Good morning, and welcome to Apollo Global Management's Third Quarter 2025 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 be discussing 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, which is 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 an 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. Joining me to discuss our results and the momentum we're seeing across the business are Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the Investor Relations portion of our website. As you can see, very strong third quarter results demonstrate the exceptional strength that we are seeing. We generated record combined fee and spread related earnings which drove adjusted net income of $1.4 billion or $2.17 per share, up 17% year-over-year. In addition to the rich commentary, we prepared for you on this morning's call, we'd like to announce that we will be hosting an extended fixed income call session for Athene this quarter on November 24. And with that, I'll hand it over to Marc.

Thanks, Noah, and good morning. I'm excited to be here and share positive news today. The third quarter's results were exceptionally strong. We reported FRE of $652 million, which is a 23% increase from last year, along with management fee growth of 22% year-over-year. Our ACS fees reached $212 million, marking our second consecutive quarter above $200 million. The SRE excluding notables was $846 million. For those interested in SRE estimates, we project Q4 SRE around $880 million, which would bring the estimated full-year SRE on a comparable basis to $3.475 billion, reflecting an approximately 8% growth from last year, surpassing our previous mid-single-digit target. These financial results stem from solid underlying fundamentals, prominently origination, which we view as the foundation of our business. This quarter's origination was notably robust, with $75 billion, primarily driven by platforms, making it our second strongest quarter after a record Q2. The average spread on our origination was 350 basis points over treasuries, remaining stable from the previous quarter, with an average rating of BBB. There's considerable interest from investors due to good origination, resulting in strong inflows of $82 billion this quarter, led by asset management with $59 billion and retirement services with $23 billion. Included in the asset management figure is $34 billion from Bridge, and if we exclude Bridge, the inflows were $26 billion. We reached a record AUM of $908 billion at the end of the quarter, a rise of 24% year-over-year. In summary, our growth mechanisms are in motion. Jim and I have numerous opportunities to discuss the reasons behind our growth. We attribute this mainly to effective management, with our committed team working hard to achieve these outcomes. We are lucky to be in an industry marked by significant demand. Companies like ours thrive when connected to economic fundamentals, charging institutions with sustainable growth in our nation and worldwide. Our operations are anchored in three strong fundamentals. First, we are financing a global industrial resurgence across various sectors—energy, infrastructure, data centers, and more. The demand for capital is at an all-time high and extends beyond the U.S. Second, there's a pressing retirement crisis impacting income stability across the Western world. Through our investments and our insurance business, we aim to mitigate this gap, being a rapidly growing area within our company. Lastly, we offer an alternative to the increasingly concentrated and correlated public markets. It can be challenging for investors seeking to avoid major market players but still wanting exposure to investments. We are also witnessing the development of additional markets for private assets. Historically, our industry was largely supported by a small portion of institutional clients, but now we are entering larger markets such as individual investors and insurance companies, who find our offerings appealing for managing their risks and returns. Furthermore, we see institutional clients diversifying into private assets as the asset management industry shifts towards a total portfolio approach. A burgeoning fifth market has emerged with traditional asset managers, potentially leading to a significant influx of private asset exposure in mutual funds and ETFs. We also face emerging opportunities from 401(k) plans and other retirement strategies. Overall, we benefit from several strong trends that contribute to our business, which meets vital economic and social needs. However, we do have concerns. We recognize that our industry's growth will hinge more on finding quality investments rather than merely raising capital. Thus, it is essential for us to continually enhance origination while adhering to the principle of generating excess return per risk unit. Additionally, we are mindful of our culture; maintaining our reputation as preferred employers is a priority. While I have concerns about market strategies, I am not overly worried about credit conditions, as effective credit underwriting is critical regardless of the originating institution. Our industry has displayed resilience, and 10 basis points of spread widening is not overly concerning. Regarding asset management, we see a strong performance across all areas, with credit returns from 8% to 12% and quarterly returns ranging from 3% to 5%. Our clients face a unique moment in asset management, prompting them to consider various risks. The simple questions we ask them are about current pricing, the direction of long-term rates, and geopolitical risks, which shape our risk-taking approach for them. Our performance reflects a disciplined strategy focused on risk management. For example, our retail vehicle has grown significantly, while our debt strategy has maintained stability. In equity, our hybrid franchise and flagship offerings have also shown promising returns with lower volatility. Our private equity investments continue to emphasize cash flow and prudent underwriting, with positive results. Looking ahead, asset management innovation is vital. We're seeing exciting advancements, including market-making improvements and new leveraged share classes for our funds. The landscape for our business looks promising, as we expect substantial growth in our FRE in the coming years. In retirement services, robust demand remains clear, driven by the ongoing retirement crisis. The inflow of $23 billion for Q3 and $69 billion year-to-date indicates a record-setting pace. Our new business is aligned with our return objectives, maintaining quality in our deployments amidst tight market spreads. Our team has excelled in sourcing liabilities and strategic decision-making, enhancing efficiency and technology to sustain our target returns. We expect continued SRE growth, projecting about 10% for next year and over a five-year timeframe. As our volume stabilizes, we foresee generating significant capital, either maintaining conservative new business strategies or redeploying it for shareholder benefit. In summary, Q3 was an outstanding quarter, signaling positive prospects for both the remainder of this year and next. This is a dynamic period in asset management and retirement services. Now, I’ll turn it over to Jim Zelter.

