4.2
Form of 3.500% Senior Notes due 2031 (included in Exhibit 4.2 to the Form 8-K filed on October 8, 2020, which is incorporated by reference).
4.1.5.1
Fourth Supplemental Indenture, dated May 25, 2021, by and between Athene Holding Ltd. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Form 8-K filed on May 25, 2021).
4.1.5.2
Form of 3.950% Senior Notes due 2051 (included in Exhibit 4.2 to the Form 8-K filed on May 25, 2021, which is incorporated by reference).
4.1.6.1
Fifth Supplemental Indenture, dated December 13, 2021, by and between Athene Holding Ltd. and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.2 to the Form 8-K filed on December 13, 2021).
4.1.6.2
Form of 3.450% Senior Notes due 2052 (included in Exhibit 4.2 to the Form 8-K filed on December 13, 2021, which is incorporated by
reference).
4.1.7.1
Sixth Supplemental Indenture, dated November 21, 2022, by and between Athene Holding Ltd. and U.S. Bank Trust Company, National
Association, as trustee (incorporated by reference to Exhibit 4.2 to the Form 8-K filed on November 21, 2022).
4.1.7.2
Form of 6.650% Senior Notes due 2033 (included in Exhibit 4.2 to the Form 8-K filed on November 21, 2022, which is incorporated by
reference).
4.1.8.1
Seventh Supplemental Indenture, dated December 12, 2023, by and between Athene Holding Ltd. and U.S. Bank Trust Company, National
Association, as trustee (incorporated by reference to Exhibit 4.2) to the Form 8-K filed on December 12, 2023).
4.1.8.2
Form of 5.875% Senior Notes due 2034 (included in Exhibit 4.2 to the Form 8-K filed on December 12, 2023, which is incorporated by
reference).
4.1.9
Eighth Supplemental Indenture, dated December 31, 2023 between Athene Holding Ltd., a corporation organized in the State of Delaware (as
successor to Athene Holding Ltd., a Bermuda exempted), and U.S. Bank Trust Company, National Association (as successor in interest to the
U.S. Bank National Association), as trustee (incorporated by reference to Exhibit 4.2 to the Form 8-K filed on January 2, 2024).
4.1.10.1
Ninth Supplemental Indenture, dated March 22, 2024, by and between Athene Holding Ltd. and U.S. Bank Trust Company, National
Association, as trustee (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on March 22, 2024).
4.1.10.2
Form of 6.250% Senior Notes due 2054 (included in Exhibit 4.3 to the Form 8-K filed on March 22, 2024, which is incorporated by reference).
4.2.1
Indenture for Subordinated Debt Securities, dated March 7, 2024, by and between Athene Holding Ltd., and U.S. Bank Trust Company,
National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on March 7, 2024).
4.2.2.1
First Supplemental Indenture, dated March 7, 2024, by and between Athene Holding Ltd., and U.S. Bank Trust Company, National
Association, as trustee (incorporated by reference to Exhibit 4.2 to the Form 8-K filed on March 7, 2024).
4.2.2.2
Form of 7.250% Fixed-Rate Reset Junior Subordinated Debentures due 2064 (included in Exhibit 4.2 to the Form 8-K filed on March 7, 2024,
which is incorporated by reference).
4.2.3.1
Second Supplemental Indenture, dated October 10, 2024, by and between Athene Holding Ltd. and U.S. Bank Trust Company, National
Association, as trustee (incorporated by reference to Exhibit 4.2 to the Form 8-K filed on October 10, 2024).
4.2.3.2
Form of 6.625% Junior Subordinated Debentures due 2054 (included in Exhibit 4.2 to the Form 8-K filed on October 10, 2024, which is
incorporated by reference).
4.3.1
Certificate of Designations of 6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A (incorporated by reference to
Exhibit 4.3 to the Form 8-K filed on January 2, 2024).
4.3.2
Form of Share Certificate evidencing 6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A (incorporated by
reference to Exhibit 4.4 to the Form 8-K filed on January 2, 2024).
4.3.3
Deposit Agreement, dated June 10, 2019, between Athene Holding Ltd., Computershare Inc. and Computershare Trust Company, N.A.,
collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on
June 10, 2019 dated June 5, 2019).
4.3.4
Amendment No. 1 to Series A Deposit Agreement, dated December 31, 2023, between Athene Holding Ltd., Computershare Inc. and
Computershare Trust Company, N.A. collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to
Exhibit 4.5 to the Form 8-K filed on January 2, 2024).
4.3.5
Form of Series A Depositary Receipt (included in Exhibit 4.5 to the Form 8-K filed on January 2, 2024, which is incorporated by reference).
4.4.1
Certificate of Designations of 5.625% Fixed Rate Perpetual Non-Cumulative Preferred Stock, Series B (incorporated by reference to Exhibit
4.7 to the Form 8-K filed on January 2, 2024).
4.4.2
Form of Share Certificate evidencing 5.625% Fixed Rate Perpetual Non-Cumulative Preferred Stock, Series B (incorporated by reference to
Exhibit 4.8 to the Form 8-K filed on January 2, 2024).
Exhibit No.
Description
Table of Contents
232
4.4.3
Deposit Agreement, dated September 19, 2019, between Athene Holding Ltd., Computershare Inc. and Computershare Trust Company, N.A.,
collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on
September 19, 2019).
4.4.4
Amendment No. 1 to Series B Deposit Agreement, dated December 31, 2023, between Athene Holding Ltd., Computershare Inc. and
Computershare Trust Company, N.A. collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to
Exhibit 4.9 to the Form 8-K filed on January 2, 2024).
4.4.5
Form of Series B Depositary Receipt (included in Exhibit 4.9 to the Form 8-K filed on January 2, 2024, which is incorporated by reference).
4.5.1
Certificate of Designations of 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C (incorporated by reference to
Exhibit 4.11 to the Form 8-K filed on January 2, 2024).
4.5.2
Form of Share Certificate evidencing 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C (incorporated by
reference to Exhibit 4.12 to the Form 8-K filed on January 2, 2024).
4.5.3
Deposit Agreement, dated June 11, 2020, between Athene Holding Ltd., Computershare Inc. and Computershare Trust Company, N.A.,
collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on
June 11, 2020).
4.5.4
Amendment No. 1 to Series C Deposit Agreement, dated December 31, 2023, between Athene Holding Ltd., Computershare Inc. and
Computershare Trust Company, N.A., collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to
Exhibit 4.13 to the Form 8-K filed on January 2, 2024).
4.5.5
Form of Series C Depositary Receipt (included in Exhibit 4.13 to the Form 8-K filed on January 2, 2024, which is incorporated by reference)
4.6.1
Certificate of Designations of 4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D (incorporated by reference to Exhibit
4.15 to the Form 8-K filed on January 2, 2024).
4.6.2
Form of Share Certificate evidencing 4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D (incorporated by reference to
Exhibit 4.16 to the Form 8-K filed on January 2, 2024).
4.6.3
Deposit Agreement, dated December 18, 2020, between Athene Holding Ltd., Computershare Inc. and Computershare Trust Company, N.A.,
collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on
December 18, 2020).
4.6.4
Amendment No. 1 to Series D Deposit Agreement, dated December 31, 2023, between Athene Holding Ltd., Computershare Inc. and
Computershare Trust Company, N.A., collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to
Exhibit 4.17 to the Form 8-K filed on January 2, 2024).
4.6.5
Form of Series D Depositary Receipt (included in Exhibit 4.17 to the Form 8-K filed on January 2, 2024, which is incorporated by reference)
4.7.1
Certificate of Designations of 7.750% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E (incorporated by reference to
Exhibit 4.19 to the Form 8-K filed on January 2, 2024).
4.7.2
Form of Share Certificate evidencing 7.750% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E (incorporated by
reference to Exhibit 4.20 to the Form 8-K filed on January 2, 2024).
4.7.3
Deposit Agreement, dated December 12, 2022, between Athene Holding Ltd., Computershare Inc., and Computershare Trust Company, N.A.,
collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to Exhibit 4.3 to the Form 8-K filed on
December 12, 2022).
4.7.4
Amendment No. 1 to Series E Deposit Agreement, dated December 31, 2023, between Athene Holding Ltd., Computershare Inc. and
Computershare Trust Company, N.A. collectively, and the holders from time to time of the Depositary Receipts (incorporated by reference to
Exhibit 4.21 to the Form 8-K filed on January 2, 2024).
4.7.5
Form of Series E Depositary Receipt (included in Exhibit 4.21 to the Form 8-K filed on January 2, 2024, which is incorporated by reference)
4.8
Description of Securities.
10.1
Credit Agreement, dated as of June 30, 2023, among Athene Holding Ltd., Athene Life Re Ltd., Athene USA Corporation and Athene Annuity
Re Ltd., as borrowers, the lenders from time to time party thereto, and Citibank, N.A., as administrative agent (incorporated by reference to
Exhibit 10.3 to the Form 10-Q filed on August 7, 2023).
10.2
Guaranty, dated as of June 30, 2023, among Athene Holding Ltd., Athene Life Re Ltd., Athene USA Corporation and Athene Annuity Re Ltd.,
as guarantors, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.4 to the Form 10-Q filed on August 7,
2023).
10.3
Credit Agreement, dated as of June 28, 2024, among Athene Holding Ltd. and Athene Life Re Ltd., as borrowers, Wells Fargo Bank, National
Association, as administrative agent and the lenders from time to time party thereto (incorporated by reference to Exhibit 10.1 to the Form 10-
Q filed on August 8, 2024).
10.4
Guaranty, dated June 28, 2024, among Athene Life Re Ltd., as guarantor, and Wells Fargo Bank, National Association, as administrative agent
(incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on August 8, 2024).
10.5
Ninth Amended and Restated Fee Agreement, dated as of December 31, 2023, between Apollo Insurance Solutions Group L.P. and Athene
Holding Ltd. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on January 2, 2024).
10.6
Applicable 2016 Liability Fee Discount, effective as of September 30, 2016, between Athene Asset Management, L.P. and Athene Holding
Ltd. (incorporated by reference to Exhibit 10.7.2 to the Form S-1 filed on October 25, 2016).
10.7
Second Amended and Restated Master Sub-Advisory Agreement, effective as of October 1, 2019, among Athene Asset Management LLC,
Apollo Capital Management, L.P., Apollo Global Real Estate Management, L.P., ARM Manager LLC, Apollo Longevity, LLC and Apollo
Emerging Markets, LLC (incorporated by reference to Exhibit 10.30.1 to the Form 10-K filed on February 20, 2020).
10.8
Third Amended and Restated Master Sub-Advisory Agreement, effective as of October 1, 2019, among Athene Asset Management LLC,
Apollo Capital Management, L.P., Apollo Global Real Estate Management, L.P., ARM Manager LLC, Apollo Longevity, LLC, Apollo
Royalties Management, LLC and Apollo Emerging Markets, LLC (incorporated by reference to Exhibit 10.30.2 to the Form 10-K filed on
February 20, 2020).
Exhibit No.
Description
Table of Contents
233
10.9
Third Amended and Restated Master Sub-Advisory Agreement, effective as of October 1, 2019, among Athene Asset Management LLC,
Apollo Capital Management, L.P., Apollo Global Real Estate Management, L.P., ARM Manager LLC, Apollo Longevity, LLC and Apollo
Emerging Markets, LLC (incorporated by reference to Exhibit 10.30.3 to the Form 10-K filed on February 20, 2020).
10.10.1
Cooperation Agreement, dated as of January 1, 2018, between AGER Bermuda Holding Ltd. and Athene Holding Ltd. (incorporated by
reference to Exhibit 10.1 to the Form 8-K filed on January 2, 2018).
10.10.2
Amendment No. 1 to the Cooperation Agreement, dated as of January 7, 2020, between Athora Holding Ltd. and Athene Holding Ltd.
(incorporated by reference to Exhibit 10.31.2 to the Form 10-K filed on February 20, 2020).
10.11.1
Reinsurance agreement (FA Business), effective as of June 1, 2018, between Athene Annuity & Life Assurance Company and Voya Insurance
and Annuity Company (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on August 3, 2018).
10.11.2
First Amendment to Reinsurance Agreement (FA Business), effective as of July 1, 2018, between Athene Annuity & Life Assurance Company
and Voya Insurance and Annuity Company (incorporated by reference to Exhibit 10.32.2 to the Form 10-K filed on February 20, 2020).
10.11.3
Partial Recapture Amendment to Reinsurance Agreement (FA Business), effective as of July 1, 2023, between Athene Annuity & Life
Assurance Company and Voya Insurance and Annuity Company (incorporated by reference to Exhibit 10.10.3 to the Form 10-K filed on
February 27, 2024).
10.11.4
Amendment to Reinsurance Agreement (FA Business), effective as of October 11, 2024, between Athene Annuity and Life Company (f/k/a
Athene Annuity & Life Assurance Company) and Venerable Insurance and Annuity Company (f/k/a Voya Insurance and Annuity Company).
10.12.1
Modified coinsurance agreement (Separate Account FA Business), effective as of June 1, 2018, between Athene Annuity & Life Assurance
Company and Voya Insurance and Annuity Company (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on August 3, 2018).
10.12.2
First Amendment to Modified Coinsurance Agreement (Separate Account FA Business), effective as of June 1, 2018, between Athene Annuity
& Life Assurance Company and Voya Insurance and Annuity Company (incorporated by reference to Exhibit 10.33.2 to the form 10-K filed
on February 20, 2020).
10.12.3
Amendment to Modified Coinsurance Agreement (Separate Account FA Business), effective as of October 11, 2024, between Athene Annuity
and Life Company (f/k/a Athene Annuity & Life Assurance Company) and Venerable Insurance and Annuity Company (f/k/a Voya Insurance
and Annuity Company).
10.13.1
Modified coinsurance agreement (FA Business), effective as of December 31, 2019, between Athene Annuity Re Ltd. and Venerable Insurance
and Annuity Company (incorporated by reference to Exhibit 10.34 to the form 10-K filed on February 20, 2020).
10.13.2
Partial Recapture Amendment to the Modified Coinsurance Agreement (FA Business), effective as of July 1, 2023, between Athene Annuity
Re Ltd. and Voya Insurance and Annuity Company (incorporated by reference to Exhibit 10.12.2 to the Form 10-K filed on February 27,
2024).
10.14.1
Coinsurance Agreement, dated as of June 18, 2020, between Jackson National Life Insurance Company and Athene Life Re Ltd. (incorporated
by reference to Exhibit 10.1 to the Form 10-Q filed on August 5, 2020).
10.14.2
Amendment No. 1 to Coinsurance Agreement, dated September 30, 2020, between Jackson National Life Insurance Company and Athene Life
Re Ltd. (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on November 3, 2020).
10.15
Amended and Restated Master Framework Agreement, dated as of December 31, 2021, by and between Athene Co-Invest Reinsurance
Affiliate 1A Ltd. and Athene Life Re Ltd. (incorporated by reference to Exhibit 10.24 to Form 10-K filed on February 25, 2022).
10.16.1
Amended and Restated Shareholders Agreement, dated as of December 31, 2021, by and among Athene Co-Invest Reinsurance Affiliate
Holding Ltd., Athene Co-Invest Reinsurance Affiliate 1A Ltd., ADIP Holdings (A), L.P., ADIP Holdings (B), L.P., ADIP Holdings (C), L.P.,
ADIP Holdings (D), L.P., ADIP Holdings (E), L.P., ADIP Holdings (Lux), L.P., Athene Life Re Ltd. and Athene Asset L.P. (incorporated by
reference to Exhibit 10.25 to the Form 10-K filed on February 25, 2022).
10.16.2
First Amendment to Amended and Restated Shareholders Agreement, effective as of July 1, 2023, by and among Athene Co-Invest
Reinsurance Affiliate Holding Ltd., Athene Co-Invest Reinsurance Affiliate 1A Ltd., ADIP Holdings (A), L.P., ADIP Holdings (B), L.P.,
ADIP Holdings (C), L.P., ADIP Holdings (D), L.P., ADIP Holdings (E), L.P., ADIP Holdings (Lux), L.P., Athene Life Re Ltd. and Athene
Asset L.P.
10.17
Master Framework Agreement, effective as of July 1, 2023, by and between Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. and
Athene Life Re Ltd. (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on August 7, 2023).
10.18.1
Shareholders Agreement, effective as of July 1, 2023, by and between Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd., Athene Life Re
Ltd., and Apollo/Athene Dedicated Investment Program II, L.P. (incorporated by reference to Exhibit 10.2 to Form 10-Q filed on August 7,
2023).
10.18.2
Joinder Agreement to Shareholders Agreement, dated as of July 1, 2023, by and among Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd.
and the Shareholders, made effective as of February 27, 2024.
10.18.3
First Amendment to the Shareholders Agreement, effective as of May 31, 2024, by and among Athene Co-Invest Reinsurance Affiliate
Holding 2 Ltd, Athene Life Re Ltd. and Apollo/Athene Dedicated Investment Program II, L.P.
10.19†
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.18 to the Form 10-K filed on February 27,
2024).
10.20†
Form of Director Retention Letter (incorporated by reference to Exhibit 10.19 to the Form 10-K filed on February 27, 2024).
10.21†
Athene Holding Ltd. 2019 Share Incentive Plan (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on June 10, 2019 dated June
4, 2019).
10.22†
Form of 2016 Share Incentive Plan Nonqualified Stock Option Award Notice and Nonqualified Stock Option Agreement (incorporated by
reference to Exhibit 10.26.2 to the Form 10-K filed on February 26, 2018).
10.23†
Form of 2019 Share Incentive Plan Nonqualified Stock Option Award Notice and Nonqualified Stock Option Agreement (incorporated by
reference to Exhibit 10.22.3 to the Form 10-K filed on February 20, 2020).
10.24†
Form of 2019 Share Incentive Plan Nonqualified Stock Option Award Notice and Nonqualified Stock Option Agreement (incorporated by
reference to Exhibit 10.2.1 to the Form 10-Q filed on May 10, 2021).
10.25†
Form of Restricted Share Unit Award Agreement under the Apollo Global Management, Inc. 2019 Omnibus Equity Incentive Plan for Estate
Planning Vehicles (incorporated by reference to Exhibit 10.2 to the Form 10-Q filed on August 9, 2022).
Exhibit No.
Description
Table of Contents
234
10.26†
Form of Restricted Share Unit Agreement under the Apollo Global Management, Inc. 2019 Omnibus Equity Incentive Plan (2022)
(incorporated by reference to Exhibit 10.32 to the Form 10-K filed on March 1, 2023).
10.27†
Form of Restricted Share Unit Agreement under the Apollo Global Management, Inc. 2019 Omnibus Equity Incentive Plan (2023)
(incorporated by reference to Exhibit 10.34 to the Form 10-K filed on March 1, 2023).
10.28†
Form of Restricted Share Unit Agreement under the Apollo Global Management, Inc. 2019 Omnibus Equity Incentive Plan (2024).
10.29†
Form of ADIP (Athene) Carry Plan, L.P. Award Letter (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on November 3,
2020).
10.30†
Form of Apollo ADIP Advisors II, L.P. Carry Award Letter (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed on August 8,
2024).
10.31†
Form of Apollo Supplemental Partner Program Award Letter (incorporated by reference to Exhibit 10.35 to the Form 10-K filed on March 1,
2023).
10.32†
Apollo Supplemental Partner Program Plan Document (incorporated by reference to Exhibit 10.36 to the Form 10-K filed on March 1, 2023).
10.33†
Amended and Restated Employment Agreement, dated as of June 16, 2022, between Athene Holding Ltd. and James R. Belardi (incorporated
by reference to Exhibit 10.3 to the Form 10-Q filed on August 9, 2022).
10.34†
Employment Agreement, dated as of October 12, 2015, between Athene Holding Ltd. and Martin P. Klein (incorporated by reference to
Exhibit 10.15.3 to Form S-1 filed on October 25, 2016).
10.35†
Letter Agreement, dated as of October 31, 2024, between Athene Holding Ltd. and Martin P. Klein.
10.36†
Restricted Share Unit Award Agreement under the Apollo Global Management, Inc. 2019 Omnibus Equity Incentive Plan, dated as of October
30, 2023, between Apollo Global Management, Inc. and Grant Kvalheim (incorporated by reference to Exhibit 10.37 to the Form 10-K filed on
February 27, 2024).
19.1
Insider Trading Policy.
21.1
Subsidiaries of the Registrant.
23.1
Consent of Deloitte & Touche LLP regarding Athene Holding Ltd. financial statements.
24.1
Power of Attorney (included on the signature page hereto)
31.1
Principal Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Principal Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Principal Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Policy relating to recovery of erroneously awarded compensation (incorporated by reference to Exhibit 97.1 to the Form 10-K filed on
February 27, 2024).
101.INS
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document.
101.SCH
XBRL Taxonomy Extension Schema.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase.
101.LAB
XBRL Taxonomy Extension Label Linkbase.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase.
101.DEF
XBRL Taxonomy Extension Definition Linkbase.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†
Management contract or compensatory plan or arrangement.
Exhibit No.
Description
Table of Contents
235
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATHENE HOLDING LTD.
Date: February 24, 2025
/s/ Martin P. Klein
Martin P. Klein
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James R. Belardi,
Martin P. Klein and Sarah J. VanBeck as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Annual Report on Form 10-K, and all
amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitutes or substitute,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant in the capacities indicated below:
/s/ James R. Belardi
Chairman and Chief Executive Officer
February 24, 2025
James R. Belardi
(Principal Executive Officer)
/s/ Martin P. Klein
Executive Vice President and Chief Financial Officer
February 24, 2025
Martin P. Klein
(Principal Financial Officer)
/s/ Sarah J. VanBeck
Senior Vice President and Corporate Controller
February 24, 2025
Sarah J. VanBeck
(Principal Accounting Officer)
/s/ Marc Beilinson
Director
February 24, 2025
Marc Beilinson
/s/ Mitra Hormozi
Director
February 24, 2025
Mitra Hormozi
/s/ Bogdan Ignaschenko
Director
February 24, 2025
Bogdan Ignaschenko
/s/ Brian Leach
Director
February 24, 2025
Brian Leach
/s/ Joseph Manchin III
Director
February 24, 2025
Joseph Manchin III
/s/ Dr. Manfred Puffer
Director
February 24, 2025
Dr. Manfred Puffer
/s/ Marc Rowan
Director
February 24, 2025
Marc Rowan
/s/ Lawrence J. Ruisi
Director
February 24, 2025
Lawrence J. Ruisi
/s/ Vishal Sheth
Director
February 24, 2025
Vishal Sheth
Signatures
Title
Date
Table of Contents
236
/s/ Lynn Swann
Director
February 24, 2025
Lynn Swann
/s/ Hope Schefler Taitz
Director
February 24, 2025
Hope Schefler Taitz
Signatures
Title
Date
Table of Contents
237
Exhibit 4.8
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO
SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
As of January 31, 2025, Athene Holding Ltd. (“we,” “us,” “our” or “the Company”) had six classes of
securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”): (1) our depositary shares, each representing a 1/1,000th interest in a share of 6.35%
fixed-to-floating rate perpetual non-cumulative preferred stock, series A, par value $1.00 per share (our
“Series A Preferred Stock”); (2) our depositary shares, each representing a 1/1,000th interest in a share of
5.625% fixed-rate perpetual non-cumulative preferred stock, series B, par value $1.00 per share (our
“Series B Preferred Stock”); (3) our depositary shares, each representing a 1/1,000th interest in a share of
6.375% fixed-rate reset perpetual non-cumulative preferred stock, series C, par value $1.00 per share (our
“Series C Preferred Stock”); (4) our depositary shares, each representing a 1/1,000th interest in a share of
4.875% fixed-rate perpetual non-cumulative preferred stock, series D, par value $1.00 per share (our
“Series D Preferred Stock”); (5) our depositary shares, each representing 1/1,000th interest in a share of
7.750% fixed-rate reset perpetual non-cumulative preferred stock, Series E, $1.00 par value per share (our
“Series E Preferred Stock” and, together with our Series A Preferred Stock, our Series B Preferred Stock,
our Series C Preferred Stock, and our Series D Preferred Stock, our “Preferred Stock”); and (6) our
7.250% fixed-rate reset junior subordinated debentures due 2064 (our “2064 Debentures”).
Our authorized preferred stock consists of 40,000,000 shares, par value $1.00 per share. As of January 31,
2025, there were 115,300 outstanding shares of Preferred Stock, consisting of 34,500 shares of Series A
Preferred Stock, 13,800 shares of Series B Preferred Stock, 24,000 shares of Series C Preferred Stock,
23,000 shares of Series D Preferred Stock, and 20,000 shares of Series E Preferred Stock, all of which
were held of record by a nominee of The Depositary Trust Company (“DTC”).
Description of the Depositary Shares
The following description of the depositary shares representing an interest in shares of Series A Preferred
Stock (the “Series A Depositary Shares”), the depositary shares representing an interest in shares of
Series B Preferred Stock (the “Series B Depositary Shares”), the depositary shares representing an
interest in shares of Series C Preferred Stock (the “Series C Depositary Shares”), the depositary shares
representing an interest in shares of Series D Preferred Stock (the “Series D Depositary Shares”), and
the depositary shares representing an interest in shares of Series E Preferred Stock (the “Series E
Depositary Shares” and, together with the Series A Depositary Shares, the Series B Depositary Shares,
the Series C Depositary Shares, and the Series D Depositary Shares, the “Depositary Shares”) is a
summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to
the terms and provisions of the Deposit Agreements (as defined below), the forms of depositary receipts,
which contain the terms and provisions of the Depositary Shares, the pertinent sections of our certificate
of incorporation, and the pertinent sections of the Certificates of Designations (as defined below), each of
which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit
4.8 is a part, and to relevant sections of the General Corporation Law of the State of Delaware (the
“DGCL”).
