Filed Pursuant to Rule 424(b)(5)
Registration No. 333-222392

 

The information in this preliminary prospectus supplement and the accompanying prospectus is not complete and may be changed. A registration statement relating to these securities became effective under the Securities Act of 1933, as amended. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to Completion, dated January 3, 2018

PRELIMINARY PROSPECTUS SUPPLEMENT

(To Prospectus dated January 3, 2018)

 

 

 

$                    

Athene Holding Ltd.

                     % Senior Notes due 20        

 

 

We are offering $                 aggregate principal amount of our         % Senior Notes due 20     (the “notes”). We will pay interest on the notes on                  and                  of each year, commencing on                      , 2018.

The stated maturity of the notes will be             , 20     . We may redeem some or all of the notes at any time and from time to time at the applicable redemption prices as further described under “Description of the Senior Notes—Optional Redemption” and all (but not less than all) of the notes in specific circumstances as further described under “ – Optional Redemption for Changes in Tax Law.” We will be required to redeem all of the notes under the circumstances and at the redemption price described in this prospectus supplement under the heading “Description of the Senior Notes – Special Mandatory Redemption.”

The notes will be our senior unsecured obligations and will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including interest sensitive contract liabilities, future policy benefits and other payables) of our subsidiaries.

We do not intend to apply for listing of the notes on any securities exchange or for inclusion of the notes in any automated quotation system.

Investing in the notes involves risks. See “Risk Factors” beginning on page S-15 of this prospectus supplement and on page 2 of the accompanying prospectus, as well as the risks described in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, to read about important factors you should consider before making a decision to invest in the notes.

 

		Per Note				Total
Price to the public			%			$
Underwriting discounts and commissions(1)			%			$
Proceeds to us (before expenses)(2)			%			$

 

(1)	See “Underwriting” for a detailed description of compensation payable to the underwriters.

(2)	Plus accrued interest, if any, from             , 2018.

Neither the Securities and Exchange Commission, any state securities commission, the Registrar of Companies in Bermuda, the Bermuda Monetary Authority (the “BMA”) or any other regulatory body has approved or disapproved of these notes or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the notes in book-entry form on or about                , 2018.

 

 

Joint Book-Running Managers

 

Barclays		Goldman Sachs & Co. LLC		Wells Fargo Securities

 

BofA Merrill Lynch		Citigroup		Credit Suisse

Deutsche Bank Securities		RBC Capital Markets

 

The date of this prospectus supplement is                , 2018.

TABLE OF CONTENTS

 

		Page
Prospectus Supplement
ABOUT THIS PROSPECTUS SUPPLEMENT			S-1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			S-2
PROSPECTUS SUPPLEMENT SUMMARY			S-4
RISK FACTORS			S-15
USE OF PROCEEDS			S-18
CAPITALIZATION			S-19
DESCRIPTION OF THE SENIOR NOTES			S-20
TAX CONSIDERATIONS			S-32
UNDERWRITING			S-35
LEGAL MATTERS			S-42
EXPERTS			S-42
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE			S-43

 

		Page
Prospectus
ABOUT THIS PROSPECTUS			1
RISK FACTORS			2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			2
INDUSTRY AND MARKET DATA			4
ENFORCEMENT OF CIVIL LIABILITIES UNDER U.S. FEDERAL SECURITIES LAWS			4
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE			5
OUR COMPANY			6
USE OF PROCEEDS			7
RATIO OF EARNINGS TO FIXED CHARGES			7
DESCRIPTION OF SECURITIES			7
DESCRIPTION OF DEBT SECURITIES			8
DESCRIPTION OF SHARE CAPITAL			16
COMPARISON OF SHAREHOLDER RIGHTS			25
DESCRIPTION OF DEPOSITARY SHARES			32
DESCRIPTION OF WARRANTS			34
DESCRIPTION OF UNITS			36
PLAN OF DISTRIBUTION			36
LEGAL OPINIONS			38
EXPERTS			38

You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus or in any free writing prospectus that we file with the Securities and Exchange Commission (the “SEC”) relating to this offering. Neither we, nor the underwriters, have authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. This prospectus supplement and the accompanying prospectus is an offer to sell only the notes offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. You should assume the information contained in this prospectus supplement, the accompanying prospectus and any free writing prospectus we authorize to be delivered to you and the documents incorporated by reference herein and therein is accurate only as of their respective dates or the date or dates specified in those documents. Our business, financial condition, results of operations or prospects may have changed since those dates.

 

S-i

ABOUT THIS PROSPECTUS SUPPLEMENT

This prospectus supplement is a supplement to the accompanying prospectus that is also a part of this document. The accompanying prospectus is part of a registration statement that we have filed with the SEC using a shelf registration process. Under the shelf registration process, from time to time, we may offer Class A common shares, preferred shares, depositary shares, debt securities, warrants and units. In the accompanying prospectus, we provide you with a general description of the securities we may offer from time to time under this shelf registration statement. In this prospectus supplement, we provide you with specific information about the notes that we are selling in this offering. Both this prospectus supplement and the accompanying prospectus include, or incorporate by reference, important information about us, the securities being offered and other information you should know before making a decision to invest in the notes. This prospectus supplement also adds to, updates and changes information contained or incorporated by reference in the accompanying prospectus. If any specific information regarding the notes in this prospectus supplement is inconsistent with the more general description of the securities in the accompanying prospectus, you should rely on the information contained in this prospectus supplement. You should read this prospectus supplement, the accompanying prospectus and any free writing prospectus we file with the SEC in connection with this offering, as well as the additional information described under “Where You Can Find More Information; Incorporation By Reference” in this prospectus supplement, before making a decision to invest in the notes. In particular, you should review the information under the heading “Risk Factors” included in this prospectus supplement, in our Annual Report on Form 10-K for the year ended December 31, 2016, and our quarterly reports on Form 10-Q that were filed subsequent thereto, all of which are incorporated by reference herein.

Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the BMA for the issue and transfer of the notes to and between persons resident and non-resident of Bermuda for exchange control purposes. Neither the BMA nor the Registrar of Companies in Bermuda accepts any responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus supplement and the accompanying prospectus.

Unless otherwise stated or the context otherwise requires, references in this prospectus to “Athene,” “we,” “our,” “us,” or “the Company” refer to Athene Holding Ltd., together with its consolidated subsidiaries, while references to “the issuer” or “AHL” refer only to Athene Holding Ltd. on an unconsolidated basis. Additionally, in this prospectus supplement and the accompanying prospectus, unless otherwise stated or the context otherwise requires, references to “dollars,” or “$” are to the lawful currency of the United States.

 

S-1

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus supplement, the accompanying prospectus and in the documents that we incorporate by reference herein and therein, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “seek,” “assume,” “believe,” “may,” “will,” “should,” “could,” “would,” “likely” and other words and terms of similar meaning, including the negative of these or similar words and terms, in connection with any discussion of the timing or nature of future operations or financial performance or other events. However, not all forward-looking statements contain these identifying words. Forward-looking statements appear in a number of places throughout this prospectus supplement, the accompanying prospectus and the documents that we incorporate by reference herein and therein and give our current expectations and projections relating to our financial condition, results of operations, plans, strategies, objectives, future performance, business and other matters.

We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated results of operations, financial condition and liquidity may differ materially from those made in or suggested by the forward-looking statements contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. There can be no assurance that actual developments will be those anticipated by us. In addition, even if our consolidated results of operations, financial condition and liquidity are consistent with the forward-looking statements contained in this prospectus supplement and the accompanying prospectus, those results or developments may not be indicative of results or developments in subsequent periods. A number of important factors could cause actual results or conditions to differ materially from those contained or implied by the forward-looking statements, including the risks set forth in the sections entitled “Risk Factors” contained and incorporated by reference in this prospectus supplement and the accompanying prospectus. Factors that could cause actual results or conditions to differ from those reflected in the forward-looking statements contained or incorporated by reference in this prospectus supplement and the accompanying prospectus include but are not limited to:

 

•

the accuracy of management’s assumptions and estimates;

 

•

variability in the amount of statutory capital that our insurance and reinsurance subsidiaries have or are required to hold;

 

•

interest rate fluctuations;

 

•

our potential need for additional capital in the future and the potential unavailability of such capital to us on favorable terms or at all;

 

•

changes in relationships with important parties in our product distribution network;

 

•

the activities of our competitors and our ability to grow our retail business in a highly competitive environment;

 

•

the impact of general economic conditions on our ability to sell our products and the fair value of our investments;

 

•

our ability to successfully acquire new companies or businesses and/or integrate such acquisitions into our existing framework;

 

•

downgrades, potential downgrades or other negative actions by rating agencies;

 

S-2

•

our dependence on key executives and inability to attract qualified personnel, or the potential loss of Bermudian personnel as a result of Bermuda employment restrictions;

 

•

market and credit risks that could diminish the value of our investments;

 

•

foreign currency fluctuations;

 

•

the impact of changes to the creditworthiness of our reinsurance and derivative counterparties;

 

•

changes in consumer perception regarding the desirability of annuities as retirement savings products;

 

•

introduction of the proposed European Union financial transaction tax;

 

•

potential litigation (including class action litigation), enforcement investigations or regulatory scrutiny against us and our subsidiaries, which we may be required to defend against or respond to;

 

•

the impact of new accounting rules or changes to existing accounting rules on our business;

 

•

interruption or other operational failures in telecommunication and information technology and other operating systems, as well as our ability to maintain the security of those systems;

 

•

the termination by Athene Asset Management, L.P. (“AAM”) of its investment management or advisory agreements with us and limitations on our ability to terminate such arrangements;

 

•

AAM’s dependence on key executives and inability to attract qualified personnel;

 

•

increased regulation or scrutiny of alternative investment advisers and certain trading methods;

 

•

potential changes to regulations affecting, among other things, transactions with our affiliates, the ability of our subsidiaries to make dividend payments or distributions to us, acquisitions by or of us, minimum capitalization and statutory reserve requirements for insurance companies and fiduciary obligations on parties who distribute our products;

 

•

suspension or revocation of our subsidiaries’ insurance and reinsurance licenses;

 

•

the issuer or Athene Life Re Ltd. (“ALRe”) becoming subject to U.S. federal income taxation;

 

•

adverse changes in U.S. tax law;

 

•

our being subject to U.S. withholding tax under the Foreign Account Tax Compliance Act (“FATCA”);

 

•

our potential inability to pay dividends or distributions; and

 

•

other risks and factors listed under “Risk Factors” and elsewhere in this prospectus supplement, the accompanying prospectus and the documents that we incorporate by reference herein and therein.

