Executive Summary / Key Takeaways

• Strategic Foundation & Growth Engines: Athene Holding Ltd. (ATHS) is a leading force in retirement services, leveraging its deep partnership with Apollo Global Management (APO) to generate robust spread income. The company's multi-channel distribution, encompassing retail, flow reinsurance, and institutional products, consistently delivers strong organic inflows, complemented by a strategic inorganic growth pipeline focused on international expansion.
• Robust Financial Performance Amidst Market Shifts: Despite a slight dip in net income available to common stockholders in H1 2025, ATHS demonstrated significant growth in net investment income and Spread Related Earnings (SRE), driven by substantial asset growth, higher deployment rates, and favorable alternative investment performance. The net investment spread, while experiencing a minor compression, remains healthy at 1.62% for H1 2025.
• Technological Edge in Risk & Capital Management: ATHS's competitive advantage is underpinned by sophisticated analytical and risk management systems, integrated with Apollo's investment expertise. This "technology" enables precise asset-liability matching, efficient hedging strategies, and disciplined capital allocation, directly contributing to its ability to manage complex liabilities and optimize investment returns.
• Fortified Capital and Liquidity: The company maintains a formidable capital position, with an estimated $8.7 billion available for deployment as of June 30, 2025, supported by strong regulatory capital ratios and ample liquidity facilities. This financial strength provides a significant buffer against market volatility and fuels future growth initiatives.
• Outlook & Key Considerations: ATHS is poised for continued growth through expanding existing channels, new product development, and strategic acquisitions, particularly in Asia. Investors should monitor the impact of evolving interest rate environments, competitive pressures on crediting rates, and the ongoing assessment of new tax regimes like the Bermuda Corporate Income Tax.

Athene's Foundation and Strategic Blueprint in Retirement Services

Athene Holding Ltd. (ATHS) stands as a prominent financial services company, specializing in the issuance, reinsurance, and acquisition of retirement savings products across the United States and globally. The company's strategic core is its direct subsidiary relationship with Apollo Global Management, Inc. , a partnership that fundamentally shapes its business model. This collaboration allows ATHS to generate substantial spread income by adeptly sourcing long-term, persistent liabilities and originating assets with preferred risk and return characteristics, leveraging Apollo's extensive asset management capabilities.

ATHS's overarching strategy is built upon a multi-channel distribution platform, enabling it to swiftly adapt and pivot into optimal and profitable avenues as market opportunities arise. This robust platform, combined with a disciplined approach to capital management, positions Athene as a solutions provider in a dynamic retirement landscape. The company's historical trajectory, marked by its entry into the pension group annuity market in 2017 and subsequent closure of 49 deals totaling $52.7 billion in group annuities by June 30, 2025, underscores its commitment to addressing the growing demand for retirement solutions.

The broader industry context highlights a significant demographic shift, with the retirement-age population projected for unprecedented growth over the next four decades. This trend, coupled with inadequate retirement savings among many working households in the U.S., fuels a rising demand for tax-efficient savings products that offer low-risk or guaranteed returns alongside potential equity market upside. Athene's product suite is strategically aligned to meet this increasing customer need. Recent market data from Q1 2025 indicates a slight decrease in total annuity market sales in the U.S. by 0.3% to $106.4 billion, and fixed annuity sales by 6.1% to $73.7 billion. However, Registered Index-Linked Annuities (RILAs) saw a robust 20.6% increase to $17.4 billion, signaling a key growth area.

Competitive Landscape: Carving a Niche in a Crowded Market

ATHS operates within a highly competitive financial services sector, contending with a diverse array of participants including large diversified financial institutions, specialized insurance and reinsurance companies, and private equity firms. These entities are all vying for a share of the expanding pool of retirement assets, a market driven by an aging population and the diminishing safety nets traditionally provided by governments and employers. In this environment, scale, the ability to offer value-added services, and the cultivation of enduring client relationships are critical for effective competition.

