10-K: Athene Reports Mixed 2025 Results Amid Strong Inflows, Tax Changes

Athene Holding Ltd. reported a 20% decrease in net income available to common stockholders in 2025 despite robust organic inflows and strategic growth initiatives.

Summary

• Net income available to Athene Holding Ltd. common stockholder decreased by $646 million, or 20%, to $2.6 billion in 2025 from $3.3 billion in 2024.
• Revenues increased by $5.0 billion to $25.7 billion in 2025 from $20.7 billion in 2024, primarily driven by higher net investment income and premiums.
• Net investment income increased by $3.4 billion to $17.8 billion in 2025, fueled by significant growth in the investment portfolio and higher rates on new deployments.
• Gross organic inflows reached $82.1 billion in 2025, a 16% increase from 2024, reflecting strong multi-channel distribution.
• Total gross inflows were $83.4 billion in 2025, up from $71.0 billion in 2024, while gross outflows increased to $35.5 billion.
• Net investment spread decreased by 17 basis points to 1.61% in 2025 from 1.78% in 2024, mainly due to a higher cost of funds.
• The company estimates $8.6 billion in deployable capital as of December 31, 2025, comprising $3.2 billion in excess equity capital, $2.6 billion in untapped leverage capacity, and $2.8 billion in available undrawn capital at ACRA.
• In January 2026, the company revoked ACRA's election to be subject to the Bermuda Corporate Income Tax (CIT), which will result in a $1.7 billion reduction to adjusted common stockholders' equity in Q1 2026 due to a full valuation allowance against Bermuda deferred tax assets.
• The company completed its second block reinsurance transaction in the Japanese market in Q4 2025, reinsuring whole life insurance policies and retroceding mortality risk to Swiss Reinsurance Company Ltd.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed report. While the company demonstrated strong organic growth and strategic expansion, the significant decrease in net income available to common stockholders and the reduction in net investment spread are notable concerns, partially offset by strong asset growth and deployable capital.

Positives

• Gross organic inflows increased by $11.1 billion (16%) to $82.1 billion in 2025, demonstrating strong multi-channel distribution and ability to pivot into profitable channels.
• Record sales of Fixed Indexed Annuity (FIA) and Registered Index-Linked Annuity (RILA) products contributed to strong retail channel performance in 2025.
• Flow reinsurance channel inflows increased significantly to $11.2 billion in 2025, driven by a strategic opportunity with a US partner and strong volumes from Asia Pacific partners.
• Institutional channel inflows increased to $36.1 billion in 2025, with record funding agreement inflows of $35.4 billion across diversified sub-channels.
• Net investment income increased by $3.4 billion to $17.8 billion in 2025, attributed to significant investment portfolio growth and higher rates on new deployments.
• The company launched new retirement products in 2025, including Guaranteed Investment Contracts (GIC) for defined contribution stable value funds and structured settlement annuities.
• Acquired Advantage Retirement Solutions, rebranded as Vitera, to expand distribution of annuities to defined contribution plans.
• Estimated deployable capital of $8.6 billion as of December 31, 2025, provides significant flexibility for growth and capital deployment.
• The revocation of ACRA's Bermuda CIT election is expected to have favorable implications for the overall tax position over the longer term, despite a near-term equity reduction.

Negatives

• Net income available to Athene Holding Ltd. common stockholder decreased by $646 million, or 20%, to $2.6 billion in 2025.
• Net investment spread decreased by 17 basis points to 1.61% in 2025, primarily due to a 40 basis point increase in the cost of funds.
• Retail channel sales decreased slightly due to a decrease in Multi-Year Guaranteed Annuity (MYGA) product sales.
• Pension group annuity inflows decreased to $751 million in 2025 from $918 million in 2024, impacted by a competitive environment and litigation against clients.
• Benefits and expenses increased by $5.5 billion to $20.6 billion in 2025, driven by higher interest sensitive contract benefits and market risk benefits remeasurement losses.
• Unfavorable net foreign exchange impacts and an increase in realized losses on Available-for-Sale (AFS) securities contributed to a $501 million decrease in investment related gains (losses).
• The company will record a full valuation allowance against Bermuda deferred tax assets in Q1 2026, resulting in a $1.7 billion reduction to adjusted common stockholders' equity.

