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8-K

Athene Holding Ltd. (ATH-PA)

8-K 2023-05-09 For: 2023-05-09
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Added on April 06, 2026
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 9, 2023

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ATHENE HOLDING LTD.

(Exact name of registrant as specified in its charter)
Bermuda 001-37963 98-0630022
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification Number)

Second Floor, Washington House

16 Church Street

Hamilton, HM 11, Bermuda

(441) 279-8400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Trading Symbols Name of each exchange on which registered
Depositary Shares, each representing a 1/1,000th interest in a 6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preference Share, Series A ATHPrA New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a 5.625% Fixed Rate Perpetual Non-Cumulative Preference Share, Series B ATHPrB New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a 6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preference Share, Series C ATHPrC New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a 4.875% Fixed-Rate Perpetual Non-Cumulative Preference Share, Series D ATHPrD New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a 7.75% Fixed-Rate Reset Perpetual Non-Cumulative Preference Share, Series E ATHPrE New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.    Results of Operations and Financial Condition.

On May 9, 2023, Athene Holding Ltd. (the “Company”) made available on its website the Company’s financial supplement for the first quarter ended March 31, 2023, furnished as Exhibit 99.1 hereto and incorporated by reference in this Item 2.02.

The foregoing information, including the Exhibit referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing or other document pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing or other document, except as shall be expressly set forth by specific reference in such a filing or document.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Quarterly Financial Supplement for Athene Holding Ltd. for the first quarter 2023 (furnished and not filed).
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ATHENE HOLDING LTD.
Date: May 9, 2023 /s/ Martin P. Klein
Martin P. Klein
Executive Vice President and Chief Financial Officer

Document

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Table of Contents image4.jpg
Important Notice 3
FINANCIAL RESULTS
Financial Highlights 4
Condensed Consolidated Statements of Income (Loss) (GAAP view) 5
Spread Related Earnings (Management view) 6
Reconciliation of Earnings Measures 7
Net Flows & Outflows Attributable to Athene by Type 8
Condensed Consolidated Balance Sheets 9
ASSETS
Net Invested Assets (Management view) & Agency Ratings 11
Net Alternative Investments (Management view) 12
Credit Quality of Securities & Net Invested Assets 13
LIABILITIES
Net Reserve Liabilities & Rollforwards 17
Deferred Annuity Liability Characteristics 18
ADDITIONAL INFORMATION
Notes to the Financial Supplement 19
Non-GAAP Reconciliations 21
Important Notice
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The information included in this financial supplement is unaudited and intended for informational purposes only.

Athene Holding Ltd. (AHL) is a subsidiary of Apollo Global Management, Inc. (AGM).The financial statements and exhibits included in this financial supplement should be read in conjunction with AHL’s reports and other filings with the US Securities and Exchange Commission, including its reports on Form 10-K, Form 10-Q and Form 8-K. This financial supplement does not constitute an offer to sell, or the solicitation of an offer to buy, any security of AHL, and nothing in this financial supplement shall in any way be relied on in connection with investment decisions. Each recipient of the information contained in this financial supplement is responsible for making its own independent assessment of the business, financial condition, prospects, status and affairs of AHL.

AHL adopted the US GAAP accounting standard related to Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI) as of January 1, 2023, which required AHL to apply the new standard retrospectively back to January 1, 2022, the date of AHL’s merger with AGM. The 2022 financial metrics and disclosures in this supplement have been retrospectively adjusted in accordance with the requirements of the adoption guidance of LDTI. Approximately 20% of Athene’s total US GAAP liabilities as of January 1, 2022 were impacted by these changes. Please refer to the discussion of Key Operating and Non-GAAP Measures herein for additional information on items that are excluded from AHL’s non-GAAP measure of spread related earnings, which was retrospectively adjusted in accordance with the requirements of the adoption guidance of LDTI. Please see Notes 1, 2, 8 and 9 to the condensed consolidated financial statements included in AHL’s Form 10-Q for the quarter ended March 31, 2023 as well as the 2022 Financial Supplement LDTI Recast published on May 5, 2023 for more information on LDTI.

AHL undertakes no obligation to update or correct the information in this financial supplement. AHL makes no representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of any of the information contained in this financial supplement. AHL does not accept any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this financial supplement or its contents or any reliance on the information contained herein.

This financial supplement includes certain non-GAAP measures, including net investment earnings, cost of funds, other operating expenses, spread related earnings, net investment spread, net spread, adjusted debt-to-capital ratio, net invested assets and net reserve liabilities. Management believes the use of these non-GAAP measures (which are defined and discussed in greater detail and reconciled elsewhere in this financial supplement), together with the relevant GAAP measures, provides information that may enhance an investor’s understanding of AHL’s results of operations and the underlying profitability drivers of AHL’s business. These measures should be considered supplementary to AHL’s results in accordance with US GAAP and should not be viewed as a substitute for the corresponding US GAAP measures.