Athene's market positioning is notably strong in specific segments. For the three months ended March 31, 2025, ATHS was the largest provider of annuities overall, capturing an 8.9% market share. It also led the fixed annuity market with a 12.4% share and the Fixed Indexed Annuity (FIA) market with a 12.1% share. While it was the eleventh largest provider of RILAs with a 2.0% market share, management views RILAs as a significant growth opportunity.

Compared to major competitors like Prudential Financial (PRU), MetLife (MET), Lincoln National Corporation (LNC), and AIG (AIG), ATHS differentiates itself through its specialized focus on retirement income solutions. ATHS's offerings, particularly its fixed annuities designed to provide stable "paychecks" for retirees, may offer a qualitative advantage in simplicity and reliability over the more diversified and sometimes complex product suites of its rivals. The company's deep partnership with Apollo Global Management enhances its efficiency in managing retirement funds, potentially leading to superior operational execution compared to more traditional insurers.

However, ATHS faces certain competitive disadvantages. Its global reach may lag behind the broader international presence of companies like Prudential and AIG, which could offer more diversified revenue streams. While ATHS demonstrates solid cash flow generation, its profitability might be more susceptible to market shifts if competitors' diversified portfolios provide greater resilience. The pension group annuity channel, for instance, continues to be impacted by a competitive environment and litigation, highlighting a specific vulnerability. Despite these challenges, ATHS's strategic adaptability in responding to evolving retirement trends and its disciplined pricing approach allow it to compete effectively, particularly by appealing to consumers seeking straightforward and reliable retirement solutions.

Technological Differentiators: The Engine of Efficiency and Risk Management

Athene's competitive edge is not rooted in a single, tangible product technology, but rather in its sophisticated analytical and risk management systems, which are deeply integrated with Apollo's investment expertise. This "proprietary technology for annuity management" and "technology for managing retirement funds" represents a powerful internal capability that underpins the company's ability to execute its core strategy and maintain its market position. These advanced systems enable disciplined management of its vast investment portfolio against its long-duration liabilities, a critical function in generating sustainable spread income.

The tangible benefits of this technological backbone are evident across several operational areas. It facilitates the precise matching of assets and liabilities through advanced asset-liability management (ALM) modeling, which is crucial for mitigating interest rate risk. Furthermore, these systems support the efficient deployment of derivative instruments for economic hedging, reducing exposure to cash flow variability, equity market risk, foreign exchange risk, and interest rate risk, particularly for its Fixed Indexed Annuity (FIA) products. This capability allows ATHS to manage complex liabilities and optimize investment returns with greater precision.

While specific R&D initiatives with quantifiable targets are not detailed, the company's commitment to "continuous product enhancements" within its retail channel and the "development of new retirement products within new markets in 2025" implicitly highlights ongoing investment in the underlying technology required to support such innovation. This strategic intent is to ensure ATHS remains at the forefront of meeting evolving retirement needs.

For investors, the "so what" of these technological differentiators is profound. They form a critical component of ATHS's competitive moat, enabling it to achieve superior efficiency in its focused operations and maintain cost leadership in retirement solutions. This technological prowess allows the company to "pivot into optimal and profitable channels" and consistently deliver on "targeted underwritten returns," directly contributing to its financial performance, market positioning, and long-term growth strategy.

Business Model & Operational Excellence: Driving Sustainable Spread Income

Athene's business model is meticulously designed to generate spread income by effectively sourcing long-term liabilities and strategically investing capital. The company's multi-channel approach to liability generation is a cornerstone of its operational excellence.

In the retail channel, ATHS offers a range of fixed annuities, including Fixed Indexed Annuities (FIAs), Multi-Year Guaranteed Annuities (MYGAs), and Registered Index-Linked Annuities (RILAs). For the six months ended June 30, 2025, retail inflows totaled $16.74 billion. While this represented a 10.0% decrease year-over-year, primarily due to lower MYGA sales, management noted strong overall sales execution across its bank, broker-dealer, and independent marketing organization (IMO) channels, supported by the current rate environment and expanding product offerings.

