Form: 8-K

Current report filing

March 15, 2017

financialsupplementcover001.jpg



Athene Holding Ltd.
Financial Supplement - December 31, 2016
Table of Contents



A.
Financial Highlights
 
 
 
 
 
 
 
 
 
 
B.
Product Summary - Retirement Services
 
 
 
 
 
 
 
C.
Consolidated Investment Summary
 
 
 
 
 
 
 
 
 
 
 
D.
Additional Information
 
 
 




Athene Holding Ltd.
Financial Supplement - December 31, 2016
Note to the Financial Supplement


Key Operating and Non-GAAP Measures

In addition to our results presented in accordance with 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 a better 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 Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.
 
Operating Income, Net of Tax

Operating income, net of tax, a commonly used operating measure in the life insurance industry, is a non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation, and other expenses.
Our operating income, net of tax, equals net income available to AHL’s shareholders adjusted to eliminate the impact of the following
(collectively, the “non-operating adjustments”):

Investment Gains (Losses), Net of Offsets - Investment gains (losses), net of offsets, consist of the realized gains and losses on the sale of AFS securities, the change in assumed modco and funds withheld reinsurance embedded derivatives, unrealized gains and losses, impairments, and other investment gains and losses. Unrealized, impairments and other investment gains and losses are comprised of the fair value adjustments of trading securities (other than CLOs) and investments held under the fair value option, derivative gains and losses not hedging FIA index credits, and the net OTTI impacts recognized in operations net of the change in AmerUs Closed Block fair value reserve related to the corresponding change in fair value of investments and the change in unit linked reserves related to the corresponding trading securities. Investment gains and losses are net of offsets related to DAC, DSI, and VOBA amortization and changes to GLWB and guaranteed minimum death benefits (GMDB) reserves as well as the MVAs associated with surrenders or terminations of contracts.

Change in Fair Values of Derivatives and Embedded Derivatives - FIAs, Net of Offsets - Impacts related to the fair value accounting for derivatives hedging the FIA index credits and the related embedded derivative liability fluctuate from period-to-period. The index reserve is measured at fair value for the current period and all periods beyond the current policyholder index term. However, the FIA hedging derivatives are purchased to hedge only the current index period. Upon policyholder renewal at the end of the period, new FIA hedging derivatives are purchased to align with the new term. The difference in duration between the FIA hedging derivatives and the index credit reserves creates a timing difference in earnings. This timing difference of the FIA hedging derivatives and index credit reserves is included as a non-operating adjustment, net of offsets related to DAC, DSI, and VOBA amortization and changes to GLWB and GMDB reserves.

We primarily hedge with options that align with the index terms of our FIA products (typically 1-2 years). From an economic basis, we believe this is suitable because policyholder accounts are credited with index performance at the end of each index term. However, because the “value of an embedded derivative” in an FIA contract is longer-dated, there is a duration mismatch which may lead to mismatches for accounting purposes.

Integration, Restructuring, and Other Non-operating Expenses - Integration, restructuring, and other non-operating expenses consist of restructuring and integration expenses related to mergers and acquisitions as well as certain other expenses which are not part of our core operations or likely to re-occur in the foreseeable future.

Stock Compensation Expense - To date, stock compensation expenses associated with our share incentive plans, excluding our long term incentive plan, are not part of our core operating expenses and fluctuate from time to time due to the structure of our plans.

Bargain Purchase Gain - Bargain purchase gains associated with acquisitions are adjustments to net income as they are not consistent with our core operations.

Provision for Income Taxes - Non-operating - The non-operating income tax expense is comprised of the appropriate jurisdiction's tax rate applied to the non-operating adjustments that are subject to income tax.

We consider these non-operating adjustments to be meaningful adjustments to net income available to AHL's shareholders for the reasons discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is effective in analyzing the trends in our results of operations. Together with net income available to AHL's shareholders, we believe operating income, net of tax, provides a meaningful financial metric that helps investors understand our underlying results and profitability. Operating income, net of tax, should not be used as a substitute for net income available to AHL's shareholders.

1


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Note to the Financial Supplement



ROE Excluding AOCI and Operating ROE Excluding AOCI

ROE excluding AOCI and operating ROE excluding AOCI are non-GAAP measures used to evaluate our financial performance excluding the impacts of AOCI. AOCI fluctuates period-to-period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities. Once we have reinvested acquired blocks of businesses, we typically buy and hold AFS investments to maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance. Accordingly, we believe using measures which exclude AOCI is more effective in analyzing the trends of our operations. To enhance the ability to analyze these measures across periods, interim periods are annualized. ROE excluding AOCI and operating ROE excluding AOCI should not be used as a substitute for ROE. However, we believe the adjustments to equity are significant to gaining an understanding of our overall results of operations.

