Good morning, and welcome to Apollo Global Management's Third Quarter 2024 Earnings Conference Call. This conference call is being recorded. This call may include forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will discuss certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, available on the company's website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in any Apollo fund. I will now turn the call over to Noah Gunn, Global Head of Investor Relations.

Thanks, operator, and welcome again, everyone, to our call. Earlier this morning, we published our earnings release and financial supplement on the Investor Relations portion of our website. We reported strong third quarter financial results that included record fee-related earnings of $531 million or $0.87 per share, near-record spread-related earnings of $856 million or $1.40 per share and adjusted net income of $1.1 billion or $1.85 per share, which reached the second highest level on record. Additionally, I'd like to take a moment to thank you all for participating in our Investor Day last month. We were thrilled to have fantastic attendance, with over 3,000 people participating live in addition to another 54,000 who have accessed the replay since then. Given our proximity to this comprehensive event, today's call will be a shorter update. I'm joined this morning by Marc Rowan, CEO; Jim Zelter, Co-President; and Martin Kelly, CFO. Marc and Martin will cover prepared remarks, and Jim will be available for Q&A. And with that, I'll hand the call over to Marc.

Thank you, Noah, and good morning. I want to echo Noah's sentiment that we take nothing for granted, and we deeply appreciate your willingness to spend 3 to 4 hours with us on Investor Day to truly dig into the unique business that we are building. Hopefully, we outlined a clear vision for our 5-year plan as well as the upside drivers. In summary, for those who did not suffer through the 3 to 4 hours, we talked about average annual FRE growth of 20% and average annual SRE growth of 10%, FRE and SRE reaching $10 billion, $5 billion each in 2029 and ANI more than doubling to $15 a share by 2029. Capital generation of $21 billion. In short, we laid out ambitious targets, but they're targets the management team and I are fully behind and believe we can meet. Third quarter was a solid start in that direction. In short, everything worked. The team made all of us look good. We will open the frozen yogurt bar today to reward the team for that. It's one of the tools we joked about on Investor Day, but it's part of the culture of Apollo. Let me spend a second as to how the long-term business plan in the quarter relate to each other. In terms of our 5-year plan, we laid out 4 mega trends or tailwinds we thought were going to drive ourselves on our industry forward over the next 5 years: The so-called global industrial renaissance and this massive need for capital to rebuild infrastructure, energy transition and next-gen power and data; the second, retirement; the third is the growth of individuals, complementing institutions who have long been the sole source of capital for private assets; and finally, the notion of public and private convergence. In short, any of these 4 TAMs could double our business over the next 5 years. It is up to us to execute against this opportunity set and to position the franchise squarely in front of these very strong tailwinds. We are fortunate in many ways that even at our size and scale, in the scheme of the asset management industry, we are a relatively small player. And while we project that we will double our business over the next 5 years, that is not all that large, particularly compared to the enormous TAMs in front of us. Bringing it down to the quarter, in terms of global industrial renaissance and the massive need for capital, this was a record origination quarter, $62 billion of originations for the quarter, $194 billion year-to-date. Platforms, really strong quarter. ATLAS, in particular, had a really strong quarter, $50 billion of cumulative origination to date, $5 billion of equity capital raised, a new $5 billion facility from BNP, 350-person strong. In short, the cylinders are all firing at ATLAS, and we expect great things from them going forward. In retirement, Athene had another $20 billion organic growth quarter. We continue to widen the funnel through distribution expansion. Just launched with BAML last week, another top 15 platform. Away from Athene, we continue to make inroads into the retirement space, in particular, in the DC market. We have our first mandate for our AAA product on an RIA platform. We are in the equity sleeve of a CIT offering, and we launched in October. While technical, this is an enormous milestone for us and I believe portends well for the future in front of us in adding private assets to help bulk and accelerate retirement solutions for those in need. In terms of individual investors in progress against retail, fundraising is on pace to increase 50% year-over-year in '24 without a flagship fund. The team here has done an extraordinary job. ABC, our asset-based company, is now distributing on 2 large wire house platforms. ASPM, our evergreen multi-asset secondary strategy, launched globally. We now have, post these 2, 11 wealth products focused on the market, 6 of which have been in the market for a year or less. But I want to really call out here what the potential of what this can be. Recall that our strategy here is to be seen as an innovator in this marketplace. So AAA, which