Athene Investor Day 2015 - Apollo Alternative AssetsKFSL_Athene_Investor_Day_20… · Athene...
Transcript of Athene Investor Day 2015 - Apollo Alternative AssetsKFSL_Athene_Investor_Day_20… · Athene...
Athene Holding Ltd. Investor Day
October 29, 2015
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Disclaimer
This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security of Athene Holding Ltd. (“Athene”).
Certain information contained herein may be “forward – looking” in nature. These statements include, but are not limited to, discussions related to Athene’s expectations regarding the performance of its business, its liquidity and capital resources and the other non‐historical statements. These forward‐looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this presentation, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions are intended to identify forward‐looking statements. Although management believes that the expectations reflected in these forward‐looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions. Due to these various risks, uncertainties and assumptions, actual events or results or the actual performance of Athene may differ materially from those reflected or contemplated in such forward‐looking statements. We undertake no obligation to publicly update or review any forward‐looking statements, whether as a result of new information, future developments or otherwise.
Information contained herein may include information respecting prior performance of Athene. Information respecting prior performance, while a useful tool, is not necessarily indicative of actual results to be achieved in the future, which is dependent upon many factors, many of which are beyond the control of Athene. The information contained herein is not a guarantee of future performance by Athene, and actual outcomes and results may differ materially from any historic, pro forma or projected financial results indicated herein. Certain of the financial information contained herein is unaudited or based on the application of non‐GAAP financial measures. These non‐GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP. Furthermore, certain financial information is based on estimates of management. These estimates, which are based on the reasonable expectations of management, are subject to change and there can be no assurance that they will prove to be correct. The information contained herein does not purport to be all‐inclusive or contain all information that an evaluator may require in order to properly evaluate the business, prospects or value of Athene. AAA or Athene does not have any obligation to update this presentation and the information may change at any time without notice.
Certain of the information used in preparing this presentation was obtained from third parties or public sources. No representation or warranty, express or implied, is made or given by or on behalf of Athene or any other person as to the accuracy, completeness or fairness of such information, and no responsibility or liability is accepted for any such information.
Any target IRR is based upon estimates and assumptions that a potential investment will yield a return equal or greater than the target. There can be no assurance that Athene’s targets will be realized or that Athene will be successful in finding investment opportunities that meet these anticipated return parameters. Athene’s target of potential return from a potential investment is not a guarantee as to the quality of the investment or a representation as to the adequacy of Athene’s methodology for estimating returns. Accordingly, the target return should not be used as a primary basis for an investor’s decision to invest. The targeted IRR information is presented gross and does not reflect the effect of management fees, incentive compensation, certain expenses, and taxes.
It may not be possible to directly invest in one or more of the indices and the holdings of any investment made by Athene may differ markedly from the holdings of any such index in terms of level of diversification, types of securities, or assets represented and other significant factors. Indices are unmanaged, do not charge any fees or expenses, assume reinvestment of income, and do not employ special investment techniques such as leveraging or short selling. No such index is indicative of the future results of any Athene portfolio.
This document is not intended to be, nor should it be construed or used as, financial, legal, tax, insurance or investment advice. There can be no assurance that Athene will achieve its objectives. Past performance is not indicative of future success.
Please refer to Apollo Global Management, LLC’s last periodic report, which is publicly available at www.sec.gov for the definition of “Assets Under Management” or “AUM”
All information is as of the dates indicated herein.
Management Speakers
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Jim Belardi Grant Kvalheim Chairman, Chief Executive Officer and Chief Investment Officer, Athene Holding Ltd. (“Athene”) and Athene Asset Management, L.P. (“AAM”) 29 years of industry experience Past experience includes 20 years at SunAmerica, including 13 years at SunAmerica Life Insurance Company and 7 years as Chief Investment Officer of AIG Retirement Services Inc., responsible for a $250 billion invested asset portfolio In 1994, Jim was President of SunAmerica when the FA‐Backed note market was created (AIG SunAmerica was one of the largest FA‐Backed note issuers)
Chief Executive Officer of Athene USA 33 years of financial services industry experience Past experience includes six years at Barclays Capital where he served as Global Head of Credit Trading & Global Head of Investment Banking, and ultimately as Co‐President Prior to joining Barclays, Grant was a member of the Corporate and Investment Bank Executive Management Committee at Deutsche Bank as Head of Global Debt Origination
Bill Wheeler President of Athene Holding 28 years of financial services industry experience Past experience includes 18 years at MetLife Inc., most recently as the President of the Americas, overseeing three major divisions, 26,000 employees and 80% of MetLife’s overall financial results Prior to being President of Americas at MetLife, Bill held various roles including EVP and Chief Financial Officer, and prior to the CFO role, oversaw product management and marketing for the individual business and financial reporting for the institutional business. In addition, Bill served as Treasurer where he played a key role in preparing MetLife to become a public company
Chip Smith President of Athene USA and Interim CFO of Athene Holding 27 years of financial services industry experience Prior to its acquisition by Athene, Chip was President and Chief Executive Officer of Liberty Life and affiliated companiesHe also served as Liberty’s Vice President, Treasurer and Chief Financial Officer and held various positions in Finance including Controller Prior to Liberty Life, Chip worked for Ernst & Young Chip is a Fellow of the Life Management Institute (FLMI) and is a Certified Public Accountant.
Table of Contents
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I. Introduction to Athene
II. Overview of Athene’s Liabilities
III. Overview of Athene’s Investment Portfolio
IV. Overview of Capitalization & Risk Management
V. Financial Overview
VI. Growth
VII. Conclusion
VIII. Appendix
Introduction to Athene
Athene's Investment Thesis
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Highly‐visible, spread‐based earnings stream
Differentiated investment strategy
through AAM & ApolloEfficient corporate platform to underwrite incremental business at
minimal cost
Strong, well‐capitalized balance sheet with no financial leverage
Accomplished and proven management
team
Ideal multi‐channel platform to source long‐term, low‐cost liabilities
Athene believes it has built an efficient multi‐channel platform to capitalize on attractive market trends and generate a long‐term, highly visible earnings stream for its shareholders
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015USD 10y Treasury BAML US Corporate BBB Option‐Adjusted Spread
2.03 %2.37 %
Athene’s Opportunistic Market Entry
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When we were founded in 2009, life insurance was an industry in distress:
Legacy asset & liability issues
Prohibitively expensive equity
Regulatory change
Shrinking market supply
At the same time, turmoil in the financial markets was driving demand for guaranteed‐return products, just as traditional life insurers were pulling back from the space
We capitalized on this market dislocation to found Athene at a time when funding costs were low and asset spreads were high
10‐Year US Treasury Yields vs. Asset Spreads
Our opportunistic founding allowed us to aggregate substantial blocks of long‐duration, low‐cost liabilities which serve as the foundation of our spread‐based business model
Against our low cost liabilities, we have invested in an attractive cash flow‐matched investment portfolio to generate a long‐term, persistent net spread and a significant base of earnings for our Company going forward
Attractive cost of funding allows us to be patient, disciplined and opportunistic in our investment philosophy – our asset allocation is driven by market opportunity
Since our opportunistic founding, we have capitalized on favorable trends to develop into a sustainable franchise that will perform across market environments
Athene founded in July 2009
Source: Bloomberg
Attractive Market Trends Supported Athene’s Ability to Scale
Aging American population driving demand for tax‐efficient retirement savings products
Baby boomers remain underprepared to fund retirement
Supply coming out of the market due to post‐crisis regulatory and rate environment
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Market Backdrop
(1) Source: U.S. Census Bureau 2014(2) Source: Pew Research Center(3) Based on household retirement account ownership for all heads of households aged 25 – 64; National Institute on Retirement Security 2013
Aging U.S. Population (1) Insufficient Retirement Savings (3)
10,000 people will turn 65 in the U.S. every day for the next 15 years(2)
45% of all working‐age households do not currently own assets in a retirement account –savings “catch up” will be necessary for retirement
Retirement Account55%
NoRetirement Account45%65 70
85
100 100110 115
12% 13%
17%
21% 22% 22% 24%
0%
5%
10%
15%
20%
25%
0
20
40
60
80
100
120
140
2000 2010 2020 2030 2040 2050 2060
% of Total U
.S. Pop.
Millions of P
eople Ag
e 65
+
Number of People Age 65+ % of Total U.S. Pop.
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Leading Fixed Annuity Players by Reserves ($ billions) (3)
Note: past performance is not indicative of future returns. See target return disclaimer on page 2.(1) Data as of 6/30/2015 unless stated otherwise (2) Represent all money paid into new and existing insurance contracts, including internal transfers to AAIA, AADE and AANY(3) Includes statutory reserve contracts for individual fixed and individual indexed annuities only (i.e. excludes payout annuities and other). As such will not tie to total reserve figure. Data as of 2014 year end per SNL.(4) GAAP figures in this presentation represent management view GAAP unless otherwise noted; see Appendix for further detail.(5) Company Action Level RBC.