Financial Highlights<br><br>Unaudited (in millions, except percentages) image4.jpg
Quarterly Trends Δ Year-to-Date Δ
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 2022 2023 Y/Y
SELECTED INCOME STATEMENT DATA
GAAP
Net income (loss) available to AHL common shareholder $ (1,050) $ (1,740) $ (622) $ 361 $ 721 100 % NM $ (1,050) $ 721 NM
Return on assets (ROA) (1.72) % (2.92) % (1.07) % 0.60 % 1.15 % 55bps NM (1.72) % 1.15 % NM
NON-GAAP
Spread related earnings $ 674 $ 455 $ 640 $ 697 $ 687 (1) % 2 % $ 674 $ 687 2 %
Net spread 1.49 % 0.97 % 1.33 % 1.42 % 1.36 % (6)bps (13)bps 1.49 % 1.36 % (13)bps
Net investment spread 1.87 % 1.34 % 1.73 % 1.85 % 1.83 % (2)bps (4)bps 1.87 % 1.83 % (4)bps
Spread related earnings - normalized1 $ 523 $ 574 $ 680 $ 746 $ 810 9 % 55 % $ 523 $ 810 55 %
Net spread - normalized1 1.16 % 1.23 % 1.41 % 1.52 % 1.61 % 9bps 45bps 1.16 % 1.61 % 45bps
Net investment spread - normalized1 1.54 % 1.60 % 1.81 % 1.95 % 2.08 % 13bps 54bps 1.54 % 2.08 % 54bps
SELECTED BALANCE SHEET DATA
GAAP
Total assets $ 244,673 $ 232,420 $ 234,554 $ 243,931 $ 257,654 6 % 5 % $ 244,673 $ 257,654 5 %
Goodwill 4,150 4,155 4,062 4,058 4,061 — % (2) % 4,150 4,061 (2) %
Total liabilities 227,380 222,662 227,917 233,382 244,604 5 % 8 % 227,380 244,604 8 %
Debt 3,287 3,279 3,271 3,658 3,650 — % 11 % 3,287 3,650 11 %
Total AHL shareholders' equity 13,973 8,697 5,133 7,158 8,698 22 % (38) % 13,973 8,698 (38) %
Debt-to-capital ratio 19.0 % 27.4 % 38.9 % 33.8 % 29.6 % NM NM 19.0 % 29.6 % NM
NON-GAAP
Gross invested assets $ 221,720 $ 229,545 $ 236,720 $ 238,310 $ 247,673 4 % 12 % $ 221,720 $ 247,673 12 %
Invested assets – ACRA noncontrolling interests (37,449) (40,240) (41,563) (41,859) (40,924) (2) % 9 % (37,449) (40,924) 9 %
Net invested assets 184,271 189,305 195,157 196,451 206,749 5 % 12 % 184,271 206,749 12 %
Net reserve liabilities 169,750 170,703 173,539 175,970 184,891 5 % 9 % 169,750 184,891 9 %
Notional debt 3,000 3,000 3,000 3,400 3,400 — % 13 % 3,000 3,400 13 %
Adjusted AHL common shareholder’s equity 15,524 15,589 16,428 16,653 16,505 (1) % 6 % 15,524 16,505 6 %
Adjusted debt-to-capital ratio 14.2 % 14.1 % 13.6 % 14.7 % 14.7 % 0bps 50bps 14.2 % 14.7 % 50bps
INFLOWS DATA
Gross organic inflows $ 11,556 $ 12,049 $ 12,955 $ 11,290 $ 11,927 6 % 3 % $ 11,556 $ 11,927 3 %
Gross inorganic inflows — — — — — NM NM — — NM
Total gross inflows $ 11,556 $ 12,049 $ 12,955 $ 11,290 $ 11,927 6 % 3 % $ 11,556 $ 11,927 3 %
Note: “NM” represents changes that are not meaningful. Please refer to Notes to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion of non-GAAP metrics. 1 Spread related earnings – normalized, net spread - normalized and net investment spread - normalized reflect adjustments to exclude notable items and normalize alternative income to an 11% long-term return. See further discussion over this non-GAAP metric in the Notes to the Financial Supplement section.
Condensed Consolidated Statements of Income (Loss) (GAAP view)<br><br>Unaudited (in millions, except percentages) image4.jpg
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Quarterly Trends Δ Year-to-Date Δ
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 2022 2023 Y/Y
REVENUES
Premiums $ 2,110 $ 5,614 $ 3,045 $ 869 $ 96 (89) % (95) % $ 2,110 $ 96 (95) %
Product charges 166 175 184 193 198 3 % 19 % 166 198 19 %
Net investment income 1,683 1,726 1,843 2,319 2,407 4 % 43 % 1,683 2,407 43 %
Investment related gains (losses) (4,212) (5,751) (2,848) 105 1,065 NM NM (4,212) 1,065 NM
Other revenues (3) (9) (26) 10 13 30 % NM (3) 13 NM
Revenues of consolidated variable interest entities
Net investment income 17 30 33 31 80 158 % NM 17 80 NM
Investment related gains (losses) (42) 22 79 260 201 (23) % NM (42) 201 NM
Total revenues (281) 1,807 2,310 3,787 4,060 7 % NM (281) 4,060 NM
BENEFITS AND EXPENSES
Interest sensitive contract benefits (99) (653) 171 1,119 1,289 15 % NM (99) 1,289 NM
Future policy and other policy benefits 2,184 5,776 3,270 1,235 466 (62) % (79) % 2,184 466 (79) %
Market risk benefits remeasurement (gains) losses (622) (609) (458) 32 346 NM NM (622) 346 NM
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired 98 108 112 126 138 10 % 41 % 98 138 41 %
Policy and other operating expenses 338 357 388 412 435 6 % 29 % 338 435 29 %
Total benefits and expenses 1,899 4,979 3,483 2,924 2,674 (9) % 41 % 1,899 2,674 41 %
Income (loss) before income taxes (2,180) (3,172) (1,173) 863 1,386 61 % NM (2,180) 1,386 NM
Income tax expense (benefit) (284) (378) (121) 137 163 19 % NM (284) 163 NM
Net income (loss) (1,896) (2,794) (1,052) 726 1,223 68 % NM (1,896) 1,223 NM
Less: Net income (loss) attributable to noncontrolling interests (881) (1,089) (465) 329 455 38 % NM (881) 455 NM
Net income (loss) attributable to Athene Holding Ltd. shareholders (1,015) (1,705) (587) 397 768 93 % NM (1,015) 768 NM
Less: Preferred stock dividends 35 35 35 36 47 31 % 34 % 35 47 34 %
Net income (loss) available to Athene Holding Ltd. common shareholder $ (1,050) $ (1,740) $ (622) $ 361 $ 721 100 % NM $ (1,050) $ 721 NM
Spread Related Earnings (Management view)<br><br>Unaudited (in millions, except percentages) image4.jpg
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Quarterly Trends Δ Year-to-Date Δ
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 2022 2023 Y/Y
SPREAD RELATED EARNINGS
Fixed income and other investment income $ 1,207 $ 1,302 $ 1,471 $ 1,727 $ 1,958 13 % 62 % $ 1,207 $ 1,958 62 %
Alternative investment income 448 186 250 322 185 (43) % (59) % 448 185 (59) %
Net investment earnings 1,655 1,488 1,721 2,049 2,143 5 % 29 % 1,655 2,143 29 %
Strategic capital management fees 12 13 14 14 14 — % 17 % 12 14 17 %
Cost of funds (822) (873) (902) (1,158) (1,235) 7 % 50 % (822) (1,235) 50 %
Net investment spread 845 628 833 905 922 2 % 9 % 845 922 9 %
Other operating expenses (109) (109) (120) (128) (126) (2) % 16 % (109) (126) 16 %
Interest and other financing costs (62) (64) (73) (80) (109) 36 % 76 % (62) (109) 76 %
Spread related earnings $ 674 $ 455 $ 640 $ 697 $ 687 (1) % 2 % $ 674 $ 687 2 %
Fixed income and other investment income 2.83 % 2.97 % 3.27 % 3.76 % 4.13 % 37bps 130bps 2.83 % 4.13 % 130bps
Alternative investment income 16.61 % 6.38 % 8.26 % 10.55 % 6.12 % NM NM 16.61 % 6.12 % NM
Net investment earnings 3.65 % 3.19 % 3.58 % 4.19 % 4.25 % 6bps 60bps 3.65 % 4.25 % 60bps
Strategic capital management fees 0.03 % 0.03 % 0.03 % 0.03 % 0.03 % 0bps 0bps 0.03 % 0.03 % 0bps
Cost of funds (1.81) % (1.88) % (1.88) % (2.37) % (2.45) % 8bps 64bps (1.81) % (2.45) % 64bps
Net investment spread 1.87 % 1.34 % 1.73 % 1.85 % 1.83 % (2)bps (4)bps 1.87 % 1.83 % (4)bps
Other operating expenses (0.24) % (0.23) % (0.25) % (0.26) % (0.25) % (1)bp 1bp (0.24) % (0.25) % 1bp
Interest and other financing costs (0.14) % (0.14) % (0.15) % (0.17) % (0.22) % 5bps 8bps (0.14) % (0.22) % 8bps
Spread related earnings 1.49 % 0.97 % 1.33 % 1.42 % 1.36 % (6)bps (13)bps 1.49 % 1.36 % (13)bps
Average net invested assets - fixed income $ 170,616 $ 175,115 $ 180,143 $ 183,597 $ 189,509 3 % 11 % $ 170,616 $ 189,509 11 %
Average net invested assets - alternatives 10,782 11,673 12,088 12,207 12,091 (1) % 12 % 10,782 12,091 12 %
Average net invested assets $ 181,398 $ 186,788 $ 192,231 $ 195,804 $ 201,600 3 % 11 % $ 181,398 $ 201,600 11 %
Please refer to Notes to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on spread related earnings.
Reconciliation of Earnings Measures<br><br>Unaudited (in millions, except percentages) image4.jpg
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Quarterly Trends Δ Year-to-Date Δ
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 2022 2023 Y/Y
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO ATHENE HOLDING LTD. COMMON SHAREHOLDER TO SPREAD RELATED EARNINGS
Net income (loss) available to Athene Holding Ltd. common shareholder $ (1,050) $ (1,740) $ (622) $ 361 $ 721 100 % NM $ (1,050) $ 721 NM
Preferred stock dividends 35 35 35 36 47 31 % 34 % 35 47 34 %
Net income (loss) attributable to noncontrolling interests (881) (1,089) (465) 329 455 38 % NM (881) 455 NM
Net income (loss) (1,896) (2,794) (1,052) 726 1,223 68 % NM (1,896) 1,223 NM
Income tax expense (benefit) (284) (378) (121) 137 163 19 % NM (284) 163 NM
Income (loss) before income taxes (2,180) (3,172) (1,173) 863 1,386 61 % NM (2,180) 1,386 NM
Realized losses on sale of AFS securities (64) (39) (41) (32) (59) (84) % 8 % (64) (59) 8 %
Unrealized, allowances and other investment gains (losses) (879) (1,195) (671) (442) 92 NM NM (879) 92 NM
Change in fair value of reinsurance assets (1,657) (1,612) (1,146) 331 357 8 % NM (1,657) 357 NM
Offsets to investment gains (losses) (3) 5 5 6 7 17 % NM (3) 7 NM
Investment gains (losses), net of offsets (2,603) (2,841) (1,853) (137) 397 NM NM (2,603) 397 NM
Change in fair values of derivatives and embedded derivatives - FIAs (37) (367) 90 (24) 143 NM NM (37) 143 NM
Non-operating change in funding agreements — — (80) (26) (6) 77 % NM — (6) NM
Change in fair value of market risk benefits 688 665 511 30 (271) NM NM 688 (271) NM
Non-operating change in liability for future policy benefits (2) (8) (3) (4) (1) 75 % 50 % (2) (1) 50 %
Non-operating change in insurance liabilities and related derivatives 649 290 518 (24) (135) NM NM 649 (135) NM