we talked about 1.5 years ago, we've now crossed $18.5 billion and we expect to be approximately $20 billion by year-end. Strong returns here, now approximately 10.5%, with a fraction of the volatility of public equity markets and public debt markets. This is the kind of product that has multiple uses across portfolios. And I stick by what I said when we launched the product, I expect this to be the largest fund at Apollo within a very short period of time. And I think next year will be when that happens. ADS, also really strong performance. Durable yield, taking advantage of trends in private credit, but done in an Apollo-esque way, lowest leverage, all first lien. We expect the strategy to be approximately $15 billion at year-end. I cite the size of this because I think it's important to show just how fast this channel is developing. And the channel development is about product, it is about performance, but it's also about the capability to serve this large and growing market and the capability to continue to innovate. We learn something almost every day in this marketplace. To cite just one example, we talked a year ago about an insurance-wrapped product to take advantage of the unique tax situation of individual investors. Our Altitude series, which encompasses our insurance-wrapped product, we expect to be approximately $1 billion at year-end and now active in 2 significant wire houses. Those 3 trends, global industrial renaissance, retirement and growth in the retail channel are 3 of the 4 cylinders that we expect or 3 of the 4 tailwinds that we expect to power our business going forward. The fourth is this whole notion of public and private convergence. We see this as fixed income replacement. What we're watching take place is investors who have historically allocated to private markets solely out of their alternative bucket, are beginning to allocate out of their fixed income bucket, which historically has been 100% public investment grade. We expect that over time, investors will begin to divide this bucket between beta, public investment grade; and alpha, private investment grade. And they will consume that in a number of different formats. Some will consume directly as pure private assets, some will consume it in fund format, and yet others will consume it in products that are more familiar to them from more familiar names, such as the partnerships and the relationships we've announced with Lord Abbett and with State Street. More on that product when it is approved because it is currently in registration. Those 4 tailwinds, I believe, will push our business forward and they will push our industry forward. But all of them ultimately depend on one factor. They depend on our capacity to originate assets that offer excess return per unit of risk or alpha. We are not solely an asset manager. If we behave like an asset manager and simply gather funds, we will simply degrade our business and degrade our franchise. That is not our intention, and that is not what we're going to do. Our capacity to grow is limited, as I've said previously, by our ability to originate, and we are keenly focused on how we go about doing this. We have a number of platforms, some 16, which we've spent roughly $8 billion building over the past 15 years that now employs approximately 4,000 people. This is a very significant investment and a bar that many of our competitors will need to cross to compete with us in this area. Some will do that, and we expect them to do that. But make no mistake, this market is enormous, but one has to originate good risk to be able to grow their business and offer their clients excess return per unit of risk. In the 3.5 hours that we talked during our Investor Day, I wish we could have covered everything, but we failed to. One area I really want to drive home and talk about our recent promotion is our third-party insurance. We have built, for Athene, the capacity to originate good assets and have proven over the past 15 years that we can scale our retirement services business. Recall that as an originator of assets, we want 25% of everything and 100% of nothing. In some ways, the ideal partners for us are other insurers, people who are trying to amortize the same sorts of liabilities that we're seeking to amortize and deal with the same capital and regulatory regimes. Our third-party insurance business is approximately $100 billion of AUM as of this date, and we expect it to double over the next 5 years. But it will not double on its own. And so we've taken one of our most senior partners, Jeff Jacobs, and asked Jeff to become the CEO of our third-party insurance business with all of the resources of the firm at his disposal. This is important to us not just in the capacity to add AUM, but also to support an industry and to support retirement and to make sure that there's a broad understanding of the regulatory and capital regimes associated with private assets, particularly private investment grade, and it's an area that will receive lots of attention from us. In short, we're playing to win. Lots of the terms we've used across the industry, this notion of origination, fixed income replacement and an industrial renaissance now seem to be mainstream. We believe we are building something unique in the context of our industry, and we believe we are uniquely positioned for this opportunity, with the capacity to originate the right cost and form of capital and the right culture to succeed. In short, we get to do this. With that, I'll turn it over to Martin.

