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UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 001-37963
ATHENE HOLDING LTD.
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(Exact name of registrant as specified in its charter) |
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Bermuda |
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98-0630022 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
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incorporation or organization) |
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Identification Number) |
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Second Floor, Washington House
16 Church Street
Hamilton, HM 11, Bermuda
(441) 279-8400
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(Address, including zip code, and telephone number, including area
code, of registrant’s principal executive offices) |
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Securities
registered pursuant to Section 12(b) of the Act: |
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Depositary Shares, each representing a 1/1,000th
interest in a
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6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative
Preference Share, Series A |
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ATHPrA |
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New York Stock Exchange |
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Depositary Shares, each representing a 1/1,000th
interest in a
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5.625% Fixed-Rate Perpetual Non-Cumulative Preference Share,
Series B |
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ATHPrB |
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New York Stock Exchange |
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Depositary Shares, each representing a 1/1,000th
interest in a
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6.375% Fixed-Rate Reset
Perpetual Non-Cumulative Preference Share, Series
C |
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ATHPrC |
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New York Stock Exchange |
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Depositary Shares, each representing a 1/1,000th
interest in a
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4.875% Fixed-Rate Perpetual Non-Cumulative Preference Share,
Series D |
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ATHPrD |
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New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
☑
No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes
☑
No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
☑ |
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company |
☐ |
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.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
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No
☑
As of April 30, 2022, 203,805,432 of our Class A common shares
were outstanding, all of which are held by Apollo Global
Management, Inc.
TABLE OF CONTENTS
PART I—FINANCIAL
INFORMATION
PART II—OTHER
INFORMATION
As used in this Quarterly Report on Form 10-Q (report), unless the
context otherwise indicates, any reference to “Athene,” “our
Company,” “the Company,” “us,” “we” and “our” refer to Athene
Holding Ltd. together with its consolidated subsidiaries and any
reference to “AHL” refers to Athene Holding Ltd. only.
Forward-Looking Statements
Certain statements in this report are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended
(Securities Act), and Section 21E of the Securities Exchange Act of
1934, as amended (Exchange Act). You can identify forward-looking
statements by the fact that they do not relate strictly to
historical or current facts. These statements may include words
such as “anticipate,” “estimate,” “expect,” “project,” “plan,”
“intend,” “seek,” “assume,” “believe,” “may,” “will,” “should,”
“could,” “would,” “likely” and other words and terms of similar
meaning, including the negative of these or similar words and
terms, in connection with any discussion of the timing or nature of
future operating or financial performance or other events. However,
not all forward-looking statements contain these identifying words.
Forward-looking statements appear in a number of places throughout
and give our current expectations and projections relating to our
business, financial condition, results of operations, plans,
strategies, objectives, future performance and other
matters.
We caution you that forward-looking statements are not guarantees
of future performance and that our actual consolidated financial
condition, results of operations, liquidity, cash flows and
performance may differ materially from that made in or suggested by
the forward-looking statements contained in this report. A number
of important factors could cause actual results or conditions to
differ materially from those contained or implied by the
forward-looking statements, including the risks discussed in
Part II–Item 1A. Risk Factors
included in this report and
Part I–Item 1A. Risk Factors
included in our Annual Report on Form 10-K for the year ended
December 31, 2021 (2021 Annual Report). Factors that could
cause actual results or conditions to differ from those reflected
in the forward-looking statements contained in this report
include:
•the
accuracy of management’s assumptions and estimates;
•variability
in the amount of statutory capital that our insurance and
reinsurance subsidiaries have or are required to hold;
•interest
rate and/or foreign currency fluctuations;
•our
potential need for additional capital in the future and the
potential unavailability of such capital to us on favorable terms
or at all;
•major
public health issues, and specifically the pandemic caused by the
effects of the spread of the Coronavirus Disease of 2019
(COVID-19);
•changes
in relationships with important parties in our product distribution
network;
•the
activities of our competitors and our ability to grow our retail
business in a highly competitive environment;
•the
impact of general economic conditions on our ability to sell our
products and on the fair value of our investments;
•our
ability to successfully acquire new companies or businesses and/or
integrate such acquisitions into our existing
framework;
•downgrades,
potential downgrades or other negative actions by rating
agencies;
•our
dependence on key executives and inability to attract qualified
personnel, or the potential loss of Bermudian personnel as a result
of Bermuda employment restrictions;
•market
and credit risks that could diminish the value of our
investments;
•changes
to the creditworthiness of our reinsurance and derivative
counterparties;
•the
discontinuation of London Inter-bank Offered Rate
(LIBOR);
•changes
in consumer perception regarding the desirability of annuities as
retirement savings products;
•potential
litigation (including class action litigation), enforcement
investigations or regulatory scrutiny against us and our
subsidiaries, which we may be required to defend against or respond
to;
•the
impact of new accounting rules or changes to existing accounting
rules on our business;
•interruption
or other operational failures in telecommunication and information
technology and other operating systems, as well as our ability to
maintain the security of those systems;
•the
termination by Apollo Global Management, Inc. (AGM) or any of its
subsidiaries (collectively, AGM together with its subsidiaries,
Apollo) of its investment management agreements with us and certain
limitations on our ability to terminate such
arrangements;
•Apollo’s
dependence on key executives and inability to attract qualified
personnel;
•the
failure to realize the expected benefits from our merger with
AGM;
•the
accuracy of our estimates regarding the future performance of our
investment portfolio;
•increased
regulation or scrutiny of alternative investment advisers and
certain trading methods;
•potential
changes to laws or regulations affecting, among other things, group
supervision and/or group capital requirements, entity-level
regulatory capital standards, transactions with our affiliates, the
ability of our subsidiaries to make dividend payments or
distributions to AHL, acquisitions by or of us, minimum
capitalization and statutory reserve requirements for insurance
companies and fiduciary obligations on parties who distribute our
products;
•the
failure to obtain or maintain licenses and/or other regulatory
approvals as required for the operation of our insurance
subsidiaries;
•increases
in our tax liability resulting from the Base Erosion and Anti-Abuse
Tax (BEAT) or otherwise;
•AHL
or any of its non-United States (US) subsidiaries becoming subject
to US federal income taxation;
•adverse
changes in US tax law;
•changes
in our ability to pay dividends or make distributions;
•the
failure to achieve the economic benefits expected to be derived
from the Athene Co-Invest Reinsurance Affiliate Holding Ltd.
(together with its subsidiaries, ACRA) capital raise or future ACRA
capital raises;
•the
failure of third-party ACRA investors to fund their capital
commitment obligations; and
•other
risks and factors listed in
Part II–Item 1A. Risk Factors
included in this report,
Part I—Item 1A. Risk Factors
included in our 2021 Annual Report and those discussed elsewhere in
this report and in our 2021 Annual Report.
We caution you that the important factors referenced above may not
be exhaustive. In addition, we cannot assure you that we will
realize the results or developments we expect or anticipate or,
even if substantially realized, that they will result in the
consequences or affect us or our operations in the way we expect or
anticipate. In light of these risks, you should not place undue
reliance upon any forward-looking statements contained in this
report. Unless an earlier date is specified, the forward-looking
statements included in this report are made only as of the date
that this report was filed with the US Securities and Exchange
Commission (SEC). We undertake no obligation, except as may be
required by law, to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise. Comparisons of results for current and any prior periods
are not intended to express any future trends, or indications of
future performance, unless expressed as such, and should only be
viewed as historical data.