Operating Earnings Per Share - Operating Diluted Class A, Weighted Average Shares Outstanding - Operating Diluted Class A Common Shares and Book Value Per Share Excluding AOCI

Operating earnings per share - operating diluted Class A, weighted average shares outstanding - operating diluted Class A common shares and book value per share excluding AOCI are non-GAAP measures used to evaluate our financial performance and financial condition. The non-GAAP measures adjust the number of shares included in the corresponding GAAP measures to reflect the conversion or settlement of all shares and other stock-based awards outstanding. We believe using these measures represent an economic view of our share counts and provide a simplified and consistent view of our outstanding shares. Operating earnings per share - operating diluted Class A is calculated as the operating income, net of tax over the weighted average shares outstanding - operating diluted Class A common shares. Book value per share excluding AOCI is calculated as the ending AHL shareholders' equity excluding AOCI divided by the operating diluted Class A common shares outstanding. Our Class B common shares are economically equivalent to Class A common shares and can be converted to Class A common shares on a one-for-one basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. In calculating Class A diluted earnings per share on a GAAP basis, we are required to apply sequencing rules to determine the dilutive impacts, if any, of our Class B common shares, Class M common shares and any other stock-based awards. To the extent our Class B common shares, Class M common shares and/or any other stock-based awards are not dilutive they are excluded. Weighted average shares outstanding - operating diluted Class A common shares and operating diluted Class A common shares outstanding assume conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares on a one-for-one basis, the impacts of all Class M common shares net of the conversion price and any other stock-based awards. For December 31, 2015 and prior, Class M shares were not included due to issuance restrictions which were contingent upon our IPO. Operating earnings per share - operating diluted Class A, weighted average shares outstanding - operating diluted Class A common shares and book value per share excluding AOCI should not be used as a substitute for basic earnings per share - Class A common shares, basic weighted average shares outstanding - Class A or book value per share. However, we believe the adjustments to the shares and equity are significant to gaining an understanding of our overall results of operations and financial condition.

Retirement Services Net Investment Earned Rate, Cost of Crediting and Investment Margin on Deferred Annuities
    
Investment margin is a key measurement of the financial health of our Retirement Services core deferred annuities. Investment margin on our deferred annuities is generated from the excess of our net investment earned rate over the cost of crediting to our policyholders. Net investment earned rate is a key measure of investment returns and cost of crediting is a key measure of the policyholder benefits on our deferred annuities.

Net investment earned rate is a non-GAAP measure we use to evaluate the performance of our invested assets that does not correspond to GAAP net investment income. Net investment earned rate is computed as the income from our invested assets divided by the average invested assets for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. The adjustments to arrive at our net investment earned rate add alternative investment gains and losses, gains and losses related to trading securities for CLOs, net VIE impacts (revenues, expenses and noncontrolling interest) and the change in reinsurance embedded derivatives. We include the income and assets supporting our assumed reinsurance by evaluating the underlying investments of the funds withheld at interest receivables and we include the net investment income from those underlying investments which does not correspond to the GAAP presentation of reinsurance embedded derivatives. We exclude the income and assets supporting business that we have exited through ceded reinsurance including funds withheld agreements. We believe the adjustments for reinsurance provide a net investment earned rate on the assets for which we have economic exposure.

Cost of crediting is the interest credited to the policyholders on our fixed strategies as well as the option costs on the index annuity strategies. With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. The interest credited on fixed strategies and option costs on index annuity strategies are divided by the average account value of our deferred annuities. Under GAAP, deposits and withdrawals for fixed indexed and fixed rate annuities are reported as deposit liabilities (or policyholder funds). Our average account values are averaged over the number of quarters in the relevant period to obtain our cost of crediting for such period. To enhance the ability to analyze these measures across periods, interim periods are annualized.


2


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Note to the Financial Supplement


Net investment earned rate, cost of crediting and investment margin on deferred annuities are non-GAAP measures we use to evaluate the profitability of our core deferred annuities business. Deferred annuities include our fixed rate annuities and FIAs, which account for approximately 80% of our Retirement Services reserve liabilities as of December 31, 2016. We believe measures like net investment earned rate, cost of crediting and investment margin on deferred annuities are effective in analyzing the trends of our core business operations, profitability and pricing discipline. While we believe net investment earned rate, cost of crediting and investment margin on deferred annuities are meaningful financial metrics and enhance our understanding of the underlying profitability drivers of our business, they should not be used as a substitute for net investment income and interest sensitive contract benefits presented under GAAP.

Invested Assets

In managing our business we analyze invested assets, which do not correspond to total investments, including investments in related parties, as disclosed in our consolidated financial statements and notes thereto. Invested assets represent the investments that directly back our policyholder liabilities as well as surplus assets. Invested assets is used in the computation of net investment earned rate, which allows us to analyze the profitability of our investment portfolio. Invested assets includes (a) total investments on the consolidated balance sheets with AFS securities at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) the consolidated VIE assets, liabilities and noncontrolling interest and (f) policy loans ceded (which offset the direct policy loans in total investments). Invested assets also excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Our invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period.

Reserve Liabilities

In managing our business we also analyze reserve liabilities, which does not correspond to total liabilities as disclosed in our consolidated
financial statements and notes thereto. Reserve liabilities represents our policyholder liability obligations net of reinsurance. Reserve liabilities is used to analyze the costs of our liabilities. Reserve liabilities includes (a) the interest sensitive contract liabilities, (b) future policy benefits, (c) dividends payable to policyholders, and (d) other policy claims and benefits, offset by reinsurance recoverables, excluding policy loans ceded. Reserve liabilities is net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and therefore we have no net economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. The majority of our ceded reinsurance is a result of reinsuring large blocks of life business following acquisitions. For such transactions, GAAP requires the ceded liabilities and related reinsurance recoverables to continue to be recorded in our consolidated financial statements despite the transfer of economic risk to the counterparty in connection with the reinsurance transaction.

Sales

Sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of understanding our business performance. Our sales statistics include fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers).