Thanks, Marc. Having navigated credit cycles for more than four decades, I can tell you we've seen this one before. Isolated incidents are nothing new, and they're rarely a signal of broader stress. As we remain vigilant in our underwriting and risk management efforts, what we're seeing is idiosyncratic, not systematic. Over the years, there has been a propensity to over-emphasize short-term technical headlines and overlook the broader direction of travel within our industry. Broad secular forces such as the increasing economic activity generated by private companies, the global industrial renaissance as well as massive capital fueling the global industrial renaissance are driving increased demand for global private credit, in particular, investment grade. At the same time, demographics and the expanding needs of retirees globally are driving the secular demand. This is the foundation of our business. We've leaned into senior secured top of the capital structure investments to serve a market that we believe exceeds $40 trillion. As you can see from our growth, that has served us well, and we are just beginning to scratch the surface. Recent events give us a moment to step back and reflect on the marketplace, and I believe there is an important point to be made here, whether a particular transaction is public or private is simply the manner in which the risk is originated. Ultimately, it is not the litmus test for credit quality. Our disciplined underwriting as an origination principle, not an agent or a tourist across both public and private markets has allowed us to be trusted stewards of our investors' capital through various market cycles and position us for continued success. We look forward to leading and performing in a marketplace with a dispersion of returns. On origination, let me put the quarter and the origination engine in perspective. As Marc mentioned, we generated $75 billion in the quarter, a remarkable number and second only to last quarter's record. This brings origination volume to over $270 billion for the last 12 months, up more than 40% versus the prior period and effectively achieves our multi-year target about three to four years early. We're encouraged by the early momentum and the capacity we have to scale. Results like this can only be driven by the full breadth and diversity across our business, platforms, core credit, high-grade capital solutions, equity, and hybrid. Within core credit, volumes were led by large-cap direct lending, commercial mortgage lending, and residential mortgage lending. Across our 16 platforms, origination volume increased more than 20% year-over-year, and MidCap was a standout, which continued to perform very well and generated more than 30% growth year-to-date. These are companies who we are providing real solutions at scale. This highlights and connects to our broader sponsor solutions ecosystem, which has more than tripled in recent years, growing from $20 billion in volume in 2022 to nearly $70 billion over the last 12 months. We believe our offering is unmatched in its scale, speed, and ability to deliver full firm solutions with a toolkit that includes not only direct lending, both large and MidCap, which is where many of our peers end, but also fund finance, asset-based finance, as well as other capabilities. Let me bring this to life with two recent examples of our origination leadership. First, in support of Keurig Dr Pepper's strategic objectives, we called a financing solution totaling $7 billion that was announced last week. This was yet another example of our leading position in the high-grade capital solutions and hybrid marketplace by providing flexible capital solutions. The second transaction I'd like to highlight is yesterday's announcement with Ørsted, where our funds will acquire a 50% stake in Hornsea 3, a 3-gigawatt scale offshore wind project for $6.5 billion. Alongside transactions we announced this year for ED&F, RWE, and BP, this is the latest large-scale transaction in Europe, where we are investing behind energy, critical infrastructure, and transition assets in the region. Our activity in providing IG capital solutions to large-scale companies in Europe is unmatched. Looking across all of our origination in the quarter, $69 billion was debt comprised of approximately 70% investment grade with an average rating of A- and approximately 30% sub-investment grade with an average rating of B. On the investment-grade origination, we generated excess spread of over 285 basis points over treasuries or approximately 200 over comparable rated corporate indexes. And in our sub-IG origination, we generated excess of 400 basis points over treasuries or approximately 220 basis points over comparably rated high-yield corporates. Importantly, we observed stable spreads on our origination quarter-over-quarter, and that's particularly notable in a period where public market spreads are near generational tights. Producing excess spreads at scale is a clear testament to the solutions we deliver. While our existing origination engine continues to scale and has driven incredible results, we're not standing still. In the past few months, we have added several new resources that will augment, grow, and diversify these origination capabilities. Number one with Olympus Housing Capital is a new homebuilder finance strategy sitting at the nexus of multiple secular tailwinds between structural undersupply of single-family homes and demographics. Stream Data Centers strengthens our presence in digital infrastructure. TenFifty is our new European CRE lending platform focused on structurally underserved small- and medium-sized CRE markets. And finally, we announced the launch of Apollo Sports Capital focused on the sports and live events ecosystem in a market that continues to exhibit strong uncorrelated growth and faces significant capital demands. This will be a permanent capital vehicle primarily focused on credit and hybrid opportunity, and ASC is designed to be a long-term value-added marketplace player, leveraging our infrastructure in credit and media and physical assets. In capital formation, momentum remains exceptionally strong this quarter. We brought in $82 billion, including $49 billion of organic inflows, nearly matching last quarter's record as well as $34 billion from our closing of the Bridge acquisition. By channel, the institutional channel remains strong, and Global Wealth had another excellent quarter with Athene continuing its remarkable trajectory. Across institutional and Global Wealth within the $26 billion of organic inflows during the quarter, 80% were focused on credit-oriented strategies and 20% to equity-oriented strategies coming from a broad array of investor classes. The $5 billion we raised in the wealth channel was the second-best quarter on record, bringing year-to-date total over $14 billion, up 60% over the prior year period. And strength in this quarter was broad-based with six strategies raising more than $200 million and ten strategies raising greater than $100 million. With that success, one strategy stood out, as Marc mentioned, ABC, which had its strongest quarter since launch, raising nearly $400 million. The asset-based focused corporation has all the makings of our next flagship, deep expertise, strong performance, and accelerating demand. Again, this trajectory reminds us of ADS since ABC is a similar point, but with a major focus on investment-grade counterparty risk. Across wealth, our distribution continued to expand. We launched three new LTIPs during the quarter, expanding our lineup and broadening access to Apollo private market strategies across EMEA, Asia, and Lat Am. It's clear our offering continues to resonate with investors around the globe, and our partners are not simply looking for a good product; they are increasingly looking for a comprehensive holistic solutions provider in constructing portfolios.

