ATH-PA — Athene Holding Ltd.

Summary of Athene Holdings Q3 2021 Earnings Call

1. Key Financial Results and Metrics

• GAAP Net Income: $698 million, or $3.51 per diluted share.
• Adjusted Operating Income: $541 million, or $2.73 per share, with adjusted operating ROE at 15.3%.
• Adjusted Book Value: Increased to $71.50 per share, reflecting a compound growth rate of 17% per year since inception.
• Organic Inflows: $12 billion in Q3, a record high, contributing to total year-to-date organic inflows of $27.7 billion.
• Annualized Organic Growth Rates: 8% for Q3 and 7% year-to-date.
• Fixed NIER: Reported at 3.49%, down 26 basis points sequentially, attributed to cash influx and lower bond call income.

2. Strategic Updates and Business Highlights

• Athene's record organic inflows were driven by strong performance across retail, pension group annuities, and funding agreements.
• Notable transactions included a landmark $4.9 billion pension risk transfer deal with Lockheed Martin.
• The company is actively pursuing acquisitions, including Foundation Home Loans and a majority stake in Newfi, enhancing its asset origination capabilities.
• Athene's alternative investments yielded an annualized net return of 16%, supported by strong performance in natural resources, private credit, and real estate.

3. Forward Guidance and Outlook

• Athene expects to exceed the revised estimate of $30 billion in total organic inflows for 2021, projecting inflows to approach $35 billion.
• Anticipated fixed NIER for Q4 is approximately 3.5%.
• The company remains optimistic about the pension risk transfer market, expecting continued growth and potential for larger transactions in 2022.
• The upcoming merger with Apollo is seen as a strategic imperative to unlock shareholder value.

4. Bad News, Challenges, or Points of Concern

• Fixed NIER decline due to cash influx and lower yields on new deployments.
• The company noted challenges in the low interest rate environment, which could impact profitability.
• Concerns regarding the competitive landscape, particularly in the MYGA market, although recent rate increases have improved conditions.
• Potential impacts from regulatory scrutiny related to private equity-owned insurers and affiliated transactions.

5. Notable Q&A Insights

• Management emphasized the growth opportunities in Asia, particularly in Japan, where indexed annuities are gaining traction.
• Discussions on the potential impact of LDTI (Long Duration Targeted Improvements) indicated minimal effects on Athene's capital and earnings, but could catalyze M&A activity in the industry.
• The pension risk transfer market is expected to remain strong, with opportunities for larger transactions as corporations seek to divest frozen pension plans.
• Management expressed confidence in maintaining a disciplined approach to acquisitions, focusing on high-quality opportunities without overextending on pricing.

Overall, Athene Holdings reported strong financial performance in Q3 2021, with record inflows and strategic growth initiatives, while also navigating challenges posed by market conditions and regulatory scrutiny. The upcoming merger with Apollo is anticipated to enhance future growth prospects.