3


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Financial Highlights
Unaudited (In millions, except percentages and per share data)







Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
$
5,309

 
$
2,478

 
Retail sales
$
1,492

 
$
2,011

 
$
1,143

 
$
663

 
$
571

3,449

 
1,131

 
Flow reinsurance
348

 
871

 
1,318

 
912

 
474


 
250

 
FABN

 

 

 

 
250

$
8,758

 
$
3,859

 
Total deposits
$
1,840

 
$
2,882

 
$
2,461

 
$
1,575

 
$
1,295

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated results of operations
 
 
 
 
 
 
 
 
 
$
805

 
$
562

 
Net income
$
368

 
$
158

 
$
192

 
$
87

 
$
242

760

 
740

 
Operating income, net of taxes
284

 
146

 
178

 
152

 
244

 
 
 
 
 
 
 
 
 
 
 
 
 
 
13.1
%
 
11.3
%
 
ROE
21.0
%
 
9.4
%
 
12.7
%
 
6.3
%
 
17.8
%
13.3
%
 
11.8
%
 
ROE excluding AOCI
23.2
%
 
10.5
%
 
13.3
%
 
6.2
%
 
17.7
%
12.5
%
 
15.6
%
 
Operating ROE excluding AOCI
17.9
%
 
9.7
%
 
12.3
%
 
10.8
%
 
17.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
 
 
 
 
 
 
 
 
 
$
809

 
$
769

 
Operating income, net of taxes
$
246

 
$
171

 
$
195

 
$
197

 
$
256

19.1
%
 
22.7
%
 
Operating ROE excluding AOCI
21.8
%
 
15.4
%
 
18.6
%
 
19.7
%
 
26.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
$
4.31

 
$
3.21

 
Basic1
$
1.94

 
$
0.85

 
$
1.03

 
$
0.47

 
$
1.30

$
4.21

 
$
3.21

 
Diluted - Class A2
$
1.80

 
$
0.85

 
$
1.03

 
$
0.47

 
$
1.30

$
3.93

 
$
4.23

 
Operating earnings per share - operating diluted Class A3
$
1.46

 
$
0.78

 
$
0.95

 
$
0.82

 
$
1.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value per share:
 
 
 
 
 
 
 
 
 
$
35.91

 
$
28.81

 
Book value per share
$
35.91

 
$
38.00

 
$
34.62

 
$
30.28

 
$
28.81

$
33.29

 
$
30.09

 
Book value per share, excluding AOCI3
$
33.29

 
$
31.76

 
$
31.46

 
$
30.55

 
$
30.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
 
 
 
 
$
86,720

 
$
80,854

 
Total assets
$
86,720

 
$
87,000

 
$
84,301

 
$
81,601

 
$
80,854

71,834

 
66,959

 
Invested assets
71,834

 
71,595

 
69,859

 
67,865

 
66,959

79,814

 
75,491

 
Total liabilities
79,814

 
79,926

 
77,863

 
75,962

 
75,491

70,951

 
65,271

 
Reserve liabilities
70,951

 
70,892

 
68,335

 
66,461

 
65,271

6,905

 
5,362

 
Total Athene Holding Ltd. shareholders' equity
6,905

 
7,073

 
6,437

 
5,638

 
5,362

6,538

 
5,599

 
Athene Holding Ltd. shareholders' equity excluding AOCI
6,538

 
6,153

 
5,868

 
5,690

 
5,599

%
 
%
 
Debt to equity (excluding AOCI) ratio
%
 
%
 
%
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share data:
 
 
 
 
 
 
 
 
 
186.8

 
175.1

 
Weighted average shares outstanding - basic1
189.2

 
185.8

 
186.0

 
186.0

 
185.9

53.5

 
41.3

 
Weighted average shares outstanding - diluted - Class A common shares2
63.9

 
49.9

 
50.1

 
50.1

 
50.0

193.4

 
175.2

 
Weighted average shares outstanding - operating diluted Class A common shares3
194.2

 
185.9

 
186.1

 
186.0

 
186.0

192.3

 
186.1

 
Common shares outstanding4
192.3

 
185.9

 
185.9

 
186.2

 
186.1

196.4

 
186.1

 
Operating diluted Class A common shares outstanding3
196.4

 
193.8

 
186.5

 
186.2

 
186.1

* Please refer to Note to the Financial Supplement section and the Non-GAAP Financial Measures Reconciliations for discussion on operating income, net of taxes, ROE excluding AOCI, operating ROE excluding AOCI and book value per share excluding AOCI.
* During the three months ended December 31, 2016, we recorded out-of-period adjustments that affected the consolidated statements of income for the three months ended September 30, 2016. These adjustments primarily related to DAC and VOBA amortization. In addition, during the three months ended September 30, 2016, we recorded out-of-period adjustments that primarily affected the consolidated statements of income for the year ended December 31, 2015. These out-of-period adjustments were primarily related to actuarial reserves, net of DAC and VOBA amortization. As a result of these out-of-period adjustments, the consolidated net income for the three months ended December 31, 2016 was understated by $5 million while the operating income, net of tax was understated by $1 million and the consolidated net income for the three months ended September 30, 2016 was overstated by $23 million while the operating income, net of tax was overstated by $19 million.
1 Basic earnings per share, including basic weighted average shares outstanding, includes all classes eligible to participate in dividends for each period presented.
2 Diluted earnings per share on a GAAP basis for Class A common shares, including diluted Class A weighted average shares outstanding, includes the dilutive impacts, if any, of Class B common shares, Class M common shares and any other stock-based awards.
3 Represents Class A common shares outstanding or weighted average common shares outstanding assuming conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares, Class M common shares and any other stock-based awards. For September 30, 2016 and prior, Class M shares were not included due to issuance restrictions which were contingent upon our IPO, except for the Class M share agreements impacted by the modification as of September 30, 2016.
4 Represents common shares outstanding for all classes eligible to participate in dividends for each period presented.