Thanks, Jim. Good morning, everyone. Our third quarter results highlight clearly the accelerating momentum across our platform, reaffirming our ability to execute consistently on our long-term plan. I'll take a few minutes to walk through the quarter's financial performance and discuss the key factors supporting our progress as we close out the year. I'll then share more details on the outlook for 2026 to supplement Marc's comments. In asset management, we generated an increase in both assets under management and fee-generating assets under management of 24% year-over-year to $908 billion and $685 billion, respectively. We generated fee-related earnings of $652 million in the quarter and $1.8 billion year-to-date, up 20% year-over-year in each quarter this year versus the comparable period, evidence of the momentum across the platform and keeping us firmly on pace for a full-year growth rate of 20%. In the quarter, we delivered 22% year-over-year growth in management fees, driven by third-party asset management inflows and record gross capital deployment, particularly across our credit platform as well as strong growth from retirement services. Capital Solutions fees of $212 million, as highlighted, represent our second strongest quarter on record. The breadth of origination capabilities was very clear this quarter, with 50% of ACS fees generated by our hybrid value, opportunistic equity, climate transition, and real estate businesses, complementing the other 50% from our high-grade and global credit businesses, including Atlas. We generated 28% year-over-year growth in fee-related performance fees, reflecting sustained growth in spread-based income across a variety of our perpetual capital vehicles, led by ADS and complemented by Redding Ridge and MidCap among other platforms. Growth in fee-related expenses reflects continued investment in hiring and infrastructure to support the firm's global strategic growth initiatives, compensation growth reflecting our performance this year and the inclusion of Bridge into our financial results. We closed the acquisition of Bridge on September 2, which significantly enhances our existing real estate business, bringing to scale some of the most attractive areas in the market, including multifamily and industrial. Bridge also adds origination capabilities that are highly synergistic with existing asset demand from Apollo's ecosystem, in particular, Athene. Bridge will initially contribute approximately $300 million of annual fee-related revenues across management fees and ACS fees and approximately $100 million of pretax FRE with expenses principally compensation based. Bridge will also contribute to SRE growth as an originator of investment-grade spread products as well as principal investing income over time. Excluding Bridge, our FRE margin was stable quarter-over-quarter and expanded approximately 120 basis points year-to-date, demonstrating continued scaling of our business. Including Bridge, we expect our full year 2025 margin to be consistent with 2024. Moving to retirement services, Q3 delivered another strong organic growth quarter, supported by $23 billion of gross inflows. Athene's net invested assets grew by 18% year-over-year to $286 billion. We generated $846 million of SRE ex notables for the quarter with an additional $37 million or 5 basis points at our long-term 11% return expectation on the alternatives portfolio. The blended net spread ex notables in Q3 was 121 basis points versus 122 basis points in the prior quarter, reflecting the effect of roll-off of existing assets and liabilities, offset by new business growth. Athene's core earnings power is very strong and clearly evident in the third quarter. In a tighter spread environment, we continue to originate new business that meets our long-term ROE targets and that is in line with historical averages. Athene's competitive positioning is unmatched. Over the last 12 months, Athene has sourced new business volumes on par with the entire size of some of its competitors with a capital profile that is self-sustaining and includes the largest sidecar in the industry and has managed to achieving a AA ratings level. During the third quarter, we took hedging actions to further reduce the size of Athene's floating rate portfolio. Net floating rate assets totaled $6 billion or 2% of total net invested assets at quarter end. Adjusting for these actions, Athene's SRE sensitivity on net floaters from a 25 basis point move in short-term interest rates is now approximately $10 million to $15 million versus $30 million to $40 million previously. In the context of the year, Q3 was a very strong quarter with earnings trending higher than our first half average, reflecting the impact of higher new business volumes and our ability to originate attractive investment-grade investment opportunities. Importantly, we believe our spread-related earnings troughed in the first half of 2025. Looking across the asset and liability profile of the portfolio, we see asset prepayment headwinds peaking through Q1 of '26 and the spread drag from profitable COVID era business dissipating in 2026 relative to 2025. For the fourth quarter, as Marc suggested, we anticipate SRE ex notables to be approximately stable to Q3 at an 11% alternative return or approximately $880 million with an equivalent SRE spread of 125 basis points. Combined with year-to-date performance behind us, this result would drive full year growth of approximately 8%, ahead of our mid-single-digit target. Importantly, with the business executing at a high level, expectations that headwinds experienced in 2024 and 2025 are starting to dissipate and exposure to floating rates largely immunized, the exit velocity into 2026 is strong. Turning to our 2026 outlook, we expect 20% plus growth in FRE in addition to the earnings from Bridge. Momentum across our core business is building with management fees showing increasing growth each quarter on an LTM basis. Recent growth initiatives, including across wealth, credit, and origination are translating into tangible results, evident in our strong quarterly and year-to-date performance. We expect that roughly 75% of our top-line growth in fee-related revenue in 2026 will be attributable to fundraising and deployment from existing well-established businesses as well as the annualization of growth already in the ground coming out of 2025. The remaining 25% of top-line growth is expected to come from new initiatives already underway from Apollo Sports Capital to Athora's pending acquisition of PIC as well as a variety of other new strategies in the pipeline. And to clarify, we expect this 20% plus FRE growth next year is without any contribution from our next flagship private equity fund, Fund XI, which we currently estimate will turn on sometime in the first half of 2027, subject to our pace of PE deployment. For SRE, we anticipate 10% growth in 2026, assuming an 11% alternative return and including notables year-over-year. This outlook is underpinned by strong organic growth and our origination capabilities, which generate high-quality assets with spread. We expect prepayment headwinds to diminish as a result, both of our reduced purchases of CLO assets and the already high prepayment levels we are experiencing at today's very tight AAA CLO spreads. We further expect the headwind from the roll-off of profitable post-COVID business to have already peaked in 2025. As Marc alluded to, we have various choices and management actions to help us navigate the path forward such as managing our floating rate position, optimizing our back book of assets, utilizing sidecar capital, and prudently managing crediting rates. Our 2026 outlook embeds the current forward rate curve, which contemplates three total cuts by year-end '26 and 9.5 total cuts over the cycle and assumes the current tight market spread environment persists. Acknowledging these growth expectations, we expect and caution that there will be normal quarterly deviation around the growth trend line, reflecting the scale of an approximately $400 billion balance sheet. Looking beyond 2026, we remain confident in our long-term FRE and SRE average annual growth targets of 20% and 10%, respectively, through 2029. We expect the earnings mix shift towards FRE will result in FRE equaling SRE sometime in 2028, a year ahead of our expectation and exceeding SRE thereafter. Lastly, on capital, we executed over $350 million in share repurchases during the quarter, the majority being opportunistic. The sequential growth in our share count reflects this activity as well as the shares issued in connection with closing the Bridge transaction. And with that, I'll hand the call back to the operator. We appreciate your time and welcome your questions.