GLOSSARY OF SELECTED TERMS
Unless otherwise indicated in this report, the following terms have
the meanings set forth below:
Entities
|
|
|
|
|
|
|
|
|
Term or Acronym |
|
Definition |
A-A Mortgage |
|
A-A Mortgage Opportunities, L.P. |
AADE |
|
Athene Annuity & Life Assurance Company |
AAIA |
|
Athene Annuity and Life Company |
AAM |
|
Apollo Asset Management, Inc., formerly known as Apollo Global
Management, Inc. |
AARe |
|
Athene Annuity Re Ltd., a Bermuda reinsurance
subsidiary |
ACRA |
|
Athene Co-Invest Reinsurance Affiliate Holding Ltd., together with
its subsidiaries |
ACRA HoldCo |
|
Athene Co-Invest Reinsurance Affiliate Holding Ltd. |
ADIP |
|
Apollo/Athene Dedicated Investment Program |
AGM |
|
Apollo Global Management, Inc. |
AHL |
|
Athene Holding Ltd. |
ALRe |
|
Athene Life Re Ltd., a Bermuda reinsurance subsidiary |
ALReI |
|
Athene Life Re International Ltd., a Bermuda reinsurance
subsidiary |
AmeriHome |
|
AmeriHome Mortgage Company, LLC |
AOG |
|
Apollo Operating Group |
Apollo |
|
Apollo Global Management, Inc., together with its subsidiaries
(other than us or our subsidiaries) |
Apollo Group |
|
(1) AGM and AGM’s subsidiaries, including AAM, (2) any investment
fund or other collective investment vehicle whose general partner
or managing member is owned, directly or indirectly, by clause (1),
(3) BRH Holdings GP, Ltd. and each of its shareholders, (4) any
executive officer or employee of AGM or AGM’s subsidiaries, and (5)
any affiliate of a person described in clauses (1), (2), (3) or (4)
above; provided none of AHL or its subsidiaries (other than ACRA
HoldCo and ACRA HoldCo’s subsidiaries) will be deemed to be a
member of the Apollo Group
|
AUSA |
|
Athene USA Corporation |
Athora |
|
Athora Holding Ltd. |
BMA |
|
Bermuda Monetary Authority |
ISG |
|
Apollo Insurance Solutions Group LP |
Jackson |
|
Jackson Financial, Inc., together with its subsidiaries |
LIMRA |
|
Life Insurance and Market Research Association |
MidCap |
|
MidCap FinCo Designated Activity Company |
NAIC |
|
National Association of Insurance Commissioners |
NYSDFS |
|
New York State Department of Financial Services |
RLI |
|
ReliaStar Life Insurance Company |
Treasury |
|
United States Department of the Treasury |
VIAC |
|
Venerable Insurance and Annuity Company |
Venerable |
|
Venerable Holdings, Inc., together with its
subsidiaries |
Wheels/Donlen |
|
Wheels, Inc. (Wheels), merged with Donlen LLC (Donlen) |
Certain Terms & Acronyms
|
|
|
|
|
|
|
|
|
Term or Acronym |
|
Definition |
ABS |
|
Asset-backed securities |
ACL |
|
Authorized control level RBC as defined by the model created by the
National Association of Insurance Commissioners |
ALM |
|
Asset liability management |
Alternative investments |
|
Alternative investments, including investment funds, CLO equity
positions and certain other debt instruments considered to be
equity-like |
Base of earnings |
|
Earnings generated from our results of operations and the
underlying profitability drivers of our business |
Bermuda capital |
|
The capital of Athene’s non-US reinsurance subsidiaries calculated
under US statutory accounting principles, including that for
policyholder reserve liabilities which are subjected to US cash
flow testing requirements, but (i) excluding certain items that do
not exist under our applicable Bermuda requirements, such as
interest maintenance reserves and (ii) including certain Bermuda
statutory accounting differences, such as marking to market of
inception date investment gains or losses relating to reinsurance
transactions. Bermuda capital may from time to time materially
differ from the calculation of statutory capital under US statutory
accounting principles primarily due to the foregoing
differences. |
Bermuda RBC |
|
The risk-based capital ratio of our non-US reinsurance subsidiaries
by applying NAIC risk-based capital factors to the statutory
financial statements on an aggregate basis. Adjustments are made to
(i) exclude US subsidiaries which are included within our US RBC
Ratio, (ii) exclude our interests in the AOG units and other
non-insurance subsidiary holding companies from our capital base
and (iii) limit RBC concentration charges such that when they are
applied to determine target capital, the charges do not exceed 100%
of the asset’s carrying value. |
Block reinsurance |
|
A transaction in which the ceding company cedes all or a portion of
a block of previously issued annuity contracts through a
reinsurance agreement |
BSCR |
|
Bermuda Solvency Capital Requirement |
CAL |
|
Company action level risk-based capital as defined by the model
created by the National Association of Insurance
Commissioners |
CLO |
|
Collateralized loan obligation |
CMBS |
|
Commercial mortgage-backed securities |
CML |
|
Commercial mortgage loans |
Cost of crediting |
|
The interest credited to the policyholders on our fixed annuities,
including, with respect to our fixed indexed annuities, option
costs, as well as institutional costs related to institutional
products, presented on an annualized basis for interim
periods |
Cost of funds |
|
Cost of funds includes liability costs related to cost of crediting
on both deferred annuities and institutional products, as well as
other liability costs. Cost of funds is computed as the total
liability costs divided by the average net invested assets for the
relevant period. Presented on an annualized basis for interim
periods. |
DAC |
|
Deferred acquisition costs |
Deferred annuities |
|
Fixed indexed annuities, annual reset annuities, multi-year
guaranteed annuities and registered index-linked
annuities |
DSI |
|
Deferred sales inducement |
Excess capital |
|
Capital in excess of the level management believes is needed to
support our current operating strategy |
FIA |
|
Fixed indexed annuity, which is an insurance contract that earns
interest at a crediting rate based on a specified index on a
tax-deferred basis |
Fixed annuities |
|
FIAs together with fixed rate annuities |
Fixed rate annuity |
|
An insurance contract that offers tax-deferred growth and the
opportunity to produce a guaranteed stream of retirement income for
the lifetime of its policyholder |
Flow reinsurance |
|
A transaction in which the ceding company cedes a portion of newly
issued policies to the reinsurer |
GAAP |
|
Accounting principles generally accepted in the United States of
America |
GLWB |
|
Guaranteed lifetime withdrawal benefit |
GMDB |
|
Guaranteed minimum death benefit |
Gross invested assets |
|
The sum of (a) total investments on the consolidated balance sheet
with available-for-sale securities at amortized cost, excluding
derivatives, (b) cash and cash equivalents and restricted cash, (c)
investments in related parties, (d) accrued investment income, (e)
consolidated variable interest entities’ assets, liabilities and
noncontrolling interest and (f) policy loans ceded (which offset
the direct policy loans in total investments). Gross invested
assets includes investments supporting assumed funds withheld and
modco agreements and excludes assets associated with funds withheld
liabilities related to business exited through reinsurance
agreements and derivative collateral (offsetting the related cash
positions). Gross invested assets includes the entire investment
balance attributable to ACRA as ACRA is 100%
consolidated |
IMA |
|
Investment management agreement |
|
|
|
|
|
|
|
|
|
Term or Acronym |
|
Definition |
IMO |
|
Independent marketing organization |
Investment margin on deferred annuities |
|
Investment margin applies to deferred annuities and is the excess
of our net investment earned rate over the cost of crediting to our
policyholders, presented on an annualized basis for interim
periods |
Liability outflows |
|
The aggregate of withdrawals on our deferred annuities, maturities
of our funding agreements, payments on payout annuities, and
pension group annuity benefit payments |
MCR |
|
Minimum capital requirements |
MMS |
|
Minimum margin of solvency |
Modco |
|
Modified coinsurance |
MVA |
|
Market value adjustment |
MYGA |
|
Multi-year guaranteed annuity |
Net invested assets |
|
The sum of (a) total investments on the consolidated balance sheet
with available-for-sale securities at amortized cost, excluding
derivatives, (b) cash and cash equivalents and restricted cash, (c)
investments in related parties, (d) accrued investment income, (e)
consolidated variable interest entities’ assets, liabilities and
noncontrolling interest and (f) policy loans ceded (which offset
the direct policy loans in total investments). Net invested assets
includes investments supporting assumed funds withheld and modco
agreements and excludes assets associated with funds withheld
liabilities related to business exited through reinsurance
agreements and derivative collateral (offsetting the related cash
positions). Net invested assets includes our economic ownership of
ACRA investments but does not include the investments associated
with the noncontrolling interest |
Net investment earned rate |
|
Income from our net invested assets divided by the average net
invested assets for the relevant period, presented on an annualized
basis for interim periods |
Net investment spread |
|
Net investment spread measures our investment performance less the
total cost of our liabilities, presented on an annualized basis for
interim periods |
Net reserve liabilities |
|
The sum of (a) interest sensitive contract liabilities, (b) future
policy benefits, (c) dividends payable to policyholders, and (d)
other policy claims and benefits, offset by reinsurance
recoverable, excluding policy loans ceded. Net reserve liabilities