Scaled and Growing Platform (1)
Sustainable franchise with multiple channels to source long‐term, low‐cost liabilities
Scaled and efficient platform capable of onboarding incremental business at limited cost
4th largest fixed annuity and 2nd largest fixed index annuity platform by reserves(3)
Generates income by earning a spread on a cash flow‐matched asset and liability portfolio
Average operating ROE from 2013‐YTD 6/30/15 of 24%
Run‐rate ROE targets of 15%+
Onshore RBC of 529%(5)
$60.9 billion in invested assets(4) and GAAP equity of $5.3 billion (excluding AOCI)
2014 retail sales of $2.6 billion(2)
A‐ financial strength rating
1,100 employees and 769,000 policies
Well Capitalized & Scaled Annuity Writer
We are one of the largest and most profitable fixed annuity platforms in the United States
$ 74
$ 67
$ 56
$ 45
$ 39
$ 31 $ 28
AIG Allianz NY Life Athene TIAA Cref American Equity Life Jackson
Best‐in‐Class Business Model
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Liabilities(2‐3% Run‐Rate Cost)
Assets(4‐5% Run‐Rate NIER)
Underwriting focus on:
Risk‐adjusted absolute and relative cost of funds
Duration
Capital intensity
Underwriting focus on:
Asset allocation for outperformance
Strong downside protection
Cash‐flow matched profile
Long‐term asset performance – hold‐to‐maturity rather than mark‐to‐market focused
Capitalize on strategic relationship with Apollo and AAM
Take advantage of market dislocations
Risk Management Embed risk management in all
facets of our operations
Manage our business on a comprehensive economic capital basis to withstand severe adverse shocks
Ensure we are appropriately capitalized to take advantage of opportunities in a downturn
Our multichannel distribution platform, differentiated investment strategy, and scalable and efficient corporate structure allow for superior shareholder returns across market environments
Organic Channels Inorganic Channels
Retail Flow Reinsurance InstitutionalAcquisitions and
Block Reinsurance Significant growth driver, with
sales through August 2015 of $1.8 billion (1)
Provide high quality products and service to our policyholders and maintain appropriate financial protection over the life of their policies
Licensed to sell products in all 50 states(2) and the District of Columbia
Target writing capital‐efficient retail product at today’s low rates
Reinsurance to ALRe from third parties (either directly to ALRe or via Athene's U.S. entities)
Reinsure MYGAs, FIAs and payout annuities
Opportunistically issue funding agreements to institutional fixed income investors
Products are scalable without any ability to surrender prior to maturity
Inaugural offering in October 2015 ‐ $250 million 3‐year issuance
Demonstrated transaction expertise; we have completed five strategic transactions since formation
Target acquiring businesses at a discount to book value and using part of this discount to ‘subsidize’ cost of liabilities (assets received > liabilities assumed)
Flexible Multi‐Channel Distribution Platform
11(1) Represents all money paid into new and existing insurance contracts, including internal transfers(2) Products sold through AANY in the state of New York
Our platform supports opportunistic origination across market environments, which better enables us to achieve stable asset growth while maintaining strong levels of profitability
We evaluate liabilities across each of the below channels based on: (1) the upfront cost of acquiring the liability, and (2) the liability’s ongoing cost of crediting
Attractive Low Risk Liabilities
Total GAAP reserves $60.0 billionWeighted average life 9.8 years
Cost of Funds(5) 2.7% (~60bps spread to 10 Year Treasury)
% MVA protected(2)(3) 71%% Surrender charge protected(2)(4) 84%Aggregate surrender charge protection(2) 8.1%Weighted average surrender charge period remaining(2) 5 years
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Conservative underwriting strategy focused on sourcing low‐cost, stable policyholder obligations – we are focused on risk‐adjusted profitability, duration, and capital intensity rather than volume or market share growth
For the eight months ending August 31, 2015, 40% of our sales contain an income rider (only 20% of sales are guaranteed income riders)
Overview of GAAP LiabilitiesOverview of GAAP Liabilities
Note: As of 6/30/15 unless otherwise noted(1) Other includes funding agreements & retained life business(2) Based on fixed index annuities and fixed annuities only(3) Refers to the % of account value that is protected by MVA(4) Refers to the % of account value that is in the surrender charge period(5) YTD 6/30/15. Defined as GAAP cost of crediting, GAAP DAC/DSI/VOBA amortization, GLWB and GMDB change in reserves, and other divided by average GAAP reserves.
Preferred structural features:
Low capital strain
Long‐duration
Surrender protected
Low cash cost (upfront acquisition costs + ongoing crediting rates)
Conservative guarantees
Fixed Indexed Annuities
66%
Fixed Rate Annuities
19%
Single Premium Immediate
Annuites/Payout10%
Other¹5%
B++ A‐ A
IMO IMO
FABN
FABN
FinancialInstitutions
IMO
Access to larger money banks and wire houses Increased IMO penetration
Access to the FI channel Access to the FABN market Third party reinsurance
FinancialInstitutions
FinancialInstitutions
Current
Near‐Term Liability Growth Drivers
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The $1.3 billion of capital we raised in 2014 has positioned the Company for continued growth in the near‐term
Organic Growth: Illustrative Long‐Term Opportunity Sizing
Opportunistic Growth
We are holding excess capital to take advantage of attractive inorganic growth opportunities as they arise
Growth Opportunities
Reinsurance
Acquisitions
Pension buy‐outs
NAIC 151%NAIC 2
36%
NAIC 36%
NAIC 4, 5, 62%
Other (Alts/Equities)
6%
Corporate & Gov't49%
ABS & CLO14%
RMBS13%
Mortgage Loans10%
Alterna ves6%
CMBS4%
Cash & Equivalents4%
Policy Loans & Other1%
Diversified Asset Portfolio
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We have constructed a diversified asset portfolio through disciplined underwriting and an intense focus on risk‐management
Asset management strategy focused on capturing incremental returns without assuming incremental credit risk Downside protection‐focused, with asset allocation informed by rigorous stress testing
Focus on underwriting high quality assets and capturing incremental spread by assuming incremental liquidity and complexity risk rather than credit risk
87% of total portfolio rated NAIC 1 or 2(1) and 94% of fixed income investments rated NAIC 1 or 2 (highest designation)
Maintain enough portfolio liquidity to opportunistically capitalize on market dislocations
Portfolio NAIC Ratings(1)
Note: Data as of 6/30/15.(1) CML mapped to NAIC ratings based on underlying capital charges. CMLs designated CM1 and CM2 are included with NAIC 2 assets, CMLs designated CM3 and CM4 are included with NAIC 3 assets, and CMLs
designated CM6 are mapped to NAIC 6. For average calculation, alternatives and equities mapped to NAIC 6.
Average NAIC Rating: 1.8
Average NAIC Rating: 1.8
Portfolio Mix
Differentiated Asset Management Capabilities
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Athene’s investment portfolio is managed by Athene Asset Management, L.P. (“AAM”), a subsidiary of Apollo Global Management,LLC (together with its affiliates, “Apollo”)
AAM was founded for the express purpose of providing a full suite of investment management services to Athene
100+ person team of dedicated investment and operations professionals led by Jim Belardi, former CIO of $250bn AIG Retirement Services portfolio
Source of strategic advantage as it provides access to Apollo's global scale, 300+ Apollo investment professionals, and the infrastructure services of a ~$162 billion asset manager
As of 6/30/2015 AAM manages 100% of Athene’s assets, of which it directly invests ~75% with its in‐house investment team (primarily into investment grade credit and other structured assets)
The remaining ~25% of Athene’s investment portfolio is sub‐advised by Apollo or invested in Apollo funds. The majority of the assets Apollo sub‐advises are invested in high‐quality credit securities, with a small portion opportunistically invested into various Apollo funds that manage higher‐yielding strategies
AAM‐Managed~75%
Subadvised and Apollo
Funds~25%
Total Athene Portfolio Subadvised and Apollo Fund Asset Composition ($ billion)Value‐Oriented IG Debt $8.1Yield‐Oriented Non‐IG Debt 0.5Real Estate Debt / Mezz 3.4Real Estate Equity 0.4Amerihome 0.2Midcap 0.5Partnerships 1.2Fixed Income Like 0.3Natural Resources 0.2CLO Equity 0.4AAA Contributed Assets 0.5Public Positions in Run‐Off ~70%Private Positions ~30%
Total $14.4
Overview of Athene’s Structure
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AGM (insurance holding company)
$114 billion
45% voting control(2); ~10%+ ownership(1)
Onshore & Offshore Insurance Subsidiaries
Athene Asset Management
Apollo Funds in Credit
~$120 billion AUM
Apollo Funds inEquity
~$43 billion AUM
55% voting control; ~90% ownership
Non-Apollo Shareholders
And ManagementApollo Global Management, LLC
(“Apollo”)(Insurance Holding Company)
~$162 billion AUM
Investment Management Agreement
We benefit from long‐term shareholders who are committed to Athene and have invested capital on multiple occasions
Apollo’s relationship with Athene is long‐term focused – not structured through a private equity fund with a finite life and short‐term investment horizon
As an insurance holding company, Apollo and its founders (controlling persons) are subject to regulatory oversight
No changes are expected to Apollo’s relationship with Athene at IPO
Note: Apollo AUM figures as of 6/30/2015. Please refer to Apollo Global Management, LLC’s last periodic report, which is publicly available at www.sec.gov for the definition of “Assets Under Management” or “AUM”(1) The approximate 10%+ ownership reflects projected expected economic ownership from receipt of shares upon realization of carried interest from AP Alternative Assets L.P. (“AAA”), and other transactions. If the realization of carried interest and other transactions are settled in cash instead of shares, the ownership percentage could be lower. (2) Class B shares own 45% voting rights in aggregate. Apollo votes the entire Class B block as a fiduciary.