Risks

• Business, financial condition, results of operations, liquidity, and cash flows depend on the accuracy of management's assumptions and estimates, which if inaccurate, could lead to significant gains or losses.
• A financial strength rating downgrade or other negative action by a rating agency could make product offerings less attractive, inhibit business acquisition, and increase capital costs.
• Operating in a highly competitive industry with numerous large and well-established competitors could limit the ability to achieve growth strategies.
• Significant reliance on third parties for various services (investment, distribution, administration) exposes the company to risks from their acts or omissions, including potential liability for misconduct.
• Artificial intelligence (AI) technologies could increase competitive, operational, legal, and regulatory risks, and failure to adopt AI effectively could lead to competitive disadvantages.
• Interruption or operational failures in telecommunications, information technology, and other operational systems, including cyber-attacks or human error, could materially adversely affect the business.
• The company is subject to significant operating and financial restrictions imposed by credit agreements and indentures, limiting operational flexibility and access to additional financing.
• Exposure to liquidity risk, the risk of being unable to meet near-term obligations, which could be exacerbated by adverse economic and geopolitical conditions.
• The amount of statutory capital required for insurance and reinsurance subsidiaries can vary significantly due to factors like statutory income/loss, reserve changes, market value fluctuations, and changes in RBC formulas.
• Investments are subject to market and credit risks, particularly during periods of extreme volatility, potentially diminishing their value and leading to losses.
• Interest rate fluctuations could adversely affect net investment spreads, asset values, prepayment rates, policyholder behavior, and the need to liquidate investments at a loss.
• Exposure to credit risk from counterparties, including ceding companies, reinsurers, plan sponsors, and derivative counterparties, could impact targeted returns.
• Investment portfolio may be subject to concentration risk in single issuers (e.g., Athora), industries (e.g., financial services), and asset classes (e.g., real estate).
• Many investments are relatively illiquid, potentially forcing sales at a loss to meet unexpected policyholder withdrawals or recapture obligations.
• Investments linked to real estate are subject to credit risk, market risk, servicing risk, and loss from catastrophic events, potentially diminishing their value.
• Investments in securities of non-US issuers, especially emerging markets, involve heightened risks compared to US issuers.
• Foreign currency fluctuations may reduce net income and capital levels if not fully hedged or if hedges are ineffective.
• Climate change-related risks, including transition and physical risks, and regulatory efforts to address climate change could adversely affect the business and investment portfolio.
• Continued heightened inflation may adversely impact business and results of operations by affecting product pricing assumptions and investment portfolio returns.
• Potential conflicts of interest exist between Apollo, the corporate parent, and the holders of preferred stock due to Apollo's control and management fees.
• Reliance on investment management agreements with Apollo, which Apollo may terminate, and limitations on the company's ability to terminate ACRA System IMAs, could adversely affect investment results.
• The historical investment portfolio performance of Apollo should not be considered indicative of future results or the ability to pay preferred stock dividends.
• The company's industry is highly regulated, and failure to comply with laws and regulations could result in penalties, reputational harm, or operational interruptions.
• Failure to obtain or maintain licenses and/or other regulatory approvals for insurance subsidiaries could materially adversely affect business operations and growth prospects.
• Changes in legal and regulatory requirements, including executive orders, could have a material adverse effect on the business.
• The tax treatment of the company's structure is complex and subject to change, potentially increasing tax liability due to new laws, regulations, or differing interpretations (e.g., BEPS, Pillar Two, Bermuda CIT).
• Ownership of certain non-US entities could lead to greater-than-expected US federal income tax exposure.
• The Base Erosion and Anti-Abuse Tax (BEAT) may significantly increase tax liability.
• AHL is a holding company, and its ability to pay dividends and debt obligations depends on distributions from subsidiaries, which may be legally restricted.
• The certificate of incorporation's exclusive forum provision for certain legal actions could limit stockholders' ability to choose a favorable judicial forum.

Future Outlook

The company plans to continue expanding its organic distribution channels, particularly in retail, flow reinsurance, and institutional markets, with a focus on international expansion in Asia. It aims to pursue attractive inorganic growth opportunities, expand its product offerings to meet evolving retirement needs, and leverage its merger with Apollo to source high-quality assets and access on-demand capital through ACRA. The US economy is projected to expand by 2.4% in 2026 and 2.0% in 2027, and RILAs are seen as a significant growth opportunity.