also includes the reserves related to assumed modco agreements in
order to appropriately match the costs incurred in the consolidated
statements of income (loss) with the liabilities. 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. Net reserve liabilities is net of the reserve
liabilities attributable to the ACRA noncontrolling
interest |
Other liability costs |
|
Other liability costs include DAC, DSI and VOBA amortization,
change in rider reserves, the cost of liabilities on products other
than deferred annuities and institutional products, excise taxes,
as well as offsets for premiums, product charges and other
revenues |
Payout annuities |
|
Annuities with a current cash payment component, which consist
primarily of single premium immediate annuities, supplemental
contracts and structured settlements |
Policy loan |
|
A loan to a policyholder under the terms of, and which is secured
by, a policyholder’s policy |
RBC |
|
Risk-based capital |
Rider reserves |
|
Guaranteed lifetime withdrawal benefits and guaranteed minimum
death benefits reserves |
RMBS |
|
Residential mortgage-backed securities |
RML |
|
Residential mortgage loan |
Sales |
|
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) |
SPIA |
|
Single premium immediate annuity |
Surplus assets |
|
Assets in excess of policyholder obligations, determined in
accordance with the applicable domiciliary jurisdiction’s statutory
accounting principles |
TAC |
|
Total adjusted capital as defined by the model created by the
NAIC |
US RBC Ratio |
|
The CAL RBC ratio for AADE, our parent US insurance
company |
VIE |
|
Variable interest entity |
VOBA |
|
Value of business acquired |
Item 1. Financial Statements
Index to Condensed Consolidated Financial Statements
(unaudited)
ATHENE HOLDING LTD.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions) |
March 31, 2022 |
|
|
December 31, 2021 |
Assets |
|
|
|
|
Investments |
|
|
|
|
Available-for-sale securities, at fair value (amortized cost: 2022
– $104,222 and 2021 – $96,458; allowance for credit losses: 2022 –
$468 and 2021 – $123)
|
$ |
96,899 |
|
|
|
$ |
100,159 |
|
Trading securities, at fair value |
1,852 |
|
|
|
2,056 |
|
Equity securities (portion at fair value: 2022 – $754 and 2021 –
$1,170)
|
1,154 |
|
|
|
1,170 |
|
Mortgage loans (allowance for credit losses: 2021 – $154; portion
at fair value: 2022 – $23,696 and 2021 – $17)
|
23,696 |
|
|
|
20,748 |
|
Investment funds (portion at fair value: 2022 – $180 and 2021 –
$183)
|
1,243 |
|
|
|
1,178 |
|
Policy loans |
296 |
|
|
|
312 |
|
Funds withheld at interest (portion at fair value: 2022 – $(1,882)
and 2021 – $782)
|
41,173 |
|
|
|
43,907 |
|
Derivative assets |
3,668 |
|
|
|
4,387 |
|
Short-term investments (portion at fair value: 2022 – $149 and 2021
– $139)
|
175 |
|
|
|
139 |
|
Other investments (portion at fair value: 2022 – $150 and 2021 –
$130)
|
1,214 |
|
|
|
1,473 |
|
Total investments |
171,370 |
|
|
|
175,529 |
|
Cash and cash equivalents |
8,523 |
|
|
|
9,479 |
|
Restricted cash |
834 |
|
|
|
796 |
|
Investments in related parties |
|
|
|
|
Available-for-sale securities, at fair value (amortized cost: 2022
– $8,429 and 2021 – $10,401; allowance for credit losses: 2022 –
$20 and 2021 – $0)
|
8,324 |
|
|
|
10,402 |
|
Trading securities, at fair value |
262 |
|
|
|
1,781 |
|
Equity securities, at fair value |
166 |
|
|
|
284 |
|
Mortgage loans (allowance for credit losses: 2021 – $5; portion at
fair value: 2022 – $1,456 and 2021 – $0)
|
1,456 |
|
|
|
1,360 |
|
Investment funds (portion at fair value: 2022 – $814 and 2021 –
$2,958)
|
3,088 |
|
|
|
7,391 |
|
Funds withheld at interest (portion at fair value: 2022 – $(570)
and 2021 – $578)
|
11,431 |
|
|
|
12,207 |
|
Short-term investments, at fair value |
53 |
|
|
|
— |
|
Other investments |
255 |
|
|
|
222 |
|
Accrued investment income (related party: 2022 – $44 and 2021 –
$54)
|
885 |
|
|
|
962 |
|
Reinsurance recoverable (portion at fair value: 2022 – $1,814 and
2021 – $1,991)
|
4,648 |
|
|
|
4,594 |
|
Deferred acquisition costs, deferred sales inducements and value of
business acquired |
4,713 |
|
|
|
5,362 |
|
Goodwill |
4,181 |
|
|
|
— |
|
Other assets (related party: 2022 – $81 and 2021 – $0)
|
7,094 |
|
|
|
1,257 |
|
Assets of consolidated variable interest entities |
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
|
Mortgage loans (related party: 2022 – $224 and 2021 – $231;
allowance for credit losses: 2021 – $78; portion at fair value:
2022 – $1,880 and 2021 – $0)
|
1,880 |
|
|
|
2,040 |
|
Investment funds (related party: 2022 – $2,856 and 2021 – $1,068;
portion at fair value: 2022 – $12,779 and 2021 –
$1,297)
|
13,568 |
|
|
|
1,297 |
|
Other investments, at fair value |
2,567 |
|
|
|
— |
|
Cash and cash equivalents |
521 |
|
|
|
154 |
|
Other assets |
315 |
|
|
|
32 |
|
Total assets |
$ |
246,134 |
|
|
|
$ |
235,149 |
|
|
|
|
|
|
(Continued)
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions, except per share data) |
March 31, 2022 |
|
|
December 31, 2021 |
Liabilities and Equity |
|
|
|
|
Liabilities |
|
|
|
|
Interest sensitive contract liabilities (related party: 2022 –
$13,023 and 2021 – $12,948; portion at fair value: 2022 – $7,800
and 2021 – $16,142)
|
$ |
164,369 |
|
|
|
$ |
156,325 |
|
Future policy benefits (related party: 2022 – $2,041 and 2021 –
$1,853; portion at fair value: 2022 – $2,082 and 2021 –
$2,262)
|
48,093 |
|
|
|
42,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
3,287 |
|
|
|
2,964 |
|
Derivative liabilities |
631 |
|
|
|
472 |
|
Payables for collateral on derivatives and securities to
repurchase |
7,071 |
|
|
|
7,044 |
|
|
|
|
|
|
Other liabilities (related party: 2022 – $225 and 2021 –
$936)
|
2,190 |
|
|
|
3,214 |
|
Liabilities of consolidated variable interest entities |
|
|
|
|
Debt (portion at fair value: 2022 – $4,067 and 2021 –
$317)
|
5,905 |
|
|
|
430 |
|
Other liabilities |
896 |
|
|
|
31 |
|
Total liabilities |
232,442 |
|
|
|
212,968 |
|
Commitments and Contingencies (Note 10) |
|
|
|
|
Equity |
|
|
|
|
Preferred stock |
|
|
|
|
Series A – par value $1 per share; $863 aggregate liquidation
preference; authorized, issued and outstanding: 2022 and 2021 – 0.0
shares
|
— |
|
|
|
— |
|
Series B – par value $1 per share; $345 aggregate liquidation
preference; authorized, issued and outstanding: 2022 and 2021 – 0.0
shares
|
— |
|
|
|
— |
|
Series C – par value $1 per share; $600 aggregate liquidation
preference; authorized, issued and outstanding: 2022 and 2021 – 0.0
shares
|
— |
|
|
|
— |
|
Series D – par value $1 per share; $575 aggregate liquidation
preference; authorized, issued and outstanding: 2022 and 2021 – 0.0
shares
|
— |
|
|
|
— |
|
Common stock |
|
|
|
|
Class A – par value $0.001 per share; authorized: 2022 and 2021 –
425.0 shares; issued and outstanding: 2022 – 203.8 and 2021 – 192.2
shares
|
— |
|
|
|
— |
|
Additional paid-in capital |
17,555 |
|
|
|
6,667 |
|
Retained earnings (accumulated deficit) |
(1,732) |
|
|
|
11,033 |
|
Accumulated other comprehensive income (loss) (related party: 2022
– $(62) and 2021 – $33)
|
(4,674) |
|
|
|
2,430 |
|
Total Athene Holding Ltd. shareholders’ equity |
11,149 |
|
|
|
20,130 |
|
Noncontrolling interests |
2,543 |
|
|
|
2,051 |
|
Total equity |
13,692 |
|
|
|
22,181 |
|
Total liabilities and equity |
$ |
246,134 |
|
|
|
$ |
235,149 |
|
|
|
|
|
|
(Concluded)
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions) |
|
|
|
|
|
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
Revenues |
|
|
|
|
|
|
|
|
|
Premiums (related party of $71 and $79 for the three months ended
March 31, 2022 and 2021, respectively)
|
|
|
|
|
|
$ |
2,110 |
|
|
|
$ |
3,011 |
|
Product charges (related party of $10 and $11 for the three months
ended March 31, 2022 and 2021, respectively)
|
|
|
|
|
|
166 |
|
|
|
150 |
|
Net investment income (related party investment income of $501 and
$596 for the three months ended March 31, 2022 and 2021,
respectively; and related party investment expense of $186 and $144
for the three months ended March 31, 2022 and 2021,
respectively)
|
|
|
|
|
|
1,683 |
|
|
|
1,669 |
|
Investment related gains (losses) (related party of $(604) and
$(139) for the three months ended March 31, 2022 and 2021,
respectively)
|
|
|
|
|
|
(4,200) |
|
|
|
(422) |
|
Other revenues |
|
|
|
|
|
(3) |
|
|
|
14 |
|
Revenues of consolidated variable interest entities |
|
|
|
|
|
|
|
|
|
Net investment income |
|
|
|
|
|
17 |
|
|
|
35 |
|
Investment related gains (losses) |
|
|
|
|
|
(42) |
|
|
|
(66) |
|
Total revenues |
|
|
|
|
|
(269) |
|
|
|
4,391 |
|
Benefits and expenses |
|
|
|
|
|
|
|
|
|
Interest sensitive contract benefits (related party of $(11) and
$76 for the three months ended March 31, 2022 and 2021,
respectively)
|
|
|
|
|
|
(41) |
|
|
|
394 |
|
Amortization of deferred sales inducements |
|
|
|
|
|
— |
|
|
|
84 |
|
Future policy and other policy benefits (related party of $63 and
$89 for the three months ended March 31, 2022 and 2021,
respectively)
|
|
|
|
|
|
2,085 |
|
|
|
3,317 |
|
Amortization of deferred acquisition costs and value of business
acquired |
|
|
|
|
|
125 |
|
|
|
164 |
|
Policy and other operating expenses (related party of $57 and $12
for the three months ended March 31, 2022 and 2021,
respectively)
|
|
|
|
|
|
335 |
|
|
|
293 |
|
|
|
|
|
|
|
|
|
|
|
Total benefits and expenses |
|
|
|
|
|
2,504 |
|
|
|
4,252 |
|
Income (loss) before income taxes |
|
|
|
|
|
(2,773) |
|
|
|
139 |
|
Income tax expense (benefit) |
|
|
|
|
|
(407) |
|
|
|
62 |
|
Net income (loss) |
|
|
|
|
|
(2,366) |
|
|
|
77 |
|
Less: Net loss attributable to noncontrolling interests |
|
|
|
|
|
(883) |
|
|
|
(537) |
|
Net income (loss) attributable to Athene Holding Ltd.