General
Each Depositary Share represents a 1/1,000th interest in a share of Preferred Stock and is evidenced by a
depositary receipt. The underlying shares of Preferred Stock are deposited with the depositary pursuant to,
(i) in the case of the Series A Preferred Stock, the deposit agreement, dated June 10, 2019, among us,
Computershare Inc. and Computershare Trust Company, N.A., collectively, acting as depositary, and the
holders from time to time of the depositary receipts, as amended by Amendment No. 1 to such deposit
agreement, dated as of December 31, 2023 (as amended, the “Series A Deposit Agreement”), (ii) in the
case of the Series B Preferred Stock, the deposit agreement, dated September 19, 2019, among us,
Computershare Inc. and Computershare Trust Company, N.A., collectively, acting as depositary, and the
holders from time to time of the depositary receipts, as amended by Amendment No. 1 to such deposit
agreement, dated as of December 31, 2023 (as amended, the “Series B Deposit Agreement”), (iii) in the
case of the Series C Preferred Stock, the deposit agreement, dated June 11, 2020, among us,
Computershare Inc. and Computershare Trust Company, N.A., collectively, acting as depositary, and the
holders from time to time of the depositary receipts, as amended by Amendment No. 1 to such deposit
agreement, dated as of December 31, 2023 (as amended, the “Series C Deposit Agreement”), (iv) in the
case of the Series D Preferred Stock, the deposit agreement, dated December 18, 2020, among us,
Computershare Inc. and Computershare Trust Company, N.A., collectively, acting as depositary, and the
holders from time to time of the depositary receipts, as amended by Amendment No. 1 to such deposit
agreement, dated as of December 31, 2023 (as amended, the “Series D Deposit Agreement”), and, (v) in
the case of the Series E Preferred Stock, the deposit agreement, dated December 12, 2022, among us,
Computershare Inc. and Computershare Trust Company, N.A., collectively, acting as depositary, and the
holders from time to time of the depositary receipts, as amended by Amendment No. 1 to such deposit
agreement, dated as of December 31, 2023 (as amended, the “Series E Deposit Agreement” and, together
with the Series A Deposit Agreement, the Series B Deposit Agreement, the Series C Deposit Agreement,
and the Series D Deposit Agreement, the “Deposit Agreements”). Subject to the terms of the Deposit
Agreements, each holder of a Depositary Share is entitled, through the depositary, in proportion to the
applicable fraction of a share of Preferred Stock represented by such Depositary Share, to all the rights
and preferences of the shares of Preferred Stock represented thereby (including any dividend, liquidation,
redemption and voting rights). If the shares of Preferred Stock are exchanged for new securities pursuant
to the provisions described under “Description of the Preferred Stock—Substitution or Variation,” each
Depositary Share will represent the same percentage interest in such new security, and will be evidenced
by a depositary receipt.
Dividends and Other Distributions
Any dividend or other distribution (including upon our voluntary or involuntary liquidation, dissolution or
winding-up) paid in respect of a Depositary Share will be in an amount equal to 1/1,000th of the dividend
declared or distribution payable, as the case may be, on the underlying share of Preferred Stock. The
depositary will distribute any cash dividends or other cash distributions received on each series of
Preferred Stock, including any additional amounts as described under “Description of the Preferred Stock
—Dividends—Payment of Additional Amounts,” to the record holders of the respective series of
Depositary Shares in proportion to the number of Depositary Shares of such series held by each holder on
the relevant record date. If we make a distribution on any series of Preferred Stock other than in cash, the
depositary will distribute any property received by it to the record holders of the respective series of
Depositary Shares in proportion to the number of Depositary Shares of such series held by each holder,
unless it determines that the distribution cannot be made proportionally among those holders or that it is
not feasible to make a distribution. In that event, the depositary may, with our approval, adopt a method
of distribution that it deems practicable, including the sale of the property and distribution of the net
proceeds from the sale to the holders of the relevant series of Depositary Shares.
Record dates for the payment of dividends and other matters relating to the Depositary Shares will be the
same as the corresponding record dates for the Preferred Stock.
Subject to any obligation to pay additional amounts as described in “Description of the Preferred Stock—
Dividends—Payment of Additional Amounts,” the amount paid as dividends or otherwise distributable by
the depositary with respect to the Depositary Shares or the underlying shares of Preferred Stock will be
reduced by any amounts required to be withheld by us or the depositary on account of taxes or other
governmental charges. The depositary may refuse to make any payment or distribution, or any transfer,
exchange or withdrawal of any Depositary Shares or the shares of Preferred Stock until such taxes or
other governmental charges are paid.
Withdrawal of Shares of Preferred Stock
Unless the related Depositary Shares have been previously called for redemption, a holder of Depositary
Shares may surrender his or her depositary receipts at the corporate trust office of the depositary, pay any
taxes, charges and fees provided for in the applicable Deposit Agreement and comply with any other
requirements of the applicable Deposit Agreement for the number of whole shares of Preferred Stock and
any money or other property represented by such holder’s depositary receipts. A holder of Depositary
Shares who exchanges such depositary receipts for shares of Preferred Stock will be entitled to receive
whole shares of Preferred Stock on the basis set forth herein; partial shares of Preferred Stock will not be
issued.
However, holders of whole shares of Preferred Stock will not be entitled to deposit those shares under the
respective Deposit Agreement or to receive Depositary Shares for those shares after the withdrawal. If the
Depositary Shares surrendered by the holder in connection with the withdrawal exceed the number of
Depositary Shares that represent the number of whole shares of Preferred Stock to be withdrawn, the
depositary will deliver to the holder at the same time new Depositary Shares evidencing the excess
number of Depositary Shares.
Redemption of Depositary Shares
If the shares of Preferred Stock underlying the Depositary Shares are redeemed, in whole or in part, a
corresponding number of the applicable series of Depositary Shares will be redeemed with the proceeds
received by the depositary from the redemption of the related shares of Preferred Stock held by the
depositary. The redemption price per Depositary Share will be equal to 1/1,000th of the applicable per
share redemption price payable in respect of such shares of Preferred Stock.
Whenever we redeem shares of Preferred Stock of any series held by the depositary, the depositary will
redeem, as of the same redemption date, the number of Depositary Shares representing an interest in the
shares of Preferred Stock of such series so redeemed. If less than all of the outstanding Depositary Shares
of a particular series are to be redeemed, the depositary will select the Depositary Shares of that series to
be redeemed by lot or pro rata or in such other manner as may be determined by the depositary to be fair
and equitable and provided that such methodology is consistent with any applicable stock exchange rules.
The depositary will mail (or otherwise transmit by an authorized method) notice of redemption to holders
of the depositary receipts not less than 30 days (with respect to Series A Depositary Shares) and 15 days
(with respect to Series B Depositary Shares, Series C Depositary Shares, Series D Depositary Shares, and
Series E Depositary Shares) and not more than 60 days prior to the date fixed for redemption of the
Depositary Shares representing an interest in shares of Preferred Stock.
Voting Rights
Holders of the Depositary Shares representing an interest in shares of Preferred Stock will not have any
voting rights, except for the limited voting rights described under “Description of the Preferred Stock—
Voting Rights.”
Because each Depositary Share represents a 1/1,000th interest in a share of Preferred Stock, holders of
depositary receipts will be entitled to 1/1,000th of a vote per share of Preferred Stock under those limited
circumstances in which holders of shares of Preferred Stock are entitled to vote. Holders of the
Depositary Shares must act through the depositary to exercise any voting rights in respect of the Preferred
Stock. Although each Depositary Share is entitled to 1/1,000th of a vote, the depositary can vote only
whole shares of Preferred Stock. While the depositary will aggregate the fractional voting interests of
individual holders of depository receipts to vote the maximum number of whole shares of Preferred Stock
in accordance with the instructions it receives, any remaining votes of holders of Depositary Shares not
representing a whole share of Preferred Stock will not be voted.
When the depositary receives notice of any meeting at which the holders of Preferred Stock are entitled to
vote, the depositary will mail (or otherwise transmit by an authorized method) the information contained
in the notice of meeting to the record holders of the Depositary Shares relating to the applicable shares of
Preferred Stock. Each record holder of the Depositary Shares on the record date, which will be the same
date as the record date for the Preferred Stock, may instruct the depositary to vote the number of Preferred
Stock votes represented by the holder’s Depositary Shares. To the extent practicable, the depositary will
vote the number of Preferred Stock votes represented by Depositary Shares in accordance with the
instructions it receives.
We will agree to take all reasonable actions that the depositary determines are necessary to enable the
depositary to vote as instructed. To the extent that the depositary does not receive specific instructions
from the holders of any Depositary Shares representing an interest in the applicable shares of Preferred
Stock, it will not vote the number of the Preferred Stock votes represented by such Depositary Shares.
Preemptive and Conversion Rights
The holders of the Depositary Shares will not have any preemptive right to subscribe to any additional
issue of our shares of any class or series or to any of our securities convertible into such shares and will
not have the right to convert Depositary Shares representing an interest in Preferred Stock into, or
exchange Depositary Shares representing an interest in Preferred Stock for, any of our other securities or
property.
Amendment and Termination of the Deposit Agreement
The forms of depositary receipt evidencing the Depositary Shares and any provision of the Deposit
Agreements may be amended by agreement between us and the depositary. However, any amendment
that materially and adversely alters the rights of the existing holders of Depositary Shares or would be
materially and adversely inconsistent with the rights of holders of Preferred Stock will not be effective
unless such amendment has been approved by the record holders of Depositary Shares representing at
least the amount of the Depositary Shares then outstanding necessary to approve any amendment that
would alter or abrogate the special rights of the applicable series of Preferred Stock. We may terminate a
Deposit Agreement with the consent of holders of a majority of then outstanding Depositary Shares of the
applicable series. A Deposit Agreement will automatically terminate if all outstanding Depositary Shares
of the applicable series have been redeemed or if there has been made a final distribution in respect of the
applicable series of Preferred Stock in connection with our liquidation, dissolution or winding-up, and
such distribution has been made to the holders of the Depositary Shares of the applicable series.
Fees, Charges and Expenses of Depositary
We will pay all transfer and other taxes, assessments, and governmental charges arising solely from the
existence of the depositary arrangements. Holders of depositary receipts will pay transfer and other taxes,
assessments, and governmental charges and any other charges as are expressly provided in the applicable
Deposit Agreement to be for their accounts. The depositary may refuse to effect any transfer of a
depositary receipt or any withdrawals of shares of Preferred Stock evidenced by a depositary receipt until
all taxes, assessments, and governmental charges with respect to the depositary receipt or shares of
Preferred Stock are paid by their holders.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its election to do so, and we may at
any time remove the depositary, with any resignation or removal to take effect upon the appointment of a
successor depositary and its acceptance of such appointment. The successor depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company
having its principal office in the United States and having a combined capital and surplus of at least $50
million. If a successor is not appointed within 60 days, the outgoing depositary may petition a court to
appoint a successor.
Miscellaneous
The depositary will forward to the holders of Depositary Shares all of our reports and communications
which are delivered to the depositary and which we are required to furnish to the holders of Preferred
Stock.
Neither we nor the depositary will be liable if we are prevented or delayed by law or any circumstance
beyond our control in performing our obligations under the applicable Deposit Agreement. All of our
obligations as well as the depositary’s obligations under the respective Deposit Agreement are limited to
performance in good faith of our respective duties set forth in the applicable Deposit Agreement, and
neither of us will be obligated to prosecute or defend any legal proceeding relating to any Depositary
Shares or Preferred Stock unless provided with satisfactory indemnity. We, and the depositary, may rely
upon written advice of counsel or accountants, or information provided by persons presenting shares of
Preferred Stock for deposit, holders of Depositary Shares, or other persons believed to be competent and
on documents believed to be genuine.
Listing of the Depositary Shares
Our Series A Depositary Shares are listed on the NYSE under the symbol “ATHPrA.”
Our Series B Depositary Shares are listed on the NYSE under the symbol “ATHPrB.”
Our Series C Depositary Shares are listed on the NYSE under the symbol “ATHPrC.”
Our Series D Depositary Shares are listed on the NYSE under the symbol “ATHPrD.”
Our Series E Depositary Shares are listed on the NYSE under the symbol “ATHPrE.”
Transfer Agent, Registrar, Dividend Disbursing Agent and Redemption Agent
Computershare Trust Company, N.A. is the transfer agent and registrar and Computershare Inc. is the
dividend disbursing agent and redemption agent for the Depositary Shares representing an interest in the
Preferred Stock.
Book-Entry; Delivery and Form
The Depositary Shares will be represented by one or more global securities that will be deposited with
and registered in the name of DTC or its nominee. This means that we will not issue certificates to holders
of the Depositary Shares except in limited circumstances. The global securities will be issued to DTC, the
depository for the Depositary Shares, who will keep a computerized record of its participants (for
example, a holder’s broker) whose clients have purchased the Depositary Shares. Each participant will
then keep a record of its clients. Unless exchanged in whole or in part for a certificated security, a global
security may not be transferred. However, DTC, its nominees, and their successors may transfer a global
security as a whole to one another. Beneficial interests in the global securities will be shown on, and
transfers of the global securities will be made only through, records maintained by DTC and its
participants.
We will wire dividend payments to DTC’s nominee and we will treat DTC’s nominee as the owner of the
global securities for all purposes. Accordingly, we will have no direct responsibility or liability to pay
amounts due on the global securities to any holder or any other beneficial owners in the global securities.
Any redemption notices will be sent by us directly to DTC, who will in turn inform the direct participants,
who will then contact beneficial holders.
It is DTC’s current practice, upon receipt of any payment of dividends or liquidation amount, to credit
direct participants’ accounts on the payment date based on their holdings of beneficial interests in the
global securities as shown on DTC’s records. In addition, it is DTC’s current practice to assign any
consenting or voting rights to direct participants whose accounts are credited with shares of Preferred
Stock on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial
interests in the global securities, and voting by participants, will be based on the customary practices
between the participants and owners of beneficial interests, as is the case with the shares of Preferred
Stock held for the account of customers registered in “street name.” However, payments will be the
responsibility of the participants and not of DTC or us.
Depositary Shares represented by global securities will be exchangeable for certificated securities with the
same terms in authorized denominations only if:
•
DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency
registered under applicable law and a successor depositary is not appointed by us within 90 days;
or
•
we determine not to require all of the Depositary Shares to be represented by global securities.
If the book-entry-only system is discontinued, the transfer agent will keep the registration books for the
Depositary Shares at its corporate office.
Description of the Preferred Stock
The following description of our Preferred Stock is a summary and does not purport to be complete. It is
subject to and qualified in its entirety by reference to the pertinent sections of our certificate of
incorporation and the certificates of designations creating the respective series of Preferred Stock (the
“Certificates of Designations”), each of which is incorporated by reference as an exhibit to the Annual
Report on Form 10-K of which this Exhibit 4.8 is a part, and to relevant sections of the DGCL.
General
The Certificates of Designations set forth the specific rights, preferences, limitations and other terms of
the Preferred Stock. Each series of Preferred Stock constitutes a series of our authorized preferred stock.
There is no issued class or series of share capital that ranks senior to the Preferred Stock, and each series
of Preferred Stock ranks equally with the other with respect to the payment of dividends and the
distribution of assets on any liquidation, dissolution or winding-up of the Company. See “—Ranking”
below.
We will generally be able to pay dividends and distributions upon liquidation, dissolution or winding-up
only out of lawfully available funds for such payment (i.e., after taking account of all indebtedness and
other non-equity claims). The shares of Preferred Stock are fully paid and nonassessable. Holders of the
Preferred Stock do not have preemptive or subscription rights to acquire more of our capital stock.
The shares of Preferred Stock are not convertible into, or exchangeable for, shares of any other class or
series of shares or other securities of ours, except under the circumstances set forth under “—Substitution
or Variation” below. The Preferred Stock has no stated maturity and will not be subject to any sinking
fund, retirement fund or purchase fund or other obligation of the Company to redeem, repurchase or retire
the Preferred Stock.
The depositary is the sole holder of Preferred Stock. The holders of Depositary Shares are required to
exercise their proportional rights in the Preferred Stock through the depositary, as described in
“Description of the Depositary Shares.”
Ranking
Each series of Preferred Stock:
•
will rank senior to our junior stock (as defined below);
•
will rank junior to our senior stock (as defined below) and any existing and future indebtedness of
the Company and any of our subsidiaries;
•
will rank equally with our parity stock (as defined below), including the other series of Preferred
Stock;
•
will not represent an interest in any of our subsidiaries; and
•
will be structurally subordinated in right of payment to all obligations of our subsidiaries.
As used herein, “junior stock” means any class or series of stock that ranks junior to the Preferred Stock
either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or
winding-up of the Company. As of January 31, 2025, our junior stock outstanding consisted solely of our
common stock.
As used herein, “senior stock” means any class or series of stock that ranks senior to the Preferred Stock
either as to the payment of dividends or as to the distribution of assets upon any liquidation, dissolution or
winding-up of the Company. As of January 31, 2025, we had no senior stock outstanding.
As used herein, “parity stock” means any class or series of stock that ranks equally with the Preferred
Stock as to the payment of dividends and the distribution of assets on any liquidation, dissolution or
winding-up of the Company. As of January 31, 2025, the five series of Preferred Stock were our only
parity stock outstanding.
Unless our stockholders otherwise provide, our board of directors may from time to time create and issue
additional classes and series of preferred stock and fix their relative rights, preferences and limitations.
Any such preferred stock could be senior stock or parity stock.
Dividends
Dividends on the Preferred Stock are non-cumulative. Consequently, if our board of directors or a duly
authorized committee of our board of directors does not authorize and declare a dividend for any dividend
period, holders of the Preferred Stock will not be entitled to receive a dividend for such period, and such
undeclared dividend will not accumulate and will not be payable. We will have no obligation to pay
dividends for a dividend period after the dividend payment date for such period if our board of directors
or a duly authorized committee of our board of directors has not declared such dividend before the related
dividend payment date, whether or not dividends are declared for any subsequent dividend period with
respect to the Preferred Stock.
Holders of Preferred Stock will be entitled to receive non-cumulative cash dividends, only when, as and if
declared by our board of directors or a duly authorized committee of our board of directors, out of funds
legally available for the payment of dividends, from and including the original issue date, quarterly in
arrears on the 30th day of March, June, September and December of each year.
To the extent declared, to but excluding June 30, 2029, which we refer to as the “fixed rate period,”
dividends on our Series A Preferred Stock will be payable in an amount per share equal to 6.35% of the
liquidation preference per annum (equivalent to $1,587.50 per share of Series A Preferred Stock and
$1.5875 per Series A Depositary Share per annum). Commencing on June 30, 2029, which is the
commencement date of the “floating rate period,” dividends on our Series A Preferred Stock will be
payable on a non-cumulative basis, when, as and if declared by our board of directors or a duly authorized
committee of the board of directors out of funds legally available for the payment of dividends in an
amount per share equal to a floating annual rate, reset quarterly, of a reference rate (the “Alternative
Rate”) selected by a central bank, reserve bank, monetary authority or any similar institution (including
any committee or working group thereof) that is consistent with accepted market practice, including any
such adjustments to such rate or the spread thereon, as well as the business day convention, determination
dates and related provisions and definitions, in each case that are consistent with accepted market practice
for the use of such rate for debt obligations or preferred stock obligations such as the Series A Preferred
Stock.
To the extent declared, dividends on our Series B Preferred Stock will be payable in an amount per share
equal to 5.625% of the liquidation preference per annum (equivalent to $1,406.25 per share of Series B
Preferred Stock and $1.40625 per Series B Depositary Share per annum).
To the extent declared, to but excluding September 30, 2025 (the “Series C First Reset Date”), dividends
on our Series C Preferred Stock will be payable on a non-cumulative basis, with respect to each dividend
period, in an amount per share equal to 6.375% of the liquidation preference per annum (equivalent to
$1,593.75 per share of Series C Preferred Stock and $1.59375 per Series C Depositary Share per annum).
Commencing on the Series C First Reset Date, dividends on the Series C Preferred Stock will be payable,
on a non-cumulative basis, with respect to each dividend period, only when, as and if declared by our
board of directors or a duly authorized committee thereof, during each reset period (as described below),
at a rate per annum equal to the Five-year U.S. Treasury Rate as of the most recent reset dividend
determination date (as described below) plus 5.97% of the liquidation preference per annum. A “reset
date” means the applicable First Reset Date and each date falling on the fifth anniversary of the preceding
reset date. Reset dates, including the applicable First Reset Date, will not be adjusted for business days. A
“reset period” means the period from, and including, the applicable First Reset Date to, but excluding, the
next following reset date and thereafter each period from, and including, each reset date to, but excluding,
the next following reset date. A “reset dividend determination date” means, in respect of any reset period,
the day falling three business days prior to the beginning of such reset period. The “Five-year U.S.
Treasury Rate” means, as of any reset dividend determination date, as applicable, (i) an interest rate
(expressed as a decimal) determined to be the per annum rate equal to the average of the yields to
maturity for the five business days immediately prior to such reset dividend determination date for U.S.
Treasury securities with a maturity of five years from the next reset date and trading in the public
securities markets or (ii) if there is no such published U.S. Treasury security with a maturity of five years
from the next reset date and trading in the public securities markets, then the rate will be determined by
interpolation between the average of the yields to maturity for the five business days immediately prior to
such reset dividend determination date for two series of U.S. Treasury securities trading in the public
securities market, (A) one maturing as close as possible to, but earlier than, the reset date following the
next succeeding reset dividend determination date, and (B) the other maturity as close as possible to, but
later than, the reset date following the next succeeding reset dividend determination date, in each case as
published in the most recent H.15 under the caption “Treasury constant maturities.” The Five-year U.S.
Treasury Rate will be determined by the calculation agent on the applicable reset dividend determination
date. If the Five-year U.S. Treasury Rate cannot be determined pursuant to the methods described in
clauses (i) or (ii) above, then the Five-year U.S. Treasury Rate will be the same interest rate determined
for the prior reset dividend determination date. “H.15” means the statistical release designated as “H.15
Daily Update,” or any successor publication, published by the Board of Governors of the U.S. Federal
Reserve System, and “most recent H.15” means the H.15 published closest in time, but at or prior, to the
close of business on the reset dividend determination date. With respect to Series C Preferred Stock,
“calculation agent” means the calculation agent appointed by us prior to the First Reset Date, which may
be a person or entity affiliated with us.
To the extent declared, dividends on our Series D Preferred Stock will be payable in an amount per share
equal to 4.875% of the liquidation preference per annum (equivalent to $1,218.75 per share of Series D
Preferred Stock and $1.21875 per Series D Depositary Share per annum).
To the extent declared, to but excluding December 30, 2027 (“Series E First Reset Date”), dividends on
our Series E Preferred Stock will be payable on a non-cumulative basis, with respect to each dividend
period, in an amount per share equal to 7.750% of the liquidation preference per annum (equivalent to
$1,937.50 per share of Series E Preferred Stock and $1.93750 per Series E Depositary Share per annum).
Commencing on the Series E First Reset Date, to the extent declared, dividends will be payable on a non-
cumulative basis, with respect to each dividend period during each reset period, at a rate per annum equal
to the Five-year U.S. Treasury Rate as of the most recent dividend determination date plus 3.962% of the
liquidation preference per annum. Each of the applicable defined terms for the Series E Preferred Stock is
analogous to that which is specified above for the Series C Preferred Stock.
Dividends, if so declared, will be payable to holders of record of the Preferred Stock as they appear on
our books and records at 5:00 p.m. (New York City time) on the applicable record date, which shall be the
15th calendar day before that dividend payment date or such other record date fixed by our board of
directors (or a duly authorized committee of the board of directors) that is not more than 60 nor less than
10 days prior to such dividend payment date (each, a “dividend record date”). These dividend record dates
will apply regardless of whether a particular dividend record date is a business day. As used in
“Description of the Preferred Stock,” “business day” means a day that is a Monday, Tuesday,
Wednesday, Thursday or Friday and is not a day on which banking institutions in New York City
generally are authorized or obligated by law or executive order to close.
A dividend period is the period from and including a dividend payment date to, but excluding, the next
dividend payment date. During the fixed rate period with respect to the Series A Preferred Stock and at all
times with respect to the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock, and the Series E Preferred Stock, if any dividend payment date falls on a day that is not a business
day, the payment of dividends will be made on the first business day following such dividend payment
date, without accrual to the actual payment date.
With respect to Series A Preferred Stock, during the floating rate period, if any dividend payment date
other than a redemption date falls on a day that is not a business day, the dividend payment date will be
postponed to the next business day and, as a result, the corresponding dividend period shall be extended.
If a redemption date falls on a day that is not a business day, the payment of dividends and redemption
price will be made on the first business day following such redemption date, without accrual to the actual
payment date.
During the fixed rate period, with respect to the Series A Preferred Stock, and at all times, with respect to
the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, and the Series E
Preferred Stock, dividends payable will be computed on the basis of a 360-day year consisting of twelve
30-day months with respect to a full dividend period, and on the basis of the actual number of days
elapsed during the period with respect to a dividend period other than a full dividend period.
With respect to the Series A Preferred Stock, during the floating rate period, dividends payable will be
computed by multiplying the dividend rate for that dividend period by a fraction, the numerator of which
will be the actual number of days elapsed during that dividend period (including the first day of the
dividend period and excluding the last day, which is the dividend payment date), and the denominator of
which will be 360, and by multiplying the result by the liquidation preference of the Series A Preferred
Stock.
So long as any shares of a particular series of Preferred Stock remain outstanding, unless the full dividend
for the last completed dividend period on all outstanding shares of such series of Preferred Stock and all
outstanding shares of parity stock have been declared and paid (or declared and a sum sufficient for the
payment thereof has been set aside):
•
no dividend shall be paid or declared on our common stock or any other junior securities or any
parity stock (except, in the case of the parity stock, on a pro rata basis with each other outstanding
series of Preferred Stock as described below), other than a dividend payable solely in our
common stock, other junior securities or (solely in the case of parity stock) other parity stock, as
applicable; and
•
no common stock, other junior securities or parity stock shall be purchased, redeemed or
otherwise acquired for consideration by us, directly or indirectly (other than (i) as a result of a
reclassification of junior stock for or into other junior securities, or a reclassification of parity
stock for or into other parity stock, or the exchange or conversion of one share of junior stock for
or into another junior security or the exchange or conversion of one share of parity stock for or
into another share of parity stock, (ii) through the use of the proceeds of a substantially
contemporaneous sale of junior stock or (solely in the case of parity stock) other parity stock, as
applicable, or (iii) as required by or necessary to fulfill the terms of any employment contract,
benefit plan or similar arrangement with or for the benefit of one or more employees, directors or
consultants).