Thanks, Marc, and good morning, everyone. So third quarter financial results across FRE, SRE and PII exceeded expectations and position us well to close out 2024, consistent with our expectations and to move confidently into the first year of our latest 5-year plan. I'll make some very brief comments on this quarter's results before opening up to Q&A. Fee-related earnings. Within asset management, FRE reached a new quarterly record and surpassed $1.5 billion on a year-to-date basis, supported by strength in fee-related revenues from our credit business. Credit management fees increased 20% year-over-year, with growth in third-party credit management fees exceeding that of Athene and Athora. Over the last 12 months, we've generated more than $140 billion of inflows to support continued management fee growth. In the third quarter, credit inflows totaled $39 billion, inclusive of the robust flows of Athene that Marc mentioned as well as broad-based fundraising activity across direct lending, opportunistic and multicredit and further inflows related to financing our ATLAS business. Our Capital Solutions business posted its second highest quarter of fees on record, supported by approximately 80 underlying transactions. Fee-related performance fees were also strong, increasing more than 40% year-over-year. This fee stream has primarily driven by stable, spread-based income from certain credit products and vehicles including ADS. Going into the fourth quarter, we expect these revenue growth trends to largely persist, supported by our previously discussed organic capital formation target of $120 million for full year 2024, and a strong, diversified origination pipeline. At the same time, we've remained focused on cost discipline, with total expenses increasing 11% year-to-date versus the prior 9-month period, excluding the impact of $15 million of fund merger costs in the second quarter that we previously commented on. Turning to retirement services. SRE results reflect robust organic growth trends of $20 billion in the quarter and solid levels of spread profitability. Net spread, excluding notable items, increased by 16 basis points quarter-over-quarter, and was roughly flat with Q2 when adjusting for our long-term expectations of an 11% alternatives return. As part of this, Athene's alternatives portfolio generated an 8.2% annualized return in the third quarter, within which AAA generated a 10.5% annualized return, approaching the 11% long-term expectation. We took several actions with respect to Athene's alternatives portfolio within Q3 to align the allocation more closely with AAA, which now accounts for approximately 80% of the portfolio at quarter end. Starting in January and going forward, we intend to pre-release return information around the first business day following quarter end in an effort to provide more near-term visibility into this line item. Turning to the year-to-date view. SRE totaled $2.4 billion, up 5% versus the prior year comparable period when excluding notable items. As we described in detail at Investor Day, we expect SRE to approximate $3.2 billion for the full year, which implies a similar level of SRE in the fourth quarter versus third quarter results on an as-reported basis. Principal investing income benefited from some monetizations by Fund IX during the quarter. Our net accrued performance fee balance at September 30 was $1.4 billion and continues to be supported by strong investment performance. We generated double-digit returns across a variety of credit strategies and hybrid value over the last 12 months, as well as more than 30% for PE Fund X over the same period. While we expect near-term realizations activity to be more in line with recent quarterly trends based on our current pipeline, we're optimistic that PII will increase meaningfully over the next couple of years as the exit environment improves. In terms of capital allocation, we deployed more than $400 million within Q3 to opportunistically repurchase more than 4 million shares at an average price of $105 amid heightened volatility during the quarter. And with that, I'll turn the call back to the operator for Q&A.

Our first question today is from Alex Blostein of Goldman Sachs.

So I was hoping you could start with the progress you guys are making on third-party fundraising, and particularly with respect to the insurance channel, Marc, as you mentioned earlier. A couple of specifics. Maybe you can give us an update on the flows you're seeing there year-to-date. I heard $100 billion in total AUM, but curious on the growth and the topic fee rates you're seeing in that channel. And just broadly, when you think about the addressable market there, what sort of changed that sort of enables some of these insurance companies to partner with you guys as a competitor in some way? And in terms of the liabilities that you're looking for in this channel, is this strictly in the annuity kind of rider channel or sort of broad insurance based?

So it's Marc, Alex. I'm going to start more generally, and then Jim will take over with the specifics. Some of the things you've mentioned don't align with our actual performance. We have always operated a third-party business. Our competitors in the liability space are also our partners on the asset side. We collaborate with them not only on assets but also, as you've seen in our public announcements, some of our direct competitors have equity stakes in our origination platform. We plan to continue this approach. Unlike limited markets like private equity, I see the market for private investment grade as extensive, and this is about having the capital to pursue those opportunities. We want to retain some of the risk on the Athene balance sheet, as well as for our credit funds and the accounts we manage for third-party clients. For now and into the foreseeable future, partnering with like-minded institutions, especially insurers that share our risk-reward outlook, regulatory frameworks, and capital structures, enhances both our franchise and theirs. Competitively, we still capture a very large share of these assets, and no competitor comes close to matching it. We see this as beneficial to our franchise. If one of our peer insurance companies originates an interesting risk and invites us to participate, we will. This is quite different from the traditional private equity landscape, which often exhibits a winner-take-all mentality. I often joke that if you originate a risk and own 100% of it, it's actually a sign that you made a mistake rather than winning something. Additionally, we have two or three different types of insurance accounting, primarily related to life and annuity, not property and casualty. Some of our third-party insurance involves direct placements with peer insurance companies, whether through programmatic investments, one-off investments, or within funds or separately managed accounts, which form a significant part of our business. Moreover, we are increasingly seeing partnerships with institutions and occasionally other financial entities working alongside us in ADIP.