Integration, restructuring and other non-operating expenses (34) (33) (37) (29) (29) — % (15) % (34) (29) (15) %
Stock compensation expense (12) (13) (15) (16) (16) — % 33 % (12) (16) 33 %
Preferred stock dividends 35 35 35 36 47 31 % 34 % 35 47 34 %
Noncontrolling interests - pre-tax income (loss) and VIE adjustments (889) (1,065) (461) 336 435 29 % NM (889) 435 NM
Less: Total adjustments to income (loss) before income taxes (2,854) (3,627) (1,813) 166 699 NM NM (2,854) 699 NM
Spread related earnings $ 674 $ 455 $ 640 $ 697 $ 687 (1) % 2 % $ 674 $ 687 2 %
Note: Please refer to Notes to the Financial Supplement section for discussion on spread related earnings.
Net Flows & Outflows Attributable to Athene by Type<br><br>Unaudited (in millions, except percentages) image4.jpg
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Quarterly Trends Δ LTM Δ
1Q’21 2Q’21 3Q’21 4Q’21 1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 1Q’22 1Q’23 Y/Y
NET FLOWS
Retail $ 1,757 $ 1,749 $ 2,372 $ 2,903 $ 2,865 $ 3,748 $ 6,132 $ 7,662 $ 8,578 12 % 199 % $ 9,889 $ 26,120 164 %
Flow reinsurance 299 279 635 1,351 1,001 1,038 2,291 1,856 1,793 (3) % 79 % 3,266 6,978 114 %
Funding agreements1 3,226 4,074 2,337 2,215 5,696 1,755 1,588 1,000 1,500 50 % (74) % 14,322 5,843 (59) %
Pension group annuities 2,893 1,474 6,593 2,877 1,994 5,508 2,944 772 56 (93) % (97) % 12,938 9,280 (28) %
Gross organic inflows 8,175 7,576 11,937 9,346 11,556 12,049 12,955 11,290 11,927 6 % 3 % 40,415 48,221 19 %
Gross inorganic inflows2 — — — — — — — — — NM NM — — NM
Total gross inflows 8,175 7,576 11,937 9,346 11,556 12,049 12,955 11,290 11,927 6 % 3 % 40,415 48,221 19 %
Gross outflows3 (4,122) (4,635) (4,433) (4,344) (4,883) (4,925) (7,000) (11,064) (6,879) (38) % 41 % (18,295) (29,868) 63 %
Net flows $ 4,053 $ 2,941 $ 7,504 $ 5,002 $ 6,673 $ 7,124 $ 5,955 $ 226 $ 5,048 NM (24) % $ 22,120 $ 18,353 (17) %
Inflows attributable to Athene $ 6,705 $ 5,895 $ 7,180 $ 7,015 $ 9,333 $ 8,889 $ 11,000 $ 10,022 $ 11,896 19 % 27 % $ 29,423 $ 41,807 42 %
Inflows attributable to ADIP4 1,470 1,681 4,757 2,331 2,223 3,160 1,955 1,268 31 (98) % (99) % 10,992 6,414 (42) %
Total gross inflows $ 8,175 $ 7,576 $ 11,937 $ 9,346 $ 11,556 $ 12,049 $ 12,955 $ 11,290 $ 11,927 6 % 3 % $ 40,415 $ 48,221 19 %
Outflows attributable to Athene $ (3,481) $ (3,941) $ (3,746) $ (3,593) $ (4,072) $ (4,062) $ (5,803) $ (9,787) $ (5,531) (43) % 36 % $ (15,352) $ (25,183) 64 %
Outflows attributable to ADIP4 (641) (694) (687) (751) (811) (863) (1,197) (1,277) (1,348) 6 % 66 % (2,943) (4,685) 59 %
Total gross outflows3 $ (4,122) $ (4,635) $ (4,433) $ (4,344) $ (4,883) $ (4,925) $ (7,000) $ (11,064) $ (6,879) (38) % 41 % $ (18,295) $ (29,868) 63 %
OUTFLOWS ATTRIBUTABLE TO ATHENE BY TYPE5
Maturity-driven, contractual-based outflows6 $ (323) $ (479) $ (579) $ (796) $ (1,384) $ (1,305) $ (2,834) $ (1,472) $ (1,717) 17 % 24 % $ (3,238) $ (7,328) 126 %
Policyholder-driven outflows7 (3,158) (3,462) (3,167) (2,797) (2,688) (2,757) (2,969) (3,453) (3,814) 10 % 42 % (12,114) (12,993) 7 %
Income oriented withdrawals (planned)8 (1,506) (1,451) (1,363) (1,585) (1,529) (1,413) (1,516) (1,813) (1,766) (3) % 16 % (5,928) (6,508) 10 %
From policies out-of-surrender-charge (planned)9 (1,179) (1,577) (1,374) (867) (865) (1,075) (1,131) (1,188) (1,480) 25 % 71 % (4,683) (4,874) 4 %
From policies in-surrender-charge (unplanned)10 (473) (434) (430) (345) (294) (269) (322) (452) (568) 26 % 93 % (1,503) (1,611) 7 %
Core outflows (3,481) (3,941) (3,746) (3,593) (4,072) (4,062) (5,803) (4,925) (5,531) 12 % 36 % (15,352) (20,321) 32 %
Strategic reinsurance transaction — — — — — — — (4,862) — NM NM — (4,862) NM
Outflows attributable to Athene $ (3,481) $ (3,941) $ (3,746) $ (3,593) $ (4,072) $ (4,062) $ (5,803) $ (9,787) $ (5,531) (43) % 36 % $ (15,352) $ (25,183) 64 %
Annualized rate11
Maturity-driven, contractual-based outflows6 (0.9) % (1.3) % (1.4) % (1.9) % (3.1) % (2.8) % (5.9) % (3.0) % (3.4) % 40bps 30bps (1.9) % (3.8) % 190bps
Policyholder-driven outflows7 (8.3) % (8.8) % (7.9) % (6.6) % (5.9) % (5.9) % (6.2) % (7.1) % (7.6) % 50bps 170bps (7.1) % (6.7) % (40)bps
Income oriented withdrawals (planned)8 (4.0) % (3.7) % (3.4) % (3.8) % (3.4) % (3.0) % (3.2) % (3.7) % (3.5) % (20)bps 10bps (3.5) % (3.4) % (10)bps
From policies out-of-surrender-charge (planned)9 (3.1) % (4.0) % (3.4) % (2.0) % (1.9) % (2.3) % (2.3) % (2.5) % (3.0) % 50bps 110bps (2.7) % (2.5) % (20)bps
From policies in-surrender-charge (unplanned)10 (1.2) % (1.1) % (1.1) % (0.8) % (0.6) % (0.6) % (0.7) % (0.9) % (1.1) % 20bps 50bps (0.9) % (0.8) % (10)bps
Core outflows (9.2) % (10.1) % (9.3) % (8.5) % (9.0) % (8.7) % (12.1) % (10.1) % (11.0) % 90bps 200bps (9.0) % (10.5) % 150bps
Strategic reinsurance transaction — % — % — % — % — % — % — % (9.9) % — % NM NM — % (2.5) % NM
Outflows attributable to Athene (9.2) % (10.1) % (9.3) % (8.5) % (9.0) % (8.7) % (12.1) % (20.0) % (11.0) % NM 200bps (9.0) % (13.0) % NM
Note: The above data includes the financial results of AHL and its subsidiaries as a standalone entity for the periods prior to the completion of the merger transaction, and AHL and its subsidiaries as a subsidiary of AGM for periods from and after the merger effective date of January 1, 2022. The financial results reflect the impacts of pushdown accounting in which we used AGM’s basis of accounting, which reflects the fair market value of our assets and liabilities at the time of the merger. 1 Funding agreements are comprised of funding agreements issued under our funding agreement backed notes (FABN) and funding agreement backed repurchase agreements (FABR) programs, funding agreements issued to the Federal Home Loan Bank (FHLB) and long-term repurchase agreements. 2 Gross inorganic inflows include acquisitions and block reinsurance transactions. 3 Gross outflows include full and partial policyholder withdrawals on deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities, funding agreement repurchases and maturities and ceded reinsurance. 4 ADIP refers to Apollo/Athene Dedicated Investment Program and represents the noncontrolling interest in business ceded to ACRA. 5 The format and methodology of this table was updated to provide additional information. 6 Represents outflows from funding agreements, pension group annuities and multi-year guarantee fixed annuities (MYGA), all of which occur based on defined maturities or substantially lapse upon reaching their contractual term. Amounts may vary on a quarterly basis, based on the timing of original issuance. 7 Represents outflows from fixed index annuities and other applicable products, which have varying degrees of predictability due to policyholder actions. 8 Represents partial annuity withdrawals to meet retirement income needs within contractual annual limits. 9 Represents outflows from policies that no longer have an active surrender charge in force. 10 Represents outflows from policies with an active surrender charge in force. 11 The outflow rate is calculated as outflows divided by average net invested assets for the respective period, on an annualized basis.
Condensed Consolidated Balance Sheets<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- ---
December 31, 2022 March 31, 2023 Δ
ASSETS
Investments
Available-for-sale securities, at fair value $ 102,404 $ 106,713 4 %
Trading securities, at fair value 1,595 1,652 4 %
Equity securities 1,487 1,368 (8) %
Mortgage loans, at fair value 27,454 29,949 9 %
Investment funds 79 77 (3) %
Policy loans 347 339 (2) %
Funds withheld at interest 32,880 31,084 (5) %
Derivative assets 3,309 3,956 20 %
Short-term investments 2,160 627 (71) %
Other investments 773 701 (9) %
Total investments 172,488 176,466 2 %
Cash and cash equivalents 7,779 13,844 78 %
Restricted cash 628 1,148 83 %
Investments in related parties
Available-for-sale securities, at fair value 9,821 11,866 21 %
Trading securities, at fair value 878 885 1 %
Equity securities, at fair value 279 251 (10) %
Mortgage loans, at fair value 1,302 1,324 2 %
Investment funds 1,569 1,595 2 %
Funds withheld at interest 9,808 9,462 (4) %
Short-term investments — 1,043 NM
Other investments, at fair value 303 338 12 %
Accrued investment income 1,328 1,458 10 %
Reinsurance recoverable 4,358 4,229 (3) %
Deferred acquisition costs, deferred sales inducements and value of business acquired 4,466 4,836 8 %
Goodwill 4,058 4,061 — %
Other assets 8,693 7,916 (9) %
Assets of consolidated variable interest entities
Investments
Trading securities, at fair value 1,063 1,069 1 %
Mortgage loans, at fair value 2,055 2,119 3 %
Investment funds, at fair value 12,480 12,880 3 %
Other investments, at fair value 101 99 (2) %
Cash and cash equivalents 362 654 81 %
Other assets 112 111 (1) %
Total assets $ 243,931 $ 257,654 6 %
Condensed Consolidated Balance Sheets, continued<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- ---
December 31, 2022 March 31, 2023 Δ
LIABILITIES
Interest sensitive contract liabilities $ 173,616 $ 181,100 4 %
Future policy benefits 42,110 42,490 1 %
Market risk benefits 2,970 3,203 8 %
Debt 3,658 3,650 — %
Derivative liabilities 1,646 1,518 (8) %
Payables for collateral on derivatives and securities to repurchase 6,707 10,196 52 %
Other liabilities 1,860 1,600 (14) %
Liabilities of consolidated variable interest entities 815 847 4 %