Management Comments

• Management believes its credit profile, current product offerings, product design capabilities, and reputation as a funding agreement issuer and pension group annuity counterparty will enable continued growth in organic channels.
• Management aims to grow the retail channel by deepening relationships with IMOs, banks, and broker-dealers, and expanding product launches and enhancements.
• Management expects its credit profile and reputation as a solutions provider to help source additional reinsurance partners and diversify the flow reinsurance channel.
• Management believes its corporate development team, supported by Apollo, has an industry-leading ability to source, underwrite, and expeditiously close transactions, making it an ideal partner for insurance companies seeking business restructuring.

Industry Context

StockSavvy.ai notes that Athene operates in a highly competitive and growing retirement services market, driven by an aging population and increasing demand for tax-efficient savings products. The company's multi-channel distribution platform and strategic partnership with Apollo Global Management provide a competitive advantage in sourcing long-term liabilities and high-quality assets. However, the pension risk transfer market is experiencing increased competition and litigation, which has impacted Athene's inflows in this segment. The broader financial services industry is also navigating evolving regulatory landscapes, including those related to AI and global minimum tax initiatives, which could introduce new compliance complexities and costs.

Comparison to Industry Standards

• Athene was the largest provider of annuities in the US for the nine months ended September 30, 2025, with a 7.7% market share, indicating a leading position.
• Athene was also the largest provider of fixed annuities in the US for the nine months ended September 30, 2025, holding a 10.6% market share, demonstrating strong performance in this segment.
• The company was the thirteenth largest provider of RILAs with a 1.8% market share for the nine months ended September 30, 2025, suggesting a smaller but growing presence in this higher-return potential product category.
• The Bermuda regulatory regime, to which Athene's reinsurance subsidiaries are subject, has been deemed equivalent to the European Union's Solvency II Directive, aligning with international prudential standards.

Management Changes

Corporate Governance

Legal Proceedings

• Putative class actions were filed in federal courts in the US against certain pension group annuity clients, alleging ERISA violations in connection with the transfer of pension obligations and purchase of pension group annuity contracts from the company.
• The lawsuits seek, among other things, that defendants guarantee the annuities purchased from the company and disgorge any profits earned from the transactions.
• The company is not a named defendant in these lawsuits, but negative allegations about the company and its business have adversely affected, and may continue to adversely affect, its ability to attract and retain customers in its pension group annuity business.
• These lawsuits could lead to increased regulatory and governmental scrutiny of the company's business and the industry overall, and/or result in the company becoming involved in these lawsuits or being named as a defendant in future lawsuits.

Related Party Transactions

• Apollo Global Management (AGM) owns 100% of the company's common stock and controls its board of directors, leading to potential conflicts of interest.
• Substantially all of the company's $386.6 billion investment portfolio is managed by Apollo, with management fees (base, sub-allocation, performance) totaling $1.441 billion in 2025.
• The company incurred $211 million in Apollo-Affiliated Service Provider (Apollo-ASP) Fees in 2025 for advisory services in private capital transactions.
• Apollo Fund Investments comprised 98% of the company's net alternative investment portfolio as of December 31, 2025, with fees ranging from 0% to 2% management fees and 0% to 20% carried interest.
• The company recognized $50 million in revenue in 2025 under a strategic cooperation agreement with an AGM subsidiary for participation in private capital transactions.
• The company consolidates Apollo Aligned Alternatives Aggregator, L.P. (AAA) and Apollo Aligned Alternatives Lux Aggregator, L.P. (AAA Lux) as Variable Interest Entities (VIEs), which hold the majority of its alternative investment portfolio.
• Investments in Athora Holding Ltd., a specialized European insurance and reinsurance group, totaled $1.487 billion as of December 31, 2025, including equity, preferred equity, and corporate debt securities. The company has a conditional commitment of $2.711 billion for additional investments in Athora.
• The company has an equity interest in Atlas Securitized Products Holdings LP and directly holds fixed income securities issued by Atlas, with net invested assets of $4.199 billion. The company also provides guarantees for Atlas's deferred purchase obligation to Credit Suisse AG.
• The company has a strategic modified coinsurance (modco) reinsurance agreement with Catalina Holdings (Bermuda) Ltd. affiliates, with a reinsurance recoverable balance of $6.336 billion as of December 31, 2025.
• Investments in MidCap FinCo Designated Activity Company and its affiliates totaled $1.926 billion in net invested assets as of December 31, 2025, including equity and fixed income securities.
• Investments in Skylign Aviation Holdings, L.P. totaled $718 million in net invested assets as of December 31, 2025, including equity and fixed income securities.
• Investments in VA Capital Company LLC and Venerable Holdings, Inc. totaled $696 million in net invested assets as of December 31, 2025, including equity and term loans receivable.
• The company directly holds $949 million in fixed income securities issued by Wheels Inc. and has commitments for an additional $60 million.
• ACRA 1 and ACRA 2 (Apollo/Athene Dedicated Investment Programs) provide on-demand capital, with the company receiving $466 million in capital contributions from ADIP and distributing $444 million to ADIP in 2025.
• The company has an unsecured revolving promissory note receivable from AGM with an outstanding balance of $227 million as of December 31, 2025.
• A tax sharing agreement with AGM resulted in a $231 million tax settlement payment received by the company in 2025 for the utilization of its tax attributes.
• A global services agreement with Rackspace US, Inc., an Apollo portfolio company, resulted in $0.7 million in fees paid in 2025 for IT services.