shareholders |
|
|
|
|
|
(1,483) |
|
|
|
614 |
|
Less: Preferred stock dividends |
|
|
|
|
|
35 |
|
|
|
36 |
|
Net income (loss) available to Athene Holding Ltd. common
shareholder |
|
|
|
|
|
$ |
(1,518) |
|
|
|
$ |
578 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions) |
|
|
|
|
|
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
Net income (loss) |
|
|
|
|
|
$ |
(2,366) |
|
|
|
$ |
77 |
|
Other comprehensive income (loss), before tax |
|
|
|
|
|
|
|
|
|
Unrealized investment gains (losses) on available-for-sale
securities, net of offsets |
|
|
|
|
|
(6,430) |
|
|
|
(2,591) |
|
Unrealized gains (losses) on hedging instruments |
|
|
|
|
|
(129) |
|
|
|
(31) |
|
Foreign currency translation and other adjustments |
|
|
|
|
|
4 |
|
|
|
— |
|
Other comprehensive loss, before tax |
|
|
|
|
|
(6,555) |
|
|
|
(2,622) |
|
Income tax benefit related to other comprehensive loss |
|
|
|
|
|
(1,170) |
|
|
|
(496) |
|
Other comprehensive loss |
|
|
|
|
|
(5,385) |
|
|
|
(2,126) |
|
Comprehensive loss |
|
|
|
|
|
(7,751) |
|
|
|
(2,049) |
|
Less: Comprehensive loss attributable to noncontrolling
interests |
|
|
|
|
|
(1,594) |
|
|
|
(713) |
|
Comprehensive loss attributable to Athene Holding Ltd.
shareholders |
|
|
|
|
|
$ |
(6,157) |
|
|
|
$ |
(1,336) |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Condensed Consolidated Statements of Equity
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
Three months ended |
(In millions) |
Preferred stock |
|
Common stock |
|
Additional paid-in capital |
|
Retained earnings (accumulated deficit) |
|
Accumulated other comprehensive income (loss) |
|
Total Athene Holding Ltd. shareholders’ equity |
|
Noncontrolling interests |
|
Total equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2022 |
$ |
— |
|
|
$ |
— |
|
|
$ |
20,270 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
20,270 |
|
|
$ |
2,276 |
|
|
$ |
22,546 |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
(1,483) |
|
|
— |
|
|
(1,483) |
|
|
(883) |
|
|
(2,366) |
|
Other comprehensive loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,674) |
|
|
(4,674) |
|
|
(711) |
|
|
(5,385) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation allocation from parent |
— |
|
|
— |
|
|
11 |
|
|
— |
|
|
— |
|
|
11 |
|
|
— |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends |
— |
|
|
— |
|
|
— |
|
|
(35) |
|
|
— |
|
|
(35) |
|
|
— |
|
|
(35) |
|
Common stock dividends |
— |
|
|
— |
|
|
— |
|
|
(188) |
|
|
— |
|
|
(188) |
|
|
— |
|
|
(188) |
|
Distributions to parent |
— |
|
|
— |
|
|
(2,726) |
|
|
(26) |
|
|
— |
|
|
(2,752) |
|
|
— |
|
|
(2,752) |
|
Contributions from noncontrolling interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
311 |
|
|
311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidation of variable interest entities |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,634 |
|
|
1,634 |
|
Other changes in equity of noncontrolling interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(84) |
|
|
(84) |
|
Balance at March 31, 2022 |
$ |
— |
|
|
$ |
— |
|
|
$ |
17,555 |
|
|
$ |
(1,732) |
|
|
$ |
(4,674) |
|
|
$ |
11,149 |
|
|
$ |
2,543 |
|
|
$ |
13,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
Three months ended |
Balance at December 31, 2020 |
$ |
— |
|
|
$ |
— |
|
|
$ |
6,613 |
|
|
$ |
8,073 |
|
|
$ |
3,971 |
|
|
$ |
18,657 |
|
|
$ |
1,483 |
|
|
$ |
20,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
— |
|
|
— |
|
|
— |
|
|
614 |
|
|
— |
|
|
614 |
|
|
(537) |
|
|
77 |
|
Other comprehensive loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,950) |
|
|
(1,950) |
|
|
(176) |
|
|
(2,126) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares, net of expenses |
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Stock-based compensation |
— |
|
|
— |
|
|
9 |
|
|
— |
|
|
— |
|
|
9 |
|
|
— |
|
|
9 |
|
Retirement or repurchase of shares |
— |
|
|
— |
|
|
— |
|
|
(4) |
|
|
— |
|
|
(4) |
|
|
— |
|
|
(4) |
|
Preferred stock dividends |
— |
|
|
— |
|
|
— |
|
|
(36) |
|
|
— |
|
|
(36) |
|
|
— |
|
|
(36) |
|
Contributions from noncontrolling interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
235 |
|
|
235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidation of variable interest entities |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40 |
|
|
40 |
|
Balance at March 31, 2021 |
$ |
— |
|
|
$ |
— |
|
|
$ |
6,623 |
|
|
$ |
8,647 |
|
|
$ |
2,021 |
|
|
$ |
17,291 |
|
|
$ |
1,045 |
|
|
$ |
18,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions) |
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
Cash flows from operating activities
|
|
|
|
|
Net income (loss) |
$ |
(2,366) |
|
|
|
$ |
77 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
Amortization of deferred acquisition costs and value of business
acquired |
125 |
|
|
|
164 |
|
Amortization of deferred sales inducements |
— |
|
|
|
84 |
|
Net amortization (accretion) of net investment premiums, discounts
and other |
73 |
|
|
|
(49) |
|
|
|
|
|
|
Net investment (income) loss (related party: 2022 – $(199) and 2021
– $(416))
|
(238) |
|
|
|
(381) |
|
Net recognized (gains) losses on investments and derivatives
(related party: 2022 – $101 and 2021 – $(77))
|
1,813 |
|
|
|
(651) |
|
Policy acquisition costs deferred |
(214) |
|
|
|
(143) |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accrued investment income (related party: 2022 – $10 and 2021 –
$(23))
|
77 |
|
|
|
(63) |
|
Interest sensitive contract liabilities (related party: 2022 –
$(21) and 2021 – $64)
|
(480) |
|
|
|
(34) |
|
Future policy benefits and reinsurance recoverable (related party:
2022 – $34 and 2021 – $59)
|
(266) |
|
|
|
1,245 |
|
Funds withheld assets (related party: 2022 – $475 and 2021 –
$153)
|
2,365 |
|
|
|
1,278 |
|
Other assets and liabilities |
(734) |
|
|
|
99 |
|
Net cash provided by operating activities |
155 |
|
|
|
1,626 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Sales, maturities and repayments of: |
|
|
|
|
Available-for-sale securities (related party: 2022 – $913 and 2021
– $350)
|
9,264 |
|
|
|
3,431 |
|
Trading securities (related party: 2022 – $51 and 2021 –
$7)
|
77 |
|
|
|
18 |
|
Equity securities |
87 |
|
|
|
38 |
|
Mortgage loans (related party: 2022 – $28 and 2021 –
$0)
|
985 |
|
|
|
325 |
|
Investment funds (related party: 2022 – $351 and 2021 –
$155)
|
427 |
|
|
|
173 |
|
Derivative instruments and other invested assets (related party:
2022 – $44 and 2021 – $0)
|
1,179 |
|
|
|
915 |
|
Short-term investments (related party: 2022 – $0 and 2021 –
$98)
|
59 |
|
|
|
330 |
|
Purchases of: |
|
|
|
|
Available-for-sale securities (related party: 2022 – $(1,055) and
2021 – $(767))
|
(11,100) |
|
|
|
(8,275) |
|
Trading securities (related party: 2022 – $(143) and 2021 –
$(120))
|
(173) |
|
|
|
(149) |
|
Equity securities (related party: 2022 – $(13) and 2021 –
$(35))
|
(59) |
|
|
|
(48) |
|
Mortgage loans (related party: 2022 – $(167) and 2021 –
$(42))
|
(4,258) |
|
|
|
(1,786) |
|
Investment funds (related party: 2022 – $(1,833) and 2021 –
$(429))
|
(1,956) |
|
|
|
(467) |
|
Derivative instruments and other invested assets (related party:
2022 – $(77) and 2021 – $0)
|
(736) |
|
|
|
(1,613) |
|
Short-term investments (related party: 2022 – $(33) and 2021 –
$(100))
|
(129) |
|
|
|
(232) |
|
Consolidation of new variable interest entities |
393 |
|
|
|
— |
|
|
|
|
|
|
Other investing activities, net |
(225) |
|
|
|
457 |
|
Net cash used in investing activities |
(6,165) |
|
|
|
(6,883) |
|
|
|
|
|
|
|
|
|
|
(Continued) |
See accompanying notes to the unaudited condensed consolidated
financial statements |
|
|
|
|
ATHENE HOLDING LTD.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
(In millions) |
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
Cash flows from financing activities |
|
|
|
|
Issuance of common stock |
$ |
— |
|
|
|
$ |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits on investment-type policies and contracts (related party:
2022 – $18 and 2021 – $26)
|
8,342 |
|
|
|
5,162 |
|
Withdrawals on investment-type policies and contracts (related
party: 2022 – $(88) and 2021 – $(100))
|
(2,245) |
|
|
|
(1,684) |
|
Payments for coinsurance agreements on investment-type contracts,
net
|
(13) |
|
|
|
(8) |
|
Capital contributions from noncontrolling interests |
311 |
|
|
|
235 |
|
Capital distributions to noncontrolling interests |
— |
|
|
|
— |
|
Net change in cash collateral posted for derivative transactions
and securities to repurchase |
27 |
|
|
|
151 |
|
|
|
|
|
|
Preferred stock dividends |
(35) |
|
|
|
(36) |
|
Common stock dividends |
(938) |
|
|
|
— |
|
|
|
|
|
|
Repurchase of common stock |
— |
|
|
|
(4) |
|
Other financing activities, net |
14 |
|
|
|
(29) |
|
Net cash provided by financing activities |
5,463 |
|
|
|
3,788 |
|
Effect of exchange rate changes on cash and cash
equivalents |
(4) |
|
|
|
— |
|
Net decrease in cash and cash equivalents |
(551) |
|
|
|
(1,469) |
|
Cash and cash equivalents at beginning of year1
|
10,429 |
|
|
|
8,442 |
|
Cash and cash equivalents at end of period1
|
$ |
9,878 |
|
|
|
$ |
6,973 |
|
|
|
|
|
|
Supplementary information |
|
|
|
|
Non-cash transactions |
|
|
|
|
Deposits on investment-type policies and contracts through
reinsurance agreements (related party: 2022 – $72 and 2021 –
$102)
|
$ |
563 |
|
|
|
$ |
214 |
|
Withdrawals on investment-type policies and contracts through
reinsurance agreements (related party: 2022 – $375 and 2021 –
$408)
|
1,774 |
|
|
|
1,925 |
|
Investments received from settlements on reinsurance
agreements |
— |
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
Investments received from pension group annuity
premiums |
1,759 |
|
|
|
1,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets contributed to consolidated VIEs |
— |
|
|
|
169 |
|
Distributions to parent |
2,145 |
|
|
|
— |
|
|
|
|
|
|
1
Includes cash and cash equivalents, restricted cash and cash and
cash equivalents of consolidated variable interest
entities.