Yes. Not a lot to add, Alex, but I would say that what Marc has described is this open architecture flywheel. And whether it's in funds, whether it's in ADIP, whether it's sharing views on how CLO should be looked at and calculated from a regulatory perspective, there's a whole variety of activity that takes place. And we have always been a player in this space. But as Marc mentioned, by putting one of our senior individuals who has really been at the intersection of the Athene portfolio leadership, applying that same insight, sourcing, portfolio, construction across the environment is helpful. And again, this is mostly investment-grade activity. And the reason why we think it can grow so large is, for the most part, all this activity, if you get into investment grade and fixed income replacement, this is really dispersion of credit risk across the platform and across the ecosystem, not just the creation, which is really more the traditional direct origination.

The next question is coming from Craig Siegenthaler of Bank of America.

Hope everyone is doing well. My question is on retirement outflows. So after a pickup last quarter, they improved back down to the 10% range annualized, kind of right in line with your target from the Athene presentation from August. But from the same disclosure, they're expected to decline again modestly in 4Q '24, but we actually don't have any visibility into 2025. So I'm wondering if you could share with us how liability outflows are expected to trend in 2025. And for the full year, is it generally in line with 2024 with some quarterly deviations?

During the significant increase in interest rates, there was considerable interest from both the research community and shareholders regarding liability behavior. As a result, we started to share the statistics that we actually use to operate our business. The runoff of insurance liabilities is quite predictable. One of our goals in publishing this information was to demonstrate that we have a solid understanding of when period-end business, specifically MYGA business, will run off. We also have a consistent flow of pension risk transfer business and regular outflows from fixed-income annuities, policy loans, and other out-of-period surrenders. I believe the best approach might be to update our 2025 forecast, but we didn't cover that during Investor Day, so it's on our agenda.

It's high up the list. We plan to. I would say I'm not aware of anyone else in the industry that publishes this information. And so it's another area where we strive to be transparent. And we track very closely against the metric. And as Marc said, the ups and downs from any one quarter to the next tend to be driven by contractual features or policies, and so they're highly predictable. Looking ahead, I wouldn't expect any different trend from what we're seeing. It's just tracking exactly as we expect.

The next question is coming from Bill Katz of TD Cowen.

Marc, I'm intrigued by two of your comments, just your notion of the retirement opportunity as well as the retail. I think I want to ask about retirement, but I'm going to ask about retail. In terms of the retail platform, you mentioned you're learning a lot. So I was wondering if you could maybe help us understand how you see the opportunity set evolving for the industry and Apollo's role in that. And then secondarily, a number of your peers have been sort of speaking to higher expenses to build out the wealth management footprint. Could you share with us where you are in terms of that expense cycle?

So I'm tempted to answer your retail question with a retirement answer, but I'm actually going to go after the retail side of it. So we're in the very early stages. I think one of the things we tried to do at Investor Day was to present this pyramid of how we think about the retail channel. At the top of the pyramid, we think about family office. Family office to us is really nothing other than institutional. We cover them like institutions. They behave like institutions. As best we can tell, they are now close to 50% private, which does not mean alternative, but in a traditional sense, but 50% private. At the bottom of the pyramid, I call that mass affluent, I hypothesize that we were not likely to serve these people directly, that we were likely to be a parts provider to incumbent asset managers, traditional asset managers who were going to blend in a number of different formats, private assets into products that are more easily understood by the vast majority of investors who will not on their own, go through the educational process and perhaps are not closely advised by a financial adviser. The channel I believe you're referring to is the advice channel, which we can describe as high net worth, although this can have various definitions. For us, this relates to offering appropriate products and services. These clients typically avoid products with binary outcomes, opting instead for yield-oriented investments that tend to stabilize or exhibit more predictable behavior. However, occasionally, they do purchase traditional alternative products in fund format, but this represents a small portion of our focus. If you think about these institutions, serving these institutions is going to be, in my opinion, an opportunity for a handful of firms. The scale that one needs to put together of people, technology, products, systems to serve one of the large wealth channel participants really only makes sense if you are multiple products at a large scale and are capable of generating alpha. Let's not forget that at the end of the day, we're not just an asset manager, we have to develop excess return. For better or worse, I think we envisioned the cost of doing this. I don't view the cost as a surprise. They've been contemplated in the context of the budgets and forecast we've given you. So I would not call out anything unique. I think what's interesting in this business is that when we enter a channel, we say we are partnered with someone. However, the reality is that we are still only selling to about 5% or 10% of their financial advisers and clients. We have not yet fully penetrated these systems. To achieve full penetration, we need to simplify our products, serve both qualified and nonqualified investors, and do so with ease through technology. Instead of cost pressure, we are seeing requests for various services, including educational, technological, and business facilitation services. One of the most intriguing aspects we mentioned before is the introduction of regular, low-cost leverage.

