Summary of Athene Holdings (ATHS) Q4 2019 Earnings Call

1Key Financial Results and Metrics

Adjusted Operating Income: Record $389 million, or $2.21 per diluted share, with an adjusted operating ROE of 16.7%.

GAAP Net Income: $432 million, or $2.42 per diluted share.

Adjusted Book Value: Increased 18% year-over-year to $54 per share.

Consolidated Net Investment Earned Rate (NIER): 4.62%, up from 4.35% in Q3.

Total Cost of Funds: 2.73%, down 45 basis points from the prior quarter.

Excess Capital: Approximately $2 billion at year-end.

2Strategic Updates and Business Highlights

Record Organic Deposits: $18 billion in 2019, a 37% increase from 2018, driven by strong performance in pension risk transfer (PRT) and flow reinsurance channels.

Pension Risk Transfer: Closed $6 billion in transactions, more than doubling 2018 volumes, including the first UK PRT transaction.

Funding Agreements: Issued $1.3 billion in 2019, with a strong outlook for 2020, including plans for non-US dollar denominated deals.

Share Repurchases: Over $900 million allocated for buybacks, with $300 million in Q4 alone.

ACRA Development: Closed the sale of 67% of ACRA, generating $575 million in capital and positioning for future growth.

3Forward Guidance and Outlook

2020 Expectations:

Anticipate organic deposit volumes similar to 2018 levels.

Fixed income NIER expected to normalize, with alternative returns projected at 10-11%.

Adjusted return on assets forecasted at 110-120 basis points.

Continued share repurchase activity anticipated, contingent on market conditions.

4Bad News, Challenges, or Points of Concern

Retail Sales Pressure: Retail sales declined due to low interest rates and competitive pricing, with expectations for continued pressure in the near term.

Market Volatility: Potential for fluctuations in investment income due to changing interest rates, particularly affecting floating rate securities.

Competition: Increased competition in the retail annuity market, particularly impacting MYGA sales.

M&A Environment: While the pipeline remains active, the timing and execution of potential transactions could be uncertain.

5Notable Q&A Insights

Credit Quality: Management expressed confidence in their portfolio's credit quality, noting low impairments (3 basis points for the year) despite challenges in the energy sector.

Retail Sales Outlook: Management expects improvement in retail sales driven by recent pricing adjustments and macroeconomic conditions.

M&A Strategy: The company is positioned to pursue large transactions due to limited competition in that space, while also considering mid-sized deals.

Capital Generation: Expected to generate approximately $2 billion in earnings from in-force business in 2020, with a net increase in excess capital anticipated. This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, challenges, and insights from the Q&A session, providing a comprehensive overview of Athene Holdings' performance and outlook for Q4 2019.