506% 529%
380%
472%
YE 2014 Q2 2015AUSA RBC Monoline Peer Average (2) Large Diversified Peer Average (3)
193% 197%
261%
YE 2013 YE 2014 Q2 2015
We are well capitalized, which provides a competitive advantage and is instrumental for future rating actions
Opportunistically holding excess capital to take advantage of dislocations
No financial leverage; no surplus notes; no meaningful economic exposure to captives(1)
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Strong Capital Position and Financial Flexibility
Athene USA Risk Based Capital (Company Action Level RBC)
(1) Athene assumed one captive, Athene Re IV, in connection with the acquisition of Aviva USA. The captive supports the AmerUs Regulatory Closed Block and is backed by an LOC from a A+ rated Bank and has stop loss backing by Global Atlantic
(2) Monoline peer average includes American Equity and Fidelity & Guaranty. RBC is disclosed annually.(3) Large Diversified Peer Average includes companies that aren’t necessarily comparable due to line of business differences. Diversified Peers include Prudential, Principal, Lincoln, Unum, Torchmark, Genworth, CNO, Primerica,
Stancorp and Symetra,. RBC is disclosed annually.(4) BSCR has been adjusted for anticipation of future regulatory changes. The BSCR model provides a method for determining an insurer’s capital requirements by taking into account the risk characteristics of different aspects of
the insurer’s business. The BSCR formula establishes capital requirements for fixed income investment risk, equity investment risk, interest rate risk, premium risk, reserve risk, credit risk, and operational risk. For each category, the capital requirement is determined by applying factors to items such as assets, premiums, reserves and amounts at risk with higher factors applied to items with greater underlying risk and lower factors for less risky items. The minimum requirement is 100% and Athene targets maintaining a minimum ratio of 150% internally.
Q2 2015
Athene Holding Consolidated ‐ %
Annuity Monoline Peer Average(2) 21.5%
Large Diversified Peer Average(3) 30.1%
ALRe Bermuda Solvency Capital Requirement (BSCR) 4
GAAP Financial Leverage Ratio vs. Peer Averages (Debt / Total Capital)
N/AN/A
Accomplished and Proven Management Team
Name Experience Years of Experience
Jim BelardiChairman, CEO and CIO, Athene Holding
Prior to founding Athene and AAM, President of SunAmerica Life Insurance Company and Chief Investment Officer of AIG Retirement Services, Inc
Substantial industry experience as well as a demonstrated track record29
Bill Wheeler President, Athene Holding
For the past 4 years acted as the President of Americas at MetLife Inc., prior to this role he led MetLife’s Finance and Accounting organization as the Executive Vice President and Chief Financial Officer from 2003 to 2011
28
Grant KvalheimCEO, Athene USA
Prior to joining Athene, Co‐President of Barclays Capital from September 2005 until the end of 2007 Joined Barclays in 2001 as Global Head of Credit Products and assumed responsibility for Investment
Banking in late 200133
Marty Klein(1)CFO, Athene Holding
Prior to joining Athene, Chief Financial Officer at Genworth Financial from 2011 until October 2015. In addition to leading Finance, Marty also previously served as Acting CEO and President of Genworth 32
Guy (Chip) SmithPresident, Athene USA
Prior to joining Athene, President and Chief Executive Officer of Liberty Life and affiliated companies from April 2010 until its acquisition by Athene in April 2011 and before that, Vice President, Treasurer and Chief Financial Officer.
27
Steve CernichEVP Corporate Development, Athene Holding
Prior to joining Athene, Chief Risk Management Officer and Executive Vice President for Capital Assurance Corporation 30
Thomas DaulaChief Risk Officer, Athene Holding
Prior to joining Athene, Chief Risk Officer for UBS Investment Bank from June 2008 until 2011 and Morgan Stanley from April 2005 until February 2008 21
Mike DowningChief Actuary, Athene Holding(2)
Prior to joining Athene, worked at Allstate from 2008 to 2014 as Vice President and subsequently Senior Vice President of Inforce and Risk Management 21
18(1) Marty will start as CFO of Athene Holding on November 9, 2015(2) Mike was previously Chief Actuary of Athene USA, but will be Chief Actuary of Athene Holding effective December 9, 2015.
Our Path to Growth
Growing aging population
Demand for tax efficient products
Increased competition across the
market requires a unique corporate
business model to grow and capitalize
on the long‐term macro trends
Increasing Market Demand
OurCompetitive Advantage
Plan for Growth
Ideal multi‐channel distribution platform to capitalize on market
trendsBest in class fixed annuity underwriting & investment
capabilities
Industry leading mangement team
Efficient platform to underwrite incremental business at minimal
cost
Continue organic growth by expanding retail, flow reinsurance and institutional channels
Target run‐rate ROE of 15%+
Extend & expand into other spread‐based products
Pursue attractive acquisitions and apply our proven asset redeployment strategy
Expand international presence
Leverage our unique relationship with Apollo & AAM to achieve superior returns
Capitalize on market dislocations to source attractive investment opportunities
Maintain risk management discipline
Strong, well capitalized balance sheet with no financial leverage
Accomplished M&A model
Relationship with AAM, as well access to Apollo, both providing extensive
asset management expertise
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We believe we are well‐positioned for sustained growth, and our efficient platform is designed for future balance sheet growth and asset optimization to translate directly into incremental earnings
Note: see target return disclaimer on page 2.
Overview of Athene’s Liabilities
Opportunistic Acquirer of Liabilities Legacy insurance companies saddled by expensive product written in the early 2000s and unable to generate adequate returns
against these liabilities as interest rates collapsed
We entered the market at a favorable point in the cycle, allowing us to acquire liabilities at a discount to book value and aggregate funding at an attractive cost (due to low “marked” cost of the liabilities)
We have taken advantage of the current interest rate environment to source a long‐term, low‐cost, surrender‐protected liability portfolio
Source: LIMRA. 21
$14 $23 $27 $25 $25 $27 $30 $32
$32
$34 $39
$48
$75
$65
$53 $53
$48
$82
$81
$50
$48
$38 $46
$48
$89 $88
$80
$78 $73
$109 $111
$82 $80 $72
$85
$96
–
$20
$40
$60
$80
$100
$120
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total A
nnuity Sales in
the U.S. ($
in billions)
0%
1%
2%
3%
4%
5%
6%
10 Year T
reasury Ra
te
Athene Inception
Acquired Presidential
Life
Acquired AvivaUSA
Indexed Fixed 10 Year Treasury
Acquired Investors Insurance
Acquired Liberty Life
Overview of Athene’s Liability Philosophy
22
Conservative underwriting strategy focused on sourcing low‐cost, stable policyholder obligations – we are focused on profitability rather than volume or market share growth
We have been able to acquire liabilities at a discount to book value and use part of this discount to ‘subsidize’ the cost of reserves (assets received > liabilities assumed)
Similar to being paid a premium to assume a bond‐like obligation
Attractive cost of funding allows us to be opportunistic and disciplined in our investment philosophy
We have developed various mechanisms to source attractive liabilities:
Write capital‐efficient retail product and issue funding agreement backed notes at today’s low rates
Acquire businesses at a discount to book value (assets received > liabilities assumed)
Reinsurance in which cedant pays Athene (assets received > liabilities assumed)
Overview of Athene’s Cost of Liability
23
Cost of Policyholder Obligations Pay‐Down Example
Key Liability Statistics
Cost of Funds(1) Weighted Avg Life Protected by MVAs Protected by Surrender Charges
2.7% 9.8 years 71% 84%
Conservative underwriting with a focus on profitability
Note: All data as of 6/30/15 unless otherwise noted.(1) YTD 6/30/15. Defined as GAAP cost of crediting, GAAP DAC/DSI/VOBA amortization, GLWB and GMDB change in reserves, and other divided by average GAAP reserves. Does not fully reflect the benefit of acquiring liabilities at a discount.