4


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Capitalization and Equity
Unaudited (In millions, except percentages)


Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
 
 
 
Capitalization
 
 
 
 
 
 
 
 
 
$

 
$

 
Total debt1
$

 
$

 
$

 
$

 
$

6,905

 
5,362

 
Total Athene Holding Ltd. shareholders' equity
6,905

 
7,073

 
6,437

 
5,638

 
5,362

6,905

 
5,362

 
Total capitalization
6,905

 
7,073

 
6,437

 
5,638

 
5,362

367

 
(237
)
 
Less: AOCI
367

 
920

 
569

 
(52
)
 
(237
)
$
6,538

 
$
5,599

 
Total capitalization excluding AOCI
$
6,538

 
$
6,153

 
$
5,868

 
$
5,690

 
$
5,599

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity by segment
 
 
 
 
 
 
 
 
 
$
4,495

 
$
3,974

 
Retirement Services
$
4,495

 
$
4,584

 
$
4,243

 
$
4,071

 
$
3,974

2,043

 
1,625

 
Corporate and Other
2,043

 
1,569

 
1,625

 
1,619

 
1,625

6,538

 
5,599

 
Total AHL shareholders' equity excluding AOCI
6,538

 
6,153

 
5,868

 
5,690

 
5,599

367

 
(237
)
 
AOCI
367

 
920

 
569

 
(52
)
 
(237
)
$
6,905

 
$
5,362

 
Total AHL shareholders' equity
$
6,905

 
$
7,073

 
$
6,437

 
$
5,638

 
$
5,362

 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
%
 
Debt to equity (excluding AOCI) ratio
%
 
%
 
%
 
%
 
%

1 Total debt is not including debt within a consolidated VIE.





5


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
December 31, 2016
 
December 31, 2015
Assets
 
 
 
Investments:
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
$
52,033

 
$
47,816

Equity securities
353

 
407

Trading securities, at fair value
2,581

 
2,468

Mortgage loans, net of allowances
5,470

 
5,500

Investment funds
689

 
733

Policy loans
602

 
642

Funds withheld at interest
6,538

 
3,482

Derivative assets
1,370

 
871

Real estate
542

 
566

Short-term investments, at fair value
189

 
135

Other investments
81

 
83

Total investments
70,448

 
62,703

Cash and cash equivalents
2,445

 
2,714

Restricted cash
57

 
116

Investments in related parties
 
 
 
Available-for-sale, at fair value
 
 
 
Fixed maturity securities
335

 
308

Equity securities
20

 

Trading securities, at fair value
195

 
217

Investment funds
1,198

 
997

Short-term investments

 
55

Other investments
237

 
245

Accrued investment income
554

 
520

Reinsurance recoverable
6,001

 
7,257

Deferred acquisition costs, deferred sales inducements, and value of business acquired
2,964

 
2,663

Current income tax recoverable
107

 
113

Deferred tax assets
369

 
606

Other assets
869

 
749

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Equity securities
161

 

Trading securities, at fair value
 
 
 
Fixed maturity securities
50

 
722

Equity securities
117

 
309

Investment funds
573

 
534

Cash and cash equivalents
14

 
6

Other assets
6

 
20

Total assets
$
86,720

 
$
80,854

 
 
 
(Continued)


6


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
December 31, 2016
 
December 31, 2015
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
61,532

 
$
57,296

Future policy benefits
14,569

 
14,540

Other policy claims and benefits
217

 
234

Dividends payable to policyholders
974

 
856

Derivative liabilities
40

 
17

Payables for collateral on derivatives
1,383

 
867

Funds withheld liability
380

 
388

Other liabilities
685

 
776

Liabilities of consolidated variable interest entities
 
 
 
Borrowings

 
500

Other liabilities
34

 
17

Total liabilities
79,814

 
75,491

Equity
 
 
 
Common Stock

 

Additional paid-in-capital
3,421

 
3,281

Retained earnings
3,117

 
2,318

Accumulated other comprehensive income (loss)
367

 
(237
)
Total Athene Holding Ltd. shareholders' equity
6,905

 
5,362

Noncontrolling interests
1

 
1

Total equity
6,906

 
5,363

Total liabilities and equity
$
86,720

 
$
80,854

 
 
 
(Concluded)




7


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Statements of Income
Unaudited (In millions)

Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
$
240

 
$
195

 
Premiums
$
35

 
$
85

 
$
60

 
$
60

 
$
96

281

 
248

 
Product charges
75

 
71

 
69

 
66

 
64

2,916

 
2,508

 
Net investment income
773

 
747

 
704

 
692

 
678

652

 
(430
)
 
Investment related gains (losses)
129

 
380

 
225

 
(82
)
 
179

 
 
 
 
Other-than-temporary impairment investment losses
 
 
 
 
 
 
 
 
 
(32
)
 
(40
)
 
Other-than-temporary impairment losses
(1
)
 
(7
)
 
(2
)
 
(22
)
 
(13
)
2

 
10

 
Other-than-temporary impairment losses recognized in other comprehensive income
(2
)
 
1

 
(9
)
 
12

 
2

(30
)
 
(30
)
 
Net other-than-temporary impairment losses
(3
)
 
(6
)
 
(11
)
 
(10
)
 