Total liabilities 233,382 244,604 5 %
EQUITY
Preferred stock — — NM
Common stock — — NM
Additional paid-in capital 18,119 18,139 — %
Retained deficit (3,640) (3,293) 10 %
Accumulated other comprehensive loss (7,321) (6,148) 16 %
Total Athene Holding Ltd. shareholders' equity 7,158 8,698 22 %
Noncontrolling interests 3,391 4,352 28 %
Total equity 10,549 13,050 24 %
Total liabilities and equity $ 243,931 $ 257,654 6 %
Net Invested Assets (Management view) & Agency Ratings<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023
Invested Asset Value1 Percent of Total Invested Asset Value1 Percent of Total
NET INVESTED ASSETS
Corporate $ 80,800 41.1 % $ 80,701 39.0 %
CLO 19,881 10.1 % 20,563 9.9 %
Credit 100,681 51.2 % 101,264 48.9 %
CML 23,750 12.1 % 24,306 11.8 %
RML 11,147 5.7 % 12,306 6.0 %
RMBS 7,363 3.7 % 7,550 3.7 %
CMBS 4,495 2.3 % 4,463 2.2 %
Real estate 46,755 23.8 % 48,625 23.7 %
ABS 20,680 10.5 % 21,566 10.4 %
Alternative investments 12,079 6.1 % 12,103 5.9 %
State, municipal, political subdivisions and foreign government 2,715 1.4 % 2,703 1.3 %
Equity securities 1,737 0.9 % 1,708 0.8 %
Short-term investments 1,930 1.0 % 1,608 0.8 %
U.S. government and agencies 2,691 1.4 % 2,685 1.3 %
Other investments 41,832 21.3 % 42,373 20.5 %
Cash and equivalents 5,481 2.8 % 12,672 6.1 %
Policy loans and other 1,702 0.9 % 1,815 0.8 %
Net invested assets $ 196,451 100.0 % $ 206,749 100.0 %
A.M. Best Standard & Poor’s Fitch Moody’s
--- --- --- --- ---
FINANCIAL STRENGTH RATINGS
Athene Annuity & Life Assurance Company A A+ A+ A1
Athene Annuity and Life Company A A+ A+ A1
Athene Annuity & Life Assurance Company of New York A A+ A+ A1
Athene Life Insurance Company of New York A NR NR NR
Athene Annuity Re Ltd. A A+ A+ A1
Athene Life Re Ltd. A A+ A+ A1
Athene Life Re International Ltd. A A+ A+ A1
Athene Co-Invest Reinsurance Affiliate 1A Ltd. and Athene Co-Invest Reinsurance Affiliate 1B Ltd. A A+ A+ A1
Athene Co-Invest Reinsurance Affiliate International Ltd. A A+ A+ A1
CREDIT RATINGS
Athene Holding Ltd. bbb+ A- A- NR
Senior notes bbb+ A- BBB+ Baa1
1 Please refer to Notes to the Financial Supplement section for discussion on net invested assets including net alternative investments and Non-GAAP Measure Reconciliations for the reconciliation of investments, including related parties, to net invested assets. Net invested assets includes our economic ownership of ACRA investments but does not include the investments associated with the noncontrolling interest.
Net Alternative Investments (Management view)<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023
Invested Asset Value1 Percent of Total Invested Asset Value1 Percent of Total
NET ALTERNATIVE INVESTMENTS
Strategic origination platforms
Wheels Donlen $ 662 5.5 % $ 647 5.3 %
Redding Ridge 624 5.2 % 610 5.0 %
NNN Lease 579 4.8 % 552 4.6 %
MidCap Financial 604 5.0 % 612 5.1 %
Foundation Home Loans 302 2.5 % 288 2.4 %
PK AirFinance 251 2.1 % 247 2.0 %
Aqua Finance 267 2.2 % 269 2.2 %
Other 308 2.5 % 249 2.1 %
Total strategic origination platforms 3,597 29.8 % 3,474 28.7 %
Strategic retirement services platforms
Athora 1,012 8.4 % 1,076 8.9 %
Catalina 417 3.4 % 407 3.4 %
FWD 400 3.3 % 400 3.3 %
Challenger 294 2.4 % 260 2.2 %
Venerable 241 2.0 % 235 1.9 %
Other 20 0.2 % — — %
Total strategic retirement services platforms 2,384 19.7 % 2,378 19.7 %
Apollo and other fund investments
Equity
Real estate 1,212 10.0 % 1,154 9.5 %
Traditional private equity 947 7.8 % 1,054 8.7 %
Other 189 1.6 % 165 1.4 %
Total equity 2,348 19.4 % 2,373 19.6 %
Hybrid
Real estate 1,289 10.7 % 1,216 10.0 %
Other 1,315 10.9 % 1,315 10.9 %
Total hybrid 2,604 21.6 % 2,531 20.9 %
Yield 885 7.3 % 883 7.3 %
Total Apollo and other fund investments 5,837 48.3 % 5,787 47.8 %
Other 261 2.2 % 464 3.8 %
Net alternative investments2 $ 12,079 100.0 % $ 12,103 100.0 %
1 Please refer to Notes to the Financial Supplement for discussion on net invested assets including net alternative investments and Non-GAAP Measure Reconciliations for the reconciliations of investments, including related parties, to net invested assets and investment funds, including related parties and VIEs, to net alternative investments. Net invested assets includes our economic ownership of ACRA investments but does not include the investments associated with the noncontrolling interest. 2 Net alternative investments does not correspond to total investment funds, including related parties and VIEs, on our condensed consolidated balance sheets. Net alternative investments adjusts the GAAP presentation to include CLO and ABS equity tranche securities that are included in trading securities in the GAAP view, a nonredeemable preferred stock viewed as an alternative investment for management view but included in equity securities for GAAP view, investment funds included in our funds withheld at interest and modco reinsurance portfolios, royalties and other investments.
Credit Quality of Securities<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023
CREDIT QUALITY OF AFS SECURITIES (GAAP VIEW) Fair Value Percent of Total Fair Value Percent of Total
NAIC designation
1 A-G $ 58,470 52.1 % $ 62,241 52.5 %
2 A-C 49,067 43.7 % 51,589 43.5 %
Total investment grade 107,537 95.8 % 113,830 96.0 %
3 A-C 3,302 3.0 % 3,292 2.8 %
4 A-C 925 0.8 % 913 0.7 %
5 A-C 190 0.2 % 203 0.2 %
6 271 0.2 % 341 0.3 %
Total below investment grade 4,688 4.2 % 4,749 4.0 %
Total AFS securities including related parties $ 112,225 100.0 % $ 118,579 100.0 %
NRSRO designation
AAA/AA/A $ 51,926 46.3 % $ 54,853 46.3 %
BBB 44,783 39.9 % 47,215 39.8 %
Non-rated1 8,985 8.0 % 9,675 8.1 %
Total investment grade2 105,694 94.2 % 111,743 94.2 %
BB 3,176 2.8 % 3,271 2.8 %
B 749 0.7 % 814 0.7 %
CCC 1,055 0.9 % 1,068 0.9 %
CC and lower 584 0.5 % 774 0.6 %
Non-rated1 967 0.9 % 909 0.8 %
Total below investment grade 6,531 5.8 % 6,836 5.8 %
Total AFS securities including related parties $ 112,225 100.0 % $ 118,579 100.0 %
1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation. With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from the NRSRO ratings methodology. 2 We view the NAIC designation methodology as the most appropriate way to view our AFS portfolio when evaluating credit risk since a large portion of our holdings were purchased at a significant discount to par. With respect to loan-backed and structured securities, the NAIC designation methodology differs in significant respects from the NRSRO rating methodology. NRSRO ratings methodology is focused on the likelihood of recovery of all contractual payments, including principal at par regardless of entry price, while the NAIC designation methodology considers our investment at amortized cost, and the likelihood of recovery of that book value as opposed to the likelihood of the recovery of all contractual payments.
Credit Quality of Net Invested Assets (Management view)<br><br>Unaudited (In millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023
Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total
CREDIT QUALITY OF NET INVESTED ASSETS CREDIT QUALITY OF NET INVESTED ASSETS
NAIC designation NRSRO designation
1 A-G $ 71,471 50.8 % $ 72,532 51.1 % AAA/AA/A $ 60,869 43.3 % $ 61,969 43.7 %
2 A-C 62,115 44.2 % 62,671 44.2 % BBB 56,029 39.9 % 56,439 39.8 %
Non-rated 506 0.4 % 330 0.2 % Non-rated2 14,686 10.5 % 14,519 10.2 %
Total investment grade 134,092 95.4 % 135,533 95.5 % Total investment grade 131,584 93.7 % 132,927 93.7 %
3 A-C 4,471 3.2 % 4,267 3.0 % BB 4,217 3.0 % 4,039 2.9 %
4 A-C 1,259 0.9 % 1,201 0.9 % B 990 0.7 % 1,023 0.7 %
5 A-C 407 0.3 % 434 0.3 % CCC 1,431 1.0 % 1,418 1.0 %
6 326 0.2 % 404 0.3 % CC and lower 906 0.6 % 1,032 0.7 %
Non-rated — — % — — % Non-rated2 1,427 1.0 % 1,400 1.0 %
Total below investment grade 6,463 4.6 % 6,306 4.5 % Total below investment grade 8,971 6.3 % 8,912 6.3 %
Total NAIC designated assets3 140,555 100.0 % 141,839 100.0 % Total NRSRO designated assets3 140,555 100.0 % 141,839 100.0 %
Assets without NAIC designation Assets without NRSRO designation
Commercial mortgage loans Commercial mortgage loans
CM1 3,998 16.8 % 3,693 15.2 % CM1 3,998 16.8 % 3,693 15.2 %
CM2 14,008 59.0 % 14,826 61.0 % CM2 14,008 59.0 % 14,826 61.0 %
CM3 5,216 22.0 % 5,258 21.6 % CM3 5,216 22.0 % 5,258 21.6 %
CM4 447 1.9 % 447 1.8 % CM4 447 1.9 % 447 1.8 %
CM5 81 0.3 % 82 0.4 % CM5 81 0.3 % 82 0.4 %
CM6 — — % — — % CM6 — — % — — %
CM7 — — % — — % CM7 — — % — — %
Total CMLs 23,750 100.0 % 24,306 100.0 % Total CMLs 23,750 100.0 % 24,306 100.0 %
Residential mortgage loans Residential mortgage loans
In good standing 10,636 95.4 % 11,753 95.5 % In good standing 10,636 95.4 % 11,753 95.5 %
90 days late 422 3.8 % 467 3.8 % 90 days late 422 3.8 % 467 3.8 %
In foreclosure 89 0.8 % 86 0.7 % In foreclosure 89 0.8 % 86 0.7 %
Total RMLs 11,147 100.0 % 12,306 100.0 % Total RMLs 11,147 100.0 % 12,306 100.0 %
Alternative investments 12,079 12,103 Alternative investments 12,079 12,103
Cash and equivalents 5,481 12,672 Cash and equivalents 5,481 12,672
Equity securities 1,737 1,708 Equity securities 1,737 1,708
Other4 1,702 1,815 Other4 1,702 1,815
Net invested assets $ 196,451 $ 206,749 Net invested assets $ 196,451 $ 206,749