We caution you that the important factors referenced above may not be exhaustive. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect or anticipate. In light of these risks, you should not place undue reliance upon any forward-looking statements contained or incorporated by reference in this prospectus supplement or the accompanying prospectus or the documents that we incorporate herein by reference. Forward-looking statements speak only as of the date they are made. We undertake no obligation, except as may be required by law, to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the dates of the documents in which such statements were made.

 

S-3

PROSPECTUS SUPPLEMENT SUMMARY

The information below is only a summary of more detailed information included elsewhere in or incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary may not contain all the information that is important to you or that you should consider before making a decision to invest in the notes in this offering. The other information is important, so please read this entire prospectus supplement and the accompanying prospectus, as well as the information incorporated by reference herein and therein carefully.

Our Company

We are a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. We generate attractive financial results for our policyholders and shareholders by combining our two core competencies of (1) sourcing long-term, generally illiquid liabilities and (2) investing in a high-quality investment portfolio, which takes advantage of the illiquid nature of our liabilities. Our steady and significant base of earnings generates capital that we opportunistically invest across our business to source attractively-priced liabilities and capitalize on opportunities. Our differentiated investment strategy benefits from our strategic relationship with Apollo Global Management, LLC (“Apollo”) and its indirect subsidiary, AAM. AAM provides a full suite of services for our investment portfolio, including direct investment management, asset allocation, mergers and acquisition asset diligence and certain operational support services, including investment compliance, tax, legal and risk management support. Our relationship with Apollo and AAM also provides us with access to Apollo’s investment professionals across the world as well as Apollo’s global asset management infrastructure across a broad array of asset classes. We are led by a highly skilled management team with extensive industry experience. We are based in Bermuda with our U.S. subsidiaries’ headquarters located in Iowa.

The issuer is a holding company for its insurance subsidiaries and does not have any significant operations of its own. The principal sources of cash to meet the issuer’s obligations are dividends, returns of capital, loans or advances or other intercompany transfers of funds from its subsidiaries. The issuer’s insurance subsidiaries are subject to regulatory restrictions on the payment of dividends imposed by the regulators of their respective domiciles. The dividend limitation for Bermuda insurance subsidiaries is based on the statutory capital and surplus as of the immediately preceding calendar year. The dividend limitation for U.S. insurance subsidiaries is based on the surplus to policyholders as of the immediately preceding calendar year and statutory net gain from operations of the immediately preceding calendar year.

The issuer is an exempted company organized under the laws of Bermuda. Our principal executive offices are located at Chesney House, First Floor, 96 Pitts Bay Road, Pembroke, HM08, Bermuda, and our telephone number is (441) 279-8400. Our website address is www.athene.com. Information contained on our website or connected thereto does not constitute a part of, and is not incorporated by reference into, this prospectus supplement or the accompanying prospectus.

Recent Developments

Voya Transaction

On December 21, 2017, we announced that we had entered into an agreement with Voya Financial, Inc. (“Voya”) to reinsure approximately $19 billion of fixed and fixed indexed annuity liabilities. In addition, it was also announced that a consortium of investors, led by affiliates of Apollo Global Management LLC (“Apollo”), Crestview Partners, L.P. and Reverence Capital Partners, L.P., had agreed to purchase Voya Insurance and

 

S-4

Annuity Company (“VIAC”), including its Closed Block Variable Annuity segment, and create a newly formed standalone entity (“Venerable Holdings, Inc.” or “Venerable”) that will be the holding company to VIAC. Additionally, we intend to make a $75 million minority equity investment in VA Capital Company LLC (“VA Capital”), the parent of Venerable, and provide debt financing to Venerable in an amount equal to $150 million, in each case, subject to certain closing adjustments. Voya will also make an approximately $35 million equity investment in VA Capital, subject to certain closing adjustments, and following the closing of the transaction, will continue to hold $350 million of existing surplus notes issued by VIAC.

As part of the transaction, Venerable, directly or through VIAC, will administer the fixed and variable annuity blocks. In connection with these announced transactions (collectively, the “Transaction”), in addition to our upfront reinsurance of $19 billion of fixed and fixed indexed annuity liabilities, we also secured the rights to reinsure liabilities that will be created from the subsequent annuitization of certain of Venerable’s variable annuities to fixed payout annuities, which are estimated to total approximately $8 billion over the life of the block. We also secured the right to reinsure fixed annuities arising from future acquisitions made by VA Capital.

The Transaction represents a compelling opportunity for us to deploy approximately $1 billion of additional capital into a large-scale block of fixed and fixed index annuities that are substantially similar to our existing deferred annuities. We believe we will be able to enhance profitability of the reinsured block, by drawing on our asset management relationship with AAM to redeploy the transferred investment portfolio to increase yields through bespoke investment opportunities sourced by AAM in line with our current investment strategy. In addition, the Transaction provides us with the opportunity to meaningfully augment our organic distribution channel by pursuing Voya’s existing fixed annuity distribution relationships which, if successful, will provide greater funding diversity for our business. We currently expect the Transaction, if consummated, to be accretive to earnings and operating returns.