$10 Negative Cede
Par Value ("Account Value") ‐ 5 Years $100 $110
Coupon 5.0% 5.0%
Cost of Obligation 5.0% 2.8%
Insurance Co. A
Our Approach to Retail Distribution
We have focused on developing capabilities to directly originate attractive retail product
Historical Retail Volumes ($ billion)Historical Retail Volumes ($ billion)
Retail PhilosophyRetail Philosophy
Ease of Doing Business
Competitive Products
Long Term Relationships
Competitive Compensation
3
Retail Focus Points24
1
24
Department of Labor Rule Status
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The Department of Labor is moving forward with proposed rulemaking requiring certain financial advisers to abide by a fiduciary standard, including those that sell annuities to qualified plans
We are closely following the proposed new rule given the uncertainty created for our producers selling annuities into IRAs. If the rule is adopted, our distribution partners will be subject to new disclosures and requirements with which they must comply and those requirements will place additional burdens on their operating models
Like others in the industry, we believe the rule as proposed creates ambiguities and uncertainty and hope the DOL provides greater clarity on the requirements when it releases the final rule
If the rule is adopted, in whatever form, we will be prepared to help producers meet any new requirements that are imposed by the rule. The guarantees and downside protections offered by our products are important to consumers and are a needed component of their retirement planning
Funding Agreement Backed Notes (“FABN”)
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FABN provide another attractive source of long‐term funding for Athene’s spread‐based business model
Our 2015 ratings upgrade to A‐ opened access to the funding agreement backed note market
Funding agreement backed notes are highly predictable liabilities with defined tenors and no ability to surrender prior to maturity
Additionally, funding agreement backed notes provide an attractive cost of funds for Athene
Earlier this month, we priced our inaugural $250 million 3‐year issuance and will look to opportunistically access the market going forward
Proceeds used to purchase investment assets consistent with our existing investment guidelines and in allocations similar to existing portfolio
Assets subject to the same cash flow testing, asset‐liability management (ALM) and other risk management procedures as embedded in the rest of our business
We believe the highly predictable and low‐cost nature of funding agreement backed notes will allow us to invest issuance proceeds in a high‐quality investment portfolio to generate target returns without stretching for yield
Our proven M&A model
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$0.0$3.8
$6.0
$3.9$1.5
201520142013
$45.5
20122011
$5.3
Date Acquired Company Location Current Athene Name Former Parent Company
April 2011 Liberty Life Insurance Company South Carolina Athene Annuity & Life Assurance Company Royal Bank of Canada
July 2011 Investors Insurance Company Delaware Athene Annuity & Life Assurance Company SCOR
December 2012 Presidential Life Insurance Company New York Athene Annuity & Life Assurance Company
of NY Public Company
October 2013 Aviva USA Iowa / New York Athene USA Aviva plc
October 2015 Delta Lloyd Deutschland Germany Athene Germany Delta Lloyd
Acquired assets over time (1) ($ in billions) We have successfully closed 5 major transactions totaling over $60 billion in acquired assets
Weighted average transaction P/B multiple of ~0.6x (2)
With each acquisition comes our ability to strengthen operations, redeploy assets into higher yielding products and offer expanded products to customers
Across each of these acquisitions, Athene has established itself as a “go‐to‐acquirer” with the capability to underwrite, integrate, and gain regulatory approval for complex deals
1
1
2
2
3
3
4
4
5
5
(1) The acquired assets indicated are equivalent to the U.S. GAAP Investments at the time of acquisition as reported in the Business Combinations footnotes from the respective audited financial statements. The Aviva USA investments have been adjusted by ~$10 billion and the Liberty Life investments have been adjusted by $1.1 billion in order to reflect the life business reinsured to Global Atlantic and Protective immediately following the acquisition.
(2) Represents purchase price (net of any ceding commissions) at time of transaction announcement, divided by bluebook C&S plus AVR at time of transaction announcement. Excludes Athene Germany.
Update on Aviva Acquisition
28
In October 2013, we closed on our transformative acquisition of Aviva USA
We retained ~$45 billion of fixed annuities and reinsured Aviva USA’s ~$10 billion life insurance portfolio to a third party
Solidified our company as a “go‐to‐acquirer” capable of underwriting, executing and gaining regulatory approval for complex transactions
The Aviva USA transaction has been transformative for us along several fronts:
Liabilities: long‐term, low‐cost liability portfolio protected by market value adjustments and surrender charges
Assets: opportunity to capitalize on our asset management expertise to redeploy a sub‐optimal portfolio
Platform: scalable retail franchise with the infrastructure to write $7 billion+ of product annually
Scale: we are now one of the largest fixed annuity platforms in the U.S.
Destination for top‐tier insurance talent
Scaled platform with the ability to onboard incremental business without significant incremental cost
Operational integration efforts are now complete
All retail products written under one Athene brand
Consolidated material U.S. offices to West Des Moines, IA headquarters
Overview of Athene’s Investment Portfolio
Sourcing low‐cost, stable liabilities is the foundation for an asset management strategy that doesn’t require ‘stretching for yield’
Allows us to be patient, disciplined and opportunistic in our asset allocation
Investment portfolio managed by Athene Asset Management (AAM), a subsidiary of Apollo founded for the express purpose of providing a full suite of asset and portfolio management services to Athene
Downside focused – asset allocation informed by rigorous stress testing and risk philosophy
Focus on underwriting liquidity and complexity risk rather than incremental credit risk
Athene’s Portfolio as of 6/30/15 GAAP Peer Portfolios1
Investment Philosophy
30(1) Peers include Prudential, MetLife, Aflac, Ameriprise, Hartford, Principal, Lincoln, Unum, Torchmark, Genworth, CNO, Primerica, Stancorp, Symetra, American Equity and Fidelity & Guaranty.
Corporate & Gov't49%
ABS & CLO14%
RMBS13%
Mortgage Loans10%
Alterna ves6%
CMBS4%
Cash & Equivalents4%
Policy Loans & Other1%
Corporate and Gov't68%
Mortgage Loans9%
Alts, Equities & Other6%
ABS & CDO / CLO4%
RMBS4%
CMBS3%
Cash 3% Policy Loans
2%
Athene Asset Management (“AAM”) is a dedicated subsidiary of Apollo founded to provide a full‐suite of asset and portfolio management services to Athene, including:
AAM manages 100% of Athene’s assets, of which it directly invests ~75% with its in‐house investment team (primarily into investment grade credit and other structured assets)
Through its strategic relationship with AAM, Athene also benefits from access to Apollo’s:
Infrastructure: Apollo provides support to AAM in tax, risk, legal, compliance, and finance, among several other areas. Access to Apollo’s infrastructure has been a significant driver of Athene’s ability to profitably scale its business
Investment Professionals: AAM professionals have full access to Apollo’s 300+ investment professionals around the globe
AAM has hired Apollo to sub‐advise specific asset classes that require unique sourcing or underwriting capabilities (~25% of Athene’s portfolio as of June 30, 2015). Sub‐advisory mandates are dependent on market opportunities, level of service, and risk adjusted performance
Athene’s Strategic Relationship with AAM
Asset allocation Risk management Hedging
Portfolio management ALM management M&A asset diligence
31
Investment Portfolio Composition
We continue to see strong performance in our holdings of residential mortgage‐backed securities, mortgage loans and collateralized loan obligations
Athene evaluates the performance of its alternatives portfolio relative to its targeted returns. Athene underwrites downside‐protected alternatives to returns of 10%‐15% over the long term. Alternative assets generated net yields of 24.3% in 2012, 24.9% in 2013, 9.3% in 2014 and 5.5% in the YTD 6/30/15 period (16% average from 2012‐YTD 2015, in‐line with underwriting targets)
Floating rate assets – Athene holds ~28% of total invested assets in floating rate securities; these assets have generated less income than anticipated at the time of the 2014 private placement given the prolonged low‐rate environment
We continue to see opportunities in residential mortgage‐backed securities based on improving fundamentals of falling unemployment & strong housing data, combined with limited impacts from global macro issues
32Note: past performance is not indicative of future returns.(1) Net Earned Rate is annualized and is calculated based on Average GAAP Book Value of $59,986M at 6/30/2015 YTD; Yields are net of asset mangement and sub‐advisory fees
Athene maintains a highly liquid portfolio to enable it to opportunistically capitalize on market opportunities
as they arise
June 30, 2015
Ending GAAP Book
Value
% of Invested Assets
Net Earned Rate 1
Credit 33,151 54.4% 3.94%Corporates 28,214 46.3% 3.70%Collateralized loan obligations 4,937 8.1% 5.31%
Real Estate 16,698 27.4% 4.66%Residential mortgage‐backed securities 7,937 13.0% 4.84%Mortgage loans 6,088 10.0% 5.32%Commercial mortgage‐backed securities 2,674 4.4% 2.61%
Other 8,478 13.9% 4.85%Asset‐backed securities 3,524 5.8% 4.24%Alternatives 3,408 5.6% 5.48%State, municipals, and policital subdivisions 1,380 2.3% 5.29%Equity Securities 89 0.1% 1.66%U.S. government and agencies 77 0.1% 0.74%
Cash and equivalents 2,151 3.5% 0.06%Policy Loans and Other 445 0.7% 1.33%Total Invested Assets 60,923 100.0% 4.10%
Athene’s High Quality Portfolio
33
Athene Portfolio Snapshot Athene Portfolio Mix by NAIC Rating2
Attractive Credit Profile: OTTI as a % of Avg. Invested Assets
94%
6%
Non Alts Alts
(1) Peers include Prudential, MetLife, Aflac, Ameriprise, Hartford, Principal, Lincoln, Unum, Torchmark, Genworth, CNO, Primerica, Stancorp, Symetra, American Equity and Fidelity & Guaranty. Represents weighted average.(2) CML mapped to NAIC ratings based on underlying capital charges. CMLs designated CM1 and CM2 are included with NAIC 2 assets, CMLs designated CM3 and CM4 are included with NAIC 3 assets, and CMLs designated CM6 are mapped to NAIC 6. For average
calculation, alternatives and equities mapped to NAIC 6.
Athene opportunistically targets allocating 5%‐10% of its portfolio to downside‐protected alternatives
NAIC 151%NAIC 2
36%
NAIC 36%
NAIC 4, 5, 62%
Other (Alts/Equities)
6%
Average NAIC Rating: 1.8
Average NAIC Rating: 1.8
0.4 bps1.0 bps
2.5 bps
9.6 bps
5.5 bps4.7 bps
2013 2014 YTD 2015Athene Peer Average¹
Athene Average: 1.3 bps
Peer Average: 6.6 bps
Acquired Portfolio Net Earned Rate(3) 3.44% 3.99% 4.03%
Deployment Volumes(3) NA $7,400 $13,101²
Average Redeployment Net Yield(3)
NA 5.41% 4.98%
5 Year Swap NA 2.94% 1.79%
Aviva Redeployment: Actual vs. Expected
34
Capitalizing on its asset management expertise to redeploy the acquired Aviva portfolio was a key value driver for Athene when it underwrote and closed the Aviva USA acquisition
Since closing the Aviva transaction, Athene has redeployed $13bn of the Aviva Fixed Income and Other portfolio (excl. alternatives) at an average net book yield of 4.98%(3) (4) and has redeployed $18 billion(2)(3) across all Athene portfolios
Aviva Portfolio: Closing
Aviva Portfolio: 6/30/15 Capital Raise Projections
Aviva Portfolio: 6/30/15 Actual
Note: past performance is not indicative of future returns.(1) Other includes Munis, Bank Loans, EM, Convertible Bonds, Equity, Treasuries, Cash & Other. (2) Excludes short WAL / short duration. (3) Includes Fixed Income and Other portfolio only; rates net of management fees & sub‐advised fees. (4) Yields are based on underwritten projections
at the time of purchase. Yields on floating rate securities are based on the forward interest rate curve for similar maturity at the time of purchase.