When dividends are not paid (or declared and a sum sufficient for the payment thereof has been set aside)
in full on any dividend payment date (or, in the case of parity stock having dividend payment dates
different from the dividend payment dates pertaining to the Preferred Stock, on a dividend payment date
falling within the related dividend period for the Preferred Stock) on the Preferred Stock and any parity
stock, all dividends declared by our board of directors or a duly authorized committee of the board of
directors on the Preferred Stock and all such parity stock and payable on such dividend payment date (or,
in the case of parity stock having dividend payment dates different from the dividend payment dates
pertaining to the Preferred Stock, on a dividend payment date falling within the related dividend period
for the Preferred Stock) shall be declared by the board of directors or such committee of the board of
directors pro rata in accordance with the respective aggregate liquidation preferences of the Preferred
Stock and any parity stock so that the respective amounts of such dividends shall bear the same ratio to
each other as all declared but unpaid dividends per share of Preferred Stock and all shares of parity stock
payable on such dividend payment date (or, in the case of parity stock having dividend payment dates
different from the dividend payment dates pertaining to the Preferred Stock, on a dividend payment date
falling within the related dividend period for the Preferred Stock) bear to each other.
Dividends on the Preferred Stock will not be declared, paid or set aside for payment if we fail to comply,
or if such act would cause us to fail to comply, with applicable laws, rules and regulations (including any
applicable capital adequacy guidelines established by the “capital regulator”).
Because we are a holding company and substantially all of our operations are conducted by our main
operating subsidiaries, our ability to meet any ongoing cash requirements and to pay dividends will
depend on our ability to obtain cash dividends or other cash payments or obtain loans from these
subsidiaries.
Determination of Floating Rate
Beginning on June 30, 2029, dividends on the Series A Preferred Stock will be payable on a non-
cumulative basis, only when, as and if declared, at a floating annual rate, which is reset quarterly, equal to
the Alternative Rate.
Payment of Additional Amounts
We will make all payments on the Preferred Stock free and clear of and without withholding or deduction
at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental
charges of whatever nature imposed or levied by or on behalf of any relevant taxing jurisdiction (as
defined under “—Optional Redemption—Change in Tax Law”), unless such taxes, fees, duties,
assessments or governmental charges are required to be withheld or deducted by (i) the laws (or any
regulations or rulings promulgated thereunder) of any relevant taxing jurisdiction or (ii) an official
position regarding the application, administration, interpretation or enforcement of any such laws,
regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a
taxing authority in any relevant taxing jurisdiction). If a withholding or deduction at source is required,
we will, subject to certain limitations and exceptions described below, pay to the holders of the Preferred
Stock such additional amounts (the “additional amounts”) as dividends as may be necessary so that every
net payment, after such withholding or deduction (including any such withholding or deduction from such
additional amounts), will be equal to the amounts we would otherwise have been required to pay had no
such withholding or deduction been required.
We will not be required to pay any additional amounts for or on account of:
(a) any tax, fee, duty, assessment or governmental charge of whatever nature that would not have
been imposed but for the fact that such holder was a resident, domiciliary or national of, or
engaged in business or maintained a permanent establishment or was physically present in, the
relevant taxing jurisdiction or any political subdivision thereof or otherwise had some connection
with the relevant taxing jurisdiction other than by reason of the mere ownership of, or receipt of
payment under, the Preferred Stock or any shares of Preferred Stock presented for payment
(where presentation is required for payment) more than 30 days after the Relevant Date (except to
the extent that the holder would have been entitled to such amounts if it had presented such shares
for payment on any day within such 30 day period). The “Relevant Date” means, in respect of
any payment, the date on which such payment first becomes due and payable, but if the full
amount of the moneys payable has not been received by the dividend disbursing agent on or prior
to such due date, it means the first date on which the full amount of such moneys having been so
received and being available for payment to holders and notice to that effect shall have been duly
given to the holders of the Preferred Stock;
(b) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other
governmental charge or any tax, assessment or other governmental charge that is payable
otherwise than by withholding or deduction from payment of the liquidation preference or of any
dividends on the Preferred Stock;
(c) any tax, fee, duty, assessment or other governmental charge that is imposed or withheld by reason
of the failure by the holder of such Preferred Stock to comply with any reasonable request by us
addressed to the holder within 90 days of such request (i) to provide information concerning the
nationality, residence or identity of the holder or (ii) to make any declaration or other similar
claim or satisfy any information or reporting requirement that is required or imposed by statute,
treaty, regulation or administrative practice of the relevant taxing jurisdiction as a precondition to
exemption from all or part of such tax, fee, duty, assessment or other governmental charge;
(d) any tax, fee, duty, assessment or governmental charge required to be withheld or deducted under
Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (or any Treasury
Regulations or other administrative guidance thereunder); or
(e) any combination of items (a), (b), (c), and (d).
In addition, we will not pay additional amounts with respect to any payment on the Preferred Stock to any
holder that is a fiduciary, partnership, limited liability company or other pass-through entity other than the
sole beneficial owner of such Preferred Stock if such payment would be required by the laws of the
relevant taxing jurisdiction to be included in the income for tax purposes of a beneficiary or partner or
settlor with respect to such fiduciary or a member of such partnership, limited liability company or other
pass-through entity or a beneficial owner to the extent such beneficiary, partner or settlor would not have
been entitled to such additional amounts had it been the holder of the Preferred Stock.
If there is a substantial probability that we or any entity formed by a consolidation, merger or
amalgamation (or similar transaction) involving us or the entity to which we convey, transfer or lease
substantially all of our properties and assets (a “successor company”) would become obligated to pay any
additional amounts as a result of a change in tax law, we will also have the option to redeem the Preferred
Stock as described in “—Optional Redemption—Change in Tax Law.”
Liquidation Rights
Upon any voluntary or involuntary liquidation, dissolution or winding-up of the Company, holders of the
Preferred Stock are entitled to receive out of our assets available for distribution to stockholders, after
satisfaction of liabilities to creditors and senior securities, if any, but before any distribution of assets is
made to holders of our common stock or any other junior securities, a liquidating distribution in the
amount of $25,000 per share of Preferred Stock (equivalent to $25.00 per Depositary Share) plus declared
and unpaid dividends, if any, to the date fixed for distribution.
After payment of the full amount of the distributions to which they are entitled, holders of the Preferred
Stock will have no right or claim to any of our remaining assets. In any such distribution, if our assets are
not sufficient to pay the liquidation preferences in full to all holders of Preferred Stock and to the holders
of any parity stock, the holders of Preferred Stock and all holders of any parity stock will be paid pro rata
in accordance with the respective aggregate liquidation preferences of those holders, but only to the extent
we have assets available after satisfaction of all liabilities to creditors and holders of senior securities. In
any such distribution, the “liquidation preference” of any holder of Preferred Stock means the amount
payable to such holder in such distribution (assuming no limitation on assets available for distribution),
including any declared but unpaid dividends (and any unpaid, accrued cumulative dividends, whether or
not declared, in the case of any holder of shares on which dividends accrue on a cumulative basis). If the
liquidation preference has been paid in full to all holders of the Preferred Stock and any holders of parity
stock, the holders of our junior securities shall be entitled to receive all of our remaining assets according
to their respective rights and preferences.
For purposes of this section, a consolidation, amalgamation, merger, arrangement, reincorporation, de-
registration, reconstruction, reorganization or other similar transaction involving the Company or the sale
or transfer of all or substantially all of our shares, property or business will not be deemed to constitute a
liquidation, dissolution or winding-up.
Mandatory Redemption
The Preferred Stock is not subject to any mandatory redemption, sinking fund, retirement fund, purchase
fund or other similar provisions. Holders of the Preferred Stock will have no right to require the
redemption or repurchase of the Preferred Stock.
Optional Redemption
On or After the Applicable Redemption Commencement Date (as Defined Below)
Except as described below under this “Optional Redemption” section, the Series A Preferred Stock is not
redeemable prior to June 30, 2029, the Series D Preferred Stock is not redeemable prior to December 30,
2025, and the Series E Preferred Stock is not redeemable prior to December 30, 2027 (each date, as the
context requires, the “Applicable Redemption Commencement Date”). On and after the Applicable
Redemption Commencement Date, the respective series of Preferred Stock will be redeemable at our
option, for cash, in whole or from time to time in part, upon not less than 30 days’ (in the case of Series A
Preferred Stock) and 15 days’ (in the case of Series D Preferred Stock and Series E Preferred Stock) nor
more than 60 days’ prior written notice, at a redemption price equal to $25,000 per share of Preferred
Stock (equivalent to $25.00 per Depositary Share), plus declared and unpaid dividends, if any, to, but
excluding, the date of redemption, without interest on such unpaid dividends. Starting September 30,
2024, the Series B Preferred Stock is redeemable at our option, for cash, in whole or from time to time in
part, upon not less than 15 days’ nor more than 60 days’ prior written notice, at a redemption price equal
to $25,000 per share of Preferred Stock (equivalent to $25.00 per Depositary Share), plus declared and
unpaid dividends, if any, to, but excluding, the date of redemption, without interest on such unpaid
dividends.
Par Call Redemption
We may redeem the Series C Preferred Stock at our option, in whole or in part, from time to time, during
any par call period, at a redemption price equal to $25,000 per share of Preferred Stock (equivalent to
$25.00 per Depositary Share), plus the amount of declared and unpaid dividends, if any, without interest
on such unpaid dividends. In the event the applicable reset date that is the redemption date is not a
business day, the redemption price will be paid on the next business day without any adjustment to the
amount of the redemption price paid.
“Par call period” means the period from and including June 30 of each year in which there is a reset date
(which is three months prior to the reset date in such year) to and including such reset date.
Voting Event
Each series of Preferred Stock is redeemable at our option in whole, but not in part, at any time (i) prior to
the Applicable Redemption Commencement Date (in the case of Series A Preferred Stock, Series D
Preferred Stock, and Series E Preferred Stock) or (ii) outside of a par call period (in the case of Series C
Preferred Stock) upon the time of notice to the holders of common stock of a proposal for a merger or
amalgamation or any proposal for any other matter that requires, as a result of any changes in Delaware
law, an affirmative vote of the holders of the Preferred Stock at the time outstanding, whether voting as a
separate series or together with any other series of Preferred Stock as a single class, at a redemption price
of $26,000 per share of Preferred Stock (equivalent to $26.00 per Depositary Share), plus declared and
unpaid dividends, if any, to, but excluding, the date of redemption, without accumulation of any
undeclared dividend, and without interest.
Capital Disqualification Event
The Preferred Stock is redeemable at our option at any time in whole, but not in part, upon not less than
30 days’ (in the case of Series A Preferred Stock) or 15 days’ (in the case of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock) nor more than 60 days’
prior written notice, at a redemption price of $25,000 per share of Preferred Stock (equivalent to $25.00
per Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of
redemption, without interest on such unpaid dividends, at any time within 90 days following the
occurrence of the date on which we have reasonably determined that, as a result of (i) any amendment to,
or change in, the laws or regulations of the jurisdiction of our “capital regulator” that is enacted or
becomes effective after the initial issuance of the Preferred Stock; (ii) any proposed amendment to, or
change in, those laws or regulations that is announced or becomes effective after the initial issuance of the
Preferred Stock; or (iii) any official administrative decision or judicial decision or administrative action or
other official pronouncement interpreting or applying those laws or regulations that is announced after the
initial issuance of the Preferred Stock, a “capital disqualification event” (as defined below) has occurred.
As used herein, “capital adequacy regulations” means the solvency margin, capital adequacy regulations
or any other regulatory capital rules applicable to us from time to time on an individual or group basis
pursuant to the laws of any applicable jurisdiction and which set out the requirements to be satisfied by
financial instruments to qualify as solvency margin or additional solvency margin or regulatory capital (or
any equivalent terminology employed by the then applicable capital adequacy regulations).
As used herein, a “capital disqualification event” has occurred if the Preferred Stock does not qualify as
“Tier 1 Capital” (or a substantially similar concept) for purposes of the capital adequacy rules or
regulatory standards of any “capital regulator” to which we are or will be subject; provided that the
proposal or adoption of any criterion that is substantially the same as the corresponding criterion in the
capital adequacy rules of the Federal Reserve Board applicable to bank holding companies as of the date
of the initial issuance of the Bermuda Series A Preferred Stock (as defined in our certificate of
incorporation) will not constitute a regulatory capital event.
As used herein, “capital regulator” means any governmental agency, instrumentality or standard-setting
organization as may then have group-wide oversight of our regulatory capital.
Change in Tax Law
The Preferred Stock is redeemable at our option at any time, in whole, but not in part, upon not less than
30 days’ (in the case of Series A Preferred Stock) or 15 days’ (in the case of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock) nor more than 60 days’
prior written notice, at a redemption price of $25,000 per share of Preferred Stock (equivalent to $25.00
per Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of
redemption, without interest on such unpaid dividends, if as a result of a change in tax law (as defined
below) there is, in our reasonable determination, a substantial probability that we or any successor
company would be required to pay any additional amounts on the next succeeding dividend payment date
with respect to the Preferred Stock and the payment of those additional amounts cannot be avoided by the
use of any reasonable measures available to us or any successor company (a “tax event”).
A “change in tax law” that would trigger the provisions of the preceding paragraph would be (i) a change
in or amendment to laws, regulations or rulings of any relevant taxing jurisdiction (as defined below), (ii)
a change in the official application or interpretation of those laws, regulations or rulings, (iii) any
execution of or amendment to any treaty affecting taxation to which any relevant taxing jurisdiction is
party or (iv) a decision rendered by a court of competent jurisdiction in any relevant taxing jurisdiction,
whether or not such decision was rendered with respect to us, in each case described in (i)-(iv) above
occurring after the date of issuance of the applicable series of Preferred Stock; provided that in the case of
a relevant taxing jurisdiction other than Bermuda in which a successor company is organized, such
change in tax law must occur after the date on which we consolidate, merge or amalgamate (or engage in
a similar transaction) with the successor company, or convey, transfer or lease substantially all of our
properties and assets to the successor company, as applicable.
As used herein, a “relevant taxing jurisdiction” is (i) Bermuda or any political subdivision or
governmental authority of or in Bermuda with the power to tax, (ii) any jurisdiction from or through
which we or our dividend disbursing agent are making payments on the Preferred Stock or any political
subdivision or governmental authority of or in that jurisdiction with the power to tax or (iii) any other
jurisdiction in which we or a successor company is organized or generally subject to taxation or any
political subdivision or governmental authority of or in that jurisdiction with the power to tax.
Prior to any redemption upon a tax event, we will be required to deliver to the transfer agent for the
Preferred Stock a certificate signed by one of our officers confirming that a tax event has occurred and is
continuing (as reasonably determined by us).
Rating Agency Event
The Preferred Stock is redeemable at our option at any time, in whole, but not in part, upon not less than
30 days’ (in the case of Series A Preferred Stock) or 15 days’ (in the case of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock) nor more than 60 days’
prior written notice, at a redemption price of $25,500 per share of Preferred Stock (equivalent to $25.50
per Depositary Share) plus declared and unpaid dividends, if any, to, but excluding, the date of
redemption, without interest on such unpaid dividends, within 90 days after the occurrence of a rating
agency event (as defined below).
As used herein, a “rating agency event” has occurred if any nationally recognized statistical rating
organization, as defined in Section 3(a)(62) of the Exchange Act, that then publishes a rating for us (a
“rating agency”) amends, clarifies or changes the criteria it uses to assign equity credit to securities such
as the Preferred Stock, which amendment, clarification or change results in:
•
the shortening of the length of time the Preferred Stock is assigned a particular level of equity
credit by that rating agency as compared to the length of time they would have been assigned that
level of equity credit by that rating agency or its predecessor on the initial issuance of the
Preferred Stock; or
•
the lowering of the equity credit (including up to a lesser amount) assigned to the Preferred Stock
by that rating agency as compared to the equity credit assigned by that rating agency or its
predecessor on the initial issuance of the Preferred Stock.
Procedures for Redemption
The redemption price for any shares of Preferred Stock shall be payable on the redemption date to the
holders of such shares against book-entry transfer or surrender of the certificate(s) evidencing such shares
to us or our agent. Any declared but unpaid dividends payable on a redemption date that occurs
subsequent to the dividend record date for a dividend period shall not be paid to the holder entitled to
receive the redemption price on the redemption date, but rather shall be paid to the holder of record of the
redeemed shares on such dividend record date relating to the dividend payment date provided in “—
Dividends” above.
If any shares of Preferred Stock are to be redeemed, the notice of redemption shall be given by first class
mail to the holders of record of the Preferred Stock to be redeemed, mailed not less than 30 days (in the
case of the Series A Preferred Stock) or 15 days (in the case of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock) nor more than 60 days prior to
the date fixed for redemption thereof (provided that, if the Preferred Stock is held in book-entry form
through DTC, we may give such notice in any manner permitted by DTC). Each notice of redemption will
include a statement setting forth:
•
the redemption date;
•
the number of shares of Preferred Stock to be redeemed and, if less than all of the applicable
series of Preferred Stock are to be redeemed, the number of shares of such Preferred Stock to be
redeemed from such holder;
•
the redemption price; and
•
that the shares should be delivered via book-entry transfer or the place or places where holders
may surrender certificates evidencing the shares of Preferred Stock for payment of the redemption
price.
If notice of redemption of any shares of Preferred Stock has been given and if the funds necessary for
such redemption have been set aside by us for the benefit of the holders of any Preferred Stock so called
for redemption, then, from and after the redemption date, no further dividends will be declared on such
shares of Preferred Stock, such shares of Preferred Stock shall no longer be deemed outstanding and all
rights of the holders of such Preferred Stock will terminate, except the right to receive the redemption
price, without interest.
In case of any redemption of only part of a particular series of Preferred Stock at the time outstanding, the
shares of Preferred Stock to be redeemed shall be selected either pro rata or by lot.
In addition, if the Preferred Stock is treated as “Tier 1 capital” (or a substantially similar concept) under
the capital guidelines of a “capital regulator,” any redemption of the Preferred Stock may be subject to
our receipt of any required prior approval from the “capital regulator” and to the satisfaction of any
conditions to our redemption of the shares of Preferred Stock set forth in those capital guidelines or any
other applicable regulations of the “capital regulator.”
Substitution or Variation
At any time following a tax event or at any time following a capital disqualification event, we may,
without the consent of any holders of the applicable series of Preferred Stock, vary the terms of such
series of Preferred Stock such that they remain securities, or exchange such Preferred Stock with new
securities, which (i) in the case of a tax event, would eliminate the substantial probability that we or any
successor company would be required to pay any additional amounts with respect to the applicable series
of Preferred Stock as a result of a change in tax law or (ii) in the case of a capital disqualification event,
for purposes of determining the solvency margin, capital adequacy ratios or any other comparable ratios,
regulatory capital resource or level of the Company or any member thereof, where subdivided into tiers,
qualify as “Tier 1 capital” (or a substantially similar concept) under the capital guidelines of our “capital
regulator.” In either case, the terms of the varied securities or new securities considered in the aggregate
cannot be less favorable to holders than the terms of the applicable series of Preferred Stock prior to being
varied or exchanged; provided that no such variation of terms or securities received in exchange shall
change the specified denominations of, dividend payable on, the redemption dates (other than any
extension of the period during which an optional redemption may not be exercised by us) or currency of,
the applicable series of Preferred Stock, reduce the liquidation preference thereof, lower the ranking in
right of payment with respect to the payment of dividends or the distribution of assets upon liquidation,
dissolution or winding-up of the applicable series of Preferred Stock, or change the foregoing list of items
that may not be so amended as part of such substitution or variation. Further, no such variation of terms or
securities received in exchange shall impair the right of a holder of the securities to institute suit for the
payment of any amounts due (as provided under the Certificates of Designations), but unpaid with respect
to such holder’s securities.
Prior to any substitution or variation, we will be required to receive an opinion of independent legal
advisers of recognized standing to the effect that holders and beneficial owners (including holders and
beneficial owners of Depositary Shares) of the applicable series of Preferred Stock (including as holders
and beneficial owners of the varied or exchanged securities) will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such substitution or variation and will be subject to U.S.
federal income tax on the same amounts, in the same manner and at the same times as would have been
the case had such substitution or variation not occurred.
Any substitution or variation of the Preferred Stock described above will be made after notice is given to
the holders of the applicable series of Preferred Stock not less than 30 days (in the case of the Series A
Preferred Stock) or 15 days (in the case of Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, and Series E Preferred Stock) nor more than 60 days prior to the date fixed for
substitution or variation, as applicable.
Voting Rights
Except as provided below or as otherwise from time to time required by law, the holders of the Preferred
Stock will have no voting rights.
Whenever dividends in respect of any series of Preferred Stock shall have not been declared and paid for
the equivalent of six or more dividend periods, whether or not for consecutive dividend periods (a
“nonpayment event”), the holders of such series of Preferred Stock, voting together as a single class with
holders of any and all other series of voting preferred stock (as defined below) then outstanding, will be
entitled to vote for the election of a total of two additional members of the board of directors of the
Company (the “preferred stock directors”), provided that the election of any such directors shall not cause
us to violate the corporate governance requirements of the SEC or the NYSE (or any other exchange on
which our securities may be listed or quoted) that listed or quoted companies must have a majority of
independent directors. In such case, we will use our best efforts to increase the number of directors
constituting the board of directors to the extent necessary to effectuate such right and, if necessary, to
amend our certificate of incorporation. Each preferred stock director will be added to an already existing
class of directors.
As used herein, “voting preferred stock” means any other class or series of our preferred stock ranking
equally with the applicable Preferred Stock as to dividends and the distribution of assets upon liquidation,
dissolution or winding-up of the Company and upon which like voting rights have been conferred and are
exercisable, which, as of January 31, 2025 consisted solely of the other classes of Preferred Stock.
If and when dividends for at least four consecutive dividend periods following a nonpayment event have
been paid in full (or declared and a sum sufficient for such payment shall have been set aside), the holders
of the applicable series of Preferred Stock shall be divested of the foregoing voting rights (subject to
revesting in the event of each subsequent nonpayment event) and, if such voting rights for all other
holders of voting preferred stock have terminated, the term of office of each preferred stock director so
elected shall terminate and any individuals then serving as a preferred stock director shall automatically
cease to be qualified as, and shall thereupon cease to be, a preferred stock director, and the number of
directors on the board of directors of the Company shall automatically decrease by two. In determining
whether dividends have been paid for four consecutive dividend periods following a nonpayment event,
we may take account of any dividend we elect to pay for such a dividend period after the regular dividend
payment date for that period has passed.
Any preferred stock director may be removed at any time without cause by the holders of record of a
majority of the aggregate voting power, as determined under our certificate of incorporation, of the
applicable series of Preferred Stock and any other shares of voting preferred stock then outstanding
(voting together as a single class) when they have the voting rights described above. So long as a
nonpayment event shall continue, any vacancy in the office of a preferred stock director (other than prior
to the initial election after a nonpayment event) may be filled by the written consent of the preferred stock
director remaining in office, or if none remain in office, by a vote of the holders of record of a majority of
the outstanding applicable series of Preferred Stock and any other shares of voting preferred stock then
outstanding (voting together as a single class) when they have the voting rights described above. Any vote
of holders of voting preferred stock to remove, or to fill a vacancy in the office of, a preferred stock
director may be taken only at a special meeting of such holders, called as provided above for an initial
election of preferred stock director after a nonpayment event (unless such request is received less than 90
days before the date fixed for the next annual or special meeting of the stockholders of the Company, in
which event such election shall be held at such next annual or special meeting of stockholders). The
preferred stock directors shall each be entitled to one vote per director on any matter. Each preferred stock
director elected at any special meeting of stockholders or by written consent of the other preferred stock
director shall hold office until the next annual meeting of the stockholders of the Company until their
successors, if any, are elected by such holders and qualified, if such office shall not have previously
terminated as above provided, subject to such preferred stock director’s earlier death, disqualification,
removal or resignation. Holders of the Depositary Shares must act through the depositary to exercise any
voting rights in respect of the Preferred Stock.
All or any of the special rights of the applicable series of Preferred Stock may be altered or abrogated
with the consent in writing of the holders of not less than three-quarters of the issued shares of Preferred
Stock of that series or with the sanction of a special resolution approved by at least a majority of the votes
cast by the holders of such series of Preferred Stock at a separate meeting. At any meeting of stockholders
held to vote on the approval of any alteration or abrogation in accordance with the immediately preceding
sentence, the presence in person or by proxy of the holders of a majority in voting power of the
outstanding shares of Preferred Stock shall constitute a quorum for the purpose of voting on such
proposal.
On any item on which the holders of the applicable series of Preferred Stock are entitled to vote, such
holders will be entitled to one vote for each shares of Preferred Stock of that series held.
Without the consent of the holders of the applicable series of Preferred Stock, so long as such action does
not materially and adversely affect the special rights, preferences, privileges and voting powers of such
Preferred Stock, taken as a whole, our board of directors may, by resolution, amend, alter, supplement or
repeal any terms of a particular series of Preferred Stock:
•
to cure any ambiguity, or to cure, correct or supplement any provision contained in the Certificate
of Designations for the applicable series of Preferred Stock that may be defective or inconsistent;
or
•
to make any provision with respect to matters or questions arising with respect to the applicable
series of Preferred Stock that is not inconsistent with the provisions of the Certificate of
Designations;
provided that any such amendment, alteration, supplement or repeal of any terms of such Preferred Stock
effected in order to conform the terms thereof to the description of the terms of such Preferred Stock set
forth under “Description of Series A Preference Shares,” “Description of Series B Preference Shares,”
“Description of the Series C Preference Shares,” “Description of the Series D Preference Shares,” or
“Description of the Series E Preference Shares” in the applicable prospectus supplement distributed in
connection with the offering of the respective Preferred Stock shall be deemed not to materially and
adversely affect the special rights, preferences, privileges and voting powers of the respective shares of
Preferred Stock, taken as a whole.
The foregoing voting provisions will not apply with respect to a particular series of Preferred Stock if, at
or prior to the time when the act with respect to which such vote would otherwise be required shall be
effected, all outstanding shares of Preferred Stock of such series shall have been redeemed or called for
redemption upon proper notice and sufficient funds shall have been set aside by us for the benefit of the
holders of such series of Preferred Stock to effect such redemption.
Conversion
The shares of Preferred Stock are not convertible into or exchangeable for any other securities or property
of the Company, except under the circumstances set forth under “—Substitution or Variation” above.