Today's first question is coming from Steve Chubak of Wolfe Research.

So I wanted to start with a discussion just around the origination targets that you unveiled at Investor Day. Annual origination volume of $275 billion, you just reported origination activity at an annualized clip of more than $300 billion. Last quarter's volumes were even better. So taking a step back, as we think about the year-to-date origination strength, which is running ahead of plan, ongoing expansion of origination capabilities with both you, Marc and Jim had discussed in your prepared remarks, has your thinking changed as to whether this is still an appropriate target? And just what informs your outlook over the next few years?

It's a valid question to consider, given our strong start. The perspective that Marc and management have shared about origination being crucial really connects to our discussion on how the pool of buyers has broadened beyond just alternatives to include the other five areas Marc mentioned. This expansion enables us to create a wider range of products and solutions for investors and retirees. However, while we are pleased with our rapid success and recognize the significant progress we're making with the solutions we offer, it would be too early to adjust our five-year forecasts just 9 to 12 months into our plan. We have great momentum, and these early successes won't detract from future opportunities. This trajectory is promising, but we are not ready to present a revised five-year estimate on this call. Nevertheless, as Martin pointed out, it's about the flywheel effect—75% of our expected growth next year will come from our existing vehicles, funds, and strategies, which is integral to the origination process. This underpins our confidence in achieving over 20% FRE growth in the years ahead.