We believe the Transaction is highly strategic for Athene and a compelling example of how our association with Apollo enables us to deliver creative solutions to the insurance industry. The Transaction is expected to close during the second or third quarter of 2018, subject to regulatory approvals and other customary closing conditions.

Effect of Tax Reform

On December 22, 2017, President Trump signed into law Public Law no. 115-97, the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (the “Tax Act”), which introduced significant changes to the U.S. Internal Revenue Code of 1986, as amended (the “Code”).

The Tax Act reduces corporate income tax rates to 21% beginning in 2018, and also imposes a new minimum tax, called the Base Erosion and Anti-abuse Tax (“BEAT”), which taxes the “modified taxable income” of an “applicable taxpayer” at a rate of 5% in 2018, 10% in 2019-2025, and 12.5% in 2026 and thereafter. In general, modified taxable income is calculated by adding back to a taxpayer’s regular taxable income the amount of certain “base erosion tax benefits” with respect to certain payments to foreign affiliates, as well as the “base erosion percentage” of any net operating loss deductions. The BEAT applies only to the extent it exceeds a taxpayer’s regular corporate income tax liability (determined without regard to certain tax credits). The BEAT is expected to apply to our U.S. subsidiaries, including with respect to payments to our Bermuda subsidiary, ALRe. There is significant uncertainty regarding the application of the BEAT to affiliate reinsurance arrangements. At this time, it is our belief that the BEAT is generally intended to apply to the net amount paid or accrued by our U.S. subsidiaries to ALRe for premium and investment income, reduced by reserve increases and expenses. If the BEAT is applied consistent with our current expectations, we believe that it will result in a modest increase in our effective tax rate. However, it is possible that the U.S. Internal Revenue

 

S-5

 

S-6

The Offering

The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more detailed description of the terms of the notes, see “Description of the Senior Notes” in this prospectus supplement and “Description of Debt Securities” in the accompanying prospectus.

 

Issuer

Athene Holding Ltd., an exempted company organized under the laws of Bermuda.

 

Securities Offered

$         aggregate principal amount of         % Senior Notes due 20     .

 

Maturity

The notes will mature on             , 20     .

 

Interest Payment Dates

We will pay interest on the notes semi-annually in arrears on                      and                      of each year, commencing on             , 2018.

 

Interest on the notes will accrue from             , 2018.

 

Interest Rate

The notes will bear interest at         % per year.

 

Optional Redemption

We may redeem some or all of the notes at any time and from time to time at the applicable redemption price described herein under “Description of the Senior Notes – Optional Redemption.”

 

We may also redeem all, but not less than all, of the notes, at our option (a “tax redemption”), if certain events relating to changes in applicable tax law occur. The redemption price in the event of a tax redemption will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. See “Description of the Senior Notes – Optional Redemption – Optional Redemption for Changes in Tax Law.”

 

Special Mandatory Redemption

If, for any reason, the Transaction is terminated prior to consummation, we will be required to redeem all, but not less than all, of the notes, for a redemption price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest to, but excluding, the Special Mandatory Redemption Date (as defined herein). See “Description of the Senior Notes – Special Mandatory Redemption.”

 

Certain Covenants

The supplemental indenture governing the notes will contain certain restrictions, including restrictions on our ability and the ability of certain of our subsidiaries to create or incur certain liens on the capital stock of certain subsidiaries, dispose of stock of certain subsidiaries, and merge, consolidate, sell or transfer assets. These covenants are subject to a number of important exceptions. See “Description of the Senior Notes – Restrictive Covenants.”

 

S-7

Events of Default

The indenture governing the notes will provide that certain events will constitute an event of default with respect to the notes. See “Description of the Debt Securities – Events of Default, Notice and Waiver” in the accompanying prospectus.

 

Ranking

The notes will be our senior unsecured obligations and will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including interest sensitive contract liabilities, future policy benefits and other payables) of our subsidiaries. See “Description of the Senior Notes – Ranking.”

 

Form and Denomination

The notes will be issued in fully registered form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

Use of Proceeds

We estimate that the proceeds from this offering will be approximately $                 after deducting underwriting discounts and estimated offering expenses. We intend to use the net proceeds of this offering for our general corporate purposes. See “Use of Proceeds.”

 

No Listing

We do not intend to apply to list the notes on any securities exchange or to have the notes quoted on any automated quotation system.

 

Governing Law

The notes and the indenture governing the notes will be governed by and construed in accordance with the laws of the State of New York.

 

Trustee

U.S. Bank National Association.

 

Risk Factors

You should carefully read and consider the information set forth in the section entitled “Risk Factors” beginning on page S-15 of this prospectus supplement and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2016, and our quarterly reports on Form 10-Q that were filed subsequent thereto, which are incorporated by reference herein, before investing in the notes.

 

S-8

 

S-9

 

S-10

Non-GAAP Measures

In addition to our results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), our results of operations include certain non-GAAP measures commonly used in our industry. Management believes the use of these non-GAAP measures, together with the relevant GAAP measures, provides information that may enhance an investor’s understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See below for the appropriate reconciliations to the GAAP measures.