Yes. What Marc is discussing is transforming a product-focused conversation into one centered on portfolio solutions. We are leading the way with our extensive range of products. As Marc mentioned, clients prefer more ongoing options rather than simple binary choices. In the equity sector, particularly in public equity, there's an opportunity for margin purchases. In the future, there will be opportunities in areas like fund finance or portfolio solutions regarding strategic asset allocation, which allows clients to explore various options. Our approach is much more comprehensive. While there will be a few standout leaders, we are committed to becoming a successful player in this space with the necessary resources and vision.

The next question is coming from Steven Chubak of Wolfe Research.

So I'm actually going to ask a question around the retirement opportunity. At Investor Day, Marc, you did make a compelling case for a rethink of the future state of target date fund allocations around the $15 trillion DC opportunity. As we think about what is tangible on a near-term basis in terms of allocations and how that might evolve, the percentage that's in target date funds, it looks like less than half of DC assets are currently held in target date funds. The majority of those fund assets are held by folks in higher age cohorts. So I wanted to get your perspective on how you see that opportunity evolving over time, how much of that $15 trillion do you believe you can service on a more near- to medium-term basis once that new market opportunity hopefully opens up to you and your peers?

So I'll start by saying that I did point it out, but it is not something we've budgeted in our plan or to get to our 5-year plan. But I think we have to just look around the world for solutions, and I did mention at Investor Day. In places in the world where private assets, and I'm not talking about alternate, but private assets have been added to portfolios, societies have gotten superior outcomes. Australia is probably the most visible place where superannuation has achieved very, very successful returns for retirees in Australia. And one can demonstrate that if you look at the inclusion of private assets along with traditional assets in a blend, we're talking about outcomes that are not slightly better, we're talking about 40% to 60% better outcomes. Over time, I believe people will see the light, and we will eventually have the inclusion of private assets in what would be traditionally public-only portfolios. Right now, recordkeeping, rule of law or practice, really, have kept significant allocations out of that for the time being to the detriment, I believe, of the participants in these plans. But the retirement opportunity is not just about the $12 trillion to $13 trillion of 401(k) and having a slice of that participate in private assets, it is also about rethinking retirement more generally. If I look at our 15 years so far at Athene, I have to really commend the team. They have done an incredible job. They took a start-up, and they turned it into the largest organic originator of retirement products in the U.S. and I believe, in the world. And they do it really efficiently. they do it really well, and they earn very nice rates of return. But if we're honest, what they've done is they have taken a traditional product set that has not really been updated all that much over the past 15 years, and they've just done a better job, and they've offered consumers a piece of the private market's alpha to create better outcomes, and it turns out consumers prefer more to less. I believe there is an opportunity to rethink the product set itself. And we had a little discussion at Investor Day, the notion of simplification and getting to guaranteed lifetime income, I believe, to be the North Star for where we would like to go. Whether we get all the way there in a simple product that offers guaranteed lifetime income, we had a little back and forth at Investor Day, but that is what we're pursuing. But this notion of rethinking the product set, I believe to be the single biggest opportunity in front of us, and that is what is baked into our 5-year plan over the next few years. Should we get access to 401(k) through broad-based reform or regulatory change or regulatory encouragement? I believe that would be upside, not just for us, but for the entire industry, limited, of course, by all of our capacity to originate. At the end of the day, this comes back to origination.

The next question is coming from Mike Brown of Wells Fargo.

I guess building on that discussion, I wanted to ask about the AAA sleeve in the CIT offering that you flagged, Marc. Do you have a pipeline of other opportunities building on other RIA platforms? And I guess, how do you see this expanding? Can it eventually move to wire houses, for example, on kind of like model portfolio structures?

So I'll start in reverse. AAA today is approximately $18.5 billion. We expect it to be around $20 billion by year-end. It is primarily an equity product, but it functions as a hybrid type of equity, which means it has lower volatility compared to traditional equities. The goal is to achieve low double-digit rates of return with significantly less volatility than public equities. Keep in mind that public equities, over a long period, typically provide returns of 9% to 10% with volatility. Therefore, the intention here is partly for equity replacement and partly for risk reduction through hybrid means, without immediately transitioning to fixed income and lower returns. We are seeing adoption in portfolio allocation. Currently, it is mainly purchased as a product, with individuals subscribing to AAA because they want access to it. However, I envision a future where we discuss 60-40 portfolios made up of public and private investments. I believe that portfolio solutions will play a significant role in the retail business. In the retirement sector, this first CIT exemplifies that trend; it serves as part of the equity component that is the default option for this group of retirees. While I think it would be premature to describe our pipeline as advanced, I am pleased to see the initial individuals and firms starting to consider this as part of a broader solution. If we execute well, we can grow from this initial stage, but it's too early to provide an overview of the pipeline.