Listing of the Preferred Stock
We do not intend to list the Preferred Stock on any exchange or expect that there will be any separate
public trading market for the Preferred Stock except as represented by the Depositary Shares, which
Depositary Shares are listed on the NYSE under the symbols “ATHPrA” (with respect to the Series A
Depositary Shares), “ATHPrB” (with respect to the Series B Depositary Shares), “ATHPrC” (with respect
to the Series C Depositary Shares), “ATHPrD” (with respect to the Series D Depositary Shares), and
“ATHPrE” (with respect to the Series E Depositary Shares).
Description of the 2064 Debentures
The following description of our 2064 Debentures is a summary and does not purport to be complete. It is
subject to and qualified in its entirety by reference to the terms and provisions of the Indenture, dated
March 7, 2024 (the “Base Indenture”), between us and U.S. Bank Trust Company, National Association,
as trustee, as supplemented by the First Supplemental Indenture, dated March 7, 2024 (the Base
Indenture, as supplemented by the First Supplemental Indenture, the “Indenture”), which are
incorporated by reference as exhibits to the Annual Report on Form 10-K of which this Exhibit 4.8 is a
part.
General
The 2064 Debentures were initially issued in $575 million aggregate principal amount. The amount
outstanding of the 2064 Debentures as of the end of our most recent fiscal year is reflected in the Notes to
Consolidated Financial Statements in our Annual Report on Form 10-K of which this Exhibit 4.8 is a part.
We may, without notice to or consent of the holders of the 2064 Debentures, re-open and issue additional
debentures having the same ranking, interest rate, maturity date and other terms as the 2064 Debentures,
except for the price to the public and issue date and, in some cases, the first interest payment date and
interest accrual date. Any additional debentures, together with the 2064 Debentures, will constitute a
single series of debt securities under the Indenture; provided that if the additional debentures are not
fungible for U.S. federal income tax purposes with the 2064 Debentures, the additional debentures will
have a separate CUSIP number. No additional debentures of the same series as the 2064 Debentures may
be issued if an event of default under the Indenture has occurred and is continuing with respect to
outstanding 2064 Debentures.
The 2064 Debentures have a maturity date of March 30, 2064.
The Indenture does not require the maintenance of any financial ratios or specified levels of net worth or
liquidity. The Indenture does not contain provisions that would afford holders of 2064 Debentures
protection in the event of a decline in our credit quality resulting from any highly leveraged transaction,
reorganization, merger or similar transaction involving us that may adversely affect such holders.
The 2064 Debentures do not have a sinking fund.
Interest Rates
The 2064 Debentures bear interest from the date issued until their maturity date or earlier acceleration or
redemption, payable on each interest payment date.
For the 2064 Debentures, interest accrues as follows:
•
from and including March 7, 2024 to, but excluding, March 30, 2029 (the “First Reset Date”) at
the fixed rate of 7.250% per annum; and
•
from, and including, the First Reset Date, during each Reset Period, at a rate per annum equal to
the Five-Year U.S. Treasury Rate as of the most recent Reset Interest Determination Date plus
2.986% to be reset on each Reset Date.
Interest on the 2064 Debentures is payable quarterly in arrears on March 30, June 30, September 30 and
December 30 of each year, beginning on June 30, 2024, each of which we refer to as an interest payment
date, to the record holders of the 2064 Debentures at the close of business on the immediately preceding
March 15, June 15, September 15 or December 15, as the case may be (whether or not a business day).
However, interest that we pay on the maturity date or a redemption date will be payable to the person to
whom the principal will be payable.
Interest payments will include accrued interest from, and including March 7, 2024, or, if interest has
already been paid, from the last date in respect of which interest has been paid or duly provided for to, but
excluding, the next succeeding interest payment date, the maturity date or the redemption date, as the case
may be. The amount of interest payable for any interest payment period will be computed on the basis of
a 360-day year consisting of twelve 30-day months. If any date on which interest is payable on the 2064
Debentures is not a business day, then payment of the interest payable on such date will be made on the
next succeeding day that is a business day (and without any interest or other payment in respect of any
such delay).
For purposes of this “Description of the 2064 Debentures”:
“Business day” means any day other than a day on which banking institutions in the State of New York or
any place of payment are authorized or required by law, executive order or regulation to close.
“Calculation agent” means, with respect to the 2064 Debentures, at any time, the person or entity
appointed by us and serving as the calculation agent with respect to the 2064 Debentures at such time.
Unless we have validly redeemed all outstanding 2064 Debentures on or before the First Reset Date, we
will appoint a calculation agent with respect to the 2064 Debentures prior to the Reset Interest
Determination Date preceding the First Reset Date. We may terminate any such appointment as long as it
appoints a successor agent at the time of termination.
“Five-Year Treasury Rate” means, as of any Reset Interest Determination Date, as applicable, (1) the
yield, under the heading “Treasury Constant Maturities” which represents the average for the immediately
preceding week, appearing in the most recently published H.15, with a maturity of five years from the
next Reset Date and trading in the public securities market or (2) if there is no such published U.S.
Treasury security with a maturity of five years from the next Reset Date and trading in the public
securities markets, the rate will be determined by the calculation agent by interpolation or extrapolation
on a straight line basis between the most recent weekly average yield to maturity for two series of U.S.
Treasury securities trading in the public securities market, (A) one maturing as close as possible to, but
earlier than, the Reset Date following the next succeeding Reset Interest Determination Date, and (B) the
other maturity as close as possible to, but later than, the Reset Date following the next succeeding Reset
Interest Determination Date, in each case as published in the most recently published H.15. If the Five-
Year U.S. Treasury Rate cannot be determined pursuant to the methods described in clauses (1) or (2)
above, then the Five-Year U.S. Treasury Rate will be the same interest rate as in effect for the prior
period.
“H.15” means the weekly statistical release designated as such, or any successor publication, published by
the Board of Governors of the United States Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities.”
“Reset Date” means the First Reset Date and each date falling on the fifth anniversary of the preceding
Reset Date.
“Reset Interest Determination Date” means, in respect of any Reset Period, the day falling two business
days prior to the beginning of such Reset Period.
“Reset Period” means the period from and including the First Reset Date to, but excluding, the next
following Reset Date and thereafter each period from and including each Reset Date to, but excluding, the
next following Reset Date or March 30, 2064, as the case may be.
Option to Defer Interest Payments
So long as no event of default with respect to the 2064 Debentures has occurred and is continuing, we
may, in our sole discretion, defer interest payments on the 2064 Debentures for one or more interest
periods (each, an “optional deferral period”) of up to five consecutive years each without giving rise to an
event of default under the terms of the 2064 Debentures. A deferral of interest payments cannot extend,
however, beyond the maturity date or the earlier acceleration or redemption of the 2064 Debentures.
During an optional deferral period, interest will continue to accrue at the then-applicable interest rate on
the 2064 Debentures, and deferred interest payments will accrue additional interest at the then-applicable
interest rate on the 2064 Debentures, compounded quarterly as of each interest payment date to the extent
permitted by applicable law. No interest otherwise due during an optional deferral period will be due and
payable on the 2064 Debentures until the end of such optional deferral period except upon an acceleration
or redemption of the 2064 Debentures during such optional deferral period.
At the end of five years following the commencement of an optional deferral period, we must pay all
accrued and unpaid deferred interest, including compounded interest, and our failure to pay all accrued
and unpaid deferred interest (including compounded interest, if any) for a period of 30 days after the
conclusion of such five-year period will result in an event of default giving rise to a right of acceleration.
If, at the end of any optional deferral period, we have paid all deferred interest due on the 2064
Debentures, including compounded interest, we can again defer interest payments on the 2064 Debentures
as described above.
We will provide to the trustee and holders of the 2064 Debentures written notice of any deferral of
interest at least one and not more than 60 business days prior to the applicable interest payment date
(subject to the applicable procedures of DTC), provided that the failure to provide such notice will not
constitute an event of default. In addition, whether or not such notice is given, our failure to pay interest
on the 2064 Debentures on any interest payment date will itself constitute the commencement of an
optional deferral period unless we pay such interest within five business days after such interest payment
date, whether or not we provide a notice of deferral.
Certain Limitations During an Optional Deferral Period
After the commencement of an optional deferral period in connection with the 2064 Debentures, until we
have paid all accrued and unpaid interest on the 2064 Debentures, we will not, and will not permit any of
our subsidiaries to:
•
declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of our capital stock (which includes common and
preferred stock) other than:
(i)
purchases, redemptions or other acquisitions of our capital stock in connection with any
employment contract, benefit plan or other similar arrangement with or for the benefit
of employees, officers, agents, directors or consultants or under any dividend
reinvestment plan or shareholder purchase plan;
(ii)
purchases of our capital stock pursuant to a contractually binding requirement to buy or
acquire capital stock entered into prior to the beginning of the related optional deferral
period, including under a contractually binding stock repurchase plan;
(iii)
as a result of any reclassification of any class or series of our capital stock, or the
exchange, redemption or conversion of any class or series of our capital stock for any
class or series of our capital stock;
(iv)
the purchase of or payment of cash in lieu of fractional interests in our capital stock in
accordance with the conversion or exchange provisions of such capital stock or the
security being converted or exchanged;
(v)
acquisitions of our capital stock in connection with acquisitions of businesses made by
us (which acquisitions are made by us in connection with the satisfaction of
indemnification obligations of the sellers of such businesses);
(vi)
dividends or distributions payable solely in our capital stock, or options, warrants or
rights to subscribe for or acquire capital stock, or repurchases or redemptions of capital
stock made solely from the issuance or exchange of such capital stock or stock that
ranks equally with or junior to such capital stock; or
(vii) the distribution, declaration, redemption or repurchase of rights in accordance with any
stockholders’ rights plan or the issuance of rights, stock or other property under any
shareholder rights plan, or the redemption or purchase of rights pursuant thereto;
•
make any payment of principal of or interest or premium, if any, on or repay, repurchase or
redeem any of our debt securities or guarantees that rank equal in right of payment with the 2064
Debentures (“parity securities”) or indebtedness ranking junior to the 2064 Debentures other than
(i) any exchange, redemption or conversion of our indebtedness for any class or series of our
capital stock, and (ii) any payment of principal on parity securities necessary to avoid a breach of
the instrument governing such Parity Securities or payment, repurchase or redemption in respect
of parity securities made ratably and in proportion to the respective amount of (1) accrued and
unpaid amounts on such parity securities, on the one hand, and (2) accrued and unpaid amounts
on the 2064 Debentures, on the other hand.
For the avoidance of doubt, no terms of the 2064 Debentures will restrict in any manner the ability of any
of our subsidiaries to pay dividends or make any distributions to us or to any of our other subsidiaries.
Ranking
The payment of the principal of, and interest on, the 2064 Debentures will be expressly subordinated, to
the extent and in the manner set forth in the Indenture, to the prior payment in full of all of our senior
indebtedness.
Subject to the qualifications described below, the term “senior indebtedness” is defined in the Indenture to
include principal of, premium, if any, and interest on, and any other payment due pursuant to any of the
following, whether incurred prior to, on or after the date of the applicable prospectus supplement:
•
all of our obligations for money borrowed (other than obligations pursuant to the Base Indenture,
including the 2064 Debentures and the 6.625% fixed-rate reset junior subordinated debentures
due 2054 (the “2054 Debentures”));
•
all of our obligations evidenced by notes, debentures, bonds or other similar instruments (other
than obligations pursuant to the Base Indenture, including the 2064 Debentures and the 2054
Debentures), including obligations incurred in connection with the acquisition of property, assets
or businesses and including all other debt securities issued by us to any trust or a trustee of such
trust, or to a partnership or other affiliate that acts as a financing vehicle for us, in connection
with the issuance of securities by such vehicles;
•
all of our obligations under leases required or permitted to be capitalized under generally
accepted accounting principles;
•
all of our reimbursement obligations with respect to letters of credit, bankers’ acceptances or
similar facilities issued for our account;
•
all of our obligations issued or assumed as the deferred purchase price of property or services,
including all obligations under master lease transactions pursuant to which we or any of our
subsidiaries have agreed to be treated as owner of the subject property for federal income tax
purposes (including trade accounts payable or accrued liabilities arising in the ordinary course of
business);
•
all of our payment obligations under interest rate swap or similar agreements or foreign currency
hedge, exchange or similar agreements at the time of determination, including any such
obligations we incurred solely to act as a hedge against increases in interest rates that may occur
under the terms of other outstanding variable or floating rate indebtedness of ours;
•
all obligations of the types referred to in the preceding bullet points of another person and all
dividends of another person the payment of which, in either case, we have assumed or guaranteed
or for which we are responsible or liable, directly or indirectly, jointly or severally, as obligor,
guarantor or otherwise;
•
all compensation, reimbursement and indemnification obligations of ours to the trustee pursuant
to the Indenture; and
•
all amendments, modifications, renewals, extensions, refinancings, replacements and refundings
of any of the above types of indebtedness.
The 2064 Debentures will rank senior to all of our equity securities, which include common stock and
preferred stock.
The senior indebtedness will continue to be senior indebtedness and entitled to the benefits of the
subordination provisions of the Indenture irrespective of any amendment, modification or waiver of any
term of the senior indebtedness or extension or renewal of the senior indebtedness. Notwithstanding
anything to the contrary in the foregoing, senior indebtedness will not include (1) any indebtedness that
by its terms expressly provides that it is subordinated, or not senior in right of payment, to the 2064
Debentures, (2) any indebtedness that by its terms expressly provides that it will rank equal in right of
payment with the 2064 Debentures, or (3) our obligations owed to our subsidiaries, subject, in any case,
to the provisions described under “—Certain Limitations During an Optional Deferral Period.”
All liabilities of our subsidiaries, including their trade accounts payable and other liabilities arising in the
ordinary course of business (including interest sensitive contract liabilities, future policy benefits, market
risk benefits and other payables), are effectively senior to the 2064 Debentures to the extent of the assets
of such subsidiaries, as we are a holding company. Because we are a holding company, we rely primarily
on dividends and other payments from our direct and indirect subsidiaries, which are generally regulated
insurance companies, to pay interest and principal on our outstanding debt obligations. Regulatory rules
may restrict our ability to withdraw capital from our subsidiaries by dividends, loans or other means.
No direct or indirect payment, in cash, property or securities, by set-off or otherwise, may be made or
agreed to be made on account of the 2064 Debentures or interest thereon, or in respect of any repayment,
redemption, retirement, purchase or other acquisition of the 2064 Debentures, if:
•
we default in the payment of any principal, premium (if any) or interest on any senior
indebtedness, whether at maturity or at a date fixed for prepayment or declaration or otherwise; or
•
an event of default occurs with respect to any senior indebtedness permitting the holders thereof
to accelerate the maturity and written notice of such event of default, requesting that payments on
the 2064 Debentures cease, is given to us by the holders of senior indebtedness,
until such default in payment or event of default has been cured, is waived or ceases to exist.
All present and future senior indebtedness, which includes, without limitation, interest accruing after the
commencement of any proceeding, assignment or marshaling of assets described below, will first be fully
paid before any payment, whether in cash, securities or other property, will be made by us on account of
the 2064 Debentures in the event of:
•
any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment, composition
or other similar proceeding relating to us, our creditors or our property;
•
any proceeding for the liquidation, dissolution or other winding-up of us, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings;
•
any assignment by us for the benefit of creditors; or
•
any other marshaling of our assets.
In any such event, payments which would otherwise be made on the 2064 Debentures will generally be
paid to the holders of senior indebtedness, or their representatives, in accordance with the priorities
existing among these creditors at that time until the senior indebtedness is fully paid. If payments on the
2064 Debentures are in the form of our securities or those of any other corporation under a plan of
reorganization or readjustment and such payments are subordinated to outstanding senior indebtedness
and to any securities issued with respect thereto under a plan of reorganization or readjustment, such
payments will be made to the holders of senior indebtedness and then, if any amounts remain, to the
holders of the 2064 Debentures before we make any payment or other distribution on account of any of
our capital stock or obligations ranking junior to the 2064 Debentures. No present or future holder of any
senior indebtedness will be prejudiced in the right to enforce the subordination of the 2064 Debentures by
any act or failure to act on our part.
If, notwithstanding any of the foregoing prohibitions, the trustee or the holders of the 2064 Debentures
receive any payment with respect to the 2064 Debentures when a responsible officer of the trustee or such
holder has actual knowledge that such payment should not have been made to it, the trustee or such holder
will hold such payment in trust for the benefit of, and, upon written request by us or the trustee or other
representative for such senior indebtedness, will pay it over to, the holders of the senior indebtedness or
their agents or representatives, for application to the payment of all principal, premium, if any, and
interest then payable with respect to any senior indebtedness.
Senior indebtedness will only be deemed to have been paid in full if the holders of such indebtedness
have received cash, securities or other property which is equal to the amount of the outstanding senior
indebtedness.
After full payment of all present and future senior indebtedness, holders of the 2064 Debentures will be
subrogated to the rights of any holders of senior indebtedness to receive any further payments that are
applicable to the senior indebtedness until all the 2064 Debentures are fully paid. In matters between
holders of the 2064 Debentures and any other creditor of ours, any payments that would otherwise be paid
to holders of senior indebtedness and are made to holders of the 2064 Debentures because of this
subrogation will be deemed a payment by us on account of senior indebtedness and not on account of the
2064 Debentures.
If such events of bankruptcy, insolvency or reorganization occur, after we have paid in full all amounts
owed on senior indebtedness, the holders of 2064 Debentures together with the holders of any of our other
obligations that rank equally with the 2064 Debentures will be entitled to receive from our remaining
assets any principal, premium or interest due at that time on the 2064 Debentures and such other
obligations before we make any payment or other distribution on account of any of our capital stock or
obligations ranking junior to the 2064 Debentures.
If we violate the Indenture by making a payment or distribution to holders of the 2064 Debentures before
we have paid all the senior indebtedness in full, then such holders of the 2064 Debentures will have to pay
or transfer the payments or distributions to the trustee in bankruptcy, receiver, liquidating trustee or other
person distributing our assets for payment of the senior indebtedness.
Because of the subordination provisions of the Indenture, if we become insolvent, holders of senior
indebtedness may receive more, ratably, and holders of the 2064 Debentures having a claim pursuant to
those securities may receive less, ratably, than our other creditors. This type of subordination will not
prevent an event of default from occurring under the Indenture in connection with the 2064 Debentures.
The 2064 Debentures do not limit our or our subsidiaries’ ability to incur additional debt, including
secured debt and debt that ranks senior to the 2064 Debentures. We expect from time to time to incur
additional indebtedness constituting senior indebtedness. In addition, the holders of our senior
indebtedness may, under certain circumstances, restrict or prohibit us from making payments on the 2064
Debentures.
The amount of our short- and long-term debt outstanding as of the end of our most recent fiscal year is
reflected in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K of which
this Exhibit 4.8 is a part, including the amount of any outstanding senior notes, which rank senior in right
of payment to the 2064 Debentures.
Optional Redemption
Redemption on or Following the First Reset Date
We may redeem the 2064 Debentures at our option, in whole or in part, from time to time, on the First
Reset Date or anytime thereafter, at a redemption price equal to the principal amount of the 2064
Debentures being redeemed plus any accrued and unpaid interest thereon (including compounded interest,
if any) to, but excluding, the date of redemption; provided that if the 2064 Debentures are not redeemed in
whole, at least $25 million aggregate principal amount of the 2064 Debentures must remain outstanding
after giving effect to such redemption.
Redemption Following a Tax Event
Prior to the First Reset Date, the 2064 Debentures are redeemable at our option at any time, in whole, but
not in part, at a redemption price equal to the principal amount plus any accrued and unpaid interest
thereon (including compounded interest, if any) to, but excluding, the date of redemption, within 90 days
of the occurrence of a Tax Event.
For purposes of this “Description of the 2064 Debentures”:
“Tax Event” means the receipt by us of an opinion of counsel, rendered by a law firm of nationally
recognized standing that is experienced in such matters, stating that, as a result of any: (i) amendment to,
or change in (including any promulgation, enactment, execution or modification of) the laws (or any
regulations under those laws) of the United States or any political subdivision thereof or therein affecting
taxation; (ii) official administrative pronouncement (including a private letter ruling, technical advice
memorandum or similar pronouncement) or judicial decision or administrative action or other official
pronouncement interpreting or applying the laws or regulations enumerated in clause (i), by any court,
governmental agency or regulatory authority; or (iii) threatened challenge asserted in writing in
connection with an audit of us or any of our subsidiaries, or a threatened challenge asserted in writing
against any taxpayer that has raised capital through the issuance of securities that are substantially similar
to the 2064 Debentures, in each case, which amendment or change is enacted and effective or which
pronouncement or decision is announced or which challenge is asserted or becomes publicly known on or
after March 7, 2024, there is more than an insubstantial increase in the risk that interest accruable or
payable by us on the 2064 Debentures is not, or will not be, deductible by us, in whole or in part, for U.S.
federal income tax purposes.
Redemption Following a Regulatory Capital Event
Prior to the First Reset Date, the 2064 Debentures are redeemable at our option at any time in whole, but
not in part, at a redemption price equal to the principal amount plus any accrued and unpaid interest
thereon (including compounded interest, if any) to, but excluding, the date of redemption, at any time
within 90 days following the occurrence of the date on which we have reasonably determined that, as a
result of (i) any amendment to, or change in, the laws or regulations of the jurisdiction of our “capital
regulator” that is enacted or becomes effective on or after March 7, 2024; (ii) any proposed amendment
to, or change in, those laws or regulations that is announced or becomes effective on or after March 7,
2024; or (iii) any official administrative decision or judicial decision or administrative action or other
official pronouncement interpreting or applying those laws or regulations that is announced on or after
March 7, 2024, a Regulatory Capital Event has occurred.
For purposes of this “Description of the 2064 Debentures”:
“Capital regulator” means any governmental agency, instrumentality or standard-setting organization as
may then have group-wide oversight of our regulatory capital.
“Regulatory Capital Event” means that we become subject to capital adequacy supervision by a Capital
Regulator and the capital adequacy guidelines that apply to us as a result of being so subject set forth
criteria pursuant to which the full principal amount of the 2064 Debentures would not qualify as capital
under such capital adequacy guidelines, as we may determine at any time, in our sole discretion.
Redemption Following a Rating Agency Event
Prior to the First Reset Date, the 2064 Debentures are redeemable at our option at any time, in whole, but
not in part, at a redemption price equal to 102% of the principal amount plus any accrued and unpaid
interest thereon (including compounded interest, if any) to, but excluding, the date of redemption, within
90 days after the occurrence of a Rating Agency Event.
For purposes of this “Description of the 2064 Debentures”:
“Rating Agency Event” means an amendment, clarification or change by any Rating Agency of the criteria
it uses to assign equity credit to securities such as the 2064 Debentures, which amendment, clarification
or change results in (i) the shortening of the length of time the 2064 Debentures are assigned a particular
level of equity credit by that Rating Agency as compared to the length of time they would have been
assigned that level of equity credit by that Rating Agency or its predecessor on the March 7, 2024 or (ii)
the lowering of the equity credit (including up to a lesser amount) assigned to the 2064 Debentures by that
Rating Agency as compared to the equity credit assigned by that Rating Agency or its predecessor on the
March 7, 2024.
Redemption Procedures
If we give a notice of redemption in respect of any of the 2064 Debentures, then prior to the redemption
date, we will:
•
irrevocably deposit with the trustee or a paying agent for the 2064 Debentures funds sufficient to
pay the applicable redemption price of, and (except if the redemption date is an interest payment
date) accrued interest on, the 2064 Debentures to be redeemed; and
•
give the trustee or such paying agent, as applicable, irrevocable instructions and authority to pay
the redemption price to the holders upon surrender of the global certificate (subject to the
applicable procedures of DTC) or such other certificates as we may have issued evidencing the
2064 Debentures.
Once notice of redemption has been given and funds deposited as required, then upon the date of the
deposit, all rights of the holders of the 2064 Debentures so called for redemption will cease, except the
right of the holders of the 2064 Debentures to receive the redemption price and any interest payable in
respect of the 2064 Debentures on or prior to the redemption date and the 2064 Debentures will cease to
be outstanding. In the event that payment of the redemption price in respect of 2064 Debentures called for
redemption is improperly withheld or refused and not paid by us, interest on the 2064 Debentures will
continue to accrue at the then-applicable interest rate from the redemption date originally established by
us for the 2064 Debentures to the date the redemption price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, U.S. federal securities law), we or our
subsidiaries or affiliates may at any time and from time to time purchase outstanding 2064 Debentures by
tender, in the open market or by private agreement.
If less than all of the 2064 Debentures are to be redeemed, the particular 2064 Debentures to be redeemed
will be selected not more than 60 days prior to the redemption date by the trustee, from the outstanding
2064 Debentures not previously called for redemption, pro rata or by lots or by such other method as the
trustee in its sole discretion deems fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any 2064 Debentures, provided that, so long as the
2064 Debentures are in the form of global certificates, such selection shall be made by DTC in
accordance with its applicable procedures, and provided further that the portion of the principal amount of
any 2064 Debenture selected for redemption shall be in an authorized denomination (which shall not be
less than the minimum authorized denomination) for such 2064 Debenture. The trustee will promptly
notify us in writing of the 2064 Debentures selected for redemption and, in the case of any 2064
Debentures selected for partial redemption, the principal amount thereof to be redeemed.
We may not redeem the 2064 Debentures in part if the principal amount has been accelerated and such
acceleration has not been rescinded or unless all accrued and unpaid interest, including deferred interest
(and compounded interest thereon), has been paid in full on all outstanding 2064 Debentures for all
interest payment dates occurring on or before the redemption date.
Notice of any redemption will be mailed at least 15 days but not more than 60 days before the redemption
date to each holder of 2064 Debentures to be redeemed at its registered address, or sent electronically in
the case of global certificates, with a copy to the trustee. Unless we default in payment of the redemption
price on the 2064 Debentures, on and after the redemption date, interest will cease to accrue on the 2064
Debentures or portions called for redemption.
Denominations
The 2064 Debentures were issued in denominations of $25 each and integral multiples of $25 in excess
thereof. The 2064 Debentures are held in book-entry form only and are held in the name of DTC or its
nominee.