Non-GAAP Measure Reconciliations

The following are reconciliations of operating income, net of tax, weighted average shares outstanding – operating diluted Class A common shares and operating income, net of tax – per operating diluted Class A common share to their corresponding GAAP measures, net income available to AHL shareholders, basic weighted average shares outstanding – Class A common shares and basic earnings per share – Class A common shares, respectively, for the periods presented below (dollars in millions, except per share data):

 

		Nine months ended September 30,								Years ended December 31,
		2017				2016				2016				2015				2014				2013				2012
Operating income, net of tax		$	777			$	448			$	728			$	738			$	785			$	775			$	232
Non-operating adjustments
Investment gains (losses), net of offsets			140				98				47				(56	)			152				(5	)			228
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets			155				(88	)			95				(25	)			(30	)			154				(38	)
Integration, restructuring and other non-operating expenses			(34	)			(8	)			(22	)			(58	)			(279	)			(184	)			(38	)
Stock compensation expense			(30	)			(59	)			(82	)			(67	)			(148	)			—				—
Bargain purchase gain			—				—				—				—				—				152				(2	)
Income tax (expense) benefit – non-operating			(24	)			13				2				30				(24	)			21				(5	)
Total non-operating adjustments			207				(44	)			40				(176	)			(329	)			138				145
Net income available to AHL shareholders		$	984			$	404			$	768			$	562			$	456			$	913			$	377
Segment Data
Retirement Services		$	786			$	535			$	777			$	767			$	756			$	414
Corporate and Other			(9	)			(87	)			(49	)			(29	)			29				361
Operating income, net of tax		$	777			$	448			$	728			$	738			$	785			$	775

 

S-11

		Nine months ended September 30,								Years ended December 31,
		2017				2016				2016				2015				2014				2013				2012
Basic weighted average shares outstanding – Class A			101,506,304				49,960,549				52,086,945				41,214,402				11,105,082				494,201				388,126
Conversion of Class B shares to Class A shares			87,703,973				135,963,975				134,445,840				133,877,400				118,414,026				113,012,256				66,955,171
Conversion of Class M shares to Class A shares			6,174,852				—				6,609,590				—				—				—				—
Effect of other stock compensation plans			428,465				92,338				229,121				86,846				11				9				—
Effect of equity swap			—				—				—				—				2,089,345				1,603,564				—
Weighted average shares outstanding – operating diluted Class A common shares			195,813,594				186,016,862				193,371,496				175,178,648				131,608,464				115,110,030				67,343,297

 

		Nine months ended September 30,								Years ended December 31,
		2017				2016				2016				2015				2014				2013				2012
Operating income, net of tax – per operating diluted Class A common share		$	3.97			$	2.41			$	3.77			$	4.21			$	5.97			$	6.73			$	3.45
Non-operating adjustments
Investment gains (losses), net of offsets			0.71				0.53				0.24				(0.33	)			1.16				(0.04	)			3.38
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets			0.79				(0.49	)			0.50				(0.14	)			(0.24	)			1.33				(0.56	)
Integration, restructuring and other non-operating expenses			(0.17	)			(0.05	)			(0.12	)			(0.33	)			(2.12	)			(1.61	)			(0.57	)
Stock compensation expense			(0.15	)			(0.32	)			(0.42	)			(0.38	)			(1.12	)			—				—
Bargain purchase gain			—				—				—				—				—				1.33				(0.03	)
Income tax (expense) benefit – non-operating			(0.12	)			0.08				0.01				0.17				(0.18	)			0.19				(0.08	)
Total non-operating adjustments			1.06				(0.25	)			0.21				(1.01	)			(2.50	)			1.20				2.14
Effect of items convertible to or settled in Class A common shares			0.02				0.02				0.13				0.01				0.05				0.11				—
Basic earnings per share – Class A common shares		$	5.05			$	2.18			$	4.11			$	3.21			$	3.52			$	8.04			$	5.59

 

S-12

The following is a reconciliation of total AHL shareholders’ equity excluding AOCI, which is used in calculating ROE excluding AOCI and book value per share excluding AOCI, to its corresponding GAAP measure, total AHL shareholders’ equity, for the periods presented (dollars in millions):

 

		Nine months ended September 30,								December 31,
		2017				2016				2016				2015				2014				2013				2012
Total AHL shareholders’ equity		$	8,669			$	7,031			$	6,858			$	5,352			$	4,545			$	2,758			$	1,863
Less: AOCI			1,162				920				367				(237	)			644				70				219
Total AHL shareholders’ equity excluding AOCI		$	7,507			$	6,111			$	6,491			$	5,589			$	3,901			$	2,688			$	1,644
Segment Data:
Retirement Services		$	5,371			$	4,542			$	4,448			$	3,964			$	2,797			$	1,938
Corporate and Other			2,136				1,569				2,043				1,625				1,104				750
Total AHL shareholders’ equity excluding AOCI		$	7,507			$	6,111			$	6,491			$	5,589			$	3,901			$	2,688

The following is a reconciliation of operating diluted Class A common shares outstanding to its corresponding GAAP measure, Class A common shares outstanding.