(11
)
34

 
25

 
Other revenues
9

 
8

 
9

 
8

 
9

 
 
 
 
Revenues related to consolidated variable interest entities
 
 
 
 
 
 
 
 
 
67

 
67

 
Net investment income
27

 
7

 
22

 
11

 
30

(53
)
 
33

 
Investment related gains (losses)
17

 
(16
)
 
(31
)
 
(23
)
 

4,107

 
2,616

 
Total revenues
1,062

 
1,276

 
1,047

 
722

 
1,045

 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
1,293

 
690

 
Interest sensitive contract benefits
225

 
482

 
333

 
253

 
417

40

 
20

 
Amortization of deferred sales inducements
20

 
14

 
2

 
4

 
6

1,043

 
517

 
Future policy and other policy benefits
181

 
377

 
261

 
224

 
178

304

 
203

 
Amortization of deferred acquisition costs and value of business acquired
101

 
113

 
62

 
28

 
59

9

 
17

 
Interest expense
3

 
3

 
2

 
1

 
2

37

 
28

 
Dividends to policyholders
(28
)
 
35

 
13

 
17

 
(5
)
615

 
532

 
Policy and other operating expenses
174

 
177

 
161

 
103

 
164

 
 
 
 
Operating expenses of consolidated variable interest entities
 
 
 
 
 
 
 
 
 
12

 
15

 
Interest expense

 
4

 
4

 
4

 
4

1

 
2

 
Other operating expenses

 

 
1

 

 

3,354

 
2,024

 
Total benefits and expenses
676

 
1,205

 
839

 
634

 
825

753

 
592

 
Income before income taxes
386

 
71

 
208

 
88

 
220

(52
)
 
14

 
Income tax expense (benefit)
18

 
(87
)
 
16

 
1

 
(22
)
805

 
578

 
Net income
368

 
158

 
192

 
87

 
242


 
16

 
Less: Net income attributable to noncontrolling interests

 

 

 

 

$
805

 
$
562

 
Net income available to Athene Holding Ltd. shareholders
$
368

 
$
158

 
$
192

 
$
87

 
$
242


* During the three months ended December 31, 2016, we recorded out-of-period adjustments that affected the consolidated statements of income for the three months ended September 30, 2016. These adjustments primarily related to DAC and VOBA amortization. In addition, during the three months ended September 30, 2016, we recorded out-of-period adjustments that primarily affected the consolidated statements of income for the year ended December 31, 2015. These out-of-period adjustments were primarily related to actuarial reserves, net of DAC and VOBA amortization. As a result of these out-of-period adjustments, the consolidated net income for the three months ended December 31, 2016 was understated by $5 million and the consolidated net income for the three months ended September 30, 2016 was overstated by $23 million.


8


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Segment Results of Operations
Unaudited (In millions, except per share data)


Results of operations by segment
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
 
 
 
 
Operating income, net of tax by segment
 
 
 
 
 
 
 
 
 
$
809

 
$
769

 
Retirement Services
$
246

 
$
171

 
$
195

 
$
197

 
$
256

(49
)
 
(29
)
 
Corporate and Other
38

 
(25
)
 
(17
)
 
(45
)
 
(12
)
760

 
740

 
Operating income, net of tax
284

 
146

 
178

 
152

 
244

 
 
 
 
 
 
 
 
 
 
 
 
 
 
77

 
83

 
Realized gains (losses) on sale of AFS securities
40

 
18

 
11

 
8

 
14

(56
)
 
(30
)
 
Unrealized, impairments, and other investment gains (losses)
(19
)
 
(13
)
 
1

 
(25
)
 
(7
)
68

 
(75
)
 
Assumed modco and funds withheld reinsurance embedded derivatives
(76
)
 
73

 
74

 
(3
)
 
(39
)
(42
)
 
(34
)
 
Offsets to investment gains (losses)
5

 
(21
)
 
(27
)
 
1

 
(4
)
47

 
(56
)
 
Investment gains (losses), net of offsets
(50
)
 
57

 
59

 
(19
)
 
(36
)
97

 
(27
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
179

 
3

 
(16
)
 
(69
)
 
65

(22
)
 
(58
)
 
Integration, restructuring and other non-operating expenses
(14
)
 
(2
)
 
(5
)
 
(1
)
 
(27
)
(79
)
 
(67
)
 
Stock compensation expense
(20
)
 
(46
)
 
(28
)
 
15

 
(16
)
2

 
30

 
Income tax (expense) benefit - non-operating
(11
)
 

 
4

 
9

 
12

45

 
(178
)
 
Total non-operating adjustments
84

 
12

 
14

 
(65
)
 
(2
)
$
805

 
$
562

 
Net income available to AHL shareholders
$
368

 
$
158

 
$
192

 
$
87

 
$
242

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3.93

 
$
4.23

 
Operating income, net of tax – per operating dilutive Class A common share
$
1.46

 
$
0.78

 
$
0.95

 
$
0.82

 
$
1.32

 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.40

 
0.47

 
Realized gains (losses) on sale of AFS securities
0.21

 
0.09

 
0.05

 
0.06

 
0.07

(0.29
)
 
(0.18
)
 
Unrealized, impairments, and other investment gains (losses)
(0.10
)
 
(0.07
)
 
0.01

 
(0.14
)
 
(0.04
)
0.34

 
(0.43
)
 
Assumed modco and funds withheld reinsurance embedded derivatives
(0.39
)
 
0.40

 
0.40

 
(0.02
)
 
(0.21
)
(0.21
)
 
(0.19
)
 