Corporates72%
CML12%
CMBS7%
RMBS1%
Alts1%
Other (1)6%
Corporates54%
CML11%
CMBS4%
RMBS11%
CLO6%
ABS5%
Alts3%
Other (1)6%
Aviva Fixed Income and Other Portfolio Metrics (excl. Alternatives)
247bps excess yield
319bps excess yield
Corporates56%
CML16%
CMBS2%
RMBS7%
CLO6%
ABS3%
Alts5%
Other (1)5%
Approach to Alternative Investments
Athene attempts to defensively position its alternatives portfolio such that it will outperform in normal and bear markets, and slightly underperform in strong equity markets – willingness to trade outsized upside for downside protection
Athene’s largest two alternative positions are investments in asset origination engines which were founded by Apollo, both of which provide Athene with additional exposure to assets that are favorable to insurance companies:
Amerihome, a platform to originate residential mortgage loans and MSRs
Midcap FinCo, a leading originator of senior debt capital in the middle‐market with expertise in asset‐backed, real estate and leveraged loans
Preferred Alternatives CharacteristicsTarget returns in the 10% ‐ 15% range over the long‐term
Funds that are “credit‐like” and produce income over funds that are “equity‐like” and rely on capital appreciation
Diversification by opportunity rather than diversification for the sake of diversification
Funds with high degree of co‐investment versus pure funds or vehicles that charge fees on undrawn capital
Investments that “pull to par” or have reduced volatility versus pure equity
Some element of downside protection or “hedge” versus pure directional bet
Avoid binary outcome investments
Athene’s allocation to alternatives targets opportunistic investments that offer attractive risk‐rewards typically due to sector/market dislocations or structural change
35Note: see note regarding target returns on slide 1
Avg. Alt. Assets $1,195M $2,723M $3,697M $3,481M
Overview of Athene’s Alternatives Portfolio
36
Portfolio Composition
Historical Alternatives Portfolio Performance
Key Considerations:
Credit Funds: credit and credit‐like investment funds
MidCap & AmeriHome: asset origination engines
Mortgage & Real Estate: funds that invest in real properties, mortgages, or mortgage related investments
Public Equities: run‐off positions from AAA contribution to pre‐fund Aviva USA acquisition
Legacy Private Equity: Remaining non‐public investments from AAA contribution and structured equity funds
Legacy Hedge Funds: primarily run‐off positions inherited from the Aviva USA and Presidential acquisitions
Athene’s alternatives portfolio has returned an average of 16% from 2012 – YTD 6/30/15, slightly in excess of Athene’s 10%‐15% long‐term underwriting targets
Credit Funds44%
Midcap & AmeriHome
19%
Real Estate & Mortgage
10%
Public Equity10%
LegacyPrivate Equity
10%
Natural Resources / Other Real Assets6%
Legacy Hedge Funds2%
24 % 25 %
9 %6 %
0.00 %
10.00 %
20.00 %
30.00 %
40.00 %
0 %
10 %
20 %
30 %
40 %
2012 2013 2014 6/30/2015 YTDAlternatives Return
10%15%
Average: 16%
Note: past performance is not indicative of future returns(1) Based on simple average. 14% on a weighted average basis.
45.8% 46.6%
7.9%2.2%
19.8%12.2% 10.0% 6.9%
24.3 % 24.9 %
9.3 %5.5 %
2012 2013 2014 YTD 2015AAA Non‐AAA Total Athene Alternatives
Alternative Investment Performance in Context
37
Consistent with our downside‐focused philosophy, we have positioned our alternatives portfolio to outperform relative benchmarks in periods of market volatility
Athene Alternatives vs. Key Benchmarks
Historical Portfolio Performance
Relative outperformance in market volatility
Period Average:AAA: 26%Non‐AAA: 12%Total: 16%
Note: past performance is not indicative of future returns. See note regarding indices on page 2.*Returns based on reported results from 2nd quarter 2015 GAAP financials. Performance related to certain alternative assets may be recorded on a monthly or quarterly lag basis, and therefore, results may not be directly compared to the S&P or high yield indices as of the date set forth.
*24.3% 24.9%
9.3%5.5%
16.0%
32.4%
13.7%
(2.9)%
15.6%
7.4%2.5%
0.1%
2012 2013 2014 YTD 2015
Athene Alternatives S&P 500 High Yield
Net Performance Since 2012
38Note: past performance is not indicative of future results.(1) Peers include Prudential, MetLife, Aflac, Ameriprise, Hartford, Principal, Lincoln, Unum, Torchmark, Genworth, CNO, Primerica, Stancorp, Symetra, American Equity and Fidelity & Guaranty.(2) Athene’s net yields in 2014 were impacted by: (1) volatility in Athene’s alternatives portfolio; (2) the decision to hold a significant part of Athene’s portfolio in floating rate assets; and (3) the mark‐to‐market on Aviva’s investment portfolio at transaction close.(3) Athene’s net yields in 2015were impacted by: (1) volatility in Athene’s alternatives portfolio; (2) the decision to hold a significant part of Athene’s portfolio in floating rate assets; and (3) the mark‐to‐market on Aviva’s investment portfolio at transaction close.(4) Alternatives are underwritten to a targeted 10%‐15% return(5) Athene 2012‐YTD 2015 Average is based on yields reflecting adjustments for Alternatives at 12.5%, impact of holding Floating Rate securities, and Impact of Aviva MTM at each period shown
Net GAAP Earned Rate vs. Peers
7.6%
6.4%
4.3% 4.1%
5.3%4.8%
4.5% 4.4% 4.4% 4.5%
5.5 %5.1 % 5.3 % 5.2 %
2012 2013 2014² YTD 2015³ (Annualized) 2012 ‐ YTD 2015Average
Athene Peer Average¹ Athene Yield with Alternatives at 12.5%4
0.6%0.2% 0.5%
0.4%
Impact of Aviva MTMImpact of Floating Rate Sec.
0.2% 0.2%
5
$11.6B $26.2B $59.7B $60.0BAvg Inv. Assets
In evaluating our Net GAAP Earned Rates, it is important to consider the impact of:
− Alternative investment performance: we underwrite alternative investments to a 10%‐15% target return over the life of the investment. Given our long‐term approach to underwriting returns the Company may experience short‐term volatility in its income statement
− Floating rate securities: we currently hold ~28% of our portfolio in floating rate securities (in excess of most peers) to manage the interest rate environment and maintain our ALM profile. Given the prolonged low‐rate environment, yields on our floating rate assets have been lower than targeted at underwriting
− Aviva mark‐to‐market: when we acquired the ~$45 billion Aviva portfolio we marked the assets to market, temporarily lowering yields until our redeployment plan is complete
Investment Deep‐Dive: MidCap FinCo (“MidCap”)
39
Business Overview
Athene owns ~35% of MidCap(1), a leading senior debt capital provider to the middle market focused on the direct origination of asset‐backed loans, leveraged loans, real estate loans, rediscount loans and venture loans
Management team led by industry veterans who previously founded Merrill Lynch Capital Partners and held executive positions at GE Capital and Heller Financial
Originated ~$22 billion of commitments over the past decade with less than 20bps of annualized loan losses
Robust in‐house loan origination and portfolio management infrastructure with proven proprietary origination capabilities and deep industry expertise
Diverse portfolio of ~$7 billion in funded assets (pro forma for the Mubadala GE Capital portfolio acquisition)
Favorable financial profile with attractive risk‐adjusted returns
Seeks to produce mid‐teens ROEs with leverage of ~4.5‐5.5x asset‐to‐equity in today’s market
Current income through quarterly dividends
Opportunity to capture franchise value through incremental scale
Positioned to benefit from continued regulatory change
Headquartered in Bethesda, MD with 105 professionals in 6 offices across the U.S.
Diverse Spectrum of Target Asset Classes
Improving Market Environment
“General Electric Co. has decided it no longer needs to be a bank.”
‐Wall Street Journal, April 10, 2015
Citing increasing regulatory burdens, GE plans to exit the bulk of its $500 billion finance business
GE Capital represents the 7th largest bank in the US
Exit expected to occur over the next 24 months
Significant opportunity for MidCap to acquire assets and capture market share with GE Capital’s departure
Unitranche Loans
General Real Estate
Legacy MidCap Current Growth Opportunities
Healthcare ABL
Healthcare Leveraged Lending
Healthcare Real Estate
General ABL
General Leveraged Lending
Lender Finance / Rediscount Lending
Healthcare Venture Lending
Attractive investment generating mid‐teens returns with potential for significant future flow of syndicated loans and other investment opportunities
See note regarding target returns on page 2(1) Athene’s ownership stake is anticipated to drop to ~20% pro forma for the Mubadala transaction.