 

		September 30, 2017				December 31,
						2016				2015				2014				2013				2012
Class A common shares outstanding			119,874,134				77,035,785				50,151,265				15,752,736				494,200				494,200
Conversion of Class B shares to Class A shares			69,544,914				111,805,829				135,963,975				125,282,892				114,605,747				111,594,479
Conversion of Class M shares to Class A shares			6,702,455				6,809,252				—				—				—				—
Effect of other stock compensation plans			918,162				749,415				—				—				—				—
Effect of equity swap			—				—				—				2,311,852				5,241,935				—
Operating diluted Class A common shares outstanding			197,039,665				196,400,281				186,115,240				143,347,480				120,341,882				112,088,679

The following is a reconciliation of book value per share, excluding AOCI to the corresponding GAAP measure, book value per share.

 

		September 30, 2017				December 31,
						2016				2015				2014				2013				2012
Book value per share		$	44.16			$	35.66			$	28.76			$	32.22			$	23.96			$	16.61
AOCI			(5.92	)			(1.91	)			1.28				(4.56	)			(0.60	)			(1.95	)
Effect of items convertible to or settled in Class A common shares			(0.14	)			(0.70	)			—				(0.45	)			(1.02	)			—
Book value per share, excluding AOCI		$	38.10			$	33.05			$	30.04			$	27.21			$	22.34			$	14.66

 

S-13

The following is Retirement Services’ investment margin and its components, net investment earned rate and cost of crediting, each reconciled to their corresponding GAAP measure, net investment income and interest sensitive contract benefits, respectively, for the period presented below (dollars in millions):

 

		Nine months ended September 30,																Years ended December 31,
		2017								2016								2016								2015								2014								2013
		Dollar				Rate				Dollar				Rate				Dollar				Rate				Dollar				Rate				Dollar				Rate				Dollar				Rate
Retirement Services:
Net investment earned rate							4.75	%							4.64	%							4.72	%							4.37	%							4.26	%							5.40	%
Cost of crediting on deferred annuities							1.89	%							1.97	%							1.96	%							1.92	%							1.94	%							2.42	%
Investment margin on deferred annuities							2.86	%							2.67	%							2.76	%							2.45	%							2.32	%							2.98	%
GAAP net investment income		$	2,427				4.31	%		$	2,137				4.12	%		$	2,914				4.19	%		$	2,510				4.06	%		$	2,333				3.94	%		$	1,074				4.14	%
Reinsurance embedded derivative impacts			137				0.25	%			144				0.28	%			189				0.27	%			84				0.15	%			67				0.11	%			155				0.59	%
Net VIE earnings			59				0.10	%			(43	)			(0.08	)%			1				0.00	%			67				0.11	%			146				0.25	%			536				2.06	%
Alternative income gain (loss)			(11	)			(0.02	)%			(34	)			(0.07	)%			(39	)			(0.06	)%			(42	)			(0.07	)%			4				0.01	%			(22	)			(0.08	)%
Held for trading amortization			(50	)			(0.09	)%			(21	)			(0.04	)%			(35	)			(0.05	)%			(9	)			(0.01	)%			(12	)			(0.02	)%			(13	)			(0.05	)%
Total adjustments to arrive at net investment earnings/earned rate			135				0.24	%			46				0.09	%			116				0.16	%			100				0.18	%			205				0.35	%			656				2.52	%
Total net investment earnings/earned rate		$	2,562				4.55	%		$	2,183				4.21	%		$	3,030				4.35	%		$	2,610				4.24	%		$	2,538				4.29	%		$	1,730				6.66	%
Retirement Services		$	2,412				4.75	%		$	2,155				4.64	%		$	2,953				4.72	%		$	2,574				4.37	%		$	2,483				4.26	%		$	1,363				5.40	%
Corporate and Other			150				2.71	%			28				0.53	%			77				1.08	%			36				1.38	%			55				5.91	%			367				49.25	%
Total net investment earnings/earned rate		$	2,562				4.55	%		$	2,183				4.21	%		$	3,030				4.35	%		$	2,610				4.24	%		$	2,538				4.29	%		$	1,730				6.66	%
Retirement Services average invested assets		$	67,722							$	62,009							$	62,558							$	58,924							$	58,290							$	25,220
Corporate and Other average invested assets			7,398								7,120								7,113								2,567								923								745
Consolidated average invested assets		$	75,120							$	69,129							$	69,671							$	61,491							$	59,213							$	25,965
GAAP interest sensitive contract benefits		$	1,866				4.43	%		$	1,081				2.83	%		$	1,296				2.49	%		$	689				1.42	%		$	1,822				3.77	%		$	1,062				5.23	%
Interest credited other than deferred annuities			(109	)			(0.26	)%			(91	)			(0.24	)%			(108	)			(0.21	)%			(98	)			(0.20	)%			(107	)			(0.22	)%			(39	)			(0.20	)%
FIA option costs			448				1.08	%			416				1.08	%			559				1.08	%			510				1.04	%			442				0.92	%			131				0.65	%
Product charges (strategy fees)			(53	)			(0.13	)%			(38	)			(0.10	)%			(53	)			(0.10	)%			(33	)			(0.07	)%			(11	)			(0.02	)%			(1	)			(0.00	)%
Reinsurance embedded derivative impacts			27				0.06	%			21				0.05	%			29				0.06	%			18				0.04	%			14				0.03	%			13				0.06	%
Change in fair value of embedded derivatives – FIAs			(1,397	)			(3.32	)%			(669	)			(1.74	)%			(735	)			(1.42	)%			(169	)			(0.35	)%			(1,294	)			(2.68	)%			(699	)			(3.44	)%
Negative VOBA amortization			30				0.07	%			36				0.09	%			48				0.09	%			68				0.14	%			73				0.15	%			33				0.16	%
Unit linked change in reserves			(17	)			(0.04	)%			(1	)			(0.00	)%			(15	)			(0.03	)%			(27	)			(0.06	)%			—				—	%			—				—	%
Other changes in interest sensitive contract liabilities			—				—	%			—				—	%			(2	)			(0.00	)%			(18	)			(0.04	)%			(3	)			(0.01	)%			(9	)			(0.04	)%
Total adjustments to arrive at cost of crediting on deferred annuities			(1,071	)			(2.54	)%			(326	)			(0.86	)%			(277	)			(0.53	)%			251				0.50	%			(886	)			(1.83	)%			(571	)			(2.81	)%
Retirement Services cost of crediting on deferred annuities		$	795				1.89	%		$	755				1.97	%		$	1,019				1.96	%		$	940				1.92	%		$	936				1.94	%		$	491				2.42	%
Average account value		$	56,102							$	51,183							$	51,921							$	48,956							$	48,353							$	20,308