Events of Default, Notice and Waiver
The Indenture provides that any one or more of the following events with respect to the 2064 Debentures
that has occurred and is continuing constitutes an event of default:
•
the failure to pay interest in full or in part, including compounded interest, on any 2064
Debenture for a period of 30 days after such interest was due (taking into account our ability to
defer interest payments on the 2064 Debentures for one or more optional deferral periods of up to
five consecutive years each) or on the maturity date;
•
the failure to pay principal of or premium, if any, on any 2064 Debenture on the maturity date or
upon redemption; or
•
certain events of our bankruptcy, insolvency or reorganization.
If an event of default under the Indenture shall occur and be continuing, the trustee or the holders of at
least 25% in aggregate principal amount of the 2064 Debentures may declare, by notice as provided in the
Indenture, the principal amount of the 2064 Debentures to be due and payable immediately; provided that,
in the case of an event of default involving certain events in bankruptcy, insolvency or reorganization,
acceleration is automatic; and, provided further, that after such acceleration, but before a judgment or
decree based on acceleration, the holders of a majority in aggregate principal amount of the 2064
Debentures may, under certain circumstances, rescind and annul such acceleration if all events of default,
other than the nonpayment of accelerated principal, have been cured or waived.
The trustee is required, within 60 days after the occurrence of a default (which is actually known to the
trustee and is continuing), with respect to the 2064 Debentures (without regard to any grace period or
notice requirements), to give to the holders of the 2064 Debentures notice of such default; provided,
however, that, except in the case of a default in the payment of the principal of (and premium, if any) or
interest on the 2064 Debentures, the trustee shall be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interests of the holders of the 2064
Debentures.
The Trustee may require indemnification by the holders of the 2064 Debentures with respect to which a
default has occurred before proceeding to exercise any right or power under the Indenture at the request
of the holders of the 2064 Debentures. Subject to such right of indemnification and to certain other
limitations, the holders of a majority in aggregate principal amount of the outstanding 2064 Debentures
under the Indenture may direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the trustee.
No holder of 2064 Debentures may institute any action against us under the Indenture (except actions for
payment of overdue principal of (and premium, if any) or interest on such 2064 Debenture) unless (i) the
holder has given to the trustee written notice of an event of default and of the continuance thereof with
respect to the 2064 Debentures specifying an event of default, as required under the Indenture, (ii) the
holders of at least 25% in aggregate principal amount of the 2064 Debentures then outstanding under the
Indenture shall have requested the trustee to institute such action and offered to the trustee reasonable
indemnity as it may require against the costs, expenses and liabilities to be incurred in compliance with
such request, and (iii) the trustee shall not have instituted such action within 60 days of such request.
We are required to promptly notify the trustee of the occurrence of any default under the Indenture and
are further required to furnish statements to the trustee as to our compliance with all conditions and
covenants under the Indenture and our knowledge of any default or event of default within 120 days of
our fiscal year end.
Defeasance, Satisfaction and Discharge
With respect to the 2064 Debentures, we may discharge or defease our obligations (except for certain
surviving provisions) under the Indenture as set forth below.
We may discharge certain obligations to holders of 2064 Debentures which have not already been
delivered to the trustee for cancellation and which have either become due and payable or are by their
terms due and payable within one year (or scheduled for redemption within one year) by irrevocably
depositing with the trustee cash or U.S. government obligations, or a combination thereof, as trust funds
in an amount certified to be sufficient to pay when due, whether at maturity, upon redemption or
otherwise, the principal of (and premium, if any) and interest on the 2064 Debentures.
We may elect either (i) to defease and be discharged from any and all obligations with respect to the 2064
Debentures (except as otherwise provided in the Indenture) (“defeasance”) or (ii) to be released from our
obligations with respect to certain covenants applicable to the 2064 Debentures of or within any series
(“covenant defeasance”), upon the deposit with the trustee, in trust for such purpose, of money and/or
U.S. government obligations which, through the payment of principal and interest in accordance with
their terms, will provide money in an amount sufficient, without reinvestment, to pay the principal of (and
premium, if any) or interest on the 2064 Debentures to maturity or redemption, as the case may be. As a
condition to defeasance or covenant defeasance, we must deliver to the trustee an opinion of counsel to
the effect that the holders and beneficial owners of the 2064 Debentures will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of such defeasance or covenant defeasance and
will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such defeasance or covenant defeasance had not occurred. Such
opinion of counsel, in the case of defeasance under clause (i) above, must refer to and be based upon a
ruling of the Internal Revenue Service or a change in applicable U.S. federal income tax law occurring
after March 7, 2024. In addition, in the case of either defeasance or covenant defeasance, we will have
delivered to the trustee (i) an officers’ certificate to the effect that the NYSE or any other relevant debt
securities exchange(s) have informed us that the 2064 Debentures, if then listed on any securities
exchange, will be delisted as a result of such deposit, and (ii) an officers’ certificate and an opinion of
counsel, each stating that all conditions precedent with respect to such defeasance or covenant defeasance
have been complied with.
We may exercise our defeasance option with respect to such debt securities notwithstanding our prior
exercise of our covenant defeasance option.
Voting Rights
The 2064 Debentures are not entitled to voting rights, subject to nay required consents in connection with
a modification or amendment of the indenture, as described below.
Modification of Indentures and 2064 Debentures
Under the Indenture, we and the trustee may supplement the Indenture for certain purposes which would
not materially adversely affect the interests or rights of the holders of 2064 Debentures without the
consent of those holders. We and the trustee may also modify the Indenture or any supplemental
indenture in a manner that affects the interests or rights of the holders of 2064 Debentures with the
consent of the holders of at least a majority in aggregate principal amount of the 2064 Debentures.
However, the Indenture requires the consent of each holder of 2064 Debentures that would be affected by
any modification which would:
•
change the stated maturity of the 2064 Debentures, or reduce the principal amount thereof, or
reduce the rate or change the time of payment of interest thereon, or reduce any premium payable
upon the redemption thereof;
•
change the currency in which the 2064 Debentures or any premium or interest is payable;
•
impair the right of any holder to enforce any payment on or with respect to the 2064 Debentures;
•
adversely change the right of any holder exercisable upon the repurchase of the 2064 Debentures;
•
reduce the percentage in principal amount of outstanding 2064 Debentures, the consent of whose
holders is required for modification or amendment of the Indenture or for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults;
•
reduce the requirements contained in the Indenture for quorum or voting;
•
make any change in the terms of the subordination of the 2064 Debentures in a manner adverse in
any material respect to the holders of any series of outstanding securities under the Indenture; or
•
modify any of the above provisions.
The Indenture permits the holders of at least a majority in aggregate principal amount of the series of
2064 Debentures which is affected by the modification or amendment to waive our compliance with
certain covenants contained in the Indenture.
Listing
The 2064 Debentures are traded on the NYSE under the symbol “ATHS.”
About the Trustee
U.S. Bank Trust Company, National Association is the Indenture trustee and also the paying agent and the
transfer agent and registrar for the 2064 Debentures. We have entered, and from time to time may
continue to enter, into banking or other relationships with U.S. Bank Trust Company, National
Association or its affiliates.
November 19, 2024
Venerable Insurance and Annuity Company
699 Walnut Street, Suite 1350
Des Moines, Iowa 50309
Attention: General Counsel
Email: legal@venerableannuity.com
To Whom it May Concern:
Re: Amendment of AADE-VIAC Reinsurance Agreement (FA Business)
Reference is made to that certain Reinsurance Agreement, effective as of June 1, 2018, by and
between Voya Insurance and Annuity Company (now known as Venerable Insurance and
Annuity Company) and Athene Annuity & Life Assurance Company (now known as Athene
Annuity and Life Company, “AAIA”) (as amended, modified or supplemented from time to
time, the “Agreement”). Capitalized terms not defined herein shall have the meaning set forth in
the Agreement.
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated December 18, 2023,
Athene Annuity & Life Assurance Company merged with and into Athene Annuity and Life
Company, effective October 11, 2024 (the “Merger”).
WHEREAS, in connection with the Merger, AAIA desires to amend the Agreement, effective as
of October 11, 2024, as follows:
1. SAP. Section 1.01 of the Agreement is hereby amended by replacing the definition of
Delaware SAP in its entirety with the following: ““SAP” shall mean the statutory
accounting principles and practices prescribed or permitted for Iowa life insurance
companies by the Iowa Insurance Division.” References to “Delaware SAP” in the
Agreement shall be replaced with “SAP”.
2. Department of Insurance. All references to the Delaware Department of Insurance
shall be replaced with references to the Iowa Insurance Division.
3. Iowa. All references to the State of Delaware shall be replaced with references to the
State of Iowa.
If these terms and conditions are acceptable to you, please execute and return to me.
Execution Version
Sincerely,
ATHENE
ANNUITY
AND
LIFE
COMPANY
BY:
/s/ Michael Downing
NAME: Michael Downing
TITLE: President & Chief Operating Officer
ACCEPTED AND AGREED:
VENERABLE
INSURANCE
AND
ANNUITY COMPANY
BY:
/s/ Lee Barnard
NAME: Lee Barnard
TITLE: Vice President
Signature Page to Amendment
November 19, 2024
Venerable Insurance and Annuity Company
699 Walnut Street, Suite 1350
Des Moines, Iowa 50309
Attention: General Counsel
Email: legal@venerableannuity.com
To Whom it May Concern:
Re: Amendment of AADE-VIAC Modified Coinsurance Agreement (Separate Account
FA Business)
Reference is made to that certain Modified Coinsurance Agreement, effective as of June 1, 2018,
by and between Voya Insurance and Annuity Company (now known as Venerable Insurance and
Annuity Company) and Athene Annuity & Life Assurance Company (now known as Athene
Annuity and Life Company, “AAIA”) (as amended, modified or supplemented from time to
time, the “Agreement”). Capitalized terms not defined herein shall have the meaning set forth in
the Agreement.
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated December 18, 2023,
Athene Annuity & Life Assurance Company merged with and into Athene Annuity and Life
Company, effective October 11, 2024 (the “Merger”).
WHEREAS, in connection with the Merger, AAIA desires to amend the Agreement, effective as
of October 11, 2024, as follows:
1. SAP. Section 1.01 of the Agreement is hereby amended by replacing the definition of
Delaware SAP in its entirety with the following: ““SAP” shall mean the statutory
accounting principles and practices prescribed or permitted for Iowa life insurance
companies by the Iowa Insurance Division.” References to “Delaware SAP” in the
Agreement shall be replaced with “SAP”.
2. Department of Insurance. All references to the Delaware Department of Insurance
shall be replaced with references to the Iowa Insurance Division.
3. Iowa. All references to the State of Delaware shall be replaced with references to the
State of Iowa.
If these terms and conditions are acceptable to you, please execute and return to me.
Execution Version
Sincerely,
ATHENE
ANNUITY
AND
LIFE
COMPANY
BY:
/s/ Michael Downing
NAME: Michael Downing
TITLE: President & Chief Operating Officer
ACCEPTED AND AGREED:
VENERABLE
INSURANCE
AND
ANNUITY COMPANY
BY:
/s/ Lee Barnard
NAME: Lee Barnard
TITLE: Vice President
Signature Page to Amendment
FIRST AMENDMENT TO
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED SHAREHOLDERS
AGREEMENT (this “Amendment”), effective as of July 1, 2023 (the “First Amendment
Effective Date”), is made by and among Athene Co-Invest Reinsurance Affiliate Holding Ltd.
(“ACRA HoldCo”), Athene Co-Invest Reinsurance Affiliate 1A Ltd., a Bermuda Class C insurer
(“ACRA”), ADIP Holdings (A), L.P., a Cayman Islands limited partnership (“ADIP A”), ADIP
Holdings (B), L.P., a Cayman Islands limited partnership (“ADIP B”), ADIP Holdings (C), L.P.,
a Cayman Islands limited partnership (“ADIP C”), ADIP Holdings (D), L.P., a Cayman Islands
limited partnership (“ADIP D”), ADIP Holdings (E), L.P., a Cayman Islands limited partnership
(“ADIP E”) and ADIP Holdings (Lux), L.P., a Cayman Islands limited partnership (“ADIP Lux”
and, together with ADIP A, ADIP B, ADIP C, ADIP D and ADIP E, the “Co- Investors” and
each, a “Co-Investor”), Athene Life Re Ltd., a reinsurance company organized under the laws of
Bermuda and Athene Asset L.P., a limited partnership organized under the laws of Bermuda
(“AALP”). ACRA HoldCo, ACRA, the Co-Investors, ALRe and AALP are the “Parties” and
each a “Party” to this Amendment.
WITNESSETH:
WHEREAS, the Parties are parties to that certain Amended and Restated Shareholders
Agreement effective as of December 31, 2021 (the “Shareholders Agreement”);
WHEREAS, the Parties desire to amend the Shareholders Agreement as provided herein;
and
WHEREAS, pursuant to Section 4.5 of the Shareholders Agreement, the Shareholders
Agreement may be amended by a written instrument duly executed by the proper officers of each
party to the Shareholders Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein,
the Parties hereby agree as follows:
1.
Definitions. Capitalized terms used but not otherwise defined in this Amendment
shall have the respective meanings ascribed to such terms in the Shareholders Agreement.
2.
Amendment.
(a)
From and after the First Amendment Effective Date, Section 1.1 is hereby
amended and restated to add the following defined term “ACRA 2 Entity”:
““ACRA 2 Entity” has the meaning set forth in the ACRA HoldCo Bye-laws.”
(b)
From and after the First Amendment Effective Date, Section 1.1 is hereby
amended and restated to add the following defined term “ACRA 2 Independent Director”:
Execution Version
““ACRA 2 Independent Director” has the meaning set forth in the ACRA HoldCo
Bye-laws.”
(c)
From and after the First Amendment Effective Date, the definition of “Affiliate”
is hereby amended and restated in its entirety to read as follows:
““Affiliate” means, as to any Person, any Person which directly or indirectly
controls, is controlled by, or is under common control with such Person. For purposes of this
definition, “control” of a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by ownership of voting stock,
by contract or otherwise. For the avoidance of doubt, none of the following groups of Persons
shall be considered “Affiliates” of each other for purposes of this Agreement: (a) Apollo and its
Subsidiaries (including Athene and its Subsidiaries (including the ACRA 2 Entities)) or (b) the
ACRA Investment Entities and their Subsidiaries.”
(d)
From and after the First Amendment Effective Date, the definition of “Athene
Group” is hereby amended and restated in its entirety to read as follows:
““Athene Group” means Athene and its Subsidiaries; provided, that (x) no other
member of the Apollo Group, (y) none of the ACRA Investment Entities or any of their
Subsidiaries or the ACRA 2 Entities (including, for the avoidance of doubt, ACRA HoldCo and
its Subsidiaries) and (z) no Person employed by Athene, the Apollo Group, the ACRA
Investment Entities, the ACRA 2 Entities, ISG or any of their respective Subsidiaries, shall be
deemed to be a member of the Athene Group.”
(e)
From and after the First Amendment Effective Date, the definition of
“Independent Director” is hereby amended and restated in its entirety to read as follows:
““Independent Director” means any Director that does not have (and such
Director’s immediate family members do not have) a material financial or other relationship with
Athene or Apollo (or any of their Affiliates), as determined by the applicable ACRA Board, the
HoldCo Board or a duly authorized committee thereof. Without limiting the foregoing, (a) no
officer or employee of any ACRA Investment Entity or any of their respective Subsidiaries shall
constitute an Independent Director, (b) no officer or employee of (i) any member of the Apollo
Group described in clauses (i) through (v) of the definition of “Apollo Group” or (ii) Apollo or
any of its Subsidiaries (excluding any Subsidiary that constitutes any portfolio company (or
investment) of (A) an investment fund or other investment vehicle whose general partner,
managing member or similar governing person is owned, directly or indirectly, by Apollo or by
one or more of its Subsidiaries or (B) a managed account agreement (or similar arrangement)
whereby Apollo or one or more of its Subsidiaries serves as general partner, managing member
or in a similar governing position) shall constitute an Independent Director and (c) the fact that a
Director serves as an ACRA 2 Independent Director does not disqualify such Director from
being an Independent Director for purposes of this Agreement.”
2
3.
Miscellaneous.
(a)
Full Force and Effect. Except as expressly modified by this Amendment, all of
the terms, covenants, agreements, conditions and other provisions of the Shareholders
Agreement shall remain in full force and effect in accordance with their respective terms and are
hereby ratified or confirmed. This Amendment shall not constitute an amendment or waiver of
any provision of the Shareholders Agreement except as expressly set forth herein. Upon the
execution and delivery hereof, the Shareholders Agreement shall thereupon be deemed to be
amended and supplemented as hereinabove set forth as fully and with the same effect as if the
amendments and supplements made hereby were originally set forth in the Shareholders
Agreement, and this Amendment and the Shareholders Agreement shall henceforth be read,
taken and construed as one and the same instrument, but such amendments and supplements shall
not operate so as to render invalid or improper any action heretofore taken under the
Shareholders Agreement. As used in the Shareholders Agreement, the terms “this Agreement,”
“herein,” “hereinafter,” “hereto,” and words of similar import shall mean and refer to, from and
after the First Amendment Effective Date, unless the context requires otherwise, the
Shareholders Agreement as amended by this Amendment.
(b)
Counterparts. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the parties hereto may
execute this Amendment by signing any such counterpart. Delivery of an electronic copy of an
executed counterpart of a signature page to this Amendment by email or facsimile shall be as
effective as delivery of a manually executed counterpart of this Amendment.
[Remainder of Page Intentionally Left Blank]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the First Amendment Effective Date.
ATHENE CO-INVEST REINSURANCE AFFILIATE HOLDING LTD.
By:
/s/ Bradley Molitor
Name: Bradley Molitor
Title: SVP, Group Actuary
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ATHENE CO-INVEST REINSURANCE AFFILIATE 1A LTD.
By:
/s/ Eric Henderson
Name: Eric Henderson
Title: Chief Risk Officer
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (A), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (B), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (C), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (D), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (E), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ADIP HOLDINGS (LUX), L.P.
By: Apollo ADIP Advisors, L.P., its general partner
By: Apollo ADIP Capital Management, LLC, its general partner
By: APH Holdings, L.P., its sole member
By: Apollo Principal Holdings III GP, Ltd., its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ATHENE LIFE RE LTD.
By:
/s/ Fergus Daly
Name: Fergus Daly
Title: Chief Financial Officer
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
ATHENE ASSET L.P.
By:
Athene Life Re Ltd., its General Partner
By:
/s/ Natasha Scotland Courcy
Name: Natasha Scotland Courcy
Title: Chief Executive Officer
Signature Page to First Amendment to
Amended and Restated Shareholders Agreement
JOINDER AGREEMENT TO SHAREHOLDERS AGREEMENT
This JOINDER AGREEMENT (this “Joinder Agreement”) to the Shareholders Agreement,
dated as of July 1, 2023 (as amended from time to time, the “Shareholders Agreement”), by and among
Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (the “Company”) and the Shareholders, is made
effective as of February 27, 2024 by the undersigned (the “New Shareholder”) in favor and for the benefit
of the existing Parties to the Shareholders Agreement. Any terms used but not otherwise defined herein
have the meaning set forth in the Shareholders Agreement.
WHEREAS, prior to the date hereof, Apollo/Athene Dedicated Investment Program II, L.P.
(“ADIP II LP”) owned shares of the Company representing 0% of the voting rights and 60% of the
economic interests in the Company;
WHEREAS, prior to the date hereof, ADIP II LP formed the New Shareholder as a special
purpose vehicle of ADIP II LP for the purpose of holding 100% of the shares of the Company currently
owned by ADIP II LP and entering into a term loan facility by and among the New Shareholder, as
borrower, ADIP II LP, as guarantor of the New Shareholder, Deutsche Bank AG or its permitted assigns,
as lender and lead arranger, and any other lenders that become party thereto (the “Term Loan”);
WHEREAS, ADIP II LP owns 100% of the limited partner interests in the New Shareholder, and
the general partner of the New Shareholder is Apollo ADIP II Advisors, L.P., which is the same entity
that is the general partner of ADIP II LP;
WHEREAS, concurrently with the execution of this Joinder Agreement, ADIP II LP is
transferring shares representing all of its voting and economic interest in the Company (the “ACRA 2
HoldCo Shares”) to the New Shareholder.
ACCORDINGLY, the New Shareholder hereby acknowledges, agrees and confirms that:
(a)
As of the date hereof, immediately after giving effect to the transfer of the ACRA 2
HoldCo Shares by ADIP II LP to the New Shareholder, the New Shareholder holds that number of ACRA
2 HoldCo Class A-1 Common Shares, ACRA 2 HoldCo Class A-2 Common Shares and ACRA 2 HoldCo
Class A-3 Common Shares as is set forth on Annex I hereto.
(b)
Any notice required to be delivered to the New Shareholder pursuant to Section 4.6 of the
Shareholders Agreement shall be delivered to the New Shareholder at the following address:
ADIP II Holdings, L.P.
c/o Apollo ADIP Advisors II, L.P.
9 W 57th Street
New York, New York 10019
Telephone: (212) 822-0456
Email: jglatt@apollo.com
(c)
The New Shareholder hereby ratifies, as of the date hereof, and agrees to be bound by, all
of the terms, provisions and conditions contained in the Shareholders Agreement. By executing this
Joinder Agreement, the New Shareholder is hereby deemed to be a Party to the Shareholders Agreement,
and the New Shareholder will have all of the rights, and will be bound by all of the obligations of a Class
A Shareholder under the Shareholders Agreement; provided, that the New Shareholder shall not be a “Co-
Investor” under the Shareholders Agreement. Upon execution of this Joinder Agreement, all of the
information contained herein, including the information set forth on Annex I hereto, shall be deemed to
supplement, and to form part of, the Shareholders Agreement.
(d)
The Company, ADIP II LP and the New Shareholder acknowledge and agree that,
notwithstanding the transfer of the ACRA 2 HoldCo Shares by ADIP II LP to the New Shareholder: (i)
ADIP II LP shall continue to be bound by the agreements set forth on Annex II hereto as the indirect
holder of the ACRA 2 HoldCo Shares, and will not be deemed to transfer any of its rights and obligations
under such agreements, other than its direct economic and voting rights in the ACRA 2 HoldCo Shares,
and (ii) any references to ADIP II LP in the agreements set forth on Annex II hereto and in the other
governance and transaction documents of the Company and its subsidiaries (the “ACRA 2 Transaction
Documents”) shall continue to refer to ADIP II LP, other than to the extent the context requires that such
term refer solely to the direct holder of the ACRA 2 HoldCo Shares, in which case such references shall
be read to refer to the New Shareholder.
(e)
For the avoidance of doubt, (i) the delivery of all Call Notices from the Company shall
continue to be made to, and the payment of all Capital Calls shall continue to be paid from, ADIP II LP,
as the indirect holder of the ACRA 2 HoldCo Shares and (ii) all ADIP II LP governance rights contained
in the ACRA 2 Transaction Documents, including, but not limited to, the right to nominate directors to
each ACRA 2 Board pursuant to Section 3.9(a)(iii) of the Shareholders Agreement, the consent right with
respect to a change in the number of Directors on the ACRA 2 Board or any Committee thereof that
would decrease the proportion of ADIP II Nominees as compared to Athene Nominees and the consent
right with respect to the amendment of certain provisions contained in the ACRA 2 Transaction
Documents pursuant to Section 2.3 of the Shareholders Agreement, shall continue to be exercised by
ADIP II LP.
(f)
The New Shareholder shall provide ALRe (and each other Athene Investor) with prompt
written notice of (i) any proposed amendment to the limited partnership agreement of the New
Shareholder, (ii) any side letters or other agreements proposed to be entered into between the New
Shareholder and ADIP II LP or a Limited Partner of ADIP II, including any proposed amendments to
such side letter or other agreements, (iii) any agreements proposed to be entered into in connection with
the Term Loan that would reasonably be expected to have a material impact on any ACRA 2 Investment
Entity and (iv) any other action proposed to be taken by the New Shareholder that would reasonably be
expected to have a material impact on the governance or operations of any ACRA 2 Investment Entity.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement effective as of the date
first written above.
ADIP II HOLDINGS, L.P.
By: Apollo ADIP Advisors II, L.P., its general
partner
By: Apollo ADIP Capital Management II, LLC, its
general partner
By: /s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Acknowledged and agreed:
APOLLO/ATHENE DEDICATED
INVESTMENT PROGRAM II, L.P.
By: Apollo ADIP Advisors II, L.P., its general
partner
By: Apollo ADIP Capital Management II, LLC, its
general partner
By: /s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
ATHENE CO-INVEST REINSURANCE
AFFILIATE HOLDING 2 LTD.
By: /s/ Fergus Daly
Name: Fergus Daly
Title: Chief Financial Officer
FIRST AMENDMENT TO THE
SHAREHOLDERS AGREEMENT
This FIRST AMENDMENT TO THE SHAREHOLDERS AGREEMENT (this
“Amendment”), effective as of May 31, 2024 (the “First Amendment Effective Date”), is made
by and among Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (“ACRA 2 HoldCo”),
Apollo/Athene Dedicated Investment Program II, L.P. (“ADIP II”) and Athene Life Re Ltd.
(“ALRe”), a reinsurance company organized under the laws of Bermuda and, as of the First
Amendment Effective Date, the holder of one hundred percent (100%) of the Class B Common
Shares of ACRA 2 HoldCo. ACRA 2 HoldCo, ADIP II and ALRe are the “Parties” and each a
“Party” to this Amendment.
WITNESSETH:
WHEREAS, the Parties are parties to that certain Shareholders Agreement, effective as of
July 1, 2023 (the “Shareholders Agreement”);
WHEREAS, the Parties desire to amend the Shareholders Agreement as provided herein;
and
WHEREAS, pursuant to Section 4.5 of the Shareholders Agreement, the Shareholders
Agreement may be amended by a written instrument duly executed by the proper officers of (i)
each ACRA 2 Investment Entity and (ii) the holders of the Class B Common Shares, each as
defined therein.
NOW, THEREFORE, in consideration of the covenants and agreements contained herein,
the Parties hereby agree as follows:
1.
Definitions. Capitalized terms used but not otherwise defined in this Amendment
shall have the respective meanings ascribed to such terms in the Shareholders Agreement.
2.
Amendment.
(a)
From and after the First Amendment Effective Date, Section 1.1 is hereby
amended and restated to add the following defined terms:
““[XXXXX] Agreement” has the meaning set forth in Section 2.4.”