The flow reinsurance channel proved to be a significant growth driver, with inflows nearly doubling to $6.96 billion for the six months ended June 30, 2025, a 93.4% increase year-over-year. This surge was attributed to a strategic opportunity with a U.S. partner and robust volumes from Asia Pacific partners, underscoring Athene's expanding international presence.

The institutional channel also demonstrated substantial growth, generating $22.85 billion in funding agreement inflows for the six months ended June 30, 2025, a 63.1% increase from the prior year. This record inflow was diversified across various sub-channels, including FABN, FABR, direct funding agreements, and FHLB issuances. In contrast, pension group annuity inflows in this channel saw a dramatic decline to $5 million, down 99.1% year-over-year, impacted by a competitive environment and ongoing litigation.

A newly developed "other" channel contributed $237 million in inflows for the first half of 2025, driven by the introduction of new retirement products in new markets. Collectively, these organic channels contributed $46.80 billion in gross inflows for the six months ended June 30, 2025, a 27.2% increase year-over-year. After accounting for gross outflows of $15.62 billion, net flows for the period were a strong $31.17 billion, up 67.5% from the prior year.

Athene's investment strategy, managed by Apollo, focuses on leveraging this persistent liability profile to identify opportunities that emphasize incremental yield through measured liquidity and complexity risk, rather than incremental credit risk. The investment portfolio is diversified across high-grade fixed income assets, structured credit products, and opportunistic alternative investments, which constitute approximately 5% of the total portfolio. As of June 30, 2025, total investments, including related parties and consolidated VIEs, reached $356.3 billion, up from $315.0 billion at December 31, 2024. Net invested assets stood at $275.0 billion, reflecting the assets directly backing net reserve liabilities and surplus. Related party investments, totaling $51.4 billion, or 12.6% of total assets, primarily consist of structured securities where Apollo manages the underlying securitization vehicle or investments in asset origination platforms, with underlying collateral generally unaffiliated with Athene.

The company's innovative Athene Co-Invest Reinsurance Affiliate (ACRA) vehicles (ACRA 1.00 and ACRA 2.00) provide long-duration, on-demand capital, with Athene holding a 37% economic interest and the remaining 63% held by Apollo-managed funds. This structure offers flexible capital solutions, enabling simultaneous deployment across multiple accretive avenues while maintaining a strong financial position.

Financial Performance: A Deep Dive into Recent Results

Athene's financial performance for the first half of 2025 reflects a dynamic operating environment, marked by significant growth in its investment portfolio and strategic capital deployment, alongside some market-driven fluctuations.

For the three months ended June 30, 2025, net income available to Athene Holding Ltd. common stockholder decreased by $80 million, or 14%, to $503 million, compared to $583 million in the prior-year quarter. This was primarily influenced by a $1.1 billion increase in benefits and expenses, partially offset by a $695 million rise in revenues, a $195 million decrease in income tax expense, and an $84 million benefit from preferred stock redemption. Revenues climbed to $5.4 billion, driven by a $920 million increase in net investment income, a $162 million rise in VIE investment-related gains/losses, and a $129 million increase in investment-related gains/losses. Net investment income benefited from substantial asset growth, higher rates on new deployments, and favorable investment fund performance, particularly in origination and retirement services platforms. However, premiums decreased by $566 million, largely due to lower pension group annuity premiums. Benefits and expenses increased to $4.7 billion, primarily due to a $1.6 billion increase in interest-sensitive contract benefits, including higher FIA reserves and growth in deferred annuity and funding agreement blocks.

Looking at the six months ended June 30, 2025, net income available to common stockholders decreased by $807 million, or 47%, to $923 million, from $1.73 billion in the comparable period of 2024. Total revenues decreased by $840 million to $9.5 billion, primarily due to a $2.4 billion decrease in investment-related gains/losses, influenced by unfavorable net foreign exchange impacts and less favorable performance of equity indices linked to FIA hedging derivatives (S&P 500 Index increased 5.5% in H1 2025 vs. 14.5% in H1 2024). This was partially offset by a $1.6 billion increase in net investment income, driven by $36.1 billion growth in average net invested assets and higher deployment rates. Benefits and expenses increased by $383 million to $8.0 billion, mainly due to a $444 million increase in market risk benefits remeasurement losses and higher interest-sensitive contract benefits. Income tax expense decreased by $327 million to $141 million, with the effective tax rate at 9% for H1 2025, down from 17% in H1 2024, partly due to the impact of the Bermuda Corporate Income Tax.

