Summary of Athene Holding's Q3 2020 Earnings Call

1Key Financial Results and Metrics

GAAP Net Income: $622 million, or $3.16 per diluted share.

Adjusted Operating Income: $302 million, or $1.53 per share (excluding notable items).

Adjusted Operating ROE: 19% for the Retirement Services segment.

Investment Purchases: Record $14 billion in investments at a yield premium of 60 basis points above the BBB corporate bond index.

Organic Growth: Generated record deposits of $7.4 billion, with total organic and inorganic growth exceeding $50 billion for the year.

2Strategic Updates and Business Highlights

Athene emphasized its strong capital position with approximately $14.5 billion in regulatory capital and a clean balance sheet.

The company executed a $29 billion transaction with Jackson National, aligning with its strategy to act as a solutions provider in the insurance industry.

Athene's alternative investments performed well, appreciating over 10% in the last two quarters.

The firm is focused on redeploying the Jackson portfolio, having reinvested over $10 billion, raising the yield by approximately 90 basis points.

3Forward Guidance and Outlook

Athene expects to maintain a fixed net investment earned rate (NIER) around 3.6% for Q4 2020, with potential for slight increases as cash levels normalize.

The company anticipates exceeding $20 billion in organic volume for 2020, with a target of operating income exceeding $8 per share in 2021, excluding the impact of Apollo shares.

The firm plans to reduce its cash balance from $6.5 billion to approximately $2 billion, which could increase annualized investment income by about $135 million.

4Bad News, Challenges, or Points of Concern

The company noted potential risks associated with credit migration and downgrades in 2021, although it has experienced minimal impairments and downgrades year-to-date.

The competitive landscape in flow reinsurance is evolving with new entrants, but Athene believes its strong capital and track record will mitigate risks.

The IMO channel remains disrupted due to the pandemic, impacting sales, though Athene has gained market share relative to competitors.

5Notable Q&A Insights

Management expressed confidence in achieving 2021 earnings targets, despite pressures on fixed income NIER due to low interest rates.

The competitive landscape for flow reinsurance was discussed, with management noting that while new competitors have emerged, Athene's established relationships and capital position provide a competitive advantage.

There was a discussion regarding the potential impact of a new DOL fiduciary standard under a Democratic administration, with management indicating they are not overly concerned about significant changes.

The company is actively exploring additional inorganic growth opportunities, with a robust pipeline for potential transactions. Overall, Athene demonstrated strong financial performance in Q3 2020, with strategic initiatives aimed at maintaining growth and profitability despite external challenges and competitive pressures.