Investment Deep‐Dive: AmeriHomeResidential Credit Origination Platform
40
Funded by Athene and an Apollo‐managed credit fund in 2013 to originate loans and retain mortgage servicing rights
− Athene currently owns ~75% of AmeriHome
AmeriHome purchases ~$2bn of residential mortgage loans each month in 49 states and the District of Columbia
AmeriHome then sells / securitizes the loans, primarily through FNMA, FHLMC, and GNMA
− AmeriHome has originated ~$80m of Non‐Agency loans for Athene to‐date
Backed by $500m of capital commitments from Athene, Apollo’s COF III, and management, with mid‐teens to low twenties return targets1
Headquartered in Woodland Hills, CA (North of LA)
In Two Years, AmeriHome Has Become the Third Largest Non‐Bank Correspondent Lender
Business Overview
Lock Volume Growth To‐Date (millions)
$175 $248 $353 $366$538 $606
$939
$1,370$1,418
$1,469$1,848
$2,050$2,081$2,137
Key Investment Highlights
Business Breakdown – September 2015 UPB ($13.7bn)
Purchase63%
No Cash Out Refi24%
Cash Out Refi13%
Investor Type Loan Purpose Type
GNMA51%
FNMA25%
FHLMC23%
Non‐Agency1%
1. Strong Service QualityIndustry‐leading cycle times: less than 7 days from lock to funding
2. High Quality OriginationDiversified, innovative product offering. 98.7% current portfolio, average FICO of 713 2
3. Highly Flexible Expense StructureTechnology, efficient outsourcing drive efficiency: $2bn of origination with ~200 FTEs
4. Industry‐Leading Loan‐Level AnalyticsSimpler version of model sold to three institutional buyers
5. Robust Servicing Oversight Without Intensive OperationsExperienced and lean team oversees outsourced subservicing
6. Bank‐like Focus on ComplianceRisk practice fueled by compliance prioritization
7. Proven Management TeamSeasoned team, 20+ years experience, led by Jim Furash, ex‐CEO of Countrywide Bank
8. Attractive Financial Returns~20% ROEs: ~40% on origination and ~8% on MSRs
(1) Following approval of additional commitments by appropriate Insurance regulatory authorities.(2) Represents % current and average FICO excluding legacy AmeriHome portfolio (<5% of total MSR BV).
Overview of Capitalization & Risk Management
Rigorous Approach to Risk Management
42
Key RisksKey Risks
Credit Spreads: Corporate, real estate
Policyholder Behavior: Lapse, income rider utilization
Interest Rates
Liquidity Risk
Internal Risk Management FrameworkInternal Risk Management Framework
Enterprise risk management
Hedging and derivatives
Asset / liability management ‐ legal entity level and economic entity level
Risk analytics and asset modeling
Extensive internal downside risk assessment and testing:
Scenario Analyses: show capital levels are sufficient to withstand even substantial economic disruptions, such as the failure of a major financial institution (e.g. Lehman) or a recession
Cash Flow Testing: since inception, Athene has passed cash flow testing for all material entities without requiring additional reserves despite relatively large moves in interest rates
Stress Tests: show interest rate risk is well contained with substantial rises and declines in rates resulting in relatively modest realized losses. Entire asset portfolio is run under severe stress scenarios on a monthly basis and presented to senior management by risk and investment professionals to monitor and set risk policy
Athene and its subsidiaries believe they have a sound governance structure to implement comprehensive risk management in every aspect of Athene’s business
Robust Liquidity Monitoring
Liquidity limits are set to ensure Athene and its subsidiaries have adequate liquidity to meet their needs across various market environments
Cash liquidity is closely monitored against the following internal limits
Immediate cash liquidity limit ‒ Limit set such that liquidity balances exceed near term cash needs
Intermediate cash flow liquidity limit ‒ Asset cash flows to cover liability cash flows over 1 year in a stress scenario
Asset stress liquidity limit ‒ Ability of Athene Life Re to meet collateral calls under reinsurance contracts in a Lehman type event
Liability stress liquidity limit ‒ Maintain assets that can be liquidated in one quarter under normal market conditions sufficient to meet potential cash requirements for portion of Athene’s policyholder obligations which are liquid
43
Athene: Key Risk Checklist
44
Athene executes on its business strategy within the boundaries of the key risks approved by its Board of Directors and Overseen by its Risk Committee
Key Limit Description
Asset‐Liability Duration Mismatch Monitor asset‐liability duration mismatch to ensure Athene operates within the parameters set by its Board of Directors
Liquidity Limits Monitor liquidity position on a daily basis to ensure compliance with limits set forth on prior page
Capital Solvency Analysis – Stress Scenario Target maintaining an unchanged financial strength rating under moderate stress events (1 in 10 year event) and above investment grade financial strength rating under a substantial stress event (1 in 25 year event)
Asset Class Concentration Define and monitor concentration limits by asset class on an ongoing basis
Single Issuer Concentration Define and monitor maximum single issuer exposure limits based on issuer category/rating on an ongoing basis
Shock Lapse Sensitivities Monitor lapse sensitivity as related to changes in the interest rate environment
Cash Flow Testing Analysis Ensure the Company’s asset cash flows are sufficient to meet liability outflows under a range of interest rate scenarios
Commitment to Strong Ratings
45
Based on an in depth look at our financials, performance, capital position, liquidity, assets, liabilities, ALM and risk, what the agencies say about us:
Superior management team with extensive experience
Strong financials and capital, with a proven ability to grow capital
3 Financial strength ratings for Athene Annuity & Life Assurance Company, Athene Annuity and Life Company, Athene Annuity and Life Assurance Company of New York and Athene Life Re Ltd. The IFS Rating is assigned to the insurance company's policyholder obligations, including assumed reinsurance obligations and contract holder obligations, such as guaranteed investment contracts. The IFS Rating reflects both the ability of the insurer to meet these obligations on a timely basis, and expected recoveries received by claimants in the event the insurer stops making payments or payments are interrupted, due to either the failure of the insurer or some form of regulatory intervention
1 Financial strength ratings for all members of Athene Group including Athene Annuity & Life Company. A.M. Best Company’s Financial Strength Rating (FSR) reflects A.M. Best Company’s assessment of the relative ability of an insurer to meet its ongoing insurance policy & contract obligations. 2 Financial strength ratings for all members of Athene Group including Athene Annuity and Life Company. S&P’s credit ratings express their opinion about the ability and willingness of an issuer to meet its financial obligations in full ‐ and on time.
Recent rating upgrades and improvements in outlook are testaments to Athene's strong credit profile
Athene’s Rating Profile
Rating Agency Rating Outlook
A.M. Best1 A‐ (excellent) Stable
S&P2 A‐ (strong) Stable
Fitch3 A‐ (strong) Stable
Financial Overview
Earnings Model: Net Investment Income
47
Our primary source of revenue is the income we generate on our high quality investment portfolio Due to the low cost of our liabilities, we do not have to stretch for yield in our investment portfolio to generate target
returns, and can be patient, opportunistic and disciplined in our asset allocation 87% of total portfolio rated NAIC 1 or 2(1) and 94% of fixed income investments rated NAIC 1 or 2 (highest
designation) ~28% of portfolio allocated to floating rate assets to manage interest rate environment and maintain ALM profile 6% of the portfolio allocated to alternatives focused on downside protection Portfolio maintains enough liquidity to opportunistically capitalize on market dislocations
Net Investment Income
Core Fixed Income NIER 3.73% 3.88% 4.11% 4.16% 3.96% 4.07%
Alts NIER 9.83% 9.56% 3.50% 14.59% 6.04% 5.01%Total NIER 4.13% 4.23% 4.08% 4.78% 4.09% 4.12%
*Q3 2014 and Q4 2014 Non‐Alts NIER is favorably impacted by significant call income and mortgage prepayment fee income(1) CML mapped to NAIC ratings based on underlying capital charges. CMLs designated CM1 and CM2 are included with NAIC 2 assets, CMLs designated CM3 and CM4 are included with NAIC 3 assets, and CMLs designated CM6 are mapped to NAIC 6.
$525 $542 $573 $580 $555 $579
$96 $88 $31$128
$53 $43
1Q 2014 2Q 2014 3Q 2014* 4Q 2014* 1Q 2015 2Q 2015$ in Core Fixed Income $ in Alts
$621 $604$630$708
$608 $622
Earnings Model: Cost of Funds
48
Our long‐duration, surrender‐protected book of liabilities has an attractive cost of funds, which consists of the following components:
Highly stable core cost of crediting, which represents the cost to Athene of funding interest credits on policyholder obligations
Amortization of deferred acquisition costs (DAC), deferred sales inducements (DSI), and value of business acquired (VOBA)
Other, which consists primarily of changes in the present value of Athene’s guaranteed lifetime withdrawal benefit (GLWB) and guaranteed minimum death benefit (GMDB) riders
Cost of Funds
Note: Components above not additive due to Cost of Crediting expense is calculated over the average account value on our deferred annuities and DAC/DSI/VOBA amortization and Other are calculated taking the costs over the total average reserves. For total Cost of Funds, bps are calculated on total average reserves.
(1) 2Q2014 bar excludes $2 positive impact of DAC/DSI/VODA amortization, total includes it. (2) The DAC/DSI/VOBA amortization and other line includes the amortization and change in GLWB and GMDB reserves for all products as well as the cost of funds on products other than deferred annuities. The rate
is calculated taking the costs over the average reserves. (3) The cost of crediting is on our deferred fixed annuity block of business, which makes up approximately 86% of our total reserves. Cost of crediting is the fixed interest credited to policyholders and the indexed
option costs on our core deferred annuities. The rate is calculated taking these costs are over the average account value of our deferred annuities.