|
(Concluded)
See accompanying notes to the unaudited condensed consolidated
financial statements
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Business, Basis of Presentation and Significant Accounting
Policies
Athene Holding Ltd. (AHL), a Bermuda exempted company, together
with its subsidiaries (collectively, Athene, we, our, us, or the
Company), is a leading financial services company specializing in
retirement services that issues, reinsures and acquires retirement
savings products in the United States (US) and
internationally.
We conduct business primarily through the following consolidated
subsidiaries:
•Our
non-US reinsurance subsidiaries, to which AHL’s other insurance
subsidiaries and third-party ceding companies directly and
indirectly reinsure a portion of their liabilities, including
Athene Life Re Ltd. (ALRe), a Bermuda exempted company, and Athene
Life Re International Ltd. (ALReI); and
•Athene
USA Corporation, an Iowa corporation (together with its
subsidiaries, AUSA).
In addition, we consolidate certain variable interest entities
(VIEs) for which we have determined we are the primary beneficiary.
See
Note 5 – Variable Interest Entities
for further information on VIEs.
Consolidation and Basis of Presentation—We
have prepared the accompanying condensed consolidated financial
statements in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim
financial information and the United States Securities and Exchange
Commission’s rules and regulations for Form 10-Q and
Article 10 of Regulation S-X. The accompanying condensed
consolidated financial statements are unaudited and reflect all
adjustments, consisting only of normal recurring items, considered
necessary for fair statement of the results for the interim periods
presented. All intercompany accounts and transactions have been
eliminated. Interim operating results are not necessarily
indicative of the results expected for the entire
year.
For entities that are consolidated, but not wholly owned, we
allocate a portion of the income or loss and corresponding equity
to the owners other than us. We include the aggregate of the income
or loss and corresponding equity that is not owned by us in
noncontrolling interests in the condensed consolidated financial
statements.
The condensed consolidated balance sheet as of December 31,
2021 has been derived from the audited financial statements, but
does not include all of the information and footnotes required by
GAAP for complete financial statements. Therefore, these condensed
consolidated financial statements should be read in conjunction
with our audited consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31,
2021. The preparation of financial statements requires the use of
management estimates. Actual results may differ from estimates used
in preparing the condensed consolidated financial
statements.
Merger
– On January 1, 2022, we completed our merger with Apollo Global
Management, Inc. (AGM, and together with its subsidiaries other
than us or our subsidiaries, Apollo) and are now a direct wholly
owned subsidiary of AGM. We have elected pushdown accounting in
which we use AGM’s basis of accounting, which reflects the fair
market value of our assets and liabilities at the time of the
merger, unless otherwise prescribed by GAAP. Our condensed
consolidated financial statements are presented as Predecessor for
the periods prior to the merger and Successor for subsequent
periods. We, along with certain of our non-US subsidiaries, are
Bermuda exempted companies that have historically not been subject
to US corporate income taxes on earnings. Due to the merger, our
non-US earnings will generally be subject to US corporate income
taxes. See
Note 2 – Business Combination
for further information on the merger.
Segments—We
operate our core business strategies out of one reportable segment.
As a wholly owned subsidiary of AGM, we no longer report certain
other operations in a corporate and other segment.
Significant Accounting Policies
Mortgage loans—Effective
January 1, 2022, we elected the fair value option on our mortgage
loan portfolio. Interest income is accrued on the principal amount
of the loan based on its contractual interest rate. We accrue
interest on loans until it is probable we will not receive
interest, or the loan is 90 days past due unless guaranteed by US
government-sponsored agencies. Interest income and prepayment fees
are reported in net investment income on the condensed consolidated
statements of income (loss). Changes in the fair value of the
mortgage loan portfolio are reported in investment related gains
(losses) on the condensed consolidated statements of income
(loss).
Derivative Instruments
Embedded Derivatives –
We issue and reinsure products, primarily indexed annuity products,
or purchase investments that contain embedded derivatives. If we
determine the embedded derivative has economic characteristics not
clearly and closely related to the economic characteristics of the
host contract, and a separate instrument with the same terms would
qualify as a derivative instrument, the embedded derivative is
bifurcated from the host contract and accounted for separately,
unless the fair value option is elected on the host contract. Under
the fair value option, bifurcation of the embedded derivative is
not necessary as the entire contract is carried at fair value with
all related gains and losses recognized in investment related gains
(losses) on the condensed consolidated statements of income (loss).
Embedded derivatives are carried on the condensed consolidated
balance sheets at fair value in the same line item as the host
contract.
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Fixed indexed annuity, index-linked variable annuity and indexed
universal life insurance contracts allow the policyholder to elect
a fixed interest rate return or an equity market component for
which interest credited is based on the performance of certain
stock market indices. The equity market option is an embedded
derivative. The benefit reserve is equal to the sum of the fair
value of the embedded derivative and the host (or guaranteed)
component of the contracts. The fair value of the embedded
derivatives represents the present value of cash flows attributable
to the indexed strategies. The embedded derivative cash flows are
based on assumptions for future policy growth, which include
assumptions for expected index credits on the next policy
anniversary date, future equity option costs, volatility, interest
rates and policyholder behavior assumptions including lapses and
the use of benefit riders. The embedded derivative cash flows are
discounted using a rate that reflects our own credit rating. The
host contract is established at contract inception as the initial
account value less the initial fair value of the embedded
derivative and accreted over the policy’s life. Contracts acquired
through a business combination which contain an embedded derivative
are re-bifurcated as of the acquisition date. Changes in the fair
value of embedded derivatives associated with fixed indexed
annuities, index-linked variable annuities and indexed universal
life insurance contracts are included in interest sensitive
contract benefits on the condensed consolidated statements of
income (loss).
Additionally, reinsurance agreements written on a funds withheld or
modco basis contain embedded derivatives. We have determined that
the right to receive or obligation to pay the total return on the
assets supporting the funds withheld at interest or funds withheld
liability, respectively, represents a total return swap with a
floating rate leg. The fair value of embedded derivatives on funds
withheld and modco agreements is computed as the unrealized gain
(loss) on the underlying assets and is included within funds
withheld at interest and funds withheld liability on the condensed
consolidated balance sheets for assumed and ceded agreements,
respectively. The change in the fair value of the embedded
derivatives is recorded in investment related gains (losses) on the
condensed consolidated statements of income (loss). Assumed and
ceded earnings from funds withheld at interest, funds withheld
liability and changes in the fair value of embedded derivatives are
reported in operating activities on the condensed consolidated
statements of cash flows. Contributions to and withdrawals from
funds withheld at interest and funds withheld liability are
reported in operating activities on the condensed consolidated
statements of cash flows.
Variable Interest Entities—An
entity that does not have sufficient equity to finance its
activities without additional financial support, or in which the
equity investors, as a group, do not have the characteristics
typically afforded to common shareholders is a VIE. The
determination as to whether an entity qualifies as a VIE depends on
the facts and circumstances surrounding each entity and may require
significant judgment. Our investment funds typically qualify as
VIEs and are evaluated for consolidation under the VIE
model.
We are required to consolidate a VIE if we are the primary
beneficiary, defined as the variable interest holder with both the
power to direct the activities that most significantly impact the
VIE’s economic performance and rights to receive benefits or
obligations to absorb losses that could be potentially significant
to the VIE. We determine whether we are the primary beneficiary of
an entity based on a qualitative assessment of the VIE’s capital
structure, contractual terms, nature of the VIE’s operations and
purpose and our relative exposure to the related risks of the VIE.
Since affiliates of AGM, a related party under common control, are
the decision makers in certain of the investment funds and
securitization vehicles, we and a member of our related party group
may together have the characteristics of the primary beneficiary in
a VIE. In this situation, we have concluded we must consolidate the
VIE when we have significant economic exposure to the entity. We
reassess the VIE and primary beneficiary determinations on an
ongoing basis.