“Shareholder Observer” has the meaning set forth in Section 3.13.”
(b)
From and after the First Amendment Effective Date, Section 2.4 is hereby
inserted as follows:
CERTAIN INFORMATION, IDENTIFIED BY AND REPLACED WITH A MARK OF
“[XXXXX],” HAS BEEN EXCLUDED FROM THIS DOCUMENT BECAUSE IT IS BOTH
NOT MATERIAL AND THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR
CONFIDENTIAL.
Execution Version
“2.4 [XXXXX] Agreement Amendments. ACRA 2 HoldCo shall not agree to
any amendment to the calculation of the Class A-1 Fee or the Class A-2 Fee or to the calculation
of the amount of the Class A-1 Loan or the Class A-2 Loan pursuant to the [XXXXX]
Agreement by and between ACRA 2 HoldCo and [XXXXX] (the “[XXXXX] Agreement”) that
would be adverse to ACRA 2 HoldCo unless ACRA 2 HoldCo has received the prior written
consent of [XXXXX]. All terms used but not defined in this Section 2.4 shall have the meaning
set forth in the [XXXXX] Agreement.”
(c)
From and after the First Amendment Effective Date, Section 3.13 is hereby
inserted as follows:
“3.13 Shareholder Observers. The Athene Investor and the Co-Investors
(through the General Partner, as general partner of the Co-Investors) shall at all times be entitled
to designate one or more individuals as non-voting observers of each ACRA 2 Board (the
“Shareholder Observers”). Each Shareholder Observer shall be entitled to attend any meetings of
each ACRA 2 Board. The Shareholder Observers shall be entitled to receive all non-privileged
information and materials that are provided to Directors but shall not be entitled to vote on any
matter; provided that such Shareholder Observers shall agree to keep such information
confidential and use such information solely for the purpose of monitoring the applicable
investment in the ACRA 2 Investment Entities.”
3.
Miscellaneous.
(a)
Full Force and Effect. Except as expressly modified by this Amendment, all of
the terms, covenants, agreements, conditions and other provisions of the Shareholders
Agreement shall remain in full force and effect in accordance with their respective terms and are
hereby ratified or confirmed. This Amendment shall not constitute an amendment or waiver of
any provision of the Shareholders Agreement except as expressly set forth herein. Upon the
execution and delivery hereof, the Shareholders Agreement shall thereupon be deemed to be
amended and supplemented as hereinabove set forth as fully and with the same effect as if the
amendments and supplements made hereby were originally set forth in the Shareholders
Agreement, and this Amendment and the Shareholders Agreement shall henceforth be read,
taken and construed as one and the same instrument, but such amendments and supplements shall
not operate so as to render invalid or improper any action heretofore taken under the
Shareholders Agreement. As used in the Shareholders Agreement, the terms “this Agreement,”
“herein,” “hereinafter,” “hereto,” and words of similar import shall mean and refer to, from and
after the First Amendment Effective Date, unless the context requires otherwise, the
Shareholders Agreement as amended by this Amendment.
(b)
Counterparts. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the parties hereto may
execute this Amendment by signing any such counterpart. Delivery of an electronic copy of an
executed counterpart of a signature page to this Amendment by email or facsimile shall be as
effective as delivery of a manually executed counterpart of this Amendment.
2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the First Amendment Effective Date.
ATHENE CO-INVEST REINSURANCE AFFILIATE HOLDING 2 LTD.
By:
/s/ Fergus Daly
Name: Fergus Daly
Title: Chief Financial Officer
Signature Page to First Amendment to the ACRA 2 HoldCo Shareholders Agreement
ATHENE LIFE RE LTD.
By:
/s/ Natasha Scotland Courcy
Name: Natasha Scotland Courcy
Title: Chief Executive Officer
Signature Page to First Amendment to the ACRA 2 HoldCo Shareholders Agreement
APOLLO/ATHENE DEDICATED INVESTMENT PROGRAM II, L.P.
By:
Apollo ADIP Advisors II, L.P., its general partner
By:
Apollo ADIP Capital Management II, LLC, its general partner
By:
/s/ Loretta Shaw-Lorello
Name: Loretta Shaw-Lorello
Title: Vice President
Signature Page to First Amendment to the ACRA 2 HoldCo Shareholders Agreement
NOTICE OF RESTRICTED SHARE UNIT AWARD
UNDER THE APOLLO GLOBAL MANAGEMENT, INC.
2019 OMNIBUS EQUITY INCENTIVE PLAN
Apollo Global Management, Inc. (the “Company”), pursuant to the Apollo Global Management, Inc. 2019
Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”), hereby grants to the individual
listed below the number of Restricted Share Units (the “RSUs”) set forth below. The RSUs are subject to
the terms and conditions as set forth in this Notice of Restricted Share Unit Award (the “Notice”), the
attached Award Agreement (the “Award Agreement”) and the Plan.
Participant:
###PARTICIPANT_NAME###
Award Type:
###CF_EE_GRANT_Detail Award Type###
Conversion Price:
$ ###RSU_PRICE###, which reflects the volume weighted
average price of the Company’s shares for the ten-day period prior
to the grant; this was used to convert the dollar value of the award
into a number of RSUs
Number of RSUs Granted:
###TARGET_GRANTED_QUANTITY###
Date of Grant:
###GRANT_DATE###
Vesting Schedule:
Subject to the terms and conditions referenced in the Award
Agreement, the RSUs will vest on the following schedule (each
date, a “Vesting Date”)
###VEST_SCHEDULE_TABLE##
APOLLO GLOBAL MANAGEMENT, INC.
By: /s/_Matthew Breitfelder________________
Name: Matthew Breitfelder
Title:
Vice President
RESTRICTED SHARE UNIT AWARD AGREEMENT
UNDER THE APOLLO GLOBAL MANAGEMENT, INC.
2019 OMNIBUS EQUITY INCENTIVE PLAN
In accordance with the attached Notice delivered to the Participant, the Company and the
Participant agree that the terms and conditions contained in the Notice, this Award Agreement (this
“Agreement”) and the Plan shall apply to the grant of RSUs set forth in the Notice. Capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the Notice and otherwise in the Plan.
1.
Vesting.
(a)
Generally. Except as otherwise provided in Section1(b), the RSUs shall vest in
accordance with the vesting schedule set forth in the Notice, provided that the Participant remains in
continuous employment with or provides services to the Company or its Affiliates (collectively, the
“Company Group”) through each applicable Vesting Date. Fractional RSUs shall not be deemed vested
until they accumulate to equal one (1) whole Share.
(b)
Special Vesting on Death or Disability. Notwithstanding the foregoing, if the Participant’s
employment or service is terminated either (i) due to the Participant’s death or (ii) by the Company Group
by reason of Disability, then the Participant shall vest in 100% of the then unvested RSUs that remain
subject to this Agreement upon such termination, subject to the Participant’s (or the Participant’s estate or
personal representative, if applicable) execution and delivery to the Company of an irrevocable general
release of claims in a form satisfactory to the Company within 60 days following the termination date (or
such shorter period as may be specified by the Company in accordance with applicable law). For
purposes of this Agreement, the Participant shall be deemed to be in continuous employment or service
until such time as the Participant dies or otherwise experiences a “separation from service” (as such term
is defined in Treasury Regulation §1.409A-1(h)(1)).
2.
Settlement; Delivery of Shares. The Company shall issue and deliver to the Participant
one (1) Share (either by delivering one or more certificates for such Shares or by entering such shares in
book-entry form, as determined by the Company in its discretion), as settlement of each vested RSU
(such Shares, the “RSU Shares”). Such RSU Shares shall be delivered as soon as administratively
practicable following the vesting of any RSU in accordance with Section 1, but in no event shall such RSU
Shares be delivered later than the 15th day of the third month following the last day of either the
Participant’s or the Company’s fiscal year in which the RSU vests, whichever is later. Upon delivery, all
such RSU Shares shall be fully assignable, alienable, saleable and transferrable by the Participant;
provided that any such assignment, alienation, sale or transfer with respect to such RSU Shares shall
comply with applicable securities laws and applicable Company policy as described in Section 4.
3.
Restrictions on RSUs. The RSUs may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of or encumbered, other than with respect to transfers (a) to the
Company, (b) by will or pursuant to the laws of descent and distribution, or (c), if approved by the
Administrator in its sole discretion, in accordance with the requirements of Instruction A.1.(a)(5) of Form
S-8 under the Securities Act or other applicable law.
4.
Disposition of Shares. Subject to applicable law, the Participant may dispose of the RSU
Shares issued under this Agreement during any “window period” in which sales by Company personnel
are permitted, and in accordance with the Company’s insider trading policy. All dispositions of RSU
Shares are subject to compliance with the Company’s Share Ownership Policy as in effect from time to
time and any other applicable Company policies.
5.
Forfeiture.
(a)
Upon the termination of the Participant’s employment or service with the Company Group
for any reason (a “Termination”), other than by reason of the Participant’s death or Disability, all then
unvested RSUs subject to this Agreement shall be immediately forfeited, terminated and canceled without
payment of any consideration by any member of the Company Group, and neither the Participant nor any
of its successors, heirs, assigns, or personal representatives shall thereafter have any further rights or
interests in such RSUs. In addition, if the Participant’s employment or service with the Company Group is
terminated either for (i) Cause (as defined on Exhibit A), or (ii) for any other reason and within twelve (12)
months following the date of such Termination, the Company determines that the Participant could have
been terminated for Cause, then, in each case, the Participant shall forfeit all outstanding RSUs with
respect to which RSU Shares have not yet been issued, including any vested RSUs. Except as otherwise
expressly set forth herein in Section 1, employment or service with the Company Group for only a portion
of a vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting
or avoid or mitigate a termination of rights and benefits upon a Termination.
(b)
Notwithstanding anything to the contrary, if (i) upon request of any member of the
Company Group, the Participant fails to certify that the Participant remains in compliance with the
Participant’s ongoing obligations to the Company Group, in such form as may be requested by the
Company Group from time to time, or (ii) any member of the Company Group determines, in its sole
discretion, that the Participant has failed to comply with the Participant’s ongoing obligations to any
member of the Company Group, then, in each case, the Company Group, in its sole discretion, may either
(A) delay the issuance of RSU Shares to the Participant in respect of any vested RSUs (to the extent
permitted under applicable tax rules without incurring any penalty) or (B) terminate and cancel all of the
Participant’s outstanding RSUs, including any vested RSUs, without payment of any consideration by any
member of the Company Group, and neither the Participant nor any of its successors, heirs, assigns, or
personal representatives shall thereafter have any further rights or interests in respect of such terminated
RSUs.
6.
Shareholder Rights; Dividend Equivalents. The Participant shall have no rights of a
shareholder (including voting rights and the right to dividends or distributions) and will not be treated as
an owner of Shares for tax or other purposes, except with respect to RSU Shares that have already been
delivered. Notwithstanding the foregoing, in the event ordinary cash dividends are paid in respect of the
Company’s Shares, then a dividend equivalent of equal value shall accrue and be paid to the Participant
with respect to each RSU (whether or not vested) no later than 30 days after such ordinary cash dividend
is paid to the holders of Shares. Rights to dividend equivalents on each RSU shall terminate upon the
issuance of the underlying RSU Share following vesting, or if earlier, upon the forfeiture of the RSU in
connection with the Participant’s Termination. Under no circumstances shall the Participant be entitled to
receive (a) both a dividend and a dividend equivalent with respect to an RSU (or its associated RSU
Share) or (b) any dividend or dividend equivalent with respect to a forfeited or fractional RSU.
7.
Agreement Subject to Plan. This Agreement is subject to all of the terms, conditions and
provisions of the Plan, which are incorporated herein by reference. Without limiting the generality of the
immediately preceding sentence, this Agreement specifically incorporates the following sections of the
Plan: Section 14(i) (Electronic Delivery), and Section 17 (Section 409A). In the event of any conflict
between any provision of this Agreement and the Plan, the Plan shall govern.
8.
No Rights to Continuation of Employment or Service. Nothing in the Plan or this
Agreement shall confer upon the Participant any right to continued employment or service with the
Company Group or interfere with, or restrict, the right of any member of the Company Group (or its
shareholders, as the case may be) to terminate the Participant’s employment or service at any time for
any reason whatsoever, with or without Cause. The Plan and this Agreement shall not (a) form any part
of any contract of employment or contract for services between any current or former member of the
Company Group and any directors, officers or employees thereof, (b) confer any legal or equitable rights
2
(other than those constituting the Awards themselves) against any current or former member of the
Company Group, directly or indirectly, or (c) give rise to any cause of action in law or in equity against any
current or former member of the Company Group.
9.
Restrictive Covenants. The restrictive covenants set forth in the Participant’s covenants
agreement or any other applicable written arrangement with any member of the Company Group, are
incorporated herein. Nothing contained herein shall reduce or limit the application or scope of any
restrictive covenants in favor of the Company Group (for example, with respect to competition, solicitation,
confidentiality, intellectual property, subsequent engagement, interference or disparagement) to which the
Participant is otherwise subject (the “Restrictive Covenants”). The Company would not have granted this
Award if the Participant had not agreed to be bound by such restrictive covenants, as the same may be
amended from time to time. In the event the Participant materially breaches any such Restrictive
Covenants, the Participant shall immediately forfeit any rights to the remaining unvested RSUs, if any, or
undelivered RSU Shares without payment of any consideration. As further described in Section 22 below,
the Company shall also have a right to recoup payment in respect of previously delivered RSU Shares, in
addition to any other remedy to which the Company may be entitled as a result of such breach. Nothing
in this Agreement or any other agreement or arrangement of the Company Group to which the Participant
is subject will (a) prohibit the Participant from making reports of possible violations of U.S. federal law or
regulation to any governmental agency or entity in accordance with Section 21F of the Securities
Exchange Act of 1934, Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower
protection provisions of U.S. federal law or regulation or other similar law, regulation or rule, or (b) require
notification or prior approval by the Company Group of any such reporting.
10.
Tax Withholding. The Participant is responsible for all federal, state, local and other taxes
and any tax-related penalties the Participant incurs in connection with the Award. The Company Group
shall be entitled to require a cash payment by or on behalf of the Participant and/or to deduct, from other
compensation payable to the Participant, any sums required by applicable law to be withheld or
accounted for by the Company Group with respect to any RSU. The Company in its discretion may
alternatively reduce the number of shares to be issued by the appropriate number of whole Shares,
valued at their then Fair Market Value, or require any other available method to satisfy any withholding or
tax obligations of the Company Group with respect to the RSUs at the applicable rates.
11.
Governing Law; Arbitration; Waiver of Jury Trial.
(a)
This Agreement shall be governed by, interpreted under and construed and enforced in
accordance with the laws of the State of Delaware (without regard to any conflicts of laws principles
thereof that would give effect to the laws of another jurisdiction).
(b)
Any dispute, controversy, suit, action or proceeding (“Proceeding”) arising out of or
relating to this Award or any other Award, other than the injunctive relief described in Section 11(c), will,
notwithstanding anything to the contrary contained in the Plan, be settled exclusively by arbitration,
conducted before a single arbitrator in New York County, New York (applying Delaware law) in
accordance with, and pursuant to, the Employment Arbitration Rules and Procedures of JAMS (“JAMS”).
The decision of the arbitrator will be final and binding upon the parties hereto. Any arbitral award may be
entered as a judgment or order in any court of competent jurisdiction. The Company and the Participant
will share the JAMS administrative fees, the arbitrator’s fee and expenses. Each party shall be
responsible for such party’s attorneys’ fees.
(c)
Either party may commence litigation in court to obtain injunctive relief in aid of
arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the U.S.
Federal Arbitration Act or the New York Arbitration Act. The arbitrator may grant interim injunctive relief
and the Company or its successors or assigns may commence litigation in court to obtain injunctive relief
or an order requiring specific performance to enforce, or prevent any violations of, the Restrictive
Covenants.
3
(d)
IF THIS AGREEMENT TO ARBITRATE IS HELD INVALID OR UNENFORCEABLE
THEN, TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED,
THE PARTICIPANT AND THE COMPANY WAIVE AND COVENANT THAT THE PARTICIPANT AND
THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE)
ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN
CONNECTION WITH AN AWARD UNDER THE PLAN OR ANY MATTERS CONTEMPLATED
THEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AND AGREE THAT THE COMPANY GROUP OR THE
PARTICIPANT MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE
COMPANY GROUP AND THE PARTICIPANT IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR
RELATING TO AN AWARD UNDER THE PLAN AND THAT ANY PROCEEDING PROPERLY HEARD
BY A COURT UNDER AN AWARD AGREEMENT UNDER THE PLAN WILL INSTEAD BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.
Agreement Binding on Successors. The terms of this Agreement shall be binding upon
the Participant and their heirs, executors, administrators, personal representatives, transferees,
assignees and successors in interest and upon the Company Group and its successors and assignees,
subject to the terms of the Plan.
13.
No Assignment. Subject to Section 3, neither this Agreement nor any rights granted
herein shall be assignable by the Participant other than (with respect to any rights that survive the
Participant’s death) by will or the laws of descent and distribution. No purported sale, assignment,
mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other
disposition of, or creation of a security interest in or lien on, any RSUs or RSU Shares by any holder
thereof in violation of the provisions of this Agreement or the Plan will be valid, and the Company will not
transfer any of said RSUs or RSU Shares on its books nor will any RSU Shares be entitled to vote, nor
will any distributions be paid thereon, unless and until there has been full compliance with said provisions
to the satisfaction of the Company. The foregoing restrictions are in addition to, and not in lieu of, any
other remedies, legal or equitable, available to enforce said provisions.
14.
HSR. Prior to any acquisition by the Participant of common stock of the Company,
whether by way of open market purchase, vesting of restricted stock units, conversion or exercise of
options or warrants, or otherwise, and whether or not contemplated by this Agreement (“Acquisition”), the
Participant and the Company will take commercially reasonable efforts in respect of any Acquisition to
ensure that the Participant complies with the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (“HSR Act”), 15 U.S.C. § 18a, including making any filings
required under the HSR Act, paying the necessary filing fees, which will be the Participant’s sole
responsibility to pay, and observing the statutory waiting period(s). Subject to the foregoing, the
Participant will provide at least 60 days’ written notice to the Company prior to any Acquisition that would
require a filing under the HSR Act.
15.
Limitation on the Participant’s Rights. The Participant has no legal or equitable rights,
interests or claims in any property of the Company due to the Plan, the Notice, this Agreement or the
grant of RSUs contained herein. The Participant shall have only the rights of a general unsecured
creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the
RSUs, and rights no greater than the right to receive the RSU Shares as a general unsecured creditor
with respect to RSUs, as and when payable hereunder.
16.
Severability. Should any provision of this Agreement be held by an arbitrator or court of
competent jurisdiction to be unenforceable, or enforceable only if modified, such holding shall not affect
the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the
parties hereto with such modification (if any) to become a part hereof and treated as though contained in
4
this original Agreement. Moreover, if one or more of the provisions contained in this Agreement shall for
any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be
unenforceable, then in lieu of severing any such provisions, they shall be construed by the appropriate
judicial body or arbitral tribunal by limiting or reducing them, so as to be enforceable to the maximum
extent compatible with the applicable law as it shall then appear, and such determination by a judicial
body or arbitral tribunal shall not affect the enforceability of any such provisions in any other jurisdiction.
17.
Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any
provision of this Agreement shall in no way be construed to be a waiver of that provision or of any other
provision hereof.
18.
Entire Agreement. The Notice, this Agreement and the Plan contain the entire agreement
and understanding among the parties as to the subject matter hereof and supersede all prior writings and
understandings with respect to the grant of RSUs covered by this Agreement and these RSUs are
granted in full settlement of the Participant’s rights to receive RSUs in respect of the particular Award
Type referenced in the Notice. The Participant acknowledges that any summary of the Plan or this
Agreement provided by the Company is subject in its entirety to the terms of the Plan and this Agreement.
References to this Agreement in the Plan or otherwise include references to Exhibit A and Exhibit B.
19.
Headings. Headings are used solely for the convenience of the parties and shall not be
deemed to be a limitation upon or description of the contents of any Section.
20.
Amendment. Except as otherwise provided in the Plan, no amendment or modification
hereof shall be valid unless it shall be in writing and signed by all parties hereto.
21.
Acknowledgements and Representations. By acceptance of this Award, the Participant is
deemed to have agreed to the acknowledgements and representations in this Section 21 and otherwise in
this Agreement. The Participant is acquiring the RSUs and, if and when the RSUs vest, will acquire the
RSU Shares covered thereby solely for the Participant’s own account, for investment purposes only, and
not with a view to or an intent to sell or distribute, or to offer for resale in connection with any unregistered
distribution, all or any portion of the RSUs or RSU Shares within the meaning of the Securities Act and/or
any applicable state securities laws. The Participant has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of this Award and the restrictions imposed
on the RSUs and the RSU Shares. The Participant has been furnished with, and/or has access to, such
information as he or she considers necessary or appropriate for deciding whether to accept this Award.
However, in evaluating the merits and risks of an investment in the Company, the Participant has and will
rely upon the advice of his/her own legal counsel, tax advisors, and/or investment advisors. The
Participant is aware that the RSU Shares may be of no practical value. The Participant has read and
understands the restrictions and limitations set forth in the Plan and this Agreement, which are imposed
on the RSUs and the RSU Shares. The Participant is responsible for all taxes and any tax-related
penalties the Participant incurs or is liable for in connection with this Award, including but not limited to
any withholding taxes, employment or payroll taxes and social security. The Participant confirms that the
Participant has not relied on any warranty, representation, assurance or promise of any kind whatsoever
in entering into this Agreement other than as expressly set out in this Agreement or in the Plan.
22.
Recoupment. By accepting this Award, the Participant is deemed to acknowledge and
agree that the Participant will be subject to any policy adopted by the Company that provides for the
repayment or forfeiture of incentive compensation, including, without limitation, the Apollo Corporate
Recoupment Policy, as may be amended from time to time, and this Award shall be subject to recoupment
or forfeiture per any such policy, in accordance therewith, or as otherwise required by law or applicable
regulatory rules or guidance.
23.
Regional and Country-Specific Provisions. The regional and country specific terms and
conditions set forth on Exhibit B shall apply to this Award solely to the extent applicable to the Participant
5
based on the Participant’s residency, location of service or region in which they are otherwise a taxpayer,
as applicable. Without limiting the Administrator’s powers under the Plan, to the extent the Participant
relocates their residency and/or employment or service to another country, the additional terms and
conditions set forth in this Section for such region or country (if any, and as such terms may be modified
or supplemented from time to time) shall apply to the extent the Company determines, in its sole
discretion, that the application of such section is necessary or advisable.
24.
Deemed Acceptance. This Award shall be effective as of the Date of Grant and shall not
require the Participant’s countersignature. The Participant shall be deemed to accept this Award, subject
to the terms and conditions set forth in the Notice, this Agreement and the Plan unless the Participant
provides to the Company written notification to the attention of its Global Head of Human Capital, of the
Participant’s rejection of this Award not later than 30 days after the Date of Grant (in which case this
Award will be forfeited and the Participant shall have no further right or interest therein as of such date).
6
Exhibit A
Definition
“Cause” means the Participant’s: (a) commission of an intentional violation of a material law or regulation,
intentional misconduct, reckless disregard of the Participant’s duties or deliberate failure to perform the
Participant’s duties, in each case, in connection with the Participant’s performance of services for any
member of the Company Group or that relates to or impacts the business of the Company Group; (b)
commission of an intentional and material breach of a written Company code of ethics or other policy of,
or written agreement with, any member of the Company Group; (c) commission of any misconduct or
failure to take any action that, individually or in the aggregate, has caused or substantially contributed to,
or is reasonably likely to cause or substantially contribute to, material economic or reputational harm to
any member of the Company Group (excluding any mistake of judgment acting in good faith); (d)
conviction of or plea of no contest to (i) any misdemeanor involving moral turpitude or (ii) any felony,
including, in each case, a foreign law equivalent, and provided that, in each case, such action (A) has a
significant adverse effect on the Participant’s ability to perform services for any member of the Company
Group, or (B) relates to or impacts the business of the Company Group; (e) fraud in connection with the
Participant’s performance of services for the Company Group; or (f) embezzlement from any member of
the Company Group or its interest holders; provided, that, the Participant fails to cure within fifteen (15)
business days after written notice thereof, to the extent such occurrence is susceptible to cure, the items
set forth in clauses (b) and (c).
A-1
Exhibit B
Certain Regional and Country-Specific Provisions
The regional and country specific terms and conditions set forth on this Exhibit B shall apply to
the Award described in the attached Agreement solely to the extent applicable to the Participant based on
the Participant’s residency, location of service or region in which they are otherwise a taxpayer, as
applicable, and override any provisions of the Agreement to the extent of any inconsistency. Terms used
herein will have the meanings set forth in the Agreement. It is intended that the Award complies with all
local laws, regulations and rules thereunder, and the Award and this Exhibit B shall be interpreted and
applied in a manner intended to comply with such requirements, and if necessary this Exhibit may be
amended from time to time to comply with such laws, regulations or rules. Notwithstanding any provision
to the contrary in the Notice, the Agreement or the Plan, the following provisions will apply to the
Agreement as applicable, based on the Participant’s regional or country affiliation:
1.
All European Regions/Countries
(a)
Terms of Participant's Office and Employment. The rights and obligations of the
Participant under the terms of their office or employment with the Company Group thereof shall not be
affected by their participation in the Plan or any right which he or she may have to participate therein. The
Award will lapse immediately in the event that the Participant is declared bankrupt, insolvent (or the
equivalent under local law)
(b)
No Employment Rights or Rights to Compensation. The Participant acknowledges that
any assignment under the Award Agreement: (i) is one-time, voluntary and occasional in nature and does
not create any contractual or other right to receive future equity awards, or benefits in lieu of such awards;
(ii) is an extraordinary item and is occasional in nature and does not constitute compensation of any kind
for services whatsoever rendered to the Company Group, and is outside the scope of the Participant's
employment contract or other position; (iii) is not part of normal or expected compensation or salary for
any purposes, including, but not limited to, calculating any severance, resignation, termination,
redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or
similar payments. Without prejudice to the generality of Section 8, if the Participant ceases to be an
Eligible Recipient, they will not be entitled to any compensation for any loss of any right or benefit or
prospective right or benefit pursuant to or in connection with the Plan or this Award Agreement, and by
accepting this Award, the Participant hereby waives all and any rights to compensation or damages in
consequence of the termination of their office or employment with any such company for any reason
whatsoever, whether such compensation is claimed by way of damages for wrongful dismissal or other
breach of contract or by way of compensation for loss of office or otherwise howsoever and insofar as
those rights arise, or may arise, from the Participant ceasing to have rights under an Award as a result of
such termination, or from the loss or diminution in value of such rights.