1 Please refer to Notes to the Financial Supplement section for discussion on net invested assets and Non-GAAP Measure Reconciliations section for the reconciliation of total investments, including related parties, to net invested assets. 2 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation. With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from the NRSRO ratings methodology. 3 NAIC and NRSRO designations include corporates, CLO, RMBS, CMBS, ABS, state, municipal, political subdivisions and foreign government securities, short-term investments and U.S. government and agencies securities. 4 Other includes policy loans, accrued interest, and other net invested assets.
Credit Quality of Net Invested Assets - ABS and CLOs (Management view)<br><br>Unaudited (In millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023
Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total
CREDIT QUALITY OF ABS – NAIC DESIGNATION CREDIT QUALITY OF ABS – NRSRO DESIGNATION
1 A-G $ 12,261 59.3 % $ 12,599 58.4 % AAA/AA/A $ 11,780 57.0 % $ 11,946 55.4 %
2 A-C 7,301 35.3 % 7,859 36.5 % BBB 7,248 35.0 % 7,973 37.0 %
Non-rated — — % — — % Non-rated2 535 2.6 % 538 2.5 %
Total investment grade 19,562 94.6 % 20,458 94.9 % Total investment grade 19,563 94.6 % 20,457 94.9 %
3 A-C 710 3.4 % 698 3.2 % BB 709 3.4 % 698 3.2 %
4 A-C 229 1.1 % 228 1.1 % B 229 1.1 % 228 1.0 %
5 A-C 157 0.8 % 159 0.7 % CCC 33 0.2 % 34 0.2 %
6 22 0.1 % 23 0.1 % CC and lower 22 0.1 % 23 0.1 %
Non-rated — — % — — % Non-rated2 124 0.6 % 126 0.6 %
Total below investment grade 1,118 5.4 % 1,108 5.1 % Total below investment grade 1,117 5.4 % 1,109 5.1 %
ABS net invested assets $ 20,680 100.0 % $ 21,566 100.0 % ABS net invested assets $ 20,680 100.0 % $ 21,566 100.0 %
CREDIT QUALITY OF CLOs – NAIC DESIGNATION CREDIT QUALITY OF CLOs – NRSRO DESIGNATION
1 A-G $ 12,455 62.7 % $ 12,964 63.1 % AAA/AA/A $ 12,455 62.7 % $ 12,964 63.1 %
2 A-C 7,278 36.6 % 7,452 36.2 % BBB 7,278 36.6 % 7,452 36.2 %
Non-rated — — % — — % Non-rated2 — — % — — %
Total investment grade 19,733 99.3 % 20,416 99.3 % Total investment grade 19,733 99.3 % 20,416 99.3 %
3 A-C 128 0.6 % 128 0.6 % BB 128 0.6 % 128 0.6 %
4 A-C 20 0.1 % 19 0.1 % B 20 0.1 % 19 0.1 %
5 A-C — — % — — % CCC — — % — — %
6 — — % — — % CC and lower — — % — — %
Non-rated — — % — — % Non-rated2 — — % — — %
Total below investment grade 148 0.7 % 147 0.7 % Total below investment grade 148 0.7 % 147 0.7 %
CLO net invested assets $ 19,881 100.0 % $ 20,563 100.0 % CLO net invested assets $ 19,881 100.0 % $ 20,563 100.0 %
1 Please refer to Notes to the Financial Supplement section for discussion on net invested assets and Non-GAAP Measure Reconciliations section for the reconciliation of total investments, including related parties, to net invested assets. 2 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation. With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from the NRSRO ratings methodology.
Credit Quality of Net Invested Assets - RMBS and CMBS (Management view)<br><br>Unaudited (In millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023
Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total Invested Asset Value1 % of Total
CREDIT QUALITY OF RMBS – NAIC DESIGNATION CREDIT QUALITY OF RMBS – NRSRO DESIGNATION
1 A-G $ 6,125 83.2 % $ 6,344 84.0 % AAA/AA/A $ 2,026 27.5 % $ 2,235 29.6 %
2 A-C 347 4.7 % 296 3.9 % BBB 735 10.0 % 496 6.6 %
Non-rated — — % — — % Non-rated2 1,647 22.4 % 1,752 23.2 %
Total investment grade 6,472 87.9 % 6,640 87.9 % Total investment grade 4,408 59.9 % 4,483 59.4 %
3 A-C 455 6.2 % 428 5.7 % BB 140 1.9 % 139 1.8 %
4 A-C 309 4.2 % 318 4.2 % B 141 1.9 % 137 1.8 %
5 A-C 102 1.4 % 113 1.5 % CCC 1,333 18.1 % 1,317 17.4 %
6 25 0.3 % 51 0.7 % CC and lower 834 11.3 % 964 12.8 %
Non-rated — — % — — % Non-rated2 507 6.9 % 510 6.8 %
Total below investment grade 891 12.1 % 910 12.1 % Total below investment grade 2,955 40.1 % 3,067 40.6 %
RMBS net invested assets $ 7,363 100.0 % $ 7,550 100.0 % RMBS net invested assets $ 7,363 100.0 % $ 7,550 100.0 %
CREDIT QUALITY OF CMBS – NAIC DESIGNATION CREDIT QUALITY OF CMBS – NRSRO DESIGNATION
1 A-G $ 3,191 71.0 % $ 3,143 70.4 % AAA/AA/A $ 2,262 50.3 % $ 2,218 49.7 %
2 A-C 811 18.0 % 822 18.4 % BBB 675 15.0 % 682 15.3 %
Non-rated — — % — — % Non-rated2 610 13.6 % 610 13.7 %
Total investment grade 4,002 89.0 % 3,965 88.8 % Total investment grade 3,547 78.9 % 3,510 78.7 %
3 A-C 295 6.6 % 294 6.6 % BB 700 15.6 % 684 15.3 %
4 A-C 80 1.8 % 81 1.8 % B 167 3.7 % 183 4.1 %
5 A-C 78 1.7 % 79 1.8 % CCC 64 1.4 % 67 1.5 %
6 40 0.9 % 44 1.0 % CC and lower 17 0.4 % 19 0.4 %
Non-rated — — % — — % Non-rated2 — — % — — %
Total below investment grade 493 11.0 % 498 11.2 % Total below investment grade 948 21.1 % 953 21.3 %
CMBS net invested assets $ 4,495 100.0 % $ 4,463 100.0 % CMBS net invested assets $ 4,495 100.0 % $ 4,463 100.0 %
1 Please refer to Notes to the Financial Supplement section for discussion on net invested assets and Non-GAAP Measure Reconciliations section for the reconciliation of total investments, including related parties, to net invested assets. 2 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security’s respective NAIC designation. With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from the NRSRO ratings methodology.
Net Reserve Liabilities & Rollforwards<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- ---
December 31, 2022 March 31, 2023
Dollars Percent of Total Dollars Percent of Total
NET RESERVE LIABILITIES
Indexed annuities $ 85,163 48.4 % $ 86,238 46.6 %
Fixed rate annuities 39,553 22.5 % 45,990 24.9 %
Total deferred annuities 124,716 70.9 % 132,228 71.5 %
Pension group annuities 20,614 11.7 % 20,735 11.2 %
Payout annuities 7,589 4.3 % 7,637 4.2 %
Funding agreements1 21,538 12.2 % 22,759 12.3 %
Life and other 1,513 0.9 % 1,532 0.8 %
Total net reserve liabilities $ 175,970 100.0 % $ 184,891 100.0 % Quarterly Trends Δ Year-to-Date Δ
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 Q/Q Y/Y 2022 2023 Y/Y
NET RESERVE LIABILITY ROLLFORWARD
Net reserve liabilities – beginning $ 168,323 $ 169,750 $ 170,703 $ 173,539 $ 175,970 1 % 5 % $ 168,323 $ 175,970 5 %
Gross inflows2 11,817 12,214 13,161 11,511 12,111 5 % 2 % 11,817 12,111 2 %
Inflows attributable to ACRA noncontrolling interest (2,271) (3,184) (1,993) (1,305) (60) (95) % (97) % (2,271) (60) (97) %
Net inflows 9,546 9,030 11,168 10,206 12,051 18 % 26 % 9,546 12,051 26 %
Net withdrawals (4,072) (4,062) (5,803) (4,925) (5,531) 12 % 36 % (4,072) (5,531) 36 %
Strategic reinsurance outflows — — — (4,862) — NM NM — — NM
Other reserve changes (4,047) (4,015) (2,529) 2,012 2,401 19 % NM (4,047) 2,401 NM
Net reserve liabilities – ending $ 169,750 $ 170,703 $ 173,539 $ 175,970 $ 184,891 5 % 9 % $ 169,750 $ 184,891 9 %
ACRA NONCONTROLLING INTEREST RESERVE LIABILITY ROLLFORWARD
Reserve liabilities – beginning $ 33,537 $ 34,036 $ 35,522 $ 35,463 $ 35,981 1 % 7 % $ 33,537 $ 35,981 7 %
Inflows 2,271 3,184 1,993 1,305 60 (95) % (97) % 2,271 60 (97) %
Withdrawals (811) (863) (1,197) (1,277) (1,348) 6 % 66 % (811) (1,348) 66 %
Other reserve changes (961) (835) (855) 490 588 20 % NM (961) 588 NM
Reserve liabilities – ending $ 34,036 $ 35,522 $ 35,463 $ 35,981 $ 35,281 (2) % 4 % $ 34,036 $ 35,281 4 %
Note: Please refer to Notes to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on net reserve liabilities. Net reserve liabilities include our economic ownership of ACRA reserve liabilities but do not include the reserve liabilities associated with the noncontrolling interest. 1 Funding agreements are comprised of funding agreements issued under our FABN and FABR programs, funding agreements issued to the FHLB and long-term repurchase agreements. 2 Gross inflows equal inflows from our retail, flow reinsurance and institutional channels as well as inflows for life and products other than deferred annuities or our institutional products, renewal inflows on older blocks of business, annuitizations and foreign currency translation adjustments on large transactions between the transaction date and the translation period. Gross inflows include all inflows sourced by Athene, including all of the inflows reinsured to ACRA.
Deferred Annuity Liability Characteristics<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- --- ---
Surrender charge (gross) Percent of total Surrender charge (net of MVA) Percent of total
SURRENDER CHARGE PERCENTAGES ON DEFERRED ANNUITIES NET ACCOUNT VALUE
No Surrender Charge $ 28,278 22.3 % $ 28,278 22.3 %
0.0% < 2.0% 1,796 1.4 % 1,218 1.0 %
2.0% < 4.0% 6,420 5.0 % 4,609 3.6 %
4.0% < 6.0% 11,645 9.2 % 10,019 7.9 %
6.0% or greater 78,919 62.1 % 82,934 65.2 %
$ 127,058 100.0 % $ 127,058 100.0 %
Surrender charge (gross) MVA benefit Surrender charge (net)
Aggregate surrender charge protection 6.0 % 1.6 % 7.6 %
Deferred annuities Percent of total Average surrender charge (gross)
--- --- --- --- --- --- ---
YEARS OF SURRENDER CHARGE REMAINING ON DEFERRED ANNUITIES NET ACCOUNT VALUE
No Surrender Charge $ 28,278 22.3 % — %
Less than 2 20,250 15.9 % 5.7 %
2 to less than 4 22,014 17.3 % 6.7 %
4 to less than 6 26,976 21.2 % 7.6 %
6 to less than 8 13,071 10.3 % 8.8 %
8 to less than 10 12,980 10.2 % 9.4 %
10 or greater 3,489 2.8 % 17.8 %
$ 127,058 100.0 %
Notes to the Financial Supplement
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KEY OPERATING AND NON-GAAP MEASURES