Offsets to investment gains (losses)
0.03

 
(0.11
)
 
(0.14
)
 

 
(0.02
)
0.24

 
(0.33
)
 
Investment gains (losses), net of offsets
(0.25
)
 
0.31

 
0.32

 
(0.10
)
 
(0.20
)
0.51

 
(0.15
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
0.92

 
0.02

 
(0.09
)
 
(0.36
)
 
0.36

(0.12
)
 
(0.33
)
 
Integration, restructuring and other non-operating expenses
(0.07
)
 
(0.02
)
 
(0.02
)
 
(0.01
)
 
(0.15
)
(0.41
)
 
(0.38
)
 
Stock compensation expense
(0.10
)
 
(0.25
)
 
(0.16
)
 
0.08

 
(0.09
)
0.01

 
0.17

 
Income tax (expense) benefit - non-operating
(0.07
)
 
0.01

 
0.03

 
0.04

 
0.06

0.23

 
(1.02
)
 
Total non-operating adjustments
0.43

 
0.07

 
0.08

 
(0.35
)
 
(0.02
)
0.15

 

 
Effect of items convertible to or settled in Class A common shares
0.05

 

 

 

 

$
4.31

 
$
3.21

 
Basic earnings per share – Class A common shares
$
1.94

 
$
0.85

 
$
1.03

 
$
0.47

 
$
1.30


* Please refer to Note to the Financial Supplement section for discussion on operating income, net of taxes.
* During the three months ended December 31, 2016, we recorded out-of-period adjustments that affected the consolidated statements of income for the three months ended September 30, 2016. These adjustments primarily related to DAC and VOBA amortization. In addition, during the three months ended September 30, 2016, we recorded out-of-period adjustments that primarily affected the consolidated statements of income for the year ended December 31, 2015. These out-of-period adjustments were primarily related to actuarial reserves, net of DAC and VOBA amortization. As a result of these out-of-period adjustments, the consolidated net income for the three months ended December 31, 2016 was understated by $5 million while the operating income, net of tax was understated by $1 million and the consolidated net income for the three months ended September 30, 2016 was overstated by $23 million while the operating income, net of tax was overstated by $19 million.


9


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Segment Results of Operations
Unaudited (In millions, except per share data)


Consolidated summary of operating income, net of tax
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
2,767

 
$
2,398

 
Fixed income and other investment income
$
720

 
$
696

 
$
668

 
$
683

 
$
653

265

 
210

 
Alternative investment income
122

 
86

 
60

 
(3
)
 
37

3,032

 
2,608

 
Net investment earnings
842

 
782

 
728

 
680

 
690

(1,019
)
 
(940
)
 
Cost of crediting on deferred annuities
(264
)
 
(259
)
 
(253
)
 
(243
)
 
(238
)
(1,021
)
 
(665
)
 
Other liability costs1
(213
)
 
(396
)
 
(206
)
 
(206
)
 
(150
)
(282
)
 
(219
)
 
Operating expenses
(74
)
 
(68
)
 
(71
)
 
(69
)
 
(68
)
710

 
784

 
Operating income, before tax
291

 
59

 
198

 
162

 
234

50

 
(44
)
 
Income tax (expense) benefit - operating income
(7
)
 
87

 
(20
)
 
(10
)
 
10

$
760

 
$
740

 
Operating income, net of tax
$
284

 
$
146

 
$
178

 
$
152

 
$
244


* Please refer to Note to the Financial Supplement section and the Non-GAAP Financial Measures Reconciliations for discussion on operating income, net of taxes.
1 Other liability costs include DAC, DSI and VOBA amortization and change in GLWB and GMDB reserves for all products, the cost of liabilities on products other than deferred annuities including offsets for premiums, product charges and other revenues.

Retirement Services summary of operating income, net of tax
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
2,651

 
$
2,365

 
Fixed income and other investment income
$
689

 
$
665

 
$
640

 
$
657

 
$
627

304

 
207

 
Alternative investment income
104

 
94

 
72

 
34

 
48

2,955

 
2,572

 
Net investment earnings
793

 
759

 
712

 
691

 
675

(1,019
)
 
(940
)
 
Cost of crediting on deferred annuities
(264
)
 
(259
)
 
(253
)
 
(243
)
 
(238
)
(967
)
 
(656
)
 
Other liability costs
(217
)
 
(364
)
 
(198
)
 
(188
)
 
(141
)
(206
)
 
(166
)
 
Operating expenses
(56
)
 
(50
)
 
(51
)
 
(49
)
 
(53
)
763

 
810

 
Operating income, before tax
256

 
86

 
210

 
211

 
243

46

 
(41
)
 
Income tax (expense) benefit - operating income
(10
)
 
85

 
(15
)
 
(14
)
 
13

$
809

 
$
769

 
Operating income, net of tax
$
246

 
$
171

 
$
195

 
$
197

 
$
256


Corporate and Other summary of operating income, net of tax
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
116

 
$
33

 
Fixed income and other investment income
$
31

 
$
31

 
$
28

 
$
26

 
$
26

(39
)
 
3

 
Alternative investment income
18

 
(8
)
 
(12
)
 
(37
)
 
(11
)
77

 
36

 
Net investment earnings
49

 
23

 
16

 
(11
)
 
15


 

 
Cost of crediting on deferred annuities

 

 

 

 

(54
)
 
(9
)
 
Other liability costs
4

 
(32
)
 
(8
)
 
(18
)
 
(9
)
(76
)
 
(53
)
 