I wanted to start with a question around the wealth market for Apollo broadly. A couple of really strong quarters, $5 billion of flows in the third quarter. You talked about the new product pipeline. And Marc, I was intrigued by your comments around the asset management partnerships broadly. So maybe you could expand a little bit on how you view this $5 billion trajectory from here? How much is likely to come from new products or the existing lineup? And when it comes to the sort of asset management partnerships, maybe expand on what that could look like for Apollo over the next couple of years.

Alex, I want to start by acknowledging that during our Investor Day last fall, we discussed reaching $150 billion in aggregate over the next five years, and we are still on track for that. Now, I'll hand it over to Marc. What we have observed is the product suite we have developed over the past 24 to 36 months. It includes a wider range of products such as evergreen and non-traded BDCs, and ABC. This suite is not only expanding in terms of product variety and geography, but you will also notice a greater focus on solutions. Additionally, as we mentioned, there are six channels that we are prioritizing. At this point, I'll pass it over to Marc to elaborate on those six channels.

So Alex, consider this: In the Global Wealth business, the highest tier consists of family offices. Apollo and the industry have chosen to engage with these accounts directly. The next level down includes high net worth individuals, though the definition of high net worth can differ across firms. For us, this refers to clients that a financial intermediary, such as an RIA or a wealth manager, is advising well. We generally cover these accounts indirectly through the RIA or wealth manager, without directly managing individual accounts. We’re only discussing a small segment of the market because most clients do not fall into the high net worth category or belong to family offices, and we, as an industry, typically don’t serve these accounts. In my view, the strategy we’re pursuing is not to attempt to cover these accounts, as they are already well-served by their traditional asset managers with whom they have established relationships. Often, they are unlikely to invest in 100% private products due to reasons like lack of knowledge, suitability, or liquidity. I believe they will gain exposure to private assets through their traditional asset managers. Look at what we've done with State Street and Lord Abbett, along with what others in our industry are accomplishing. I foresee a significant increase in partnerships that will not only introduce new products but also integrate private assets into existing portfolios. This will be the quickest growth in the wealth market, as I see it, and it will come in the form of billions rather than through incremental fundraising every quarter. Thus, as an industry, we need to adapt and innovate, recognizing that we operate within a public ecosystem. You will notice that by year-end, we will offer daily NAV on our fixed income suite of replacement products. Providing daily NAV is essential for collaboration with traditional asset managers. The work we’re doing to enhance transparency and liquidity, despite opposition from some in our industry, is crucial to gaining access to these traditional managers. The more we make private investments accessible, the more I believe those capable of originating and producing them will succeed. I'm optimistic about our progress. I believe there is substantial demand for private assets over time. Our discussions will increasingly center on the quality and capacity to originate, and we must ensure that both the industry and our firm are equipped with the necessary choices and operational techniques to engage in these new environments.

I'm sure you've seen, but Colm Kelleher is on the tape this morning warning on private letter ratings arbitrage in U.S. insurance being 'looming systemic risk.' Firstly, what are your thoughts on that view? And then perhaps more specifically to Athene, can you remind us to what extent Athene is using similar private letter ratings in its own portfolio?

First, Colm is highly regarded in the banking sector. Unfortunately, I’m not in Hong Kong this year, as I typically follow him and we enjoy engaging with the audience together. Speaking on behalf of Athene, I must say that Colm is mistaken. For instance, Athene does not rely on Egan-Jones, and under 8% of our assets are rated by Kroll or DBRS. Seventy percent of our assets have ratings from two or more agencies, with S&P, Moody's, and Fitch each rating half of our fixed income assets, while Kroll accounts for 18% and DBRS for 15%. It’s worth noting that DBRS and Kroll currently lead in structured product expertise and compete effectively with the larger ratings agencies. I do not mean to suggest they are any less qualified than the big three. However, I compare the insurance industry with banking, where 100% of a bank’s balance sheet consists of private credit that usually lacks ratings. When we mention private letter ratings, at least they come with some rating. Not everyone in our industry has followed our approach, and Colm is justified in discussing systemic risk, as there are both strong and weak players in the insurance landscape, similar to banking. However, I don’t think the emphasis should be on private letter ratings. I maintain that there are substantial offshore jurisdictions that haven’t aligned with U.S. ratings and regulatory standards, particularly highlighting Cayman, though there are others. Colm rightly points out systemic risks accumulating at this point in the credit cycle, but I believe shifting focus from banking to insurance is a simplification often made at conferences. A look at recent failures reveals that most occurred in credits supported by the banking system. The distinction between public and private credit versus bank credit lies mainly in whether it's syndicated. There are strong and weak entities in banks, asset management, and insurance. We are not facing systemic risk but rather late-cycle behaviors and nefarious actors, who will eventually be identified. Similar to banking, our industry faces contagion risks; asset managers must ensure we communicate our credit underwriting philosophy and operational methods to investors and the public. At Athene, less than 0.75% of our direct lending is involved, with over 90% being investment grade, contrasting with the banking sector’s 60% investment grade.