In addition to our results presented in accordance with accounting principles generally accepted in the United States of America (US GAAP), we present certain financial information that includes non-GAAP measures. Management believes the use of these non-GAAP measures, together with the relevant US GAAP measures, provides information that may enhance an investor’s understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers, as such items fluctuate from period to period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with US GAAP and should not be viewed as a substitute for the corresponding US GAAP measures.

SPREAD RELATED EARNINGS (SRE) AND NET SPREAD

Spread related earnings is a pre-tax non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation and other expenses. Our spread related earnings equals net income (loss) available to AHL common shareholder adjusted to eliminate the impact of the following:

•Investment Gains (Losses), Net of Offsets—Consists of the realized gains and losses on the sale of AFS securities, the change in fair value of reinsurance assets, unrealized gains and losses, changes in the credit loss allowance, and other investment gains and losses. Unrealized, allowances and other investment gains and losses are comprised of the fair value adjustments of trading securities (other than CLOs) and mortgage loans, investments held under the fair value option, derivative gains and losses not hedging FIA index credits, and the change in credit loss allowances recognized in operations net of the change in AmerUs Closed Block fair value reserve related to the corresponding change in fair value of investments. The change in fair value of our investment in Apollo was included in prior years. Investment gains and losses are net of offsets related to the market value adjustments (MVA) associated with surrenders or terminations of contracts.

•Non-operating Change in Insurance Liabilities and Related Derivatives

•Change in Fair Values of Derivatives and Embedded Derivatives – FIAs—Consists of impacts related to the fair value accounting for derivatives hedging the FIA index credits and the related embedded derivative liability fluctuations from period to period. The index reserve is measured at fair value for the current period and all periods beyond the current policyholder index term. However, the FIA hedging derivatives are purchased to hedge only the current index period. Upon policyholder renewal at the end of the period, new FIA hedging derivatives are purchased to align with the new term. The difference in duration between the FIA hedging derivatives and the index credit reserves creates a timing difference in earnings. This timing difference of the FIA hedging derivatives and index credit reserves is included as a non-operating adjustment. We primarily hedge with options that align with the index terms of our FIA products (typically 1–2 years). On an economic basis, we believe this is suitable because policyholder accounts are credited with index performance at the end of each index term. However, because the term of an embedded derivative in an FIA contract is longer-dated, there is a duration mismatch which may lead to mismatches for accounting purposes.

•Non-operating Change in Funding Agreements—Consists of timing differences caused by changes to interest rates on variable funding agreements and funding agreement backed notes and the associated reserve accretion patterns of those contracts. Further included are adjustments for gains associated with our repurchases of funding agreement backed notes.

•Change in Fair Value of Market Risk Benefits—Consists primarily of volatility in capital market inputs used in the measurement at fair value of our market risk benefits, including certain impacts from changes in interest rates, equity returns and implied equity volatilities.

•Non-operating Change in Liability for Future Policy Benefits—Consists of the non-economic loss incurred at issuance for certain pension group annuities and other payout annuities with life contingencies when valuation interest rates prescribed by US GAAP are lower than the net investment earned rates, adjusted for profit, assumed in pricing. For such contracts with non-economic US GAAP losses, the SRE reserve accretes interest using an imputed discount rate that produces zero gain or loss at issuance.

•Integration, Restructuring, and Other Non-operating Expenses—Consists of restructuring and integration expenses related to acquisitions and block reinsurance costs as well as certain other expenses, which are not predictable or related to our underlying profitability drivers.

•Stock Compensation Expense—Consists of stock compensation expenses associated with our share incentive plans, including long-term incentive expenses, which are not related to our underlying profitability drivers and fluctuate from time to time due to the structure of our plans.

•Income Tax (Expense) Benefit—Consists of the income tax effect of all income statement adjustments, including our Apollo investment in prior years, and is computed by applying the appropriate jurisdiction’s tax rate to all adjustments subject to income tax.

We consider these adjustments to be meaningful adjustments to net income (loss) available to AHL common shareholder for the reasons discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is useful in analyzing our business performance and the trends in our results of operations. Together with net income (loss) available to AHL common shareholder, we believe spread related earnings provides a meaningful financial metric that helps investors understand our underlying results and profitability. Spread related earnings should not be used as a substitute for net income (loss) available to AHL common shareholder.

Net spread is a non-GAAP measure used to evaluate our financial performance and profitability. Net spread is computed using our spread related earnings divided by average net invested assets for the relevant period. To enhance the ability to analyze this measure across periods, interim periods are annualized. While we believe this metric is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for ROA presented under GAAP.

ADJUSTED DEBT TO CAPITAL RATIO

Adjusted debt to capital ratio is a non-GAAP measure used to evaluate our capital structure excluding the impacts of AOCI and the cumulative changes in fair value of funds withheld and modco reinsurance assets as well as mortgage loan assets, net of tax. Adjusted debt to capital ratio is calculated as total debt at notional value divided by adjusted capitalization. Adjusted capitalization includes our adjusted AHL common shareholder’s equity, preferred stock and the notional value of our debt. Adjusted AHL common shareholder’s equity is calculated as the ending AHL shareholders’ equity excluding AOCI, the cumulative changes in fair value of funds withheld and modco reinsurance assets and mortgage loan assets as well as preferred stock. These adjustments fluctuate period to period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities. Except with respect to reinvestment activity relating to acquired blocks of businesses, we typically buy and hold AFS investments to maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance. Adjusted debt to capital ratio should not be used as a substitute for the debt to capital ratio. However, we believe the adjustments to shareholders’ equity are significant to gaining an understanding of our capitalization, debt utilization and debt capacity.