Stakeholder Impact

• Shareholders (common): Experienced a 20% decrease in net income available to common stockholders, but the long-term tax position is expected to improve due to Bermuda CIT revocation.
• Shareholders (preferred): Series C preferred stock was redeemed, impacting holders of that series. Overall preferred stock dividends decreased due to the redemption.
• Policyholders: Continued strong product offerings and distribution channels aim to meet growing retirement needs. However, litigation against pension group annuity clients could affect confidence in the pension risk transfer business.
• Employees: Management changes at the executive level, including new CEO and CFO appointments. Compensation programs are designed to attract, retain, and motivate talent, with annual incentive awards and long-term incentives tied to company performance.
• Customers: Expansion of product offerings (GIC, structured settlements) and distribution channels aims to provide more solutions. Focus on improving customer experience and product innovation.
• Regulators: Increased scrutiny on AI technologies, global minimum tax initiatives (Pillar Two), and group supervision (IAIG designation) will require ongoing compliance and adaptation.
• Apollo Global Management: Continues to benefit from significant management fees from the company's investment portfolio and strategic partnerships. Leadership roles are shared between the two entities, indicating continued close alignment.

Next Steps

• Expand organic distribution channels, particularly in retail, flow reinsurance, and institutional markets, with a focus on international expansion in Asia.
• Continue to innovate and develop new products suitable for defined contribution plans, stable value funds, health savings accounts, and international retirement markets.
• Leverage the merger with Apollo to source high-quality assets and access on-demand capital through ACRA.
• Capitalize on future market dislocations to opportunistically reposition the investment portfolio to capture incremental yield.
• Complete the acquisition of an approximately $9 billion portfolio of commercial mortgage loans from Apollo Commercial Real Estate Finance, Inc. (ARI), expected in Q2 2026.
• Monitor and adapt to evolving legal and regulatory frameworks related to artificial intelligence and global minimum tax initiatives (Pillar Two).

Key Dates

Recommendation

The company exhibits strong underlying business fundamentals with significant organic growth in inflows and a robust capital position. However, the notable decrease in net income available to common stockholders and the reduction in net investment spread in 2025, coupled with ongoing litigation risks in the pension group annuity segment and the near-term negative impact of the Bermuda CIT revocation on equity, suggest a 'hold' recommendation. While long-term prospects are supported by strategic initiatives and the Apollo partnership, these headwinds warrant a cautious stance until clearer trends emerge in profitability and risk resolution.

Keywords

Annuities, Reinsurance, Investment Management, Financial Services, SEC Filing, 10-K, Fixed Indexed Annuities, Funding Agreements, Capital Management, Apollo Global Management, Risk Management, Corporate Governance, Bermuda Corporate Income Tax, Financial Performance, Insurance, Asset Management, Preferred Stock, Subordinated Debentures, Market Share, Regulatory Compliance