I just want to circle back on the wealth management opportunity. One of the pushbacks we get for Apollo and the industry at large is just as rates come down, the demand for yield or income will come down and the industry will suffer from rotation risk. I was wondering if you could address what you're sort of seeing and how you think about that. And then as you look out to 2026, I wonder if you could just lay out a little bit more detail the roadmap in terms of what drives the incremental growth from here.

So it's Marc. I'll begin with some philosophical thoughts before handing it over to Jim for more specifics. Private lending was more lucrative four years ago, three years ago, two years ago, and last year. I wish I had invested in Nvidia during those years as well. This is a crucial point that many overlook. The shift towards private credit signifies a move away from equity investments. Investors are consciously deciding to reduce risk because they see value in earning long-term returns in first lien debt at the top of the capital structure, which they consider an appealing opportunity. However, we cannot ignore that more value existed previously, just like it did in the equity market. We're currently evaluating our position within the valuation cycle and the alternatives we offer. As I've indicated, we believe prices are elevated, long rates are unlikely to decrease significantly, and geopolitical risks have increased. Therefore, as a firm, we are focused on risk reduction. We advocate for risk reduction, and our balance sheet reflects this approach. The trends we observe in traditional private credit, especially in leveraged lending, show that investors are indeed reducing risk and reallocating funds from equity into private credit instruments.

Yes. And I'll add, Bill. Obviously, I agree with Marc's comments. But again, I think a lot of those are to the narrow definition of direct lending with sponsors, which while compressed still versus the safe public markets is still a very wide spread. You're getting SOFR 450, 500 versus the classic high-yield index inside of 250 over; you're still getting a fair return. And again, I think the mistake that people are making is the tactical or technicals in the recent market versus the secular change. I just got back from a 2.5-week, nine-country tour. Everywhere I went, there was massive need for evergreen compounding retirement income. And that is such a large number. It overwhelms the $1.6 trillion direct lending market. And again, we just find country after country, region after region, the ability to generate high-quality compounding robust yield is a secular trend. And especially as the rates have gone up over the last 5 to 7 years, as more pensions are fully funded, they're going through a variety of immunization strategies. So yes, on the margin, not as attractive as it might have been 24, 36 months ago. That's why we've been preaching top of the capital structure, no PIK, less software, et cetera, et cetera, but do not confuse that with the secular tailwinds.

We wanted to come back to Marc's comments on the six markets, including several newish markets like the traditional asset management and the $12 trillion U.S. 401(k) channel. What type of share do you think the alts will eventually take on both the traditional and the 401(k) markets? And also, what investments does not just Apollo, but the entire industry need to make in order to prepare the origination platforms to address this much larger TAM?

I start with traditional asset managers because there is a natural limit. Currently, in several investment vehicles, there is a 15% cap, and most investors do not reach this limit. We believe there is potential, unlike a forecast, of about 10% of traditional asset managers. If you look at traditional asset managers who have been significant investors in private markets, they own companies like SpaceX and OpenAI, along with other large-cap growth firms. We have long thought this applied to a unique network, but it does not. I would not be surprised to see around 20 large industrial companies remain private for an extended time, along with various credit and other vehicles. We expect to gain more insight into this in the first quarter of next year, as some of the partnerships currently under discussion start to be announced and rolled out. Furthermore, the industry's reward is not just the creation of new products—we will develop new products as we have done and as others will too. The real opportunity lies in acquiring in-place assets as traditional asset managers strive for yields and performance for their clients. Few in the traditional asset management sector have the $35 billion BlackRock possesses. If you observe BlackRock's actions and you are in traditional asset management, you will seek ways to gain private market exposure. I believe they will achieve this through partnerships and relationships. Our focus needs to extend beyond just investing in origination; we must also invest in infrastructure and business processes. We need to prioritize transparency and disclosure, as traditional asset managers will hesitate entering the private marketplace in significant numbers unless we can offer daily net asset values, pricing, and liquidity. A completely new skill set will need to be adopted by our industry, and I believe we are in a leadership position to embrace this methodology for how we will conduct business moving forward.