(c)
Data Protection. The Company shall process personal data in association with the
Participant's participation in the Plan as described in the European Union Privacy Policy and/or United
Kingdom privacy notice in effect under the Plan from time to time, which notice is available upon request
from the Company’s Human Capital department.
(d)
Prospectus Rules. For the purposes of European Union and UK securities law, the Plan,
read together with this Agreement, is an employee information document relating to Apollo Global
Management, Inc which has been prepared in accordance with Article 1(4)(i) (employee offers exempt
from requirement to publish prospectus in relation to offer to the public) of the Prospectus Regulation (EU)
2017/1129 and of the UK version of the Prospectus Regulation (EU) 2017/1129, which is retained EU law
by virtue of the European Union (Withdrawal) Act 2018 (and related statutory instruments). Neither the
Plan, this Agreement, nor the Award granted under this Agreement have been approved by the Financial
Conduct Authority in the UK or by any regulatory authority in the EU. For the avoidance of doubt this
B-1
Agreement is not a Prospectus. For the purposes of the above, the Shares are traded on the New York
Stock Exchange under Code name 'APO'. Further details can be found by following this link: https://
www.nyse.com/quote/XNYS:APO. Additional information on the Company can be found on its website at
https://www.apollo.com/stockholders/apollo-global-management-inc/overview.
(e)
United Kingdom.
(1)
s.431 Election. If and to the extent the Participant is notified by the Company
that a tax election is required due to the fact that any RSU Shares acquired by the Participant could
constitute 'restricted securities' for the purposes of Chapter 2 of Part 7 to the Income Tax (Earnings &
Pensions) Act 2003 ("ITEPA"), the Participant shall enter into a joint election with the Company (or their
employer if different) under section 431(1) of ITEPA in order to disapply all restrictions attaching to such
RSU Shares (in the form prescribed or agreed by HM Revenue & Customs) and in order to elect to pay
income tax (if any) computed by reference to the unrestricted market value (as defined in ITEPA) of the
RSU Shares no later than 14 days after the acquisition of a beneficial interest in such Shares (or such
longer period as HMRC may direct).
(2)
Eligibility. For purposes of granting this Award, the Company has determined
that the Participant is an Eligible Recipient due to the fact that the Participant is engaged by an entity that
is either a "Subsidiary" or an "Affiliate" in accordance with the UK Companies Act 2006 or such entity is
otherwise a member of the Company's Group for purposes of Article 60 of the Financial Services and
Markets Act 2000 (Financial Promotions) Order 2005 (as amended).
(3)
Recoupment. By acceptance of this Award, the Participant agrees and
acknowledges for the purposes of the Employment Rights Act 1996 or otherwise, that recoupment of (i)
the Award, (ii) some or all of the RSU Shares issued pursuant to the Award and/or (iii) any proceeds or
value of such RSU Shares, may be recouped by the Company in such manner as it sees fit in accordance
with Section 22 of this Award Agreement.
(f)
Belgium. The benefits to the Participant under the Plan and this Agreement shall not
form any part of wages, remuneration or fees or count as pay, remuneration or fees for pension fund,
severance payments, indemnity in lieu of notice or other purposes. Provided that the Shares underlying
the RSU program are listed, Participants subject to social security and tax in Belgium can opt for a
favorable social security and tax treatment on condition that the Participant and the Company Group
mutually agree that the RSU Shares are 'unavailable' (blocked) for an uninterrupted period of two years
following vesting. Such mutual agreement is to be agreed upon before the vesting of the RSUs. If a
mutual agreement is made, social security and taxes are due on 100/120 (83,33%) of the fair market
value of the Shares.
(g)
France. By exception to Section 24 of the Notice, the grant of RSUs remains subject to:
the Participant’s acceptation in writing to the terms and conditions of the Notice, the Award Agreement
and the Plan, by sending by email to the Company Group to apollocompensation@apollo.com the
following paragraph : “I, the undersigned, hereby unconditionally and irrevocably agrees to the terms and
conditions set forth (i) in the notice of restricted share unit (“RSUs”) award under the Apollo Global
Management, Inc. 2019 Omnibus Equity Incentive Plan, dated [date] (the “Notice”), (ii) in the Award
Agreement and (iii) in the Plan (as these terms are defined in the Notice) and further acknowledges that
the grant of RSUs is in particular subject to certain restrictive covenants.”
(h)
Germany. Any liability to taxes, employee social security obligations, duties or other
expenses which may be incurred by the Participant in connection with the purchase, holding or disposal
of RSUs and/or RSU Shares shall be borne by the respective Participant, provided that any liability to
employer's national insurance contribution shall be excluded to the extent that it is unlawful for an
employer to recover the same from a present or former employee.
B-2
(i)
Italy.
(1)
Tax Consequences. By accepting this Award, the Participant acknowledges that
the Company Group will not act as withholding tax agents in connection to the grant or the exercise of the
RSUs, unless it is required by law, and in such case, the Company Group may deduct or withhold the
amounts due and/or require the Participant to remit cash to the Company Group in order to satisfy the tax
fulfilments required by law. The Participant acknowledges fulfilling the relevant tax obligations required by
law in connection with the grant of the RSUs and that the Participant shall be responsible for any tax
fulfilments connected to the holding, transfer, disposal, gift of the RSUs and/or RSU Shares (including but
not limited to the payment of wealth taxes, the payment of transfer taxes, and the fulfillment of tax
monitoring obligations). The Participant is encouraged to consult with a qualified tax advisor with respect
to the tax implications and the tax obligations to be fulfilled deriving from the grant and of the RSUs or
delivery of the RSU Shares.
(2)
Amendment of Award Agreement. For the purpose of defining “continuous
employment” indicated within Section 1 (a) continuous employment means actively in service and, thus,
the Participant as of each Vesting Date should not be working their notice period or should not be under
disciplinary proceedings resulting in a dismissal for Cause (for the avoidance of doubt if any Participant as
of the relevant Vesting Date is working the notice period or is under a disciplinary proceeding which
results in a dismissal for Cause, the RSUs they are entitled to will not vest). Any release required by
Section 1 (b) of the Award Agreement shall be in a form unchallengeable under local laws.
(j)
Switzerland.
(1)
Treatment of Payments or Benefits. Any payments or benefits received under
the Plan are gross. The Participant and Apollo Management Advisors Switzerland Sàrl and/or the
Company shall each pay half of the contributions for social security insurances mandatory under Swiss
law such as "AHV" (Old Age and Survivors' Insurance), "IV" (Invalidity Insurance), "ALV" (Loss of
Earnings Insurance), "EO" (Unemployment Insurance), etc. The Participant’s contributions are deducted
by Apollo Management Switzerland Advisors Sàrl and/or the Company from the gross amount. Apollo
Management Switzerland Advisors Sàrl and/or the Company also shall deduct from amounts payable to
the Participant, all applicable payroll taxes or other deductions that might be due pursuant to the
legislation applicable to such payments.
(2)
Personal Data. The Participant agrees that Apollo Management Advisors
Switzerland Sàrl may process and store personal data concerning the Participant to the extent such data
relates to the Participant’s necessary to perform the employment relationship, in particular, for the
purposes of the administration of the Plan and this Agreement. The Participant agrees that personal data
may be transferred to companies affiliated with Apollo Management Advisors Switzerland Sàrl that are
located outside Switzerland, including to entities or persons located in countries that do not offer a level of
protection equivalent to that applicable in Switzerland, in particular, in the following countries: Australia,
Bermuda, Canada, China, Hong Kong, India and Japan.
2.
Asia & EMEA
(a)
China.
(1)
Data Protection. By acceptance of this Award, the Participant is deemed to
agree that the Company Group may collect and process personal information relating to the Participant
and transmit, share or transfer such personal information outside People’s Republic of China, for the
purpose of granting RSUs and other administrative matters hereunder in accordance with Civil Code of
PRC, Personal Information Protection Law of PRC and other applicable laws.
B-3
(2)
RSUs; Tax. The RSUs and other benefits granted to the Participant hereunder, if
any, shall not form any part of their salary as defined in Labor Contract Law of PRC and/or for the
purpose of determining other statutory benefits (i.e. statutory severance, social insurances, housing fund).
The Participant will be solely responsible for the payment of any tax arising hereof (i.e. individual income
tax) in any jurisdictions including the People’s Republic of China, United States and any other locations
where the Participant may have personal tax obligations. The Participant must not engage in any form of
facilitating tax evasion, whether under PRC law, U.S. law or under the law of any foreign jurisdictions.
(b)
Hong Kong.
(1)
Regulatory Review; Distribution of Documents; Reproduction or Transmission of
Documents; Confidentiality. The contents of this Notice, the Award Agreement and any Plan offering
document (together the “Documents”) have not been reviewed by any regulatory authority in Hong Kong.
Participant is advised to exercise caution in relation to the offer of the Award. If Participant is in any doubt
about any of the contents of the Documents, you should obtain independent professional advice. No
action has been taken in Hong Kong to permit the distribution of the Documents. In particular, the
Documents have not been approved by the Securities and Futures Commission in Hong Kong. This
Award and the Documents have only be distributed in Hong Kong to “eligible employees” of the Company
and its participating direct and indirect majority-owned Subsidiaries. The Documents may not be
reproduced in any form or transmitted to any person other than the person to whom it is addressed. The
Documents are distributed on a confidential basis. No right to participate in the Award is granted to any
Person other than the Person to whom the Documents have been sent. No Person in Hong Kong other
than the Person to whom the Documents are addressed may treat the same as constituting an invitation
to them to participate.
(2)
Acceptance. By accepting this Award, the Participant acknowledges and
warrants that they understand that their employer in Hong Kong will in its annual employer’s return report
all sums chargeable to salaries tax in Hong Kong paid to the Participant under or by virtue of this Award.
The Participant acknowledges and warrants that they understand that they are exclusively responsible for
filing their own personal tax return accordingly, and for the payment of any salaries tax due with respect to
this Award.
(c)
India. Any Participant, who is an Indian resident in terms of the Indian foreign exchange
control laws, must repatriate or cause to be repatriated to India any funds received pursuant to the Plan
within such time period as prescribed under applicable Indian foreign exchange control laws, as may be
amended from time-to-time (e.g., currently, proceeds received from the sale of RSU Shares, dividends,
cash distributions or liquidation proceeds must be repatriated to India within one hundred and eighty (180)
days of receipt). The Participant agrees to retain and provide, upon written request by the applicable
Indian governmental authority or the employer, appropriate evidence of the repatriation of funds, as
applicable. The repatriation requirements may change if the Participant’s investment in the RSU Shares
is considered as overseas direct investment under applicable foreign exchange control laws in India. It is
solely the Participant’s responsibility to comply with applicable foreign exchange control laws in India. By
accepting the RSUs, the Participant agrees that the Company Group shall not bear any responsibility for
the Participant’s compliance with applicable foreign exchange control requirements. When the RSUs vest
and RSU Shares are delivered to any Participant, payroll taxes will become payable by reference to the
market value of the RSU Shares at that time.
(d)
Singapore.
(1)
Notification under Section 309B(1) of the Singapore Securities and Futures Act
2001; Securities Law Information. The RSUs and RSU Shares are prescribed capital markets products
(as defined in the Singapore Securities and Futures (Capital Markets Products) Regulations 2018), being
rights issued or proposed to be issued by a corporation in respect of its own stocks or shares and stocks
or shares issued or proposed to be issued by a corporation, respectively, and Excluded Investment
B-4
Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS
Notice FAA-N16: Notice on Recommendations on Investment Products). By accepting this Award, the
Participant acknowledges and agrees that the RSUs and underlying RSU Shares are granted pursuant to
the “qualifying person” exemption under Section 273(1)(i), read with Section 273(4) of the Singapore
Securities and Futures Act 2001 and therefore will not be subject to selling restrictions pursuant to the
Singapore Securities and Futures Act 2001. The Participant acknowledges that the Plan has not been,
nor will it be, lodged or registered as a prospectus with the Monetary Authority of Singapore.
(2)
Selling Restrictions. The Award has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, the Award and any other document or material in
connection with the offer or sale, or invitation for subscription or purchase, of the RSUs and/or RSU
Shares may not be circulated or distributed, nor may the RSUs and/or RSU Shares be offered or sold, or
be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons
in Singapore other than pursuant to, and in accordance with, the conditions of an exemption under any
provision (other than Section 280) of Subdivision (4) of Division 1 of Part 13 of the Singapore Securities
and Futures Act 2001
3.
Other Regions
(a)
Australia.
(1)
Offer under ESS Act. As required to comply with certain Australian regulatory
disclosure relief, the Company confirms that this Award is an offer made in accordance with Division 1A
(Employee Share Schemes) of the Corporations Act 2001 (Australia) (the "Corporations Act"). For the
avoidance of doubt, nothing in this Award is taken to supersede the Company's obligations under Division
1A (Employee Share Schemes) of the Corporations Act, and to the extent of any inconsistencies, Division
1A will prevail and the relevant terms and conditions will be read down accordingly.
(2)
Australian Employee Share Scheme. This Award Agreement, together with the
Plan (as amended pursuant to this Exhibit A, clause (b)), forms the rules of the employee share scheme
applicable to the Australia-based Participants.
(3)
Subsidiaries and Affiliates; Eligible Recipients. For purposes of the issuances of
this Award to the Participant in Australia: (a) an entity will only meet the definition of a "Subsidiary" or an
"Affiliate" under the Plan if it is a "Subsidiary" of the Company in accordance with the Corporations Act
2001 (Cth) (Australia); and (b) a Person will only meet the definition of an "Eligible Recipient" under the
Plan if they are an employee of either the Company or a Subsidiary or Affiliate thereof or they provide
services to either the Company or a Subsidiary or Affiliate thereof in accordance with section 83A-325 of
the Income Tax Assessment Act 1997 (Cth) (the "Australian Tax Act 1997"). It has been determined that
the Participant meets these requirements and is eligible to receive this Award.
(4)
Australian Tax Deferral. Subdivision 83A-C of the Australian Tax Act 1997
applies to the RSUs (subject to the requirements of the Australian Tax Act 1997), unless the RSUs expire
or lapse which allows for the RSUs to be taxed on a deferral basis, provided that the relevant conditions in
the Australian Tax Act 1997 are satisfied.
(b)
Canada. The RSUs shall and any rights thereunder shall be settled entirely in newly-
issued Shares of the Company. Fractional RSUs shall be settled solely through the issuance and delivery
of newly-issued Shares of the Company instead of cash.
B-5
October 31, 2024
Martin Klein
C/O Athene Holding, Ltd. 7700 Mills Civic Parkway
West Des Moines, IA 50266-3862
Dear Marty:
On behalf of Athene Holding Ltd. (the “Company”) and its Board of Directors (the “Board”), I want to
thank you for your many years of service to the Company, during which you have demonstrated remarkable
leadership and have made immeasurable contributions to the Company.
This letter agreement (“Agreement”) sets forth the terms agreed upon between the Company and you
regarding your services to and positions with the Company from the date hereof through your eventual
retirement from the Company and its affiliates.
Term and Duties: You will continue to serve as the Executive Vice President and Chief Financial Officer
of the Company, under your current terms and conditions of employment (including, but not limited to, your
continued eligibility to receive severance benefits un accordance with the terms of the Company’s severance
policy upon a qualifying separation), through the date on which your successor is appointed which is
expected to be on or about June 30, 2025 (the “Transition Date”), on which date you will retire as Executive
Vice President and Chief Financial Officer and will immediately assume the role of Senior Advisor to the
Company. Notwithstanding the foregoing, either party may terminate your employment upon 90 days’ prior
written notice and the Company may terminate your employment immediately upon a termination for cause.
In the position of Senior Advisor, you shall have such duties and responsibilities as may be reasonably and
lawfully requested by any of the Board, the Chief Executive Officer of the Company or the Chief Financial
Officer of Apollo Global Management, Inc. from time to time, which shall include the duties and
responsibilities separately provided to you on the date hereof.
Upon the expiration of your service as Senior Advisor, unless otherwise agreed to by the parties, you shall
be deemed to have resigned, without any further action by you, from any and all positions that you,
immediately prior to such termination, (i) held with the Company or any of its affiliates or (ii) held with any
other entities at the direction of, or as a result of your affiliation with, the Company or any of its affiliates. If
for any reason this Agreement is deemed to be insufficient to effectuate such resignations, then you shall,
upon the Company’s request, execute any documents or instruments that the Company may deem necessary
or desirable to effectuate such resignations.
Compensation: For service through December 31, 2025, (i) your base salary and benefits arrangements will
continue at the same level that they have been prior to the Transition Date, (ii) you shall remain eligible for
an annual bonus with respect to the 2024 calendar year (with a target bonus opportunity equal to
$1,222,000) and payable no later than March 15, 2025, which bonus shall be subject to the terms of the
annual bonus plan and the achievement of the same performance goals that apply to the annual bonuses for
other similarly situated executive officers of the Company, (iii) as part of your compensation for calendar
year 2025, you shall receive a long-term incentive award granted in the first quarter of 2025, with a grant
date fair value of $975,000 and granted in the same vehicles as 2025 calendar year long-term incentive
awards granted to other similarly situated executive officers of the Company, and (iv) you shall be entitled
to receive a partner stipend for 2025 in the amount of $250,000, which amount shall be paid to you in March
2025. Beginning January 1, 2026 and subject to your continued service with the Company, your target direct
compensation will be $1,000,000, consisting of a base salary of $650,000 and a bonus opportunity equal to
$350,000.
While serving as a Senior Advisor, (i) your outstanding equity awards and your outstanding awards under
the Apollo/Athene Dedicated Investment Program (“ADIP I”) and the Apollo/Athene Dedicated Investment
Program II (together with your outstanding awards under ADIP I, the “ADIP Awards”) will continue to vest
in accordance with their terms and the underlying equity plans; provided, that, for the avoidance of doubt,
the “Vesting Percentage” (as defined in the applicable award agreements) for each of your ADIP Awards
shall not exceed seventy-five percent (75%) following your termination of employment; (ii) you shall
continue to participate in the Company’s benefit plans and programs, subject to the terms of such plans; (iii)
you shall continue to receive administrative support, reimbursement for travel expenses and airline status,
each in the ordinary course subject to Company policy and at the same level applicable to Executive Vice
Presidents of the Company; (iv) you shall remain eligible to receive severance benefits in accordance with
the terms of the Company’s severance policy upon a qualifying separation based on your base salary in
effect at the time of your termination from the Company, subject to any required notice period under your
existing employment agreement and (iv) you shall continue to be entitled to receive an annual partner
stipend of $250,000.
Due to your service as Chief Financial Officer and Senior Advisor during the 2025 performance year, you
shall remain eligible for an annual bonus with respect to the 2025 calendar year, with a target bonus equal to
$961,000, the payment of which shall be subject to your continued service through December 31, 2025 and
the achievement of performance goals that shall be determined in the sole discretion of the executive
committee of the Board and which shall be paid to you no later than March 15, 2026. For the avoidance of
doubt, except as otherwise set forth herein, you shall not be entitled to receive any additional long-term
incentive awards following the date hereof. In addition, subject to your continued service with the Company
through December 31, 2025 and execution and non-revocation of the Company’s standard release of claims
in favor of the Company and its affiliates and compliance with the terms of the awards and your restrictive
covenants in favor of the Company, the continued vesting and settlement in accordance with the normal
settlement schedule of your SPA awards for the 2024 and 2025 performance years and outstanding equity
awards as if you had remained employed with the Company through the last scheduled vesting date for each
applicable award, with your outstanding equity awards to be settled in shares of Apollo Global
Management, Inc.
Other Board and Consulting Service. While serving as Senior Advisor, you shall be entitled to serve as a
member of the board of directors of a reasonable number of other companies, to serve on civic, charitable,
educational, religious, public interest or public service boards, provide consulting services and to manage
your personal and family investments, in each case, to the extent such activities are not competitive with the
Company and are in accordance with the Company’s outside business interest policy and do not materially
interfere with the performance of your duties and responsibilities hereunder.
Existing Employment Agreement. You and the Company agree that this Letter Agreement shall supersede
your Employment and Confidentiality and Non-Compete Agreement, dated as of October 12, 2015, between
you and the Company (the “Employment Agreement”), with the exception that you shall continue to be
bound by the covenants set forth in Article VII of the Employment Agreement including, without limitation,
the non-solicitation and confidentiality covenants set forth therein as well as any restrictive covenants set
forth in any other agreement between you and the Company or its affiliates, subject to any waiver agreed to
in advance and in writing by the Chief Executive Officer of the Company. In addition, you and the
Company hereby acknowledge and agree that your assumption of the role of Senior Advisor on the
Transition Date does not entitle you to any severance benefits under the Company’s severance policy.
Notwithstanding anything in this Agreement or any other agreement with the Company to the contrary, you
understand that neither this letter nor any other agreement prohibits or limits your ability to communicate
with any federal, state or local governmental agency or commission, or to otherwise participate in any
investigation or proceeding that may be conducted by such an agency or commission, including providing
documents or other information.
Again, thank you for your many years of dedicated service to the Company and your agreement to assist the
Company in its leadership transition.
Athene Holding Ltd.
By:
/s/ James R. Belardi
Name:
James R. Belardi
Title:
Chief Executive Officer
Apollo Global Management, Inc.
By:
/s/ Martin Kelly
Name:
Title:
This letter agreement correctly reflects our understanding, and I hereby confirm my agreement to the same as of
the date set forth above.
By: /s/ Martin P. Klein
Martin Klein
[Signature Page to Letter
Agreement]
Exhibit 19.1
APOLLO GLOBAL MANAGEMENT, INC.
INSIDER TRADING POLICY
Approved as of January 30, 2025
Apollo Global Management, Inc. (“Apollo” and together with its subsidiaries, the “Company”) has
adopted this Insider Trading Policy (this “Policy”), which prohibits Covered Persons (as defined herein) from
trading in the Company’s securities while in possession of Material Non-Public Information (as defined
herein) and outlines the procedures that all Covered Persons must follow in order to transact in Company
securities. This Policy and the procedures described herein arise from the Company’s responsibility as a
publicly traded company and the U.S. and non-U.S. securities laws that prohibit insider trading. Failure to
comply with this Policy and the required procedures could result in a serious violation of such securities laws
by you and/ or the Company and give rise to both civil and criminal penalties. It is important that you review
this Policy carefully.
1.
General Prohibition Against Insider Trading
IT IS THE COMPANY’S POLICY THAT IF ANY COVERED PERSON HAS ANY MATERIAL
NON-PUBLIC INFORMATION, HE OR SHE MUST REFRAIN FROM TRADING IN SUCH
COMPANY’S SECURITIES OR DISCLOSING THE INFORMATION TO SOMEONE ELSE UNTIL THE
INFORMATION HAS BEEN PROPERLY DISCLOSED BY THE COMPANY TO THE PUBLIC AND
THE OTHER REQUIREMENTS SET FORTH HEREIN ARE SATISFIED.
2.
Definition of Insider; Covered Persons; Reason for the Policy
In general, an “insider” is any person who possesses, or has access to, Material Information (as
defined below) concerning the Company, including, without limitation, Apollo Asset Management, Inc. or its
subsidiaries (collectively, “AAM”), or Athene Holding Ltd. or its subsidiaries (collectively “Athene”), that
has not been fully disclosed to the public (“Material Non-Public Information”). Insiders may be subject to
criminal prosecution and/or civil liability for engaging in a transaction (including a purchase or sale) in the
securities of the Company when they are in possession of Material Non-Public Information.
This policy applies to: (1) members of the boards of directors of the Company, including without
limitation, the board of directors of Apollo, AAM and Athene (a “Board of Directors”),
(2) officers of the Company, (3) employees of the Company, (4) certain consultants, representatives or
independent contractors of the Company who have knowledge of Material Non-Public Information regarding
the Company, (5) with respect to a person covered by the foregoing subsections (1) through (4), any member
of such person’s immediate family1 who resides with such person and to whose support such person
significantly contributes, any other
1 “Immediate family” means a Covered Person’s spouse, children, stepchildren, grandchildren, parents, grandparents,
stepparents, siblings, and persons with whom the Covered Person has an adoptive or in-law relationship.
person to whose support such person significantly contributes and any other person or entity controlled by
such person (e.g., partnerships in which such person is a general partner, trusts of which such person is a
trustee, estates of which such person is an executor) or for which transactions in the Company’s securities are
directed by such person, and (6) any other person as may be designated from time to time by the Chief
Compliance Officer (as defined herein) (persons covered by any of the foregoing subsections (1) through (6),
collectively, referred to as “Covered Persons”). Covered Persons who are subject to the AAM Compliance
Program for purposes of personal trade pre-clearance are collectively referred to as “Access Covered
Persons.” For the avoidance of doubt, references in this Policy to the securities of the Company shall include
any securities issued by Apollo, AAM, Athene or any of their subsidiaries.
Insider trading prohibitions are not limited to actual trading by an insider. They also make it illegal
for an insider or certain other persons to disclose to others (absent certain limited exceptions including (i)
where there is a legitimate need to know such information for the purpose of carrying out the Company’s
business or (ii) pursuant to a non-disclosure agreement ensuring that such information will remain
confidential) Material Non-Public Information or to advise others to trade on the basis of Material Non-
Public Information. Liability in such cases can extend both to the “tippee” (the person to whom the insider
disclosed inside information) and to the “tipper” (the insider disclosing such information). Penalties apply
whether or not the tipper derives, or even intended to derive, any profit or other benefit from the tippee’s
actions. It should be noted that while an insider’s parent or sibling may not be considered a Covered Person
or insider (unless that person lives in the same household), such person may be deemed a “tippee” for
securities laws purposes.