Deferred Acquisition Costs, Deferred Sales Inducements and Value of
Business Acquired
Deferred Acquisition Costs and Deferred Sales Inducements
– Costs related directly to the successful acquisition of new, or
renewal of, insurance or investment contracts are deferred to the
extent they are recoverable from future premiums or gross profits.
These costs consist of commissions and policy issuance costs, as
well as sales inducements credited to policyholder account
balances, and are included in deferred acquisition costs (DAC),
deferred sales inducements (DSI) and value of business acquired
(VOBA) on the condensed consolidated balance sheets. We perform
periodic tests, including at issuance, to determine if the deferred
costs are recoverable. If we determine that the deferred costs are
not recoverable, we record a cumulative charge to the current
period.
Deferred costs related to universal life-type policies and
investment contracts with significant revenue streams from sources
other than investment of the policyholder funds are amortized over
the lives of the policies, based upon the proportion of the present
value of actual and expected deferred costs to the present value of
actual and expected gross profits to be earned over the life of the
policies. Gross profits include investment spread margins,
surrender charge income, policy administration charges and
expenses, changes in the guaranteed lifetime withdrawal benefit
(GLWB) and guaranteed minimum death benefit (GMDB) reserves and
realized gains and losses on investments. Current period gross
profits for fixed indexed annuities also include the change in fair
value of both freestanding and embedded derivatives. Estimates of
the expected gross profits and margins are based on assumptions
using accepted actuarial methods related to policyholder behavior,
including lapses and the utilization of benefit riders, mortality,
yields on investments supporting the liabilities, future interest
credited amounts (including indexed related credited amounts on
fixed indexed annuity products), and other policy changes as
applicable, and the level of expenses necessary to maintain the
policies over their expected lives. Each reporting period, we
update estimated gross profits with actual gross profits as part of
the amortization process and adjust the DAC and DSI balances due to
the other comprehensive income (OCI) effects of unrealized
investment gains and losses on AFS securities. We also periodically
revise the key assumptions used in the amortization calculation,
which results in revisions to the estimated future gross profits.
The effects of changes in assumptions are recorded as unlocking in
the period in which the changes are made.
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Deferred costs related to investment contracts without significant
revenue streams from sources other than investment of the
policyholder funds are amortized using the effective interest
method. The effective interest method amortizes the deferred costs
by discounting the future liability cash flows at a break-even
rate. The break-even rate is solved for such that the present value
of future liability cash flows is equal to the net liability at the
inception of the contract.
Value of Business Acquired
– We establish VOBA for blocks of insurance contracts acquired
through the acquisition of insurance entities and through
application of pushdown accounting. We record the fair value of the
liabilities assumed in two components: reserves and VOBA. Reserves
are established using our best estimate assumptions consistent with
our policies for future policy benefits and interest sensitive
contract liabilities. VOBA is the difference between the fair value
of the liabilities and the reserves. VOBA can be either positive or
negative. Any negative VOBA is recorded to the same financial
statement line on the condensed consolidated balance sheets as the
associated reserves. Positive VOBA is recorded in deferred
acquisition costs, deferred sales inducements and value of business
acquired on the condensed consolidated balance sheets. We perform
periodic tests to determine if the VOBA remains recoverable. If we
determine that VOBA is not recoverable, we record a cumulative
charge to the current period.
In connection with the application of pushdown accounting, we
changed our VOBA amortization method such that all VOBA and
negative VOBA balances are amortized in relation to applicable
policyholder liabilities. VOBA and negative VOBA are amortized in
relation to applicable policyholder liabilities. Significant
assumptions that impact VOBA and negative VOBA amortization are
consistent with those that impact the measurement of policyholder
liabilities. See
Note 7 – Deferred Acquisition Costs, Deferred Sales
Inducements and Value of Business Acquired
for further information.
Recognition of Revenues and Related Expenses—Revenues
for universal life-type policies and investment contracts,
including surrender and market value adjustments, costs of
insurance, policy administration, GMDB, GLWB and no-lapse guarantee
charges, are earned when assessed against policyholder account
balances during the period. Interest credited to policyholder
account balances and the change in fair value of embedded
derivatives within fixed indexed annuity contracts is included in
interest sensitive contract benefits on the condensed consolidated
statements of income (loss).
Premiums for long-duration contracts, including products with fixed
and guaranteed premiums and benefits, are recognized as revenue
when due from policyholders. When premiums are due over a
significantly shorter period than the period over which benefits
are provided, such as immediate annuities with life contingencies
(which includes pension group annuities), a deferred profit
liability is established equal to the excess of the gross premium
over the net premium. The deferred profit liability is recognized
in future policy benefits on the condensed consolidated balance
sheets and amortized into income in relation to applicable
policyholder liabilities through future policy and other policy
benefits on the condensed consolidated statements of income
(loss).
All insurance related revenue is reported net of reinsurance
ceded.
Recently Issued Accounting Pronouncements
Insurance – Targeted Improvements to the Accounting for
Long-Duration Contracts (ASU 2020-11, ASU 2019-09, ASU
2018-12)
These updates amend four key areas pertaining to the accounting and
disclosures for long-duration insurance and investment
contracts.
•The
update requires cash flow assumptions used to measure the liability
for future policy benefits to be updated at least annually and no
longer allows a provision for adverse deviation. The remeasurement
of the liability associated with the update of assumptions is
required to be recognized in net income. Loss recognition testing
is eliminated for traditional and limited-payment contracts. The
update also requires the discount rate used in measuring the
liability to be an upper-medium grade fixed-income instrument
yield, which is to be updated at each reporting date. The change in
liability due to changes in the discount rate is to be recognized
in other comprehensive income.
•The
update simplifies the amortization of deferred acquisition costs
and other balances amortized in proportion to premiums, gross
profits, or gross margins, requiring such balances to be amortized
on a constant level basis over the expected term of the contracts.
Deferred costs are required to be written off for unexpected
contract terminations but are not subject to impairment
testing.
•The
update requires certain contract features meeting the definition of
market risk benefits to be measured at fair value. Among the
features included in this definition are GLWB and GMDB riders
attached to our annuity products. The change in fair value of the
market risk benefits is to be recognized in net income, excluding
the portion attributable to changes in instrument-specific credit
risk which is recognized in other comprehensive
income.
•The
update also introduces disclosure requirements around the liability
for future policy benefits, policyholder account balances, market
risk benefits, separate account liabilities, and deferred
acquisition costs. This includes disaggregated rollforwards of
these balances and information about significant inputs, judgments,
assumptions and methods used in their measurement.
We are required to adopt these updates on January 1, 2023. Certain
provisions of the update are required to be adopted on a fully
retrospective basis, while others may be adopted on a modified
retrospective basis. Early adoption is permitted. We are currently
evaluating the impact of this guidance on our condensed
consolidated financial statements.
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. Business Combination
At the closing of the merger with AGM, each issued and outstanding
AHL Class A common share (other than shares held by Apollo, the
Apollo Operating Group (AOG) or the respective direct or indirect
wholly owned subsidiaries of Athene or the AOG) was converted
automatically into 1.149 shares of AGM common shares and any cash
paid in lieu of fractional AGM common shares. In connection with
the merger, AGM issued to AHL Class A common shareholders
158.2 million AGM common shares in exchange for
137.6 million AHL Class A common shares that were issued and
outstanding as of the acquisition date, exclusive of the
54.6 million shares previously held by Apollo immediately
before the acquisition date.
The consideration was calculated based on historical AGM’s December
31, 2021 closing share price multiplied by the AGM common shares
issued in the share exchange, as well as the fair value of
stock-based compensation awards replaced, fair value of warrants
converted to AGM common shares and other equity consideration, and
effective settlement of pre-existing relationships and other
consideration.
The following represents the calculation of
consideration:
|
|
|
|
|
|
(In millions, except exchange ratio and share price
data) |
Consideration |
AHL common shares purchased |
138 |
|
Exchange ratio |
1.149 |
Shares of common stock issued in exchange |
158 |
|
AGM Class A shares closing price |
$ |
72.43 |
|
Total merger consideration at closing |
$ |
11,455 |
|
Fair value of estimated RSUs, options and warrants assumed and
other equity consideration |
699 |
|
Effective settlement of pre-existing relationships |
896 |
|
Total merger consideration |
13,050 |
|
Fair value of AHL common shares previously held by Apollo and other
adjustments |
4,554 |
|
Total AHL equity value held by AGM |
17,604 |
|
Fair value of preferred stock |
2,666 |
|
Noncontrolling interest |
2,276 |
|
Total AHL equity value |
$ |
22,546 |
|
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following represents the calculation of goodwill and fair value
amounts recognized:
|
|
|
|
|
|
(In millions) |
Fair value and goodwill calculation |
Merger consideration |
$ |
13,050 |
|
Fair value of AHL common shares previously held by Apollo and other
adjustments |
4,554 |
|
Total AHL equity value held by AGM |
17,604 |
|
|
|
Assets |
|
Investments |
$ |
175,987 |
|
Cash and cash equivalents |
9,479 |
|
Restricted cash |
796 |
|
Investment in related parties |
33,786 |
|
|
|
Reinsurance recoverable |
4,977 |
|
VOBA |
4,547 |
|
Other assets |
5,779 |
|
Assets of consolidated variable interest entities |
3,635 |
|
Estimated fair value of total assets acquired by AGM |
238,986 |
|
Liabilities |
|
Interest sensitive contract liabilities |
160,248 |
|
Future policy benefits |
47,130 |
|
Long-term debt |
3,295 |
|
|
|
Payables for collateral on derivatives and securities to
repurchase |
7,044 |
|
Other liabilities |
2,443 |
|
Liabilities of consolidated variable interest entities |
461 |
|
Estimated fair value of total liabilities assumed by
AGM |
220,621 |
|
Identifiable net assets |
18,365 |
|
Less: Fair value of preferred stock |
2,666 |
|
Less: Fair value of noncontrolling interests |
2,276 |
|
Estimated fair value of net assets acquired by AGM, excluding
goodwill |
13,423 |
|
Goodwill attributable to AHL |
$ |
4,181 |
|
Included within the above are provisional amounts for (1) VOBA, (2)
interest sensitive contract liabilities, (3) future policy
benefits, and (4) other assets and other liabilities for the
portion of our net assets AGM acquired relating to other
identifiable intangible assets and deferred taxes, based on the
availability of data as of the date the financial statements were
available to be issued. Any adjustment to provisional amounts will
be made prospectively as data becomes available. The income effects
from changes to provisional amounts will be recorded in the period
the adjustment is made, as if the adjustment had been recorded on
the merger date. We expect to finalize pushdown accounting as soon
as practicable but no later than one year from the merger
date.