Spread Related Earnings (SRE), a key non-GAAP measure, increased by $108 million (15%) to $820 million for Q2 2025 and by $96 million (6%) to $1.6 billion for H1 2025. This growth was fueled by increased net investment earnings and strategic capital management fees, partially offset by higher cost of funds and financing costs. The net investment spread, a measure of core profitability, was 1.58% for Q2 2025 (down 6 basis points YoY) and 1.62% for H1 2025 (down 12 basis points YoY). The slight compression was primarily due to higher cost of funds, partially mitigated by a higher net investment earned rate.

The investment portfolio remains robust. As of June 30, 2025, Available-for-Sale (AFS) securities had a fair value of $210.7 billion, with 96.7% classified as investment grade by NAIC designation. Gross unrealized losses on AFS securities decreased to $13.2 billion from $15.4 billion at year-end 2024, primarily due to a decrease in U.S. Treasury rates. The company holds an allowance for credit losses on AFS securities of $761 million. International exposure within the AFS portfolio stands at 38%, with 97.5% being investment grade.

Liquidity & Capital Strength: Fueling Future Growth

Athene maintains a robust liquidity and capital position, essential for supporting its long-duration liabilities and ambitious growth strategies. The company's liquidity management framework is designed to match projected cash demands with ample sources of cash and other liquid assets, ensuring timely payment of policy and contract benefits without resorting to inopportune asset sales.

As of June 30, 2025, ATHS reported approximately $130.8 billion in liquid assets, excluding those within modified coinsurance and funds withheld portfolios, which themselves hold an additional $10.1 billion in liquid assets. The company also has access to significant external liquidity, including an undrawn $1.25 billion credit facility, an undrawn $2.60 billion liquidity facility, and $2.0 billion in committed repurchase facilities. Its membership in the Federal Home Loan Bank (FHLB) provides access to up to an estimated $25.4 billion in additional borrowing capacity, with $21.0 billion in FHLB funding agreements outstanding.

Capital sufficiency is a key focus, measured against internal models, rating agency requirements, and regulatory standards. As of December 31, 2024, the U.S. insurance companies' Total Adjusted Capital (TAC) was $7.7 billion, with a U.S. RBC ratio of 419%. Bermuda insurance subsidiaries reported $17.0 billion in statutory capital and surplus, with a Bermuda Solvency Capital Requirement (BSCR) ratio of 243%. The consolidated RBC ratio stood at 430%. All these metrics are well above regulatory minimums, demonstrating exceptional financial strength.

Crucially, ATHS estimates approximately $8.7 billion in capital available for deployment as of June 30, 2025. This comprises $3.1 billion in excess equity capital, $2.4 billion in untapped leverage capacity, and $3.2 billion in available undrawn capital from its ACRA vehicles. This substantial capital reservoir provides the flexibility to pursue both organic and inorganic growth opportunities, reinforcing the company's ability to meet its strategic objectives and maintain its desired financial strength ratings.

Outlook & Strategic Trajectory: Charting the Course Ahead

Athene is strategically positioned for sustained growth, building on its strong foundation and multi-channel approach. The company anticipates an expected annual net investment spread of 1.20% over the estimated 7.40-year weighted-average life of its net reserve liabilities, reflecting its core profitability engine.

The retail channel is expected to benefit from ATHS's robust credit profile, continuous product enhancements, and new product launches, aiming to capture additional distribution opportunities and support sales growth at targeted returns. This involves deepening relationships with its extensive network of approximately 41 IMOs, 17 banks, and 158 broker-dealers, collectively representing around 146,000 independent agents. The flow reinsurance channel is projected to expand further, leveraging Athene's reputation as a solutions provider to attract new partners and diversify its presence, particularly in Asia. The institutional channel will continue to grow through programmatic issuances of funding agreements and engagement in pension group annuity transactions.