The next question is coming from Patrick Davitt of Autonomous Research.

Going back to Bill's question, it sounds like, obviously, you're getting a lot of traction adding retail distribution. But on that, another manager last week is seemingly talking down near-term margin expectations primarily as a result of the ramp of payments directly to the distribution platforms. And we aren't really hearing that message from you or others for that matter. So is this a headwind we should expect to see more of? And in that vein, maybe expand on how you account for those and why it might be different than others are.

Patrick, it's Martin. We're not experiencing that challenge. If you examine the retail product distribution across various channels, you'll find that a significant portion of it incurs no cost. For instance, we handle family offices ourselves without any external distribution costs. There are also a few other channels that are similar. Within the channels where we incur costs, these costs can take one of two forms. They may either be a trailer against revenues, which is netted against the revenue line, or an upfront placement fee, which is expensed as incurred. We are still in the early stages of this evolution. However, we are observing a shift in costs from upfront fees to trailer fees. This shift indicates the quality and stickiness of the product. All of this is included in the plan we have outlined. We do not anticipate margin degradation as a result. Over time, we expect that most costs will be netted against revenues rather than treated as explicit non-comp costs. I hope this clarifies things.

I will add a bit to it. This is part of a broader outlook. Implicit in our discussion about origination is our expectation that private assets will have strong demand but shorter supply. If we are correct, we anticipate that fees will remain stable over a long period, barring any unexpected developments in the industry. We've built this entire business, our industry, out of the smallest bucket of our institutional clients called alternatives. All of a sudden, we have 3 new sources of demand for private assets. Retirement is full swing into private assets. Insurance companies and others have been for a long period of time, and you're seeing them broaden out what they do. The second is individuals, individuals both through the retail channels that you've been talking about, but also through the convergence of public and private, the inclusion of private assets in public products. So we see that as really interesting growth to what's happening. And then we see our institutions who historically have only invested in private assets out of their alternative business beginning to invest in private assets out of their much larger and heretofore untapped fixed income bucket. If we're right, we expect there to be significant demand for private assets, and the supply of private assets is not the same as the supply for an asset manager. It is up to each of the firms in their respective areas and where they have expertise to generate these assets that offer excess return per unit of risk. That's after all the promise of private markets.

The next question is coming from Brennan Hawken of UBS.

So thanks for the adjusted metric of origination. It looks like it largely maps to the prior debt origination disclosure, but maybe can you speak to the equity that you added that's reflected now in the new number and where that's largely sourced from? And then also, you have 16 origination platforms. And I believe historically, you guys have talked about rationalizing that footprint and reducing the number of platforms. So could you give us an update on those efforts and maybe updated expectations for how many platforms you expect and what impact that will have on the P&L?

Sure. This is Jim. I'll just go through some basic numbers and Martin can give some color as well. But the $62 billion is the origination number for the quarter. And it's really a vast majority of is the debt origination, mid- to high 50s is debt origination. And that's split on the debt side between the platforms and the core credit, that's a lion's share of that with also our high-grade capital solutions. Certainly, it's our view, the 16 platforms we've organized, and Chris Edson now is the person who runs our global origination business, we brought it all together. We have it run in 3 or 4 buckets where there's a rationalization of oversight, there's symmetry and risk and sourcing and analytics. And so we're not tied to the number. We did sell one in the past, and it really was a question of the size of the flow that we received versus the equity investment got out of balance. But for the most part, we're very, very happy with the 16 today. They're diverse in terms of product set. They're diverse in terms of regional and global coverage. They do have one similarity, senior-secured top-of-the-capital structure risk, the 4 biggest being ATLAS, MidCap, Redding Ridge and Wheels. So we're very focused on those 16 and don't see any more rationalization other than how we oversee and direct the business. Our Apollo ecosystem combines our traditional private equity approach with centralized analytics to enhance capital markets and origination activities, and we have seen significant success. In addition, our core areas like credit, large-cap originations, CLOs, and CRE are performing well. We currently have over 12 origination partnerships, only a few of which are publicly known, with Citi being a notable partner. From our viewpoint, we consider ourselves a market leader. Many of our peers are discussing a renewed interest in this strategy during these calls, but we believe we stand at the forefront, focusing on achieving strong yields on a risk-adjusted basis. Therefore, our strategy remains unchanged.

