Athene CEO: New Deals, Multichannel Strategy Drive Growth for Company
February 26, 2018 by David Pilla
PEMBROKE, Bermuda – A strong multichannel strategy and significant new deals are driving growth for life reinsurer Athene Holding Ltd., said the company’s chief executive officer.
CEO James Belardi said in a conference call 2017 “was a milestone year” for Athene as it “executed on all four of our distribution channels.” He added the institutional channel had a strong level of new deposits. Retirement services and retail also had strong results, he said.
Belardi added Athene expanded both its product offerings and distribution arrangements, and with “in-flow reinsurance” it recently signed Lincoln Financial as a new partner.
“Of particular note in 2017 was our success in our institutional channel,” which he said had $5.3 billion in deposits, of which $3 billion were in funding agreements and $2.3 billion in pension risk transfer obligations, “both sources of deposits we did not have in 2016.”
A transaction of note for Athene was with Voya Financial, reinsuring $19 billion of fixed and fixed-index annuities liabilities. Belardi said Athene expects to deploy about $1 billion of total capital for that transaction.
Voya said in December it would divest its closed-block variable annuity and individual fixed and fixed indexed annuity businesses through an agreement with a consortium of investors led by affiliates of Apollo Global Management LLC, Crestview Partners and Reverence Capital Partners (Best’s News Service, Dec. 21, 2017). Athene and Voya are both participating in the consortium, with Voya holding a 9.9% equity stake in Venerable Holdings, a newly formed investment vehicle owned by the consortium.
The account value of the closed-blocked variable annuity segment is about $35 billion, based on account balances as of June 30, Voya said in December.
“This transaction demonstrates both Athene’s and Apollo’s expertise and financial capability to provide creative and customized solutions to take advantage of the ongoing restructuring of the life insurance industry,” Belardi said.
Belardi told Best’s News Service the Voya transaction was a good example of what Athene can accomplish in partnership with Apollo. He added Apollo “knew the variable annuity space,” could price and hedge it and was knowledgeable about it. “They knew how to bid for that piece of the business and that was the main instigator for the transaction with Voya,” he said.
Athene wanted to reinsure the fixed-annuity part of the Voya deal, and Apollo was able to help Athene get that done as a partner, he said. Belardi said that partnership may “form a template for future deals.”
Belardi told Best’s News Service in addition to the Voya transaction, Athene’s $5.3 billion in deals through the institutional channel highlighted 2017 as a year of growth. “We think we’re very well-positioned in both of those areas for a very good 2018 as well,” he said.
With the Voya transaction set to close around mid-2018, Belardi told Best’s News Service “we’re aggressively pursuing other inorganic growth opportunities.”
With respect to recently enacted U.S. tax reform, Belardi said Athene expects to maintain its competitive position in the market with a tax rate of about 14%.
Looking to 2018, Belardi said Athene is “perfectly positioned,” in part because interest rates are rising. “Everything about our company is better in a higher rate environment,” he said to Best’s News Service. “Sales are better, the asset portfolio performs better. We welcome that.”
Fourth-quarter net income for Athene rose to $464 million from $364 million in the same quarter a year earlier. Total revenue rose to $3.87 billion from $1.07 billion.
Underwriting affiliates of Athene Holding Ltd. have current Best’s Financial Strength Ratings of A (Excellent).
Shares of Athene Holding Ltd. (NYSE: ATH) were trading at $47.26 on the afternoon of Feb. 22, down 2.80% from the previous close.
(By David Pilla, news editor, BestWeek: David.Pilla@ambest.com)
BN-NJ-2-22-2018 1602 ET #