Yes, Craig, and I would just add that I think many of us in the industry two, three years ago thought that the promised land was just getting our products on their platform, which they would deliver and distribute. And that's worked for some. It's not worked for many. And as Marc mentioned, when BlackRock made their variety of purchases, there's many income funds, there's many total income funds, total return funds that have a basket, and I think servicing them in partnership. It's very similar to the bank alternative credit provider. There's a view that it's a black-and-white war. It's actually much more open architecture. It's much more problem-solving together. And this is just one of the many distribution channels that we believe you'll be able to service going forward, just like in a place like a variety of firms that are using models and OCIOs, the ability to cover those folks with actual product solutions as well, not just funds. So it's really a much more open architecture view of how you partner with your origination, which is the scarce attribute.

Sorry, one more on this topic because I think it's so interesting. So I'm a believer. I think you infusing some of your private market origination can produce better returns, better diversification, even maybe turn their outflows into inflows for some of these products. My question is, how do you get a traditional manager to give up some of the assets and therefore, some of the fees in order to make this investment and turning around their products or making them more appealing to their investor base?

So Glenn, it's Marc. I'll address it. First, we were apparently very long-winded, so we will cut the call at 9:45. Anyone we miss, we will catch up with as we go. When we work with a client, especially in wealth management, we have a massive infrastructure in place, involving hundreds of people and significant expenses. When working with traditional managers, we are effectively leveraging their distribution. Our ability to share a portion of our fee is beneficial for both us and them. If we can deliver strong performance and convert outflows into inflows or offer a unique client solution, we give the client a reason to stay with the asset manager. That’s a win. Looking ahead, I believe we will experience higher demand for private assets compared to their supply. We need to focus on balancing, protecting, and diversifying our distribution. For distributors who can effectively reduce costs from our system, we should be open to working with them and compensating them appropriately.

Just wondering if you could unpack a few more of the details around the 2026 SRE guide. And how should we be thinking about gross flows, outflows, the level of spread? It sounds like versus at least prior expectations, the decline in spread over the next couple of quarters should be much lower than expected. So any other details you can share a utilization just as we're kind of fine-tuning models after the results?

I'll start by addressing the key points, and then I'll pass it to Martin. At the end of last year and the beginning of this year, we faced three distinct challenges: headwinds from rates, headwinds from prepayments, and the decline of very profitable business due to the contracts we established during COVID. As Martin mentioned, after taking a closer look at our position regarding prepayments and the business roll-off, and with a more stable rate outlook, we have a clearer and more predictable understanding of where we stand on an SRE basis, keeping in mind the complexities associated with a $400 billion balance sheet. On the 24th, we plan to take more time to go over this to assist you in developing a model. However, to summarize, I don't expect significant changes in ADIP II utilization and gross flows, inflows, or outflows.

Yes. I won't say much more given the 24th, but base assumptions remain unchanged. The one other point I think, which is relevant is we're clearly outperforming in '25 relative to the prior guide that we indicated, and that also has a run-rate benefit jumping off into 2026. And so we've written this year-to-date almost in nine months, almost the entire volume that we wrote last year. We will be likely close to but not quite at the 5-year average on top line growth in year 1. And when you pair that with a very strong sort of robust origination environment with the spreads that we've been able to achieve and the rate actions we've taken, that all sort of gets to a more healthy jump-off point into '26 with a sort of similar baseline set of assumptions, and we'll unpack that more.

With the capital markets world opening up more and OpenAI moving towards an IPO in '26, do you think this open capital markets environment and those companies moving from the private bucket to the public market will cause a natural inflow of public dollars back into those private assets from those asset managers you mentioned?

It's interesting. The last six, eight weeks, Amazon, Google, Meta, Oracle and several others have issued jumbo IG issuance. At the same time, we had a record quarter. These needs are so vast and so great and global that temporary flows into the public IG market, which is a necessary portion of the overall multi-trillion funding, it's going to be funded by all markets. When you look at the capital structure in the future, you'll have a company that will have a broadly syndicated facility, they'll have public IG, they'll have private IG. That is the way of the world. And so when a company can and scale issue in the public IG market, they should. But as we've talked about, a company like we announced, whether the two that I mentioned on the call, Keurig Dr Pepper or Ørsted, very unique financing needs that the public market solution is not going to check the box. So it's not a black and white winner takes all. It's open architecture like you've seen in other financing markets.

I wanted to ask about the partnerships with the traditional asset managers that you were alluding to earlier. I was hoping you could elaborate a bit on how you anticipate these partnerships evolving, what the different flavors might look like and what scenario might it make sense to maybe even acquire in some of those types of firms as opposed to partnering? And then if you could just speak to market making around your aspirations and steps you're taking there as you look to support the development of the marketplace.