I want to touch on two points, starting with costs. Remember that these platforms operate as separate entities. While we may initially own 100% of them, over time we typically do not retain full ownership of the larger platforms. We collaborate with institutional investors and sometimes with competitive peer insurance companies. There are no ongoing expenses from these platforms; they manage their own costs, which is factored into their return on equity. Speaking of which, the returns on equity for these platforms are generally quite strong, and they represent a significant portion of what we have in AAA right now. This demonstrates the synergy in how the business operates together. The part we didn't talk about was equity, and I think it's interesting to talk about equity. Our 5-year plan envisions very substantial penetration of fixed income replacement. Recall, the 5-year plan calls for a doubling of the size of our credit business, which is already our largest business. But in contrast to our first 5-year plan, the second 5-year plan also forecasts that we will substantially grow our equity business, particularly in hybrid equity. Hybrid being not a hybrid like a bank hybrid, but hybrid being the midpoint between debt and equity. Think of it as lower risk, lower reward equity. Starting to measure that, holding the teams responsible for that is a key part of the way the business is run. And so putting it out there and having a report card with all of you that shows how we're doing, I believe to be very important. I thought the team did a very good job and presented a very compelling case for the growth of the equity franchise over a period of time, and it's a key plank in our strategy, and measuring is where it starts.

The next question is coming from Brian Bedell of Deutsche Bank.

Regarding the origination at $62 billion, that annualizes to nearly $250 million, while your target is $275 million per year over the next five years. I would like to understand where this level could progress, particularly if there are any major capacity constraints that might prevent exceeding a $275 million run rate. Additionally, typically, the distribution has been 25% third party, 50% Athene, and 25% syndication. How would any potential overage, if you surpass the $275 million target, affect the allocation among the different segments of your business?

Well, thank you. It's Jim. Since we are about 60 days into our 5-year plan, we won't be making any adjustments to the numbers right now. However, I would like to provide a bit more insight into our business regarding spread, scale, and breadth. Before I delve into that, it's important to highlight our overall philosophy regarding the third-party business, syndication, open architecture, and evergreen products. All of these concepts are connected to the idea of expanding our footprint, increasing origination, forming partnerships, and aiming for 25% of everything instead of 100% of nothing. This aligns well with our overarching theme. I will provide some additional insights. Over the past two years, we have observed that our origination platforms have experienced substantial growth and are significant contributors to our performance. The actual spreads on the products we are producing have remained in the mid-300s, approaching 400 on a spread basis. Despite the volatility in the treasury market and the substantial compression of spreads in public corporate credit, which has seen over 150 basis points of compression, spreads have only tightened by about 10 to 15 basis points from our origination platform. This results in spreads narrowing from approximately 400 to around 385 or 390. On the traditional credit platforms, we've experienced some compression. While public markets have contracted by 150 basis points, we've seen about 60 to 70 basis points of compression in our spread. Overall, we were around 410 a year ago, and now we're in the 375 to 380 range. This creates a compelling scaled value proposition that benefits all our businesses, including ADS, AAA, and ASPC, and will continue to do so. We're looking forward to launching ABC for our asset-backed corporation. However, it may be premature to expand our estimate of scale, although we should not underestimate the positive effects of the syndication flywheel of ACS, global wealth, and third-party insurance, which impacts all these areas.

The next question is coming from Ken Worthington of JPMorgan Chase.

Rates have backed up subsequent to the end of the quarter. How does the move impact the hedges that you called out last quarter? And to what extent are you using the higher rates to engage to further fix your floating assets? And is the move that we've seen in rates enough to impact spreads as we think about 4Q?

Our plan is to maintain a net floating rate position around $15 billion. A change in rates will not alter that hedge posture, especially given the current context. As we mentioned during the Investor Day, we had projected six rate cuts, or their equivalent, this year, plus another four by the end of next year. That seems more achievable now than it did a month or six weeks ago. So, Ken, there’s no significant change; it's just a factor of our earnings. We previously addressed how extreme moves in rates, both upwards and downwards, can influence the blended growth of the business beyond core earnings growth. However, there have been no changes to our hedge posture or outlook.

The next question is coming from Ben Budish of Barclays.

I wanted to ask about the SRE guidance. If I just think back to last quarter, can you unpack a little bit what went sort of better than expected? When I look at least at Street numbers, it looked like your cost of funds came in a little lower than expected. And then thinking through to Q4, your full year guidance is unchanged. So thinking about what perhaps went better this quarter. Is there some sort of reversal expected or any kind of timing differences? How should we be thinking about those different factors?