Operating expenses
(18
)
 
(18
)
 
(20
)
 
(20
)
 
(15
)
(53
)
 
(26
)
 
Operating income, before tax
35

 
(27
)
 
(12
)
 
(49
)
 
(9
)
4

 
(3
)
 
Income tax (expense) benefit - operating income
3

 
2

 
(5
)
 
4

 
(3
)
$
(49
)
 
$
(29
)
 
Operating income, net of tax
$
38

 
$
(25
)
 
$
(17
)
 
$
(45
)
 
$
(12
)


10


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Retirement Services Product Summary
Unaudited (In millions, except percentages)

Retirement Services investment margin on deferred annuities (a non-GAAP measure)
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
4.73
%
 
4.37
%
 
Net investment earned rate
4.91
%
 
4.77
%
 
4.62
%
 
4.59
%
 
4.53
%
1.96
%
 
1.92
%
 
Cost of crediting on deferred annuities
1.95
%
 
1.96
%
 
1.99
%
 
1.96
%
 
1.94
%
2.77
%
 
2.45
%
 
Investment margin on deferred annuities
2.96
%
 
2.81
%
 
2.63
%
 
2.63
%
 
2.59
%

* Please refer to Note to the Financial Supplement section and the Non-GAAP Financial Measures Reconciliations for discussion on investment margin, net investment earned rate and cost of crediting on deferred annuities. Investment margin on deferred annuities is net of ceded reinsurance activity.

Summary of net investment earned rate
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
4.41
%
 
4.17
%
 
Fixed income and other investments
4.44
%
 
4.36
%
 
4.32
%
 
4.54
%
 
4.37
%
12.34
%
 
9.40
%
 
Alternative investments
16.25
%
 
14.90
%
 
11.82
%
 
5.79
%
 
8.67
%
4.73
%
 
4.37
%
 
Total net investment earned rate
4.91
%
 
4.77
%
 
4.62
%
 
4.59
%
 
4.53
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,651

 
$
2,365

 
Fixed income and other investment income
$
689

 
$
665

 
$
640

 
$
657

 
$
627

304

 
207

 
Alternatives investment income
104

 
94

 
72

 
34

 
48

$
2,955

 
$
2,572

 
Total net investment earnings
$
793

 
$
759

 
$
712

 
$
691

 
$
675

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average invested assets
 
 
 
 
 
 
 
 
 
$
60,048

 
$
56,705

 
Fixed income and other investments
$
62,096

 
$
61,117

 
$
59,235

 
$
57,902

 
$
57,342

2,461

 
2,212

 
Alternative investments
2,543

 
2,521

 
2,451

 
2,357

 
2,245

$
62,509

 
$
58,917

 
Total average invested assets
$
64,639

 
$
63,638

 
$
61,686

 
$
60,259

 
$
59,587


* Please refer to Note to the Financial Supplement section and the Non-GAAP Financial Measures Reconciliations for discussion on net investment earned rate and invested assets.
* The investment results above are presented net of investment management fees.

Summary of cost of crediting on deferred annuities
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
534

 
$
495

 
FIA option costs
$
136

 
$
135

 
$
133

 
$
130

 
$
128

485

 
445

 
Fixed interest credited to policyholders
128

 
124

 
120

 
113

 
110

$
1,019

 
$
940

 
Cost of crediting on deferred annuities
$
264

 
$
259

 
$
253

 
$
243

 
$
238

1.96
%
 
1.92
%
 
Cost of crediting on deferred annuities rate
1.95
%
 
1.96
%
 
1.99
%
 
1.96
%
 
1.94
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
51,921

 
$
48,956

 
Average account value on deferred annuities
$
54,358

 
$
52,739

 
$
50,817

 
$
49,626

 
$
49,139




11


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


Deferred annuities account value rollforward
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
49,257

 
$
48,617

 
Account value at beginning of period
$
53,837

 
$
51,640

 
$
49,994

 
$
49,257

 
$
49,021

8,887

 
3,691

 
Deposits
1,878

 
2,914

 
2,497

 
1,598

 
1,068

200

 
133

 
Premium and interest bonuses
56

 
60

 
47

 
37

 
31

910

 
1,398

 
Fixed and index credits to policyholders
304

 
268

 
174

 
164

 
247

(4,159
)
 
(4,411
)
 
Surrenders and benefits paid
(1,135
)
 
(990
)
 
(1,020
)
 
(1,014
)
 
(1,064
)
(215
)
 
(171
)
 
Fee and product charges
(60
)
 
(55
)
 
(52
)
 
(48
)
 
(46
)
$
54,880

 
$
49,257

 
Account value at end of period
$
54,880

 
$
53,837

 
$
51,640

 
$
49,994

 
$
49,257


* The account value rollforwards on deferred annuities include our fixed rate and fixed indexed annuities and are net of ceded reinsurance activity.