Notes to the Financial Supplement, continued

NET INVESTMENT SPREAD AND OTHER OPERATING EXPENSES

Net investment spread is a key measure of profitability. Net investment spread measures our investment performance plus our strategic capital management fees, less our total cost of funds. Net investment earned rate is a key measure of our investment performance while cost of funds is a key measure of the cost of our policyholder benefits and liabilities. Strategic capital management fees consist of management fees received by us for business managed for others, primarily the non-controlling interest portion of Athene’s business ceded to ACRA.

•Net investment earned rate is a non-GAAP measure we use to evaluate the performance of our net invested assets that does not correspond to US GAAP net investment income. Net investment earned rate is computed as the income from our net invested assets divided by the average net invested assets, for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. The adjustments to net investment income to arrive at our net investment earned rate add (a) alternative investment gains and losses, (b) gains and losses related to trading securities for CLOs, (c) net VIE impacts (revenues, expenses and noncontrolling interest), (d) forward points gains and losses on foreign exchange derivative hedges and (e) the change in fair value of reinsurance assets, and removes the proportionate share of the ACRA net investment income associated with the ACRA noncontrolling interest. The gain or loss on our investment in Apollo was removed in prior years. We include the income and assets supporting our change in fair value of reinsurance assets by evaluating the underlying investments of the funds withheld at interest receivables and we include the net investment income from those underlying investments which does not correspond to the US GAAP presentation of change in fair value of reinsurance assets. We exclude the income and assets supporting business that we have exited through ceded reinsurance including funds withheld agreements. We believe the adjustments for reinsurance provide a net investment earned rate on the assets for which we have economic exposure.

•Cost of funds includes liability costs related to cost of crediting on both deferred annuities and institutional products as well as other liability costs, but does not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interest. Cost of crediting on deferred annuities is the interest credited to the policyholders on our fixed strategies as well as the option costs on the indexed annuity strategies. With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. Cost of crediting on institutional products is comprised of (1) pension group annuity costs, including interest credited, benefit payments and other reserve changes, net of premiums received when issued, and (2) funding agreement costs, including the interest payments and other reserve changes. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than deferred annuities and institutional products, premiums and certain product charges and other revenues. We exclude the costs related to business that we have exited through ceded reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets, for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. We believe a measure like cost of funds is useful in analyzing the trends of our core business operations and profitability. While we believe cost of funds is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total benefits and expenses presented under US GAAP.

•Net investment earned rate, cost of funds, and net investment spread are non-GAAP measures we use to evaluate the profitability of our business. We believe these metrics are useful in analyzing the trends of our business operations, profitability and pricing discipline. While we believe each of these metrics are meaningful financial metrics and enhance our understanding of the underlying profitability drivers of our business, they should not be used as a substitute for net investment income or total benefits and expenses presented under US GAAP.

•Other operating expenses excludes integration, restructuring and other non-operating expenses, stock compensation and long-term incentive plan expenses, interest expense and policy acquisition expenses. We believe a measure like other operating expenses is useful in analyzing the trends of our core business operations and profitability. While we believe other operating expenses is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for policy and other operating expenses presented under US GAAP.

NET INVESTED ASSETS

In managing our business, we analyze net invested assets, which does not correspond to total investments, including investments in related parties, as disclosed in our consolidated financial statements and notes thereto. Net invested assets represent the investments that directly back our net reserve liabilities as well as surplus assets. Net invested assets is used in the computation of net investment earned rate, which allows us to analyze the profitability of our investment portfolio. Net invested assets includes (a) total investments on the consolidated balance sheet, with AFS securities at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and noncontrolling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Net invested assets excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our net invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Net invested assets includes our proportionate share of ACRA investments, based on our economic ownership, but does not include the proportionate share of investments associated with the noncontrolling interest. Our net invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period. While we believe net invested assets is a meaningful financial metric and enhances our understanding of the underlying drivers of our investment portfolio, it should not be used as a substitute for total investments, including related parties, presented under US GAAP.

NET RESERVE LIABILITIES

In managing our business, we also analyze net reserve liabilities, which does not correspond to total liabilities as disclosed in our consolidated financial statements and notes thereto. Net reserve liabilities represent our policyholder liability obligations net of reinsurance and is used to analyze the costs of our liabilities. Net reserve liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include our proportionate share of ACRA reserve liabilities, based on our economic ownership, but do not include the proportionate share of reserve liabilities associated with the noncontrolling interest. Net reserve liabilities is net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore, we have no net economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. The majority of our ceded reinsurance is a result of reinsuring large blocks of life business following acquisitions. For such transactions, US GAAP requires the ceded liabilities and related reinsurance recoverables to continue to be recorded in our consolidated financial statements despite the transfer of economic risk to the counterparty in connection with the reinsurance transaction. While we believe net reserve liabilities is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total liabilities presented under US GAAP.

SALES

Sales statistics do not correspond to revenues under US GAAP but are used as relevant measures to understand our business performance as it relates to inflows generated during a specific period of time. Our sales statistics include inflows for fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers). We believe sales is a meaningful metric that enhances our understanding of our business performance and is not the same as premiums presented in our condensed consolidated statements of income (loss).