Mike, I want to touch on a few points we've previously discussed. You’re aware of our collaboration with State Street on the ETFs and our discussions with Lord Abbett regarding the short-duration vehicle. What Marc and I are highlighting, along with our partners, is how things are evolving. Ten years ago, the concept of private direct lending was an addition to the high yield and loan markets; it was another option. Many questions today focus on market size and potential, but it's premature to address that. Our goal is to show that there are multiple pathways to success, not just through our ADS and ABC offerings, but through a diverse range of open architecture solutions that will develop as trust is built within those traditional strategies. We believe we are still in the early stages. Our aim is to position ourselves as a leading voice in this space and contribute to the broader conversation. Brand and scale will be essential. From our extensive combined experience, we’ve seen that increased transparency, information dissemination, and price discovery lead to growth in asset classes. Having witnessed the early days of the high-yield market, I recognize the importance of information and dialogue in fostering development. As we look to stablecoins and tokenization, we see an evolving ecosystem, and we plan to be at the forefront of that change.

I just wanted to ask, I know we're going to get into all the components of SRE on the 24th. But on the alt return, you guys restructured the portfolio about a year ago, laid it out at the Investor Day. The returns have gotten better, but they still have run below that 11% level. I know you guys are assuming a return to the 11% for next year and it's part of the outlook. So what has constrained it even despite the restructuring from getting to that 11% and maybe even seeing a few quarters above it, which you would think with an average would happen? And what's the confidence of the progression continuing to eliminate that gap?

Overall, we will discuss this in more detail on the 24th. Athene's alternative investments portfolio consists of two main components. The larger component is AAA, which I recall is at 10.9% over the last twelve months. The returns from AAA have been satisfactory, although we do experience some cash drag. However, we have a strong pipeline and anticipate that the cash drag will decrease. We are hopeful and confident, depending on market conditions, that we will surpass our target in that area. The other part of Athene's alternative investments involves holdings in other insurance assets, including Venerable, which has significantly surpassed the 11% benchmark. In contrast, Athora has lagged a bit due to a substantial amount of excess capital we are holding. We believe deploying this excess capital into PIC, pending regulatory approval, will enhance the Athora investment. We expect to see the returns from both insurance assets and AAA align with or exceed target return levels.

We're showing time for one final question today. The final question will be coming from Brian Bedell of Deutsche Bank.

Returning to the topic of 401(k)s, Marc, are you noticing any immediate interest from plan sponsors in adding private investments to their portfolios? I understand this is a long-term trend, but I'm curious if we might witness some advancements in the industry this year. Additionally, concerning deaccumulation, you’ve mentioned the potential for Athene to enter deaccumulation strategies for retirement plans. Do you see any possibility of progress in that area in the next couple of years that could lead to an increase beyond the current $85 billion run rate for retirement service inflows?

That's the hope. We are very focused on the concept of guaranteed lifetime income, which is a straightforward decumulation strategy that retirees have experienced for some time. Historically, they preferred their defined benefit plans because they knew exactly what to expect. However, corporations shifted many of them into 401(k) self-directed plans, and most retirees end up choosing the default option their employer selects without making an active decision. Our goal is to provide guaranteed lifetime income through commercial means by third parties, which we see as a key objective. We plan to address this further on the 24th, although it might align more with our guaranteed income strategy, which isn't part of our five-year plan but is something we believe has potential for growth. In 401(k)s, we are seeing progress as well. As I have mentioned in previous calls, we've crossed a couple of billion dollars across various managed account platforms as individuals explore their options. However, it’s not yet a widespread trend; most are still gathering information. The guidance from the administration has been beneficial, but I don't anticipate significant adoption until we receive clear guidance or a ruling, which may take time. This is an opportunity for us to educate, and Jim and I closely monitor all the call reports, which are one of our top priorities.

We actually are showing time for one additional question. Our next question is coming from Wilma Burdis of Raymond James.

How do you think about the trade-off between higher volumes versus higher spreads in this ultra-tight credit spread environment? And how does that change Athene's capital efficiency or ROE?

So I don't know that it's just an Athene issue. I think it's across the board. We are in the excess return per unit of risk. And so it's not just spread absolute. It's spread in various marketplaces. And so to the extent we can earn excess spread at the A level or at the AA level, we have different requirements than we do having it at the BBB or BB level. So we see this across the board. For Athene, where we are the capital at the end of the day that supports this, we do not think it is fundamentally intelligent to grow the business without adequate spread. If you do this, you will be the only one who supports it. The reason we have been trusted with the industry's largest sidecar is because investors know that we will not take volume unless we are earning adequate spread. And you bring back one of the themes that I think Jim and I live with, at the end of the day, we and our entire industry are origination constrained. Now the good news is we're doing any number of things to massively scale origination, and there are a number of very positive trends in the world in that regard. But we should not ignore that we are essentially hostage to origination and our capacity to create excess return per unit of risk. That is the promise of private markets.

And I would just add, I think if you look at the last five to seven years, how we've navigated our securitized product CLO holdings, we've constantly upgraded, and it's with a view of where we are in a credit cycle. Even though we probably would have on a pencil, we'd have a higher ROE owning more BBB and BBs, but we've owned a lot more AAs and As because of the overriding view on credit. So let our actions speak louder than our statements. Thank you all. Look forward to next quarter, and thanks for all your support on the call.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.