Inorganic growth remains a vital component of Athene's strategy. The company plans to continue diversifying its business through acquisitions and block reinsurance transactions, with a strong focus on international expansion, especially in Asia. A notable post-period development includes a conditional commitment made in July 2025 to invest up to an additional $2.5 billion in Athora Holding Ltd. (ATH) in connection with Athora's acquisition of a UK insurer, signaling continued strategic M&A activity.

Recent corporate actions, effective August 5, 2025, further streamline the company's capital structure and governance. These include a 1-for-1000 reverse stock split of common stock and a reduction in authorized shares, aimed at enhancing operational efficiencies. Concurrently, the Board approved a restructuring of its governance framework, delegating the responsibilities of the Conflicts Committee to the Audit Committee. The cooperation agreement with Athora was also mutually terminated, indicating a refined strategic alignment. These proactive measures underscore management's commitment to optimizing the company for long-term value creation.

Key Risks & Challenges: A Prudent Investor's View

While Athene's investment thesis is compelling, a prudent investor must consider the inherent risks and challenges. The company is significantly exposed to market volatility, including fluctuations in equity, credit, commodity, and foreign exchange markets, as well as interest rates and inflation. These factors can materially impact the valuation of investments and overall income. The ongoing uncertainty in global trade policy and geopolitical tensions, such as those in the Middle East and between Ukraine and Russia, present a downside risk, potentially leading to a stagflationary environment with lower growth and higher inflationary pressures.

Interest rate movements pose a dual challenge. While rising rates can increase yields on new investments and floating-rate income, they can also diminish the value of existing holdings. Conversely, prolonged low interest rates could negatively impact the net investment spread if Athene is unable to adequately reduce policyholder crediting rates due to guaranteed minimums or competitive pressures. The company's ability to adjust crediting rates on deferred annuity products, though contractually permitted, may be constrained by the highly competitive market.

The investment fund portfolio, particularly its alternative investments, is subject to interest rate and equity market risks, which can introduce volatility into earnings. Furthermore, the company's reliance on Apollo for asset management, while a significant strength, also represents a dependency. Policyholder withdrawal risk, where actual withdrawals exceed estimates, remains a concern, although surrender charges and market value adjustments are in place to mitigate this.

Regulatory constraints on dividends from insurance subsidiaries, along with the capital levels required to maintain desired financial strength ratings from agencies like S&P, A.M. Best, Fitch, and Moody's, can limit the holding company's liquidity. The ongoing assessment of deferred taxes related to the Bermuda Corporate Income Tax also introduces a degree of uncertainty. Lastly, like all financial institutions, Athene is subject to litigation in the ordinary course of business, with inherently uncertain outcomes that could materially affect operating results in a given period.

Conclusion

Athene Holding Ltd. presents a compelling investment narrative, firmly rooted in its specialized approach to retirement services and its strategic alliance with Apollo Global Management. The company's ability to consistently generate robust spread income, driven by a diversified multi-channel liability sourcing platform and disciplined asset management, forms the core of its investment thesis. Despite recent market headwinds reflected in some financial metrics, ATHS has demonstrated resilience and strategic agility, particularly in growing its flow reinsurance and funding agreement channels.

The company's technological capabilities, manifested in its advanced analytical and risk management systems, are not merely operational tools but fundamental competitive advantages. These systems enable precise asset-liability matching, efficient hedging, and optimized capital deployment, directly contributing to its strong financial performance and market leadership in key annuity segments. With substantial capital available for deployment and a clear strategic roadmap for both organic and inorganic growth, including international expansion, Athene is well-positioned to capitalize on the enduring demographic tailwinds of an aging population seeking reliable retirement solutions. While market volatility, competitive pressures, and regulatory shifts present ongoing challenges, ATHS's integrated strategy, robust capital structure, and commitment to operational excellence underscore its potential for continued long-term value creation for discerning investors.