Non-GAAP Reconciliations<br><br>Unaudited (in millions, except percentages) image4.jpg
Quarterly Trends
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23
RECONCILIATION OF TOTAL AHL SHAREHOLDERS’ EQUITY TO TOTAL ADJUSTED AHL COMMON SHAREHOLDER’S EQUITY
Total AHL shareholders' equity $ 13,973 $ 8,697 $ 5,133 $ 7,158 $ 8,698
Less: Preferred stock 2,667 2,667 2,667 3,154 3,154
Total AHL common shareholder's equity 11,306 6,030 2,466 4,004 5,544
Less: Accumulated other comprehensive loss (2,318) (5,698) (8,473) (7,321) (6,148)
Less: Accumulated change in fair value of reinsurance assets (1,271) (2,521) (3,394) (3,127) (2,791)
Less: Accumulated change in fair value of mortgage loan assets (629) (1,340) (2,095) (2,201) (2,022)
Total adjusted AHL common shareholder's equity $ 15,524 $ 15,589 $ 16,428 $ 16,653 $ 16,505
RECONCILIATION OF DEBT TO CAPITAL RATIO TO ADJUSTED DEBT TO CAPITAL RATIO
Total debt $ 3,287 $ 3,279 $ 3,271 $ 3,658 $ 3,650
Less: Adjustment to arrive at notional debt 287 279 271 258 250
Notional debt $ 3,000 $ 3,000 $ 3,000 $ 3,400 $ 3,400
Total debt $ 3,287 $ 3,279 $ 3,271 $ 3,658 $ 3,650
Total AHL shareholders' equity 13,973 8,697 5,133 7,158 8,698
Total capitalization 17,260 11,976 8,404 10,816 12,348
Less: Accumulated other comprehensive loss (2,318) (5,698) (8,473) (7,321) (6,148)
Less: Accumulated change in fair value of reinsurance assets (1,271) (2,521) (3,394) (3,127) (2,791)
Less: Accumulated change in fair value of mortgage loan assets (629) (1,340) (2,095) (2,201) (2,022)
Less: Adjustment to arrive at notional debt 287 279 271 258 250
Total adjusted capitalization $ 21,191 $ 21,256 $ 22,095 $ 23,207 $ 23,059
Debt to capital ratio 19.0 % 27.4 % 38.9 % 33.8 % 29.6 %
Accumulated other comprehensive loss (2.0) % (7.3) % (14.7) % (10.5) % (7.8) %
Accumulated change in fair value of reinsurance assets (1.1) % (3.2) % (5.9) % (4.5) % (3.5) %
Accumulated change in fair value of mortgage loan assets (0.6) % (1.7) % (3.7) % (3.2) % (2.6) %
Adjustment to arrive at notional debt (1.1) % (1.1) % (1.0) % (0.9) % (1.0) %
Adjusted debt to capital ratio 14.2 % 14.1 % 13.6 % 14.7 % 14.7 %
Non-GAAP Reconciliations<br><br>Unaudited (in millions, except percentages) image4.jpg
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Quarterly Trends Year-to-Date
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2022 2023
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO AHL COMMON SHAREHOLDER TO NORMALIZED SPREAD RELATED EARNINGS
Net income (loss) available to Athene Holding Ltd. common shareholder $ (1,050) $ (1,740) $ (622) $ 361 $ 721 $ (1,050) $ 721
Preferred stock dividends 35 35 35 36 47 35 47
Net income (loss) attributable to noncontrolling interests (881) (1,089) (465) 329 455 (881) 455
Net income (loss) (1,896) (2,794) (1,052) 726 1,223 (1,896) 1,223
Income tax expense (benefit) (284) (378) (121) 137 163 (284) 163
Income (loss) before income taxes (2,180) (3,172) (1,173) 863 1,386 (2,180) 1,386
Less: Total adjustments to income (loss) before income taxes (2,854) (3,627) (1,813) 166 699 (2,854) 699
Spread related earnings 674 455 640 697 687 674 687
Normalization of alternative investment income to 11% (151) 135 82 14 148 (151) 148
Other notable items — (16) (42) 35 (25) — (25)
Normalized spread related earnings $ 523 $ 574 $ 680 $ 746 $ 810 $ 523 $ 810
RECONCILIATION OF NET INVESTMENT INCOME TO NET INVESTMENT EARNINGS
US GAAP net investment income $ 1,683 $ 1,726 $ 1,843 $ 2,319 $ 2,407 $ 1,683 $ 2,407
Change in fair value of reinsurance assets 220 50 11 52 70 220 70
VIE earnings and noncontrolling interest 79 91 219 197 200 79 200
Alternative gains (losses) 18 (28) 10 41 (9) 18 (9)
ACRA noncontrolling interest (305) (347) (407) (446) (448) (305) (448)
Reinsurance impacts — — — (41) (64) — (64)
Apollo investment gain (33) — — — — (33) —
Held for trading amortization and other (7) (4) 45 (73) (13) (7) (13)
Total adjustments to arrive at net investment earnings (28) (238) (122) (270) (264) (28) (264)
Total net investment earnings $ 1,655 $ 1,488 $ 1,721 $ 2,049 $ 2,143 $ 1,655 $ 2,143
RECONCILIATION OF NET INVESTMENT INCOME RATE TO NET INVESTMENT EARNED RATE
US GAAP net investment income 3.71 % 3.70 % 3.83 % 4.74 % 4.78 % 3.71 % 4.78 %
Change in fair value of reinsurance assets 0.49 % 0.11 % 0.02 % 0.11 % 0.14 % 0.49 % 0.14 %
VIE earnings and noncontrolling interest 0.17 % 0.19 % 0.46 % 0.40 % 0.40 % 0.17 % 0.40 %
Alternative gains (losses) 0.04 % (0.06) % 0.02 % 0.08 % (0.02) % 0.04 % (0.02) %
ACRA noncontrolling interest (0.67) % (0.74) % (0.85) % (0.91) % (0.89) % (0.67) % (0.89) %
Reinsurance impacts — % — % — % (0.08) % (0.13) % — % (0.13) %
Apollo investment gain (0.07) % — % — % — % — % (0.07) % — %
Held for trading amortization and other (0.02) % (0.01) % 0.10 % (0.15) % (0.03) % (0.02) % (0.03) %
Total adjustments to arrive at net investment earned rate (0.06) % (0.51) % (0.25) % (0.55) % (0.53) % (0.06) % (0.53) %
Net investment earned rate 3.65 % 3.19 % 3.58 % 4.19 % 4.25 % 3.65 % 4.25 %
Average net invested assets $ 181,398 $ 186,788 $ 192,231 $ 195,804 $ 201,600 $ 181,398 $ 201,600
Non-GAAP Reconciliations<br><br>Unaudited (in millions, except percentages) image4.jpg
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Quarterly Trends Year-to-Date
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2022 2023
RECONCILIATION OF BENEFITS AND EXPENSES TO COST OF FUNDS
US GAAP benefits and expenses $ 1,899 $ 4,979 $ 3,483 $ 2,924 $ 2,674 $ 1,899 $ 2,674
Premiums (2,110) (5,614) (3,045) (869) (96) (2,110) (96)
Product charges (166) (175) (184) (193) (198) (166) (198)
Other revenues 3 9 26 (10) (13) 3 (13)
FIA option costs 294 306 322 342 365 294 365
Reinsurance impacts 12 12 12 (19) (37) 12 (37)
Non-operating change in insurance liabilities and embedded derivatives 1,080 1,574 652 (481) (873) 1,080 (873)
Policy and other operating expenses, excluding policy acquisition expenses (247) (260) (294) (309) (310) (247) (310)
AmerUs Closed Block fair value liability 127 114 77 (27) (42) 127 (42)
ACRA noncontrolling interest (81) (53) (157) (258) (287) (81) (287)
Other 11 (19) 10 58 52 11 52
Total adjustments to arrive at cost of funds (1,077) (4,106) (2,581) (1,766) (1,439) (1,077) (1,439)
Total cost of funds $ 822 $ 873 $ 902 $ 1,158 $ 1,235 $ 822 $ 1,235
RECONCILIATION OF TOTAL BENEFITS AND EXPENSES RATE TO COST OF FUNDS RATE
US GAAP benefits and expenses 4.19 % 10.66 % 7.25 % 5.97 % 5.31 % 4.19 % 5.31 %
Premiums (4.65) % (12.02) % (6.34) % (1.78) % (0.19) % (4.65) % (0.19) %
Product charges (0.37) % (0.37) % (0.38) % (0.39) % (0.39) % (0.37) % (0.39) %
Other revenues 0.01 % 0.02 % 0.06 % (0.02) % (0.03) % 0.01 % (0.03) %
FIA option costs 0.65 % 0.65 % 0.67 % 0.70 % 0.72 % 0.65 % 0.72 %
Reinsurance impacts 0.03 % 0.03 % 0.02 % (0.04) % (0.07) % 0.03 % (0.07) %
Non-operating change in insurance liabilities and embedded derivatives 2.38 % 3.38 % 1.36 % (0.98) % (1.73) % 2.38 % (1.73) %
Policy and other operating expenses, excluding policy acquisition expenses (0.55) % (0.56) % (0.61) % (0.63) % (0.62) % (0.55) % (0.62) %
AmerUs Closed Block fair value liability 0.28 % 0.24 % 0.16 % (0.05) % (0.08) % 0.28 % (0.08) %
ACRA noncontrolling interest (0.18) % (0.11) % (0.33) % (0.53) % (0.57) % (0.18) % (0.57) %
Other 0.02 % (0.04) % 0.02 % 0.12 % 0.10 % 0.02 % 0.10 %
Total adjustments to arrive at cost of funds (2.38) % (8.78) % (5.37) % (3.60) % (2.86) % (2.38) % (2.86) %
Total cost of funds 1.81 % 1.88 % 1.88 % 2.37 % 2.45 % 1.81 % 2.45 %
Average net invested assets $ 181,398 $ 186,788 $ 192,231 $ 195,804 $ 201,600 $ 181,398 $ 201,600
Non-GAAP Reconciliations<br><br>Unaudited (in millions) image4.jpg
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Quarterly Trends Year-to-Date
1Q’22 2Q’22 3Q’22 4Q’22 1Q’23 2022 2023
RECONCILIATION OF POLICY AND OTHER OPERATING EXPENSES TO OTHER OPERATING EXPENSES
US GAAP policy and other operating expenses $ 338 $ 357 $ 388 $ 412 $ 435 $ 338 $ 435
Interest expense (33) (41) (68) (85) (115) (33) (115)
Policy acquisition expenses, net of deferrals (91) (97) (94) (103) (125) (91) (125)
Integration, restructuring and other non-operating expenses (34) (33) (37) (29) (29) (34) (29)
Stock compensation expenses (12) (13) (15) (16) (16) (12) (16)
ACRA noncontrolling interest (51) (59) (73) (48) (17) (51) (17)
Other changes in policy and other operating expenses (8) (5) 19 (3) (7) (8) (7)
Total adjustments to arrive at other operating expenses (229) (248) (268) (284) (309) (229) (309)
Other operating expenses $ 109 $ 109 $ 120 $ 128 $ 126 $ 109 $ 126
December 31, 2022 March 31, 2023
RECONCILIATION OF TOTAL INVESTMENTS, INCLUDING RELATED PARTIES, TO NET INVESTED ASSETS
Total investments, including related parties $ 196,448 $ 203,230
Derivative assets (3,309) (3,956)
Cash and cash equivalents (including restricted cash) 8,407 14,992
Accrued investment income 1,328 1,458
Net receivable (payable) for collateral on derivatives (1,486) (1,909)
Reinsurance funds withheld and modified coinsurance 1,423 942
VIE and VOE assets, liabilities and noncontrolling interest 12,747 12,799
Unrealized (gains) losses 22,284 19,782
Ceded policy loans (179) (175)
Net investment receivables (payables) 186 39
Allowance for credit losses 471 521
Other investments (10) (50)
Total adjustments to arrive at gross invested assets 41,862 44,443
Gross invested assets 238,310 247,673
ACRA noncontrolling interest (41,859) (40,924)
Net invested assets $ 196,451 $ 206,749
Non-GAAP Reconciliations<br><br>Unaudited (in millions) image4.jpg
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December 31, 2022 March 31, 2023
RECONCILIATION OF INVESTMENT FUNDS, INCLUDING RELATED PARTIES AND VIES, TO NET ALTERNATIVE INVESTMENTS
Investment funds, including related parties and VIEs $ 14,128 $ 14,552
Equity securities 509 469
CLO and ABS equities included in trading securities 225 229
Investment funds within funds withheld at interest 1,126 1,142
Royalties 15 15
Net assets of the VIE, excluding investment funds (2,041) (2,398)
Unrealized (gains) losses 44 43
ACRA noncontrolling interest (1,836) (1,860)
Other assets (91) (89)
Total adjustments to arrive at net alternative investments (2,049) (2,449)
Net alternative investments $ 12,079 $ 12,103
RECONCILIATION OF TOTAL LIABILITIES TO NET RESERVE LIABILITIES
Total liabilities $ 233,382 $ 244,604
Debt (3,658) (3,650)
Derivative liabilities (1,646) (1,518)
Payables for collateral on derivatives and securities to repurchase (3,841) (7,331)
Other liabilities (1,635) (1,381)
Liabilities of consolidated VIEs (815) (847)
Reinsurance impacts (9,176) (9,090)
Policy loans ceded (179) (175)
Market risk benefit asset (481) (440)
ACRA noncontrolling interest (35,981) (35,281)
Total adjustments to arrive at net reserve liabilities (57,412) (59,713)
Net reserve liabilities $ 175,970 $ 184,891

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