As part of pushdown accounting, we recorded the calculated goodwill
based on the amount that our AHL equity value to be held by AGM
exceeded the fair value of identifiable net assets less the amounts
attributable to fair values of preferred stock and noncontrolling
interests. Goodwill is primarily attributable to the scale, skill
sets, operations, and synergies that can be achieved subsequent to
the merger. The goodwill recorded is not expected to be deductible
for tax purposes. We incurred transaction costs of $70 million
associated with the merger which were included in policy and other
operating expenses on the consolidated statements of income for the
year ended December 31, 2021.
We also recorded VOBA and other identifiable intangible assets.
Other identifiable intangible assets are included in other assets
on the condensed consolidated balance sheets, as
follows:
|
|
|
|
|
|
|
|
|
Distribution channels |
|
These assets are valued using the excess earnings method, which
derives value based on the present value of the cash flow
attributable to the distribution channels, less returns for
contributory assets. |
Trade name |
|
This represents the Athene trade name and was valued using the
relief-from-royalty method considering publicly available
third-party trade name royalty rates as well as expected premiums
generated by the use of the trade name over its anticipated
life. |
Insurance licenses |
|
Licenses are protected through registration and were valued using
the market approach based on third-party market transactions from
which the prices paid for state insurance licenses could be
derived. |
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The fair value and weighted average estimated useful life of
identifiable intangible assets consists of the
following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
(in millions)
|
|
Weighted average useful life
(in years)
|
VOBA |
$ |
4,547 |
|
|
7 |
Distribution channels |
1,870 |
|
|
18 |
Trade name |
160 |
|
|
20 |
Insurance licenses |
26 |
|
|
Indefinite |
Total |
$ |
6,603 |
|
|
|
3. Investments
AFS Securities—Our
AFS investment portfolio includes bonds, collateralized loan
obligations (CLO), asset-backed securities (ABS), commercial
mortgage-backed securities (CMBS), residential mortgage-backed
securities (RMBS) and redeemable preferred stock. Our AFS
investment portfolio includes related party investments that are
primarily comprised of investments over which Apollo can exercise
significant influence. These investments are presented as
investments in related parties on the condensed consolidated
balance sheets, and are separately disclosed below.
The following table represents the amortized cost, allowance for
credit losses, gross unrealized gains and losses and fair value of
our AFS investments by asset type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
March 31, 2022 |
(In millions) |
Amortized Cost |
|
Allowance for Credit Losses |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
AFS securities |
|
|
|
|
|
|
|
|
|
US government and agencies |
$ |
3,123 |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
(163) |
|
|
$ |
2,961 |
|
US state, municipal and political subdivisions
|
1,209 |
|
|
— |
|
|
— |
|
|
(117) |
|
|
1,092 |
|
Foreign governments |
1,173 |
|
|
(66) |
|
|
11 |
|
|
(107) |
|
|
1,011 |
|
Corporate |
65,935 |
|
|
(55) |
|
|
34 |
|
|
(5,675) |
|
|
60,239 |
|
CLO |
14,282 |
|
|
(18) |
|
|
3 |
|
|
(239) |
|
|
14,028 |
|
ABS |
9,572 |
|
|
(11) |
|
|
4 |
|
|
(281) |
|
|
9,284 |
|
CMBS |
2,883 |
|
|
(6) |
|
|
14 |
|
|
(144) |
|
|
2,747 |
|
RMBS |
6,045 |
|
|
(312) |
|
|
8 |
|
|
(204) |
|
|
5,537 |
|
Total AFS securities |
104,222 |
|
|
(468) |
|
|
75 |
|
|
(6,930) |
|
|
96,899 |
|
AFS securities – related party |
|
|
|
|
|
|
|
|
|
Corporate |
948 |
|
|
— |
|
|
10 |
|
|
(26) |
|
|
932 |
|
CLO |
2,776 |
|
|
(3) |
|
|
2 |
|
|
(43) |
|
|
2,732 |
|
ABS
|
4,705 |
|
|
(17) |
|
|
4 |
|
|
(32) |
|
|
4,660 |
|
Total AFS securities – related party
|
8,429 |
|
|
(20) |
|
|
16 |
|
|
(101) |
|
|
8,324 |
|
Total AFS securities including related party
|
$ |
112,651 |
|
|
$ |
(488) |
|
|
$ |
91 |
|
|
$ |
(7,031) |
|
|
$ |
105,223 |
|
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
December 31, 2021 |
(In millions) |
Amortized Cost |
|
Allowance for Credit Losses |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair
Value |
AFS securities |
|
|
|
|
|
|
|
|
|
US government and agencies |
$ |
231 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
(10) |
|
|
$ |
223 |
|
US state, municipal and political subdivisions |
1,081 |
|
|
— |
|
|
134 |
|
|
(2) |
|
|
1,213 |
|
Foreign governments |
1,110 |
|
|
— |
|
|
35 |
|
|
(17) |
|
|
1,128 |
|
Corporate |
62,817 |
|
|
— |
|
|
4,060 |
|
|
(651) |
|
|
66,226 |
|
CLO |
13,793 |
|
|
— |
|
|
44 |
|
|
(185) |
|
|
13,652 |
|
ABS |
8,890 |
|
|
(17) |
|
|
151 |
|
|
(35) |
|
|
8,989 |
|
CMBS |
2,764 |
|
|
(3) |
|
|
56 |
|
|
(59) |
|
|
2,758 |
|
RMBS |
5,772 |
|
|
(103) |
|
|
326 |
|
|
(25) |
|
|
5,970 |
|
Total AFS securities |
96,458 |
|
|
(123) |
|
|
4,808 |
|
|
(984) |
|
|
100,159 |
|
AFS securities – related party |
|
|
|
|
|
|
|
|
|
Corporate |
842 |
|
|
— |
|
|
19 |
|
|
(2) |
|
|
859 |
|
CLO |
2,573 |
|
|
— |
|
|
5 |
|
|
(29) |
|
|
2,549 |
|
ABS |
6,986 |
|
|
— |
|
|
61 |
|
|
(53) |
|
|
6,994 |
|
Total AFS securities – related party |
10,401 |
|
|
— |
|
|
85 |
|
|
(84) |
|
|
10,402 |
|
Total AFS securities including related party |
$ |
106,859 |
|
|
$ |
(123) |
|
|
$ |
4,893 |
|
|
$ |
(1,068) |
|
|
$ |
110,561 |
|
The amortized cost and fair value of AFS securities, including
related party, are shown by contractual maturity
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
March 31, 2022 |
(In millions) |
Amortized Cost |
|
Fair Value |
AFS securities |
|
|
|
Due in one year or less |
$ |
1,047 |
|
|
$ |
1,041 |
|
Due after one year through five years |
9,154 |
|
|
8,734 |
|
Due after five years through ten years |
18,960 |
|
|
17,605 |
|
Due after ten years |
42,279 |
|
|
37,923 |
|
CLO, ABS, CMBS and RMBS |
32,782 |
|
|
31,596 |
|
Total AFS securities |
104,222 |
|
|
96,899 |
|
AFS securities – related party |
|
|
|
|
|
|
|
Due after one year through five years |
24 |
|
|
23 |
|
Due after five years through ten years |
776 |
|
|
752 |
|
Due after ten years |
148 |
|
|
157 |
|
CLO and ABS |
7,481 |
|
|
7,392 |
|
Total AFS securities – related party
|
8,429 |
|
|
8,324 |
|
Total AFS securities including related party |
$ |
112,651 |
|
|
$ |
105,223 |
|
Actual maturities can differ from contractual maturities as
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Unrealized Losses on AFS Securities—The
following summarizes the fair value and gross unrealized losses for
AFS securities, including related party, for which an allowance for
credit losses has not been recorded, aggregated by asset type and
length of time the fair value has remained below amortized
cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
March 31, 2022 |
|
Less than 12 months |
|
12 months or more |
|
Total |
(In millions) |
Fair Value |
|
Gross Unrealized Losses |
|
Fair Value |
|
Gross Unrealized Losses |
|
Fair Value |
|
Gross Unrealized Losses |
AFS securities |
|
|
|
|
|
|
|
|
|
|
|
US government and agencies
|
$ |
2,919 |
|
|
$ |
(163) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,919 |
|
|
$ |
(163) |
|
US state, municipal and political subdivisions
|
1,080 |
|
|
(117) |
|
|
— |
|
|
— |
|
|
1,080 |
|
|
(117) |
|
Foreign governments |
951 |
|
|
(107) |
|
|
— |
|
|
— |
|
|
951 |
|
|
(107) |
|
Corporate |
59,336 |
|
|
(5,674) |
|
|
— |
|
|
— |
|
|
59,336 |
|