 

S-14

RISK FACTORS

Investing in the notes involves a high degree of risk. In addition to the other information contained in this prospectus supplement, the accompanying prospectus and in documents that we incorporate by reference herein and therein, you should carefully consider the risks discussed below before making a decision about investing in our notes. The risks and uncertainties discussed below are not the only ones facing us. Additional risks and uncertainties not presently known to us, or that we currently see as immaterial, may also harm our business. If any of these risks occur, our business, financial condition and operating results could be materially adversely affected, the trading price of our notes could decline and you could lose part or all of your investment. The following should be read in conjunction with, and supplements and amends, as applicable, the factors that may affect our business or operations described in Part I – Item 1A. Risk Factors of our Annual Report and Part II – Item 1A. Risk Factors of our Q3 Quarterly Report.

Risks Related to the Notes

The notes are effectively subordinated to our secured debt and any liabilities of our subsidiaries.

The notes will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to any of our liabilities that are not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including interest sensitive contract liabilities, future policy benefits and other payables) of our subsidiaries. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure debt ranking senior or equal in right of payment to the notes will be available to pay obligations on the notes only after the secured debt has been repaid in full from these assets. There may not be sufficient assets remaining to pay amounts due on any or all of the notes then outstanding. The indenture governing the notes will not prohibit us from incurring additional senior debt or secured debt, nor does it prohibit any of our subsidiaries from incurring additional liabilities.

As of September 30, 2017, AHL had no indebtedness and had $1.0 billion of availability under its $1.0 billion unsecured revolving credit facility. As of September 30, 2017, our subsidiaries had $87,356 million of indebtedness and other liabilities (including interest sensitive contract liabilities, future policy benefits and other payables, but excluding intercompany obligations and liabilities of a type not required to be reflected on a balance sheet of such subsidiaries in accordance with GAAP) to which the notes would have been structurally subordinated.

The issuer is a holding company with limited operations of its own. As a consequence, our ability to make payments in connection with the notes will depend on the ability of our subsidiaries to make distributions or other payments to us, which may be restricted by law.

The issuer is a holding company with limited business operations of its own. Our primary subsidiaries are insurance and reinsurance companies that own substantially all of our assets and conduct substantially all of our operations. Accordingly, our ability to make timely payments on our debt obligations, including the notes, is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and their ability to make such cash or other assets available to us, by dividend or otherwise. Dividends or distributions that may be paid by our insurance subsidiaries to us are limited or restricted by applicable insurance or other laws that are based in part on the prior year’s statutory income and surplus, or other sources. See “ – Risks Relating to Insurance and Other Regulatory Matters – Our industry is highly regulated and we are subject to significant legal restrictions, regulations and regulatory oversight in connection with the operations of our business, including the discretion of various governmental entities in applying such restrictions and regulations and these restrictions may have a material adverse effect on our business, financial condition, liquidity, results of operations, cash flows and prospects” in “Item 1A – Risk Factors” in our Annual Report.

Certain of our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to meet our obligations and pay dividends. In particular, as a condition to the New York State Department of

 

S-15

Financial Services’ (“NYSDFS”) approval of our acquisition of ALICNY in connection with the broader Aviva USA (now known as Athene USA Corporation) acquisition, we have agreed not to cause ALICNY to declare, distribute or pay any dividend until October 2, 2018, without the prior written consent of the NYSDFS. Similarly, as a condition to the approval of the Iowa Insurance Division (“IID”) of our acquisition of Aviva USA’s Iowa-domiciled subsidiaries, we have agreed not to cause AAIA to pay any dividend or other distribution to shareholders until August 15, 2018, without the prior approval of the IID. Further, any dividends paid to us by our U.S. subsidiaries would be subject to a 30% withholding tax under the Code, which creates a significant disincentive for our subsidiaries to pay such dividends and could have the effect of significantly reducing dividends or other amounts payable to us by our U.S. subsidiaries. These limitations on our U.S. subsidiaries’ abilities to pay dividends to us as a shareholder may negatively impact our financial condition, results of operations and cash flows.