23
194 bps 197 bps 198 bps 195 bps 194 bps 189 bps
21 bps 30 bps 35 bps 29 bps 34 bps
80 bps 87 bps78 bps 65 bps 73 bps 92 bps
257 bps 243 bps 267 bps 258 bps 260 bps279 bps
1Q 2014 2Q 2014¹ 3Q 2014 4Q 2014 1Q 2015 2Q 2015Cost of Crediting DAC/DSI/VOBA Amortization Other
(1bps)
2
Earnings Model: G&A
49
Athene has designed its platform to provide significant operating leverage and to provide the ability to onboard future business with very little incremental operating costs
Efficient platform allows for high flow through of incremental net spread to incremental earnings
Athene targets 40bps of G&A expense as a percent of average invested assets
G&A ‐ % of Average Invested Assets
32 bps
42 bps 40 bps
29 bps34 bps
45 bps
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
*Q2 2015 includes $13M of stock compensation expense; if excluded, G&A expense would be 36bps.
*
($ millions) 2013 2014 (4) YTD 6/30/2015 (4)
Balance SheetInvested Assets ‐ Alternatives $4,069 $3,569 $3,408Invested Assets ‐ Core Fixed Income 56,528 55,656 57,515Total Invested Assets $60,597 $59,225 $60,923
Reserves $60,534 $59,867 $60,036
Debt $351 – –
Ending Equity (ex AOCI) $2,667 $3,922 $5,254
Book value per share ex. AOCI – As Reported $23.18 $27.81 $28.30
Income Statement ($ & bps) $ bps (1) $ bps (1) $ bps (1)Net Investment Income ‐ Alternatives $678 24.9% $342 9.3% $96 5.5%Net Investment Income – Core Fixed Income 1,010 4.6% 2,221 4.0% 1,134 4.0%Net Investment Income $1,688 6.4% $2,563 4.3% $1,230 4.1%
Core Cost of Crediting (2) ($495) (2.4%) ($946) (2.0%) ($467) (1.9%)Other (266) (1.0%) (594) (1.0%) (344) (1.1%)Cost of Funds ($761) (3.0%) ($1,540) (2.6%) ($811) (2.7%)
Net Spread $927 3.4% $1,023 1.7% $419 1.4%G&A (160) (0.6%) (212) (0.4%) (118) (0.4%)Operating Income, before tax $767 2.8% $811 1.4% $301 1.0%Operating ROE 35.5% 24.6% 13.1%Rolling 3 Year Average Operating ROE(3) 19.2% 27.3% 24.0%
50
Against its long‐term, low‐cost book of liabilities, Athene has matched a high‐quality investment portfolio, resulting in a significant and long‐term earnings stream
Due to the stable and predictable nature of our funding costs and expense base, new business growth and the rate we earn on our investment portfolio will be the primary drivers of our financial performance going forward
Earnings Model: Tying it All Together
Note: past performance is not indicative of future returns.(1) Bps calculated as income statement metric over average invested assets for all metrics other than cost of funds. Cost of funds bps calculated as cost of funds over average reserves.(2) Bps calculated over average FIA reserves, rather than average total reserves.(3) Calculated from 2013‐YTD 6/30/2015 for the YTD 2015 period.(4) In April 2015, Athene drew the remaining $1.1 billion of capital from its 2014 private placement. Assuming that the full amount of the private placement was drawn at the beginning of 2014, 2014 operating ROE would be 19.2% and YTD 6/30/15 operating ROE would be 11.7%. See next
page.
High Level GAAP Business Model and Financials – As Reported
Athene’s GAAP Financials: Normalized View
51
Key Considerations Alternative Investments Our opportunistic allocation to alternatives is a key driver of the Company’s financial performance We underwrite credit‐like, downside‐protected alternatives to 10%‐15% target returns. We seek to generate these returns over the life
of the alternative investment, rather than on a quarterly basis Given our long‐term approach to underwriting returns, the Company may experience short‐term volatility in its income statement which
needs to be normalized Normalizing for alternative investment performance, the largest driver of our YTD 6/30/15 financial performance vs. our 2014 financial
performance is higher amortization of DAC, VOBA and DSI balances
2014 and YTD 2015 Financials at Various Alternative Returns
Athene targets generating run‐rate 15%+ ROEsNote: Alternatives returns at 10%, 12.5% and 15% represent management adjustments rather than actual performance. Past performance is not indicative of future returns. See note regarding target returns on page 2.(1) Assumes full $1.3bn of capital was drawn on 12/31/2013 and earns 5% in 2014.
2014 YTD 6/30/2015
Alternatives Return Alternatives Return($ millions) Actual 10.0% 12.5% 15.0% Actual 10.0% 12.5% 15.0%
Net Investment Income ‐ Alternatives $342 $370 $462 $555 $96 $174 $218 $261Net Investment Income ‐ Core Fixed Income 2,221 2,221 2,221 2,221 1,134 1,134 1,134 1,134Total Net Investment Income $2,563 $2,590 $2,683 $2,775 $1,230 $1,308 $1,352 $1,395Cost of Crediting (946) (946) (946) (946) (467) (467) (467) (467)Amortization & Other (594) (594) (594) (594) (344) (344) (344) (344)Total Cost of Funds ($1,540) ($1,540) ($1,540) ($1,540) ($811) ($811) ($811) ($811)
Net Spread $1,023 $1,050 $1,143 $1,235 $419 $497 $541 $584G&A (212) (212) (212) (212) (118) (118) (118) (118)Operating Income, before tax $811 $838 $931 $1,023 $301 $379 $423 $466Annualized Operating Income, before tax $811 $838 $931 $1,023 $602 $758 $845 $932Operating ROAE 24.6% 25.3% 27.7% 30.1% 13.1% 16.4% 18.2% 20.0%Operating ROAE Adj. for Capital Draw (1) 19.2% 19.7% 21.6% 22.8% 11.7% 14.6% 16.2% 17.8%
125 bps
150 bps
175 bps
200 bps
225 bps
250 bps
Oct‐13 Feb‐14 Jul‐14 Dec‐14 May‐15 Sep‐15
BBB Co
rporate OAS
State of the World: Capital Raise vs. Today
52
Swap Curve
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1Mo
2Mo
3Mo
6Mo
9Mo
1Yr
2Yr
3Yr
4Yr
5Yr
7Yr
9Yr
10Yr
12Yr
15Yr
20Yr
30Yr
50Yr
Yields (%
)
Actual on 9/30/2015 Projected as of 10/1/2013
The projected swap curve has declined and flattened since the Aviva acquisition
Deployment yields for fixed and floating rate assets remain lower than forecasted
Income realization on floating rate assets continues to underperform expectations
BBB Corporate OAS
Significant periods of spread‐tightening post‐capital raise
Redeployment Comparison
53
Cumulative Net Investment Income from Redeployed Aviva Fixed Income & Other Assets (excl. Alternatives)1
Total Portfolio NAIC Composition2
–
$100
$200
$300
$400
$500
$600
$700
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Cumulative Net Investmen
t Incom
e from
Red
eployed Assets
Actual Capital Raise Projections
$662
$400
NAIC 151%NAIC 2
36%
NAIC 36%
NAIC 4, 5, 62%
Other (Alts/Equities)
6%
Average NAIC Rating: 1.8
Average NAIC Rating: 1.8
Total Portfolio Composition: Alts vs. Non‐Alts
(1) Net investment income in each quarter defined as assets redeployed in that quarter multiplied by average net redeployment yield for the quarter. Cumulative net investment income from redeployed assets defined as cumulative earnings on redeployed assets since Q4 2013. Fixed income and other assets only – i.e., excludes alternative investments.
(2) CML mapped to NAIC ratings based on underlying capital charges. CMLs designated CM1 and CM2 are included with NAIC 2 assets, CMLs designated CM3 and CM4 are included with NAIC 3 assets, and CMLs designated CM6 are mapped to NAIC 6. For average calculation, alternatives and equities mapped to NAIC 6.
6/30/15 average NAIC weighting of 1.8 vs. 1.5‐2.0 projected in capital raise
94% ~92%
6% ~8%
Current Capital Raise Projection
Non‐Alts Alts
Athene has redeployed ~1.75x the volume of fixed income & other
Aviva assets anticipated in the 2013/14 private
placement
Athene’s Performance: Actual vs. Expected
54
Aviva Fixed Income & Other Redeployment Volumes (ex. Alts) (1) 2014 Operating Income(2)
2014 Operating ROE 2014 Book Value per Share ex. AOCI(3)
In 2014, Athene materially outperformed the projections presented to private placement investors in 2013/14
19.6 %
24.6 %
Capital Raise Actual
$726
$811
Capital Raise Actual
Note: past performance is not indicative of future returns.(1) $ billion, as of 6/30/2015.(2) $ million(3) Undiluted for management equity. A large driver of the delta between capital raise and actual BVPS ex. AOCI is share count. Capital raise projections assumed $500 million raised at $25, all of which was drawn at 12/31/14 (151mm shares
outstanding). Actual represents $1.3bn offering at $26, 20% of which was drawn at 12/31/14. Pro forma for the remaining draw in April 2015, BVPS would have been $27.03.