|
(5,674) |
|
CLO |
12,066 |
|
|
(214) |
|
|
— |
|
|
— |
|
|
12,066 |
|
|
(214) |
|
ABS |
6,098 |
|
|
(247) |
|
|
— |
|
|
— |
|
|
6,098 |
|
|
(247) |
|
CMBS
|
2,360 |
|
|
(134) |
|
|
— |
|
|
— |
|
|
2,360 |
|
|
(134) |
|
RMBS
|
3,677 |
|
|
(157) |
|
|
— |
|
|
— |
|
|
3,677 |
|
|
(157) |
|
Total AFS securities
|
88,487 |
|
|
(6,813) |
|
|
— |
|
|
— |
|
|
88,487 |
|
|
(6,813) |
|
AFS securities – related party |
|
|
|
|
|
|
|
|
|
|
|
Corporate |
775 |
|
|
(26) |
|
|
— |
|
|
— |
|
|
775 |
|
|
(26) |
|
CLO |
2,069 |
|
|
(38) |
|
|
— |
|
|
— |
|
|
2,069 |
|
|
(38) |
|
ABS
|
1,521 |
|
|
(28) |
|
|
— |
|
|
— |
|
|
1,521 |
|
|
(28) |
|
Total AFS securities – related party
|
4,365 |
|
|
(92) |
|
|
— |
|
|
— |
|
|
4,365 |
|
|
(92) |
|
Total AFS securities including related party
|
$ |
92,852 |
|
|
$ |
(6,905) |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
92,852 |
|
|
$ |
(6,905) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
December 31, 2021 |
|
Less than 12 months |
|
12 months or more |
|
Total |
(In millions) |
Fair Value |
|
Gross Unrealized Losses |
|
Fair Value |
|
Gross Unrealized Losses |
|
Fair Value |
|
Gross Unrealized Losses |
AFS securities |
|
|
|
|
|
|
|
|
|
|
|
US government and agencies |
$ |
164 |
|
|
$ |
(8) |
|
|
$ |
22 |
|
|
$ |
(2) |
|
|
$ |
186 |
|
|
$ |
(10) |
|
US state, municipal and political subdivisions |
122 |
|
|
(2) |
|
|
1 |
|
|
— |
|
|
123 |
|
|
(2) |
|
Foreign governments |
387 |
|
|
(17) |
|
|
1 |
|
|
— |
|
|
388 |
|
|
(17) |
|
Corporate |
18,995 |
|
|
(523) |
|
|
863 |
|
|
(59) |
|
|
19,858 |
|
|
(582) |
|
CLO |
7,685 |
|
|
(124) |
|
|
1,537 |
|
|
(35) |
|
|
9,222 |
|
|
(159) |
|
ABS |
4,038 |
|
|
(16) |
|
|
165 |
|
|
(12) |
|
|
4,203 |
|
|
(28) |
|
CMBS |
880 |
|
|
(29) |
|
|
177 |
|
|
(22) |
|
|
1,057 |
|
|
(51) |
|
RMBS |
437 |
|
|
(9) |
|
|
274 |
|
|
(5) |
|
|
711 |
|
|
(14) |
|
Total AFS securities |
32,708 |
|
|
(728) |
|
|
3,040 |
|
|
(135) |
|
|
35,748 |
|
|
(863) |
|
AFS securities – related party
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
313 |
|
|
(2) |
|
|
— |
|
|
— |
|
|
313 |
|
|
(2) |
|
CLO |
1,245 |
|
|
(20) |
|
|
163 |
|
|
(3) |
|
|
1,408 |
|
|
(23) |
|
ABS |
3,801 |
|
|
(52) |
|
|
13 |
|
|
(1) |
|
|
3,814 |
|
|
(53) |
|
Total AFS securities – related party
|
5,359 |
|
|
(74) |
|
|
176 |
|
|
(4) |
|
|
5,535 |
|
|
(78) |
|
Total AFS securities including related party
|
$ |
38,067 |
|
|
$ |
(802) |
|
|
$ |
3,216 |
|
|
$ |
(139) |
|
|
$ |
41,283 |
|
|
$ |
(941) |
|
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following summarizes the number of AFS securities that were in
an unrealized loss position, including related party, for which an
allowance for credit losses has not been recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
March 31, 2022 |
|
Unrealized loss position |
|
Unrealized loss position 12 months or more |
AFS securities |
8,329 |
|
|
— |
|
AFS securities – related party |
106 |
|
|
— |
|
The unrealized losses on AFS securities can primarily be attributed
to changes in market interest rates since application of pushdown
accounting or acquisition. We did not recognize the unrealized
losses in income as we intend to hold these securities and it is
not more likely than not we will be required to sell a security
before the recovery of its amortized cost.
Allowance for Credit Losses—The
following table summarizes the activity in the allowance for credit
losses for AFS securities by asset type:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
Three months ended March 31, 2022 |
|
|
|
Additions |
|
Reductions |
|
|
|
|
(In millions) |
January 1, 2022 |
|
Initial credit losses |
|
Initial credit losses on PCD securities |
|
Securities sold during the period |
|
|
|
|
|
|
|
Additions (reductions) to previously impaired
securities |
|
Ending Balance |
AFS securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign governments |
$ |
— |
|
|
$ |
66 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
$ |
— |
|
|
$ |
66 |
|
Corporate |
— |
|
|
55 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
55 |
|
CLO |
— |
|
|
18 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
18 |
|
ABS |
5 |
|
|
5 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
1 |
|
|
11 |
|
CMBS |
— |
|
|
6 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
6 |
|
RMBS |
306 |
|
|
9 |
|
|
— |
|
|
(8) |
|
|
|
|
|
|
|
|
5 |
|
|
312 |
|
Total AFS securities |
311 |
|
|
159 |
|
|
— |
|
|
(8) |
|
|
|
|
|
|
|
|
6 |
|
|
468 |
|
AFS securities – related party |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLO |
— |
|
|
3 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
3 |
|
ABS |
— |
|
|
17 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
17 |
|
Total AFS securities – related party |
— |
|
|
20 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
20 |
|
Total AFS securities including related party |
$ |
311 |
|
|
$ |
179 |
|
|
$ |
— |
|
|
$ |
(8) |
|
|
|
|
|
|
|
|
$ |
6 |
|
|
$ |
488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor |
|
Three months ended March 31, 2021 |
|
|
|
Additions |
|
Reductions |
|
|
|
|
(In millions) |
Beginning balance |
|
Initial credit losses |
|
Initial credit losses on PCD securities |
|
Securities sold during the period |
|
|
|
|
|
|
|
Additions (reductions) to previously impaired
securities |
|
Ending Balance |
AFS securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
$ |
6 |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
(2) |
|
|
|
|
|
|
|
|
$ |
2 |
|
|
$ |
8 |
|
CLO |
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
(1) |
|
|
— |
|
ABS |
6 |
|
|
5 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
— |
|
|
11 |
|
CMBS
|
10 |
|
|
2 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
2 |
|
|
14 |
|
RMBS
|
80 |
|
|
— |
|
|
2 |
|
|
(3) |
|
|
|
|
|
|
|
|
(1) |
|
|
78 |
|
Total AFS securities |
103 |
|
|
9 |
|
|
2 |
|
|
(5) |
|
|
|
|
|
|
|
|
2 |
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFS securities - related party, CLO |
1 |
|
|
— |
|
|
— |
|
|
(1) |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AFS securities including related party
|
$ |
104 |
|
|
$ |
9 |
|
|
$ |
2 |
|
|
$ |
(6) |
|
|
|
|
|
|
|
|
$ |
2 |
|
|
$ |
111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATHENE HOLDING LTD.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Net Investment Income—Net
investment income by asset class, including related party, consists
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
|
|
|
(In millions) |
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
|
|
|
|
AFS securities |
$ |
876 |
|
|
|
$ |
860 |
|
|
|
|
|
Trading securities |
63 |
|
|
|
63 |
|
|
|
|
|
Equity securities |
15 |
|
|
|
4 |
|
|
|
|
|
Mortgage loans |
237 |
|
|
|
178 |
|
|
|
|
|
Investment funds |
304 |
|
|
|
442 |
|
|
|
|
|
Funds withheld at interest |
337 |
|
|
|
206 |
|
|
|
|
|
Other |
42 |
|
|
|
64 |
|
|
|
|
|
Investment revenue |
1,874 |
|
|
|
1,817 |
|
|
|
|
|
Investment expenses |
(191) |
|
|
|
(148) |
|
|
|
|
|
Net investment income |
$ |
1,683 |
|
|
|
$ |
1,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Related Gains (Losses)—Investment
related gains (losses) by asset class, including related party,
consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Predecessor |
|
|
|
|
(In millions) |
Three months ended March 31, 2022 |
|
|
Three months ended March 31, 2021 |
|
|
|
|
AFS securities |
|
|
|
|
|
|
|
|
Gross realized gains on investment activity |
$ |
103 |
|
|
|
$ |
73 |
|
|
|
|
|
Gross realized losses on investment activity |
(410) |
|
|
|
(143) |
|
|
|
|
|
Net realized investment losses on AFS securities |
(307) |
|
|
|
|