Each subsidiary is a distinct legal entity and legal and contractual restrictions may also limit our ability to obtain cash from our subsidiaries. In addition to the specific restrictions described above, our subsidiaries, as members of our insurance holding company system, are subject to various statutory and regulatory restrictions on their ability to pay dividends to us, as further described under “Item 1. – Business – Regulation – United States – Restrictions on Dividends and Other Distributions” and “ – Bermuda – MMS, ECR and Restrictions on Dividends and Distributions” in our Annual Report.

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Despite our debt levels after giving effect to the issuance of the notes, we may still incur substantially more debt or take other actions which would intensify the risks discussed above.

Despite our consolidated debt levels after giving effect to the issuance of the notes we and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, some of which may be secured debt. We will not be restricted under the terms of the indenture governing the notes from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indenture governing the notes that could have the effect of diminishing our ability to make payments on the notes when due. Our existing credit facility restricts our ability to incur additional indebtedness, including secured indebtedness, but if the facility matures or is repaid, we may not be subject to such restrictions under the terms of any subsequent indebtedness.

The notes are not protected by restrictive covenants.

The indenture governing the notes will not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. The indenture will not contain any covenants or other provisions to afford protection to holders of the notes in the event of a fundamental change or other corporate transaction involving us except to the extent described under “Description of the Senior Notes – Consolidation, Merger, Sale of Assets and Other Transactions.”

 

S-16

We cannot assure you that an active trading market will develop for the notes.

Prior to this offering, there has been no trading market for the notes, and we do not intend to apply to list the notes on any securities exchange or to arrange for quotation on any automated dealer quotation system. We have been informed by the underwriters that they intend to make a market in the notes after the offering is completed. However, the underwriters may cease their market-making at any time without notice. In addition, the liquidity of the trading market in the notes, and the market price quoted for the notes, may be adversely affected by changes in the overall market for this type of security and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, we cannot assure you that an active trading market will develop for the notes. If an active trading market does not develop or is not maintained, the market price and liquidity of the notes may be adversely affected. In that case you may not be able to sell your notes at a particular time or you may not be able to sell your notes at a favorable price.

Any adverse rating of the notes may cause their trading price to fall.

We intend to seek a rating on the notes from one or more rating services. If a rating service that rates the notes were to lower its rating on the notes below the rating initially assigned to the notes or otherwise announces its intention to put the notes on credit watch, the trading price of the notes could decline.

We may be unable to redeem the notes in the event of a special mandatory redemption.

If, for any reason, the Transaction is terminated prior to its consummation, we will be required to redeem all, but not less than all, of the notes at a redemption price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest thereon from the date of initial issuance to, but excluding, the Special Mandatory Redemption Date (as defined herein). See “Description of the Senior Notes – Special Mandatory Redemption.” We are not obligated to place the proceeds from the sale of the notes in escrow prior to consummation of the Transaction or to provide a security interest in those proceeds, and there are no restrictions on our use of these proceeds during such time. Accordingly, we will need to fund any such redemption using proceeds that we have voluntarily retained or from other sources of liquidity. In the event of a special mandatory redemption, we may not have sufficient funds to redeem any or all of the notes.

In the event of a special mandatory redemption, holders of the notes may not obtain their expected return on such notes.

The Transaction is subject to various closing conditions, many of which are beyond our control. If we are unable to consummate the Transaction and we redeem the notes pursuant to the special mandatory redemption provisions of the indenture, holders of notes may not obtain their expected return on such notes and may not be able to reinvest the proceeds from such special mandatory redemption in an investment that results in a comparable return. In addition, as a result of the special mandatory redemption provisions of the notes, the trading prices of such notes may not reflect the financial results of our business or macroeconomic factors.

Holders of notes will have no rights under the special mandatory redemption provisions of the indenture unless the Transaction is terminated prior to consummation. In addition, holders of the notes will not have any right to require us to repurchase their notes if, between the closing of this offering and the consummation of the Transaction, we experience any changes, including any material changes, in our respective businesses or financial condition, or if the terms of the definitive agreement for the Transaction changes, including in any material respect.

 

S-17

USE OF PROCEEDS

We estimate that the proceeds from this offering will be approximately $         after deducting underwriting discounts and estimated offering expenses. We intend to use the net proceeds of this offering for our general corporate purposes.

 

S-18

CAPITALIZATION

The following table sets forth our unaudited consolidated cash and cash equivalents and our capitalization at September 30, 2017:

 

•

on an actual basis; and

 

•

on an as adjusted basis to give effect to the issuance and sale of the notes in this offering, after deducting underwriting discounts and estimated offering expenses payable by us.

This table should be read in conjunction with “Use of Proceeds,” our consolidated financial statements and related notes thereto and the other information included in or incorporated by reference into this prospectus supplement and the accompanying prospectus.

 

(In millions)		Actual				As Adjusted
Cash and cash equivalents		$	3,607			$
Restricted cash			100
Total cash, cash equivalents and restricted cash		$	3,707			$
Debt(1)
Credit facility		$	—			$
Senior notes offered hereby			—
Other			—
Total debt			—
Common stock			—
Additional paid-in capital			3,461
Retained earnings			4,046
Accumulated other comprehensive income			1,162
Total Athene Holding Ltd. shareholders’ equity			8,669
Total capitalization		$	8,669			$

 

(1)	Does not include $14 million associated with a loan participation transaction of a subsidiary classified as secured indebtedness for accounting purposes.

 

S-19