Yes. So we had a $20 billion quarter. So that's very strong, and that drove earnings. We also were able to invest at the margin. And sort of using the metrics that Jim just walked through, the spread that we are able to earn on assets at the margin was a bit better than we were expecting it to be. So it's really those 2 components. I mentioned that we expect Q4 to be more or less the same as Q3 in terms of SRE dollars, assuming 11% return on alts. That would get you to a 5% growth rate for the year like-for-like. We said 4% at the Investor Day. So it's sort of right on top of what we suggested. So no real change, it's just we had a larger quarter in top line growth and that pulled through to reported SRE.

The next question is coming from Dan Fannon of Jefferies.

So just a follow-up on that question. So are the changes to the alternatives allocation for retirement services complete? I think you mentioned AAA now represents 8%. So therefore, getting to that 11% normalized return given AAA's performance, is that what we should be expecting going forward?

Yes, the changes to the alternatives allocation for retirement services are complete. To provide some context, approximately 80% of the alternatives portfolio is comprised of AAA. Around 10% is made up of retirement services platforms that we maintain, primarily Athora, with a small exposure to Venerable. The remaining platforms have either been repositioned or sold within the group during the third quarter. The other 10% consists of various investments, typically in hybrid fund investments related to the platform, which we anticipate will yield returns in the teens over time. We have completed the repositioning, and we believe this will support achieving sustained returns of around 11% over time.

Our final question today is coming from Michael Cyprys of Morgan Stanley.

I was hoping you could update us on the use of your sidecar vehicle ADIP. I recall in the past, you guys had talked about ADIP taking down about 40% to 45% or so of new funds over time. I think year-to-date, it's a bit less than that. Just curious if you could just update us on how you see that evolving over the next couple of years. What factors you consider in toggling ADIP's contribution higher? And then in what scenario might you increase the dividend out of Athene relative to your guide for the consistent $750 million a year of dividends?

So we outlined that the SRE growth is governed by or driven by a couple of different components. Obviously, the underlying core growth in the business is one; rates, two; back book repositioning, three; and then the contribution of ADIP capital to taking down new business as the fourth. There are some choices in there that we can make, and we were pretty clear that within parameters that we've established, we can make choices to increase or decrease the participation that ADIP has over time. And that's relevant not just in aggregate, but it's also relevant at the product level. And so that's part of how we are able to achieve the earnings growth that we've outlined. I think over time, you should expect that the rate of participation will be consistent with that long-term average. So think sort of mid- to high 30s, 40% as an appropriate return percentage participation in business over time.

Maybe I'll just close it out with just 2 additional thoughts. In terms of capital, as you know, we take roughly a $750 million a year dividend out of Athene. The forecast that we gave you does not have any real change in that because it is also tied to a substantial amount of growth in the retirement services business. And growth, as Martin suggested, can be organic growth in the business, or Athene always has a choice to own more of the business that it creates rather than giving it out to the sidecar, which is not done on a deal-by-deal basis, it's done over a long period of time and over a vintage. So it's not something you can change immediately. But you should assume, as Martin suggested, that the dividend out of Athene remains the same, absent a real falloff in business, which we do not expect. I believe it's important to address the sidecar. We have made significant efforts to emphasize this point. The insurance and retirement services businesses are so appealing that we have clients willing to partner with us financially. They not only pay the same asset management fees to the sidecar as Athene does but also provide a fronting fee to Athene for putting the business on the books and an additional promote fee overall. Therefore, the ability to invest over $6 billion into a sidecar shows our confidence in managing this responsibly while generating strong, sustainable returns over the long term. If you do that, you get to raise a sidecar. If you don't do that, you are forced to build the business solely with your own capital to subsidize. That is a little bit of what we see going on in the industry today. And recall that capital regimes in the U.S. and Bermuda on the one hand and capital regimes in places like Cayman and the other are totally different. I do believe a word of caution in our industry. Anytime you hear people have gone to Cayman, you should just divide the capital by 2. I do not personally believe that is going to end well, and it's not where we intend or how we run the business. We want to do things on a long-term sustainable basis that provide good rates of return for people while having adequate capital in the business.

Great. I'd just like to close by saying on behalf of our entire team, we really appreciate, again, all the time that you've given to us and focusing on our business between Investor Day and today's call. If you have any follow-up questions on anything we discuss, feel free to follow up with us directly, and we look forward to speaking with you again next quarter. Thank you.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast, and enjoy the rest of your day.