$ 25.92
$ 27.81
Capital Raise Actual
$7.4
$13.1
Capital Raise Actual
Public Company Readiness: Progress to Date
55
Progress Towards Public Company Readiness
Have upgraded and continue to upgrade financial systems
Tax material weakness downgraded by management to significant deficiency
Management expects to downgrade actuarial material weakness by the end of the year
Implemented public company board governance changes
Resumed GAAP financial statement production
Supplemented our industry‐leading management team with key hires across the organization including: Bill Wheeler, President: 28 years of insurance and financial services experience Marty Klein, CFO: 32 years of insurance and financial services experience Tom Daula, CRO: 21 years of financial services risk management experience Mike Downing, Chief Actuary: 21 years of actuarial experience Randy Epright, CIO: 25 years of IT and operating experience
55
Public Company Readiness: Remaining Priorities
56
Remaining Public Company Workstreams
Management team integration
Marty Klein will be starting as CFO of Athene Holding in early November
Creation of an Investor Relations function
GAAP financial statement production
Adopt ASU 2015‐02 (new FASB consolidation guidance)
Primary impact will be a reclass between line items on Athene’s income statement
The cumulative impact on earnings is anticipated to be a favorable impact to equity of less than 0.50%
Improve closing cycle efficiency to ensure Athene can adhere with public company reporting timelines
We anticipate finalizing our S‐1 and filing with the SEC no later than June 30, 2016
Growth
Organic Channels Inorganic Channels
Retail Flow Reinsurance InstitutionalAcquisitions and
Block Reinsurance Significant growth driver, with
sales through August 2015 of $1.8 billion (1)
Provide high quality products and service to our policyholders and maintain appropriate financial protection over the life of their policies
Licensed to sell products in all 50 states(2) and the District of Columbia
Target writing capital‐efficient retail product at today’s low rates
Reinsurance to ALRe from third parties (either directly to ALRe or via Athene's U.S. entities)
Reinsure MYGAs, FIAs and payout annuities
Opportunistically issue funding agreements to institutional fixed income investors
Products are scalable without any ability to surrender prior to maturity
Inaugural offering in October 2015 ‐ $250 million 3‐year issuance
Demonstrated transaction expertise; we have completed five strategic transactions since formation
Target acquiring businesses at a discount to book value and using part of this discount to ‘subsidize’ cost of liabilities (assets received > liabilities assumed)
Flexible Multi‐Channel Distribution Platform
58(1) Represents all money paid into new and existing insurance contracts, including internal transfers(2) Products sold through AANY in the state of New York
Our platform supports opportunistic origination across market environments, which better enables us to achieve stable asset growth while maintaining strong levels of profitability
We evaluate liabilities across each of the below channels based on: (1) the upfront cost of acquiring the liability, and (2) the liability’s ongoing cost of crediting
Attractive Opportunity Set…
59
Domestic M&A Block reinsurance
Flow reinsurance
Retail (IMO, FI)
FABN
Domestic M&A
Block reinsurance
LegacyAthene
International M&A Retail (money
center banks; wirehouses)
Pension buyout Other spread‐
based products
Flow reinsurance Retail (IMO; FI) FABN
Domestic M&A Block reinsurance
Today’sCore
Tomorrow’sFrontier
Key Catalysts
Global financial crisis
Attractive market demographics
Prolonged low‐rate environment
Post‐crisis regulation
Ratings
Solvency II Ratings Expansion of
demonstrated underwriting & investing expertise
…with Significant Near Term Growth Drivers…
60
Addressable Markets
Opportunity Market Size Presence Today Ratings Requirement
Retail Channel Expansion – FI ~$135B2015 AnnualizedIMO ‐ $2.7B
Flow Reinsurance ‐ $0.7BA‐/A
Funding Agreement Back Notes (FABN) ~$20B YTD $250M A‐/A
Closed Block Reinsurance Significant Opportunistic A‐
Bulk Annuities Reinsurance (U.K.) ~$20B Opportunistic A‐/A
Pension Buyouts (U.S.) ~$10B Future A
Domestic M&A Steady Opportunistic N/A
International M&A Significant Opportunistic N/A
Conclusion
Athene's Investment Thesis
62
Highly‐visible, spread‐based earnings stream
Differentiated investment strategy
through AAM & ApolloEfficient corporate platform to underwrite incremental business at
minimal cost
Strong, well‐capitalized balance sheet with no financial leverage
Accomplished and proven management
team
Ideal multi‐channel platform to source long‐term, low‐cost liabilities
Athene believes it has built an efficient multi‐channel platform to capitalize on attractive market trends and generate a long‐term, highly visible earnings stream for its shareholders
Appendix
64
Non‐GAAP Measures
Operating income, before taxes, a commonly used operating measure in the life insurance industry, is a non‐GAAP measure used to evaluate our financial performance excluding economic measures and expenses related to integration and restructuring. Our operating income equals net income adjusted to eliminate the impact of the change in fair value of derivatives and embedded derivatives on index annuities, net investment gains and losses, bargain purchase gains including any adjustments, integration and restructuring expenses, and the income tax provisions. These items fluctuate period‐to‐period in a manner inconsistent with our core operations due to their economic nature. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations. Together with net income, we believe operating income provides a meaningful financial metric that helps investors understand our underlying results and profitability. Operating income, should not be used as a substitute for net income. However, we believe the adjustments made to net income are significant to gaining an understanding of our overall results of operations.
ROE excluding AOCI is a non‐GAAP measure used to evaluate our financial performance due to the exclusion of the impacts of accumulated other comprehensive income from the calculations. These items fluctuate period‐to period in a manner inconsistent with our core operations due to their economic nature. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations and allow for a better understanding of the underlying trends in our operations. ROE excluding AOCI should not be used as a substitute for ROE including AOCI. However, we believe the adjustments to equity are significant to gaining an understanding of our overall results of operations.
Book Value per share excluding AOCI is a non‐GAAP measure used to evaluate our financial performance due to the exclusion of the impacts of accumulated other comprehensive income from the calculations. These items fluctuate period‐to period in a manner inconsistent with our core operations due to their economic nature. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations and allow for a better understanding of the underlying trends in our operations. Book value per share excluding AOCI should not be used as a substitute for book value per share including AOCI. However, we believe the adjustments to equity are significant to gainingan understanding of our overall results of operations.
65
Non‐GAAP Measure Reconciliations
Summary of adjustments to arrive at Operating income, before tax
Summary of adjustments to arrive at total equity excluding AOCI
(In millions) YTD 2015 YTD 2014
Net income available to Athene common shareholders 228$ 135$
Change in fair values of derivatives and embedded derivatives - index annuities, net of offsets 31 46 Investment (gains) losses, net of offsets (6) (90) Integration and restructuring expenses 25 266 Provision for income taxes - non-operating (1) 11
Total adjustments to arrive at operating income, after tax 49 233 Operating income, after tax 277$ 368$
(In millions) YTD 2015 YTD 2014
Total equity 5,657$ 4,226$ Accumulated other comprehensive income 344 783 Total equity excluding AOCI 5,313$ 3,443$
66
Non‐GAAP Measure Reconciliations
Summary of adjustments to arrive at Total revenue and Total benefits and expenses
(In millions) YTD 2015 YTD 2014
Operating revenues 1,436$ 1,429$ Product Charges (8) (5) Net Investment Income (57) (83) Investment related gains (losses) (67) 708 Revenues related to consolidated variable interest entities:
Net Investment Income 17 43 Investment related gains (losses) (1) 8
Increase (decrease) in total revenue (116) 671 Total GAAP revenues 1,320$ 2,100$
Operating benefits and expenses 1,135$ 1,040$ Interest Sensitive Contract Benefits (42) 508 Amortization of DSI 1 - Future Policy and Other Policy Benefits (69) 102 Amortization of DAC and VOBA (2) (10) Interest Expense 12 13 Policy and other operating expenses 25 266 Operating expenses of consolidated variable interest entities:
Interest Expense 6 10 Other operating expenses 1 3
Increase (decrease) in total benefits and expenses (68) 892 Total GAAP benefits and expenses 1,067$ 1,932$
Definitions
Net Spread the return on invested assets in excess of the benefits paid to our policyholders.
Net investment earned rate is the net investment earned rate on our assets. This is the net investment income as a percentage of our average invested assets.
Cost of Funds (COF) is the total expected cost of servicing the liabilities in a given period to compare to the investment yield on the assets supporting the liabilities. Cost of funds represents the accrued amount that we expect to ultimately pay to the policyholder in excess of the initial deposits.
Return on Equity (ROE) is the annualized net income (loss) (or net operating income) divided by average equity. Average equity is the average of the beginning and ending equity for the period.
Earnings per Share is the net income (or net operating income) divided by the weighted average common shares outstanding – basic (or diluted).
Book Value per Share is the ending equity (excluding AOCI) divided by the common shares outstanding – basic at the end of the period.
Cost of crediting includes the fixed interest credited to policyholders on our deferred annuities and the option amortization related to the index annuities over the average account value on deferred annuities.
Invested Assets - are defined as the sum of (a) Total Investments on the 10-K with AFS securities at amortized cost excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) accrued investment income, (d) investments in related parties, (e) assets, liabilities and noncontrolling interest related to variable interest entities, (f) policy loans ceded and excluding funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral.
Reserve Liabilities includes the 10-K lines for Interest Sensitive Contract Liabilities, Future Policy Benefits, and Other Policy Claims and Benefits offset by Reinsurance Ceded Receivables, excluding policy loans ceded.
67