Potential penalties for insider trading violations include imprisonment and criminal fines and civil
fines (including disgorgement of all profits gained or losses avoided). If Apollo fails to take appropriate steps
to prevent illegal insider trading, Apollo may have “controlling person” liability for a trading violation, with
potential criminal and civil penalties. The civil penalties can extend personal liability to Apollo’s directors,
officers and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.
Finally, in addition to the potential criminal and civil liabilities mentioned above, in certain circumstances
Apollo may be able to recover all profits made by an insider and collect other damages.
Without regard to the penalties that may be imposed by others, willful violation of this Policy
constitutes grounds for immediate removal from the Board of Directors of Apollo, AAM, Athene or other
Apollo subsidiaries to the extent permitted by applicable law, termination of employment from the Company
or, with respect to the Company’s consultants, representatives or independent contractors, termination of
their relationships with the Company.
Finally, insider trading can have a negative effect on the public and the securities markets’
confidence in the Company and its securities, which could have a significant adverse impact on the Company
and its stockholders.
3.
Definition of Full Disclosure
Full disclosure to the public generally means any of the following: a press release followed by
publication in the mainstream print or electronic media; a press release issued by a national wire service; the
posting of materials to the Investor Relations section of the Company’s website; or a public filing with the
U.S. Securities and Exchange Commission (the “SEC”), such as a disclosure made in a Current Report on
Form 8-K. On the other hand, a speech to an audience, a TV or radio appearance, or an article in an obscure
magazine generally does not qualify as full disclosure and, absent express confirmation from Apollo’s Chief
Compliance Officer or Chief Legal Officer (both as defined below) should not be considered full disclosure.
Full disclosure also requires that the securities markets have had the opportunity to digest the news.
4.
Definition of Material Information
There is no bright-line test for determining what constitutes “Material Information.” A fact may be
deemed to be Material Information if there is a substantial likelihood that a reasonable investor would
consider it important in making a decision to buy, sell or hold a security or where the fact is likely to have an
effect on the market price of the security. While it may be difficult under this standard to determine whether
certain information is Material Information, there are various categories of information that would almost
always be regarded as Material Information, such as:
•
Earnings information;
•
Changes in forecasts or guidance;
•
Significant mergers, acquisitions, dispositions (including sales of significant assets),
tender offers, or joint ventures;
•
Changes in control or in senior management;
•
Significant developments involving corporate relationships;
•
Changes in the Company’s outside auditor or notification by the auditor to the
Company that the Company may no longer rely on an auditor’s report;
•
Events regarding the Company’s securities, for example, defaults on senior
securities, calls of securities for redemption, repurchase plans, stock splits or changes in
dividends, changes to the rights of security holders, and public or private sales of debt or
equity securities;
•
Significant borrowings or write-offs;
•
Bankruptcies or receiverships; and
•
Lawsuits (or threats of lawsuits) involving substantial potential liability and
significant developments in or the settlement of such lawsuits.
The contents of any earnings update teleconference or earnings-related press release shall, for
purposes of the Policy, always constitute Material Information.
This Policy also applies to material non-public information a Covered Person obtains in the course of
employment with, or by serving as a director of, the Company, relating to any other company. Potential
examples of such other companies include (i) our customers, clients or suppliers, (ii) any entity with which
the Company may be negotiating a transaction or business combination, or (iii) any entity as to which the
Company has an indirect or direct control relationship or a designee on the board of directors. A Covered
Person may not effect transactions in the securities of any such other company while in possession of
material non- public information concerning such company that was obtained in the course of employment or
service with the Company, as further detailed in the AAM and Athene personal trading policies.
If any person has questions as to the materiality of information, he or she should contact Apollo’s
Chief Compliance Officer (the “Chief Compliance Officer”) or his or her designee (collectively,
“Compliance”) or Apollo’s Chief Legal Officer (the “Chief Legal Officer”) or his or her designee for
clarification.
5.
Specific Pre-Trade Approval Requirements for Access Covered Persons
This Section 5 applies to Access Covered Persons, which include all Covered Persons, except Athene
employees other than a group of Athene employees designated by Athene and Apollo Compliance, who are
to be subject to the pre-clearance requirements set forth herein. Except as may otherwise be provided herein,
before any Access Covered Person executes a transaction in Company securities, including, without
limitation, exercising stock options or warrants (other than in accordance with Section 7.A. below), making
gifts, the placing of limit orders, pledges, options or contracts to purchase or sell or any other arrangement
that would transfer the economic consequences of ownership of Company securities, such Access Covered
Person, to the extent they have access to the Company’s personal trading system, must submit a request via
the Company’s personal trading system, which will then be subject to approval by Compliance. Access
Covered Persons who do not have access to the Company’s personal trading system must submit requests via
email to [intentionally omitted] or to the Company’s Secretary, and such requests will then be subject to
review by Compliance. In connection with a request to trade, an Access Covered Person must make a
representation that they are not in possession of Material Non-Public Information and, in the case of
proposed sales, that the securities have been held for a minimum of 90 days. Approved trades will be
authorized for a limited window period of up to 3 business days during an Open Window Period (as defined
below). If the Access Covered Person has not completed the trade within 3 business days of approval of the
trade, then he or she must re-submit the request to receive a new approval from Compliance and re-verify the
nonexistence of any restrictions on such trade. If the Access Covered Person becomes aware of Material
Non-Public Information before the transaction is executed, the approval shall be void. For the avoidance of
doubt, the approval outlined in this section must be obtained prior to an Access Covered Person executing a
transaction in Company securities, even during an Open Window Period.
6.
Specific Restrictions for Covered Persons
A. Except as otherwise provided in Section 6.C. or herein, and subject to approval by
Compliance, Covered Persons may not engage in any transaction involving the Company’s
securities (including purchases or sales) during a Blackout Period (as defined in Section 6.C.)
The Company’s quarterly blackout period (the “Quarterly Blackout Period”) typically commences on the 13th
day of the month in which any fiscal quarter of the Company ends and ends 24 hours after the release of the
Company’s quarterly or annual financial information in a press release reporting the results of such fiscal
quarter, and any period other than a Quarterly Blackout Period or Special Blackout Period (as defined in
Section 6.C. below)is an “Open Window Period”, with the end of the relevant blackout period and the
commencement of an Open Window Period being communicated to Covered Persons by Compliance.
B. Covered Persons may not engage in transactions of a speculative nature involving
Company securities at any time, including, but not limited to, the purchase or sale of put options or
covered calls. All Covered Persons are prohibited from short-selling Company securities or
engaging in transactions, whether in a discretionary or managed account or 10b5-1 Plan, (i)
involving other Company-based Derivative Securities (as defined below) or (ii) that hedge or offset,
or are designed to hedge or offset, any decrease in the market value of Company securities,
including, but not limited to, swap or exchange agreements. “Derivative Securities” are options,
warrants, restricted stock units, stock appreciation rights or similar rights whose value is derived
from the value of an equity security, such as the Company’s common stock. This prohibition
includes, but is not limited to, trading in Company-based put option contracts, transacting in
straddles, prepaid variable forward contracts, equity swaps and collars. However, this prohibition
does not include (i) the receipt of grants of Derivative Securities issued under an Equity Plan or the
exercise of options granted under an equity-incentive plan of Apollo, AAM or Athene (an “Equity
Plan”) if in accordance with Section 7 of this Policy or (ii) the entry into, by a PVFC Covered
Person (as defined below), no more than once every three consecutive calendar years, except as
otherwise approved by the Company’s Chief Compliance Officer and Chief Legal Officer, and only
during an Open Window Period, of a prepaid variable forward contract or substantially similar
transaction covering at least 50,000 shares and at most, when aggregated with all other prepaid
variable forward contracts or substantially similar transactions entered into by such Covered Person,
10% of the shares of the Company’s common stock (including shares covering or underlying vested
equity awards) beneficially owned by such Covered Person on such date; provided that, as a
condition to entering into a prepaid variable forward contract or substantially similar transaction, the
Covered Person shall (a) provide advance notice of such prepaid variable forward contract or
substantially similar transaction and its terms to the Chief Legal Officer and (b) enter into a lock-up
agreement, substantially in a form approved by Apollo’s board of directors or a committee of the
board, that generally restricts the transfer or other disposition for one year from such date of all
other shares of the Company’s common stock beneficially owned by such PVFC Covered Person on
such date. For the avoidance of doubt, if a PVFC Covered Person elects to settle a prepaid variable
forward contract or substantially similar transaction in cash, or take any other action with respect to
such prepaid variable forward contract or similar transaction that would be deemed a purchase or
sale under applicable securities laws, such action will represent a separate trade in the Company’s
securities and will be subject to this Policy. “PVFC Covered Person” means Covered Persons of
Apollo and Athene who are members of the Apollo Leadership Team or the Athene Management
Executive Committee and who have at least five years of service with Apollo and/or Athene at the
time of entry into the prepaid variable forward contract.
C. The Company may prohibit Covered Persons from engaging in transactions involving
Company securities when, in the judgment of the Chief Compliance Officer or Chief Legal Officer,
a blackout period other than a Quarterly Blackout Period (a “Special Blackout Period”, and together
with the Quarterly Blackout period, a “Blackout Period”) is warranted. Additionally, the Chief
Compliance Officer or the Chief Legal Officer may start, extend or end a Blackout Period, at any
time, in such officer’s sole discretion. The Chief Compliance Officer also has the authority to
impose restrictions on trading in Company securities by appropriate individuals (including, for
example, certain Access Covered Persons who have been designated by the Chief Compliance
Officer or his or her designee to be subject to information barriers that are intended to limit
Company-wide dissemination of potential material non-public information concerning certain
Apollo strategic and other transactions) at any time. In any such event, the affected individuals will
be notified, either personally or by email or voicemail, and informed of the restrictions. It should be
noted that even during an Open Window Period, any person who comes into possession of Material
Non-Public Information must not engage in any transactions involving the Company’s securities,
whether or not the Company has imposed or recommended a suspension of trading to that person.
The Chief Compliance Officer further has the authority to request brokerage or other trading-related
statements from any Covered Persons (including, for the avoidance of doubt, where not otherwise
reported to the Company in connection with its policies and procedures) for purposes of evaluating
compliance with this Policy.
D. Any Covered Person who has placed a limit order or open instruction to buy or sell
Company securities shall bear responsibility for canceling such instructions immediately in the
event restrictions are imposed on such person’s ability to trade.
E. All Covered Persons should be particularly careful to avoid even the appearance of
engaging in transactions in the Company’s securities on the basis of Material Non-Public
Information.
F. Covered Persons who are directors, executive officers, or 10% beneficial owners of
Apollo or Athene are subject to reporting of transactions under Section 16(a) and the restrictions set
forth in Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) with respect to
the purchase and sale of securities of Apollo or Athene. Section 16(b) generally prohibits a director,
officer or 10% beneficial owner from consummating both a purchase and sale transaction in a given
company’s securities in any period of less than 6 months. Any profits made through such
transactions by such individuals are recoverable by Apollo or Athene, as applicable, even if the
transaction was done inadvertently.
G. Except in connection with a prepaid variable forward contract or substantially similar
transaction pursuant to clause B above, Covered Persons who are directors or officers (as defined in
Section 16a-1 of the Exchange Act) of Apollo or Athene (“Section 16 Individuals”) are prohibited
from pledging Company securities as collateral for a loan or holding such securities in a margin
account. Covered Persons not restricted by the foregoing may pledge Company securities as
collateral for a loan or hold such securities in a margin account, provided such pledge occurs during
an Open Window Period and they receive prior written approval to engage in such transactions from
the Chief Compliance Officer and the Chief Legal Officer. Note that even if such approval is
provided, a Covered Person who has entered into a pledge of Company securities is responsible for
ensuring that foreclosure on any such securities would not violate this Policy.
7.
Very Few Exceptions
There are almost no exceptions to the prohibition against insider trading. For example, it does not
matter that the transactions in question may have been planned or committed to before the Covered Person
came into possession of the Material Non-Public Information, or the economic loss that the person may
believe he or she might suffer as a consequence of not trading. It is also irrelevant that publicly disclosed
information about the Company might, even aside from the Material Non-Public Information, provide a
substantial basis for engaging in the transaction. The existence of a personal financial emergency also does
not excuse you from compliance with this Policy. You simply cannot trade in Company securities while in
possession of Material Non-Public Information about the Company.
There are no limits on the size of a transaction that will trigger insider trading liability; relatively
small trades have in the past occasioned SEC investigations and lawsuits.
The only exceptions to this Policy are as follows:
A.Exercise of options issued under an Equity Plan, Company issued warrants or conversion
of a convertible Company security. Notwithstanding anything to the contrary set forth in this Policy,
exercises of stock options issued under an Equity Plan, exercises of Company issued warrants, or
the conversion of a convertible Company security, in each case in situations in which the other party
to the transaction is the Company and the price does not vary with the market, but is fixed by the
terms of the relevant option, warrant or other award agreement, are exempt from this Policy. This
exemption does not apply to the sale of any securities issued upon such exercise or conversion,
including pursuant to a “cashless exercise” of options or “cashless conversion” of convertible
securities that is accomplished by a sale of a portion of the shares issued upon exercise of an option
or conversion of a convertible security.
B. Surrender of shares to the Company for tax withholding obligations. The surrendering of
shares to the Company in satisfaction of any tax withholding obligations upon the vesting of a
Covered Person’s restricted stock units, restricted stock or other equity-based awards covering
Company securities shall be exempt from this Policy.
C. Sales made pursuant to approved 10b5-1 Plans. A written plan adopted by a Covered
Person for selling Company securities that (i) is approved in advance by the Chief Compliance
Officer or the Chief Legal Officer, (ii) conforms to all requirements of Section 240.10b5-1(c) of the
Code of Federal Regulations as then in effect (such a written plan, a “10b5-1 Plan”) and (iii)
conforms to any other requirements deemed appropriate by the Company in its sole discretion, shall
be exempt from this Policy. See “Guidelines for the Adoption and Administration of 10b5-1 Plans
Covering Company Securities” set forth in Section 9 below.
D. Certain transactions for estate planning purposes. Transfers or bona fide gifts of
Company securities by a Covered Person to a vehicle formed for estate-planning purposes or a
family limited partnership, charitable foundation or similar entity shall be exempt from this Policy,
if (i) the transfer is approved in advance by the Chief Compliance Officer, (ii) the investment and
voting decisions of such transferee organization are controlled by the Covered Person, such that the
transfer would not involve a change in beneficial ownership, and (iii) the Covered Person has
confirmed in writing to the Chief Compliance Officer that he or she will not
permit the transferee organization to sell or otherwise transfer the Company securities during a Blackout
Period.
E. ESPP. This Policy does not apply to purchases of Company securities made on an
employee’s behalf under the AHL Employee Stock Purchase Program, or any other employee stock
purchase program the Company or its subsidiaries may offer from time to time, (each, an “ESPP”)
resulting from a Covered Person’s periodic contribution of money to the program pursuant to an
election made at the time of enrollment in the ESPP (as such election may later be modified in
accordance with such program). This Policy does apply, however, to a Covered Person’s election to
enroll in the ESPP, election to change the amount contributed to the ESPP and sales of Company
securities purchased pursuant to the ESPP.
F. Exceptions for extraordinary circumstances. Transactions receiving prior written
approval of the Chief Compliance Officer, which approval may be given only under extraordinary
circumstances, for example, to allow a Covered Person to comply with a court order or divorce
settlement, shall be exempt from this Policy.
8.
Post-Termination Transactions
If you are in possession of Material Non-Public Information when your employment or service
relationship terminates, you may not trade in Company securities until that information is no longer Material
Non-Public Information.
9.
Guidelines for Adoption and Administration of 10b5-1 Plans Covering Company Securities
A 10b5-1 Plan, which typically takes the form of a contract between an insider and his or her broker,
may be entered into when that insider has no Material Non-Public Information about the Company or
Company securities. Schedule I to this Policy contains guidelines for the adoption and administration of
10b5-1 Plans. If you have any questions about 10b5-1 Plans, please contact the Chief Compliance Officer or
the Chief Legal Officer.
10. Amendments and Waivers
Any amendments or modifications to this Policy shall be subject to the approval of each of the Chief
Compliance Officer, the Chief Legal Officer and the Nominating and Corporate Governance Committee of
the Board of Directors of Apollo (the “NCG Committee”). Any waiver of this Policy for an executive officer
or director of the Company shall be subject to the approval of the NCG Committee, and any waivers of this
Policy for all other Covered Persons shall be subject to the approval of either the Chief Compliance Officer
or the Chief Legal Officer.
If you have any questions about this Policy, please contact the Chief Compliance Officer.
Schedule I
Guidelines for Adoption and Administration of 10b5-1 Plans
Under Rule 10b5-1 of the Exchange Act, large stockholders, directors, officers and other insiders
who regularly possess Material Non-Public Information but who nonetheless wish to buy or sell securities
may establish an affirmative defense to an illegal insider trading charge by adopting a written plan to buy or
sell at a time when they are not in possession of Material Non- Public Information.
A 10b5-1 Plan typically takes the form of a contract between the insider and his or her broker. The
plan must be entered into at a time when the insider has no Material Non-Public Information about the
Company or its securities (even if no trades will occur until after the release of the Material Non- Public
Information). A 10b5-1 Plan established in and treated throughout its duration with good faith at a time when
a person is unaware of Material Non- Public Information creates an affirmative defense against insider
trading even if actual trades made pursuant to the plan are executed at a time when the person may be aware
of Material Non- Public Information.
A 10b5-1 Plan entered into by a Covered Person must satisfy the following conditions mandated by
the SEC (Section A) and required by the Company (Section B) listed below:
A. For a 10b5-1 Plan to provide an affirmative defense against illegal insider trading under
prescribed by Rule 10b5-1(c) of the Exchange Act, the following SEC-mandated conditions must be
met:
•
Good faith. The plan must be entered into in good faith and not as part of a plan or scheme
to evade Rule 10b5-1, and an insider must continue to act in good faith with respect to the plan
throughout its duration;
•
No Material Non-Public Information. The plan must be adopted during an open trading
window and at a time when the insider is not in possession of Material Non- Public Information;
•
Cooling-off period. No sales or purchases under a 10b5-1 Plan may occur until:
◦
For Section 16 Individuals, the later of (i) the ninety (90) calendar days following the
date the plan is adopted, modified2 or terminated and (ii) two (2) business days following the
disclosure of the Company’s financial results in a Form 10-Q or Form 10-K covering the
quarter in which the 10b5-1 Plan was adopted, provided that, in any event, such period will
be no greater than one hundred twenty (120) calendar days;
2 A modification or change to the amount, price or timing of the purchase or sale of securities (or a formula or algorithm
that determines such parameters) qualifies as a termination of an existing plan and the concurrent adoption of a new
plan, thereby triggering a new cooling-off period. Modifications that do not alter the prices or price ranges, the amount
of securities to be sold or purchased, or the timing of transactions will not trigger a new cooling-off period.
•
For other Company insiders (including all remaining Covered Persons), at least thirty
(30) calendar days following the date the plan is adopted, modified or terminated;
•
Transaction details. The terms of the plan must specify the amount, price, and date of the
transaction or include a formula for determining the amount, price and trading date (either directly
or pursuant to a written formula or algorithm or a computer program);
•
Director & officer representations. Section 16 Individuals must include a representation in
their 10b5-1 Plans that they are (i) not in possession of Material Non-Public Information and (ii)
adopting the plan in good faith and not to evade the prohibitions of Rule 10b5-1 or Section 10(b) of
the Exchange Act;
•
No subsequent influence. The insider must not exercise any subsequent influence over the
trades once the plan is in place;
•
Single-trade plans. The insider may not have more than one3 single-trade plan during any
rolling 12-month period;
•
One plan. The insider may not maintain more than one3 10b5-1 Plan at a given time;
provided that limited exceptions exist for (i) one later commencing plan (a) if trading under the
later-commencing plan is not authorized to begin until after all trades under the earlier-commencing
plan are completed or expire without execution and (b) if the earlier plan is terminated early, the
first trade under the later-commencing plan must not be scheduled to occur until after the effective
cooling-off period following the termination of the earlier plan, and (ii) separate contracts with
multiple brokers that otherwise comply with Rule 10b5-1(c) when taken as a whole; and
•
Plan deviations or hedging. The trades must be executed in accordance with the plan.
Deviations from a plan and alterations to a plan during its term, as well as entering into or altering
corresponding or hedging transactions with respect to such securities, may undermine the defense.
B. Set forth below are additional Company requirements with respect to 10b5-1 Plans covering
Company securities:
1. All 10b5-1 Plans covering Company securities must be approved by the Chief
Compliance Officer or the Chief Legal Officer, including any amendments, modifications,
suspensions or terminations of 10b5-1 Plans.
2. 10b5-1 Plans shall have a term of no less than six (6) months.
3 Sell-to-cover plans solely to satisfy tax withholding obligations arising from the vesting of Company securities shall
not count towards the one plan limit.
3. A 10b5-1 Plan may be amended by a Covered Person only one time during any six-
month period; provided that such amendment may be made only during an Open Trading
Window.
4. 10b5-1 Plans for Section 16 Individuals must provide that any trade that is initiated
under a 10b5-1 Plan must be reported to the Chief Legal Officer as soon as possible but not later
than within 24 hours of initiation, as such persons must file a Form 4 with the SEC reporting all
transactions in Company Securities within two business days.
5. 10b5-1 Plans must allow for mandatory suspension or termination if legally required.
10b5-1 Plans that provide discretion to a broker or other third party over trading in the 10b5-1
Plan, such as authorizing a broker to determine whether, how and when to make trades in
Company securities, are prohibited.
6. The inclusion of hedging transactions in any 10b5-1 Plan is prohibited.
7. Covered Persons may not have a 10b5-1 Plan in effect and be participating in a
Company employee stock purchase program at the same time.
For Section 16 Individuals, the Company is required to publicly disclose whether, during the last fiscal
quarter, such person adopted, modified or terminated a 10b5-1 Plan and, if so, disclose the material non-
price terms of the plan, including: the name and title of the Section 16 Individual; the date of adoption,
modification or termination; the duration of the plan; and the aggregate amount of securities to be bought
or sold under the plan. For Covered Persons who are not Section 16 Individuals, the adoption, amendment
or termination of a 10b5-1 Plan is not required to be publicly disclosed. Nevertheless, the Chief Legal
Officer shall have discretion to determine to disclose the adoption, amendment or termination of a 10b5-1
Plan.
These guidelines are subject to change based on Company policy and changes to applicable
law.
Subsidiaries of the Registrant
Subsidiary
Jurisdiction of incorporation
Athene Life Re Ltd.
Bermuda
Athene Asset L.P.
Bermuda
Athene Life Re International Ltd.
Bermuda
Athene USA Corporation
Iowa
Athene Annuity Re Ltd.
Bermuda
Athene Employee Services, LLC
Iowa
Athene London Assignment Corporation
Delaware
Athene Assignment Corporation
Delaware
A-A Onshore Fund, LLC
Delaware
Athene Noctua, LLC
Delaware
ACM Trademarks, L.L.C
Iowa
ARPH (Headquarters Building), LLC
Iowa
Athene Annuity and Life Company
Iowa
P.L. Assigned Services, Inc.
New York
Athene Annuity & Life Assurance Company of New York
New York
Structured Annuity Reinsurance Company
Iowa
Athene Securities, LLC
Iowa
Centralife Annuities Service, Inc.
Arizona
Athene Re USA IV, Inc.
Vermont
Athene Life Insurance Company of New York
New York
AADE RML, LLC
Iowa
AAIA RML, LLC
Iowa
Athene Bermuda Employee Company Ltd.
Bermuda
Athene IP Holding Ltd.
Bermuda
Athene North Employment Service Corporation
Canada
Athene Co-Invest Reinsurance Affiliate Holding Ltd.
Bermuda
Athene Co-Invest Reinsurance Affiliate 1A Ltd.
Bermuda
Athene Co-Invest Reinsurance Affiliate 1B Ltd.
Bermuda
Athene Co-Invest Reinsurance Affiliate LP
Delaware
Athene Co-Invest Reinsurance Affiliate International Ltd.
Bermuda
Athene Risk Aggregator, LLC
Delaware
ADIP (Athene) Carry Plan, L.P.
Bermuda
Athene Re Services, LLC
New York
Rosencrantz Depositor, LLC
Delaware
NNN AGP Opportunities GP, LLC
Delaware
AARE Structured Holdings, LLC
Delaware
Athene Co Invest Reinsurance Affiliate Holding 2 Ltd.
Bermuda
Athene Co Invest Reinsurance Affiliate 2A Ltd.
Bermuda
Athene Co Invest Reinsurance Affiliate 2B Ltd.
Bermuda
Athene Annuity Re II Ltd.
Bermuda
Athene Japan K.K.
Japan
Athene Re Japan Solutions Co., Ltd
Japan
A-A Mortgage HoldCo, LLC
Delaware
A-A Mortgage Investor, LLC
Delaware
141 W Jackson Owner, LLC
Delaware
660 NC LLC
Delaware
Exhibit 21.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333- 276340 on Form S-3 of our report dated
February 24, 2025, relating to the financial statements and financial statement schedules of Athene Holding Ltd., appearing in
this Annual Report on Form 10-K for the year ended December 31, 2024.
/s/ Deloitte & Touche LLP
Des Moines, Iowa
February 24, 2025
Exhibit 23.1
I, James R. Belardi, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Athene Holding Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 24, 2025
/s/ James R. Belardi
James R. Belardi
Chairman, Chief Executive Officer and Chief Investment Officer
(principal executive officer)
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY OF 2002
I, Martin P. Klein, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Athene Holding Ltd.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 24, 2025
/s/ Martin P. Klein
Martin P. Klein
Executive Vice President and Chief Financial Officer
(principal financial officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY OF 2002
I, James R. Belardi, certify that Athene Holding Ltd.’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in
the Report fairly presents, in all material respects, the financial condition and results of operations of Athene Holding Ltd.
Date: February 24, 2025
/s/ James R. Belardi
James R. Belardi
Chairman, Chief Executive Officer and Chief Investment Officer
(principal executive officer)
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate
disclosure document.
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Martin P. Klein, certify that Athene Holding Ltd.’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in
the Report fairly presents, in all material respects, the financial condition and results of operations of Athene Holding Ltd.
Date: February 24, 2025
/s/ Martin P. Klein
Martin P. Klein
Executive Vice President and Chief Financial Officer
(principal financial officer)
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate
disclosure document.
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002