Surrender charge protection and account values by product type
 
Surrender Charge
 
Net Account Value
 
Average years at issue
 
Average years remaining
 
Average percent remaining
 
Dollars
 
Percent of Total
Fixed index annuities
10.2

 
5.6

 
8.0
%
 
$
41,633

 
75.9
%
Single-year fixed rate guaranteed annuities
7

 
1.7

 
3.0
%
 
8,092

 
14.7
%
Multi-year fixed rate guaranteed annuities
5.3

 
3.9

 
8.0
%
 
5,155

 
9.4
%
Total
 
 
 
 
 
 
$
54,880

 
100.0
%

Summary of surrender charge percentages
 
 
 
Net account value
 
 
 
Surrender charge (gross)
 
Percent of Total
 
Surrender charge (net of MVA)
 
Percent of Total
No surrender charge
$
7,854

 
14.3
%
 
$
7,854

 
14.3
%
0.0% < 2.0%
122

 
0.2
%
 
444

 
0.8
%
2.0% < 4.0%
1,311

 
2.4
%
 
2,924

 
5.3
%
4.0% < 6.0%
3,423

 
6.2
%
 
6,957

 
12.7
%
6.0% < 8.0%
11,269

 
20.5
%
 
10,297

 
18.8
%
8.0% < 10.0%
14,681

 
26.8
%
 
10,107

 
18.4
%
10.0% or greater
16,220

 
29.6
%
 
16,297

 
29.7
%
 
$
54,880

 
100.0
%
 
$
54,880

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Surrender charge (gross)
 
MVA benefit
 
Surrender charge (net)
Aggregate surrender charge protection
 
 
7.6
%
 
0.2
%
 
7.8
%


12


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


Surrender charge expiration by year
Years of surrender charge remaining
Deferred annuities account value
 
Percent of total
 
Average surrender charge percent (gross of MVA)
No Surrender Charge
$
7,854

 
14.3
%
 
%
> 0 to less than 2
7,337

 
13.4
%
 
5.1
%
2 to less than 4
11,513

 
21.0
%
 
7.2
%
4 to less than 6
12,364

 
22.5
%
 
9.0
%
6 to less than 8
6,508

 
11.9
%
 
10.1
%
8 to less than 10
5,789

 
10.5
%
 
11.5
%
10 to less than 12
2,518

 
4.6
%
 
14.1
%
12 or greater
997

 
1.8
%
 
14.7
%
 
$
54,880

 
100.0
%
 
 

Minimum guarantees on deferred annuities
 
At minimum guarantees
 
Total account value
 
Percent of total account value at minimum guarantees
Fixed indexed annuities
$
14,529

 
$
41,633

 
34.9
%
Fixed rate annuities
6,739

 
13,247

 
50.9
%
Total deferred annuities
$
21,268

 
$
54,880

 
38.8
%
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
Distance to guarantees1
 
 
 
 
75 - 85 bps


1 Distance to guarantees is the difference between the current crediting rates and the contractual guaranteed minimum crediting rates on our deferred annuities. The distance to guarantees includes the minimum guarantees on all of our deferred annuities, including those with crediting rates already at their minimum guarantees.


13


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Reserve Liabilities
Unaudited (In millions, except percentages)


Consolidated reserve liabilities
 
December 31, 2016
 
December 31, 2015
 
Dollars
 
Percent of Total
 
Dollars
 
Percent of Total
Fixed indexed annuities
$
43,501

 
61.3
 %
 
$
39,594

 
60.7
 %
Fixed rate annuities
13,490

 
19.0
 %
 
10,882

 
16.7
 %
Total deferred annuities
56,991

 
80.3
 %
 
50,476

 
77.4
 %
Payout annuities
5,446

 
7.7
 %
 
5,708

 
8.7
 %
Funding agreements
1,109

 
1.6
 %
 
1,576

 
2.4
 %
Life and other (excluding German products)
2,176

 
3.0
 %
 
2,094

 
3.2
 %
Retirement Services reserve liabilities
65,722

 
92.6
 %
 
59,854

 
91.7
 %
Germany products
5,381

 
7.6
 %
 
5,542

 
8.5
 %
Intersegment eliminations
(152
)
 
(0.2
)%
 
(125
)
 
(0.2
)%
Total reserve liabilities
$
70,951

 
100.0
 %
 
$
65,271

 
100.0
 %

* Please refer to Note to the Financial Supplement section and the Non-GAAP Financial Measures Reconciliations for discussion on reserve liabilities.


Reserve liability rollforward
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
59,854

 
$
60,024

 
Retirement Services reserve liabilities - beginning
$
65,073

 
$
62,650

 
$
60,708

 
$
59,854

 
$
59,394

9,080

 
4,358

 
Deposits
1,884

 
2,979

 
2,537

 
1,680

 
1,504

(5,396
)
 
(5,344
)
 
Withdrawals
(1,350
)
 
(1,412
)
 
(1,282
)
 
(1,352
)
 
(1,359
)
2,184

 
816

 
Other reserve changes
115

 
856

 
687

 
526

 
315

65,722

 
59,854

 
Retirement Services reserve liabilities - ending
65,722

 
65,073

 
62,650

 
60,708

 
59,854

5,381

 
5,542

 
Germany reserve liabilities
5,381

 
5,982

 
5,846

 
5,918

 
5,542

(152
)
 
(125
)
 
Intersegment eliminations
(152
)
 
(163
)
 
(161
)
 
(165
)
 
(125
)
$
70,951

 
$
65,271

 
Consolidated reserve liabilities - ending
$
70,951

 
$
70,892

 
$
68,335

 
$
66,461

 
$
65,271



14


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)


Investments and investments in related parties summary
 
December 31, 2016
 
December 31, 2015
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Available for sale securities at fair value:
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
U.S. government and agencies
$
60

 
0.1
%
 
$
45

 
0.1
%
State, municipals and political subdivisions
1,140

 
1.6
%
 
1,165

 
1.8
%
Foreign governments
2,235

 
3.1
%
 
2,464

 
3.8
%
Corporate
30,020

 
41.4
%
 
26,936

 
41.7
%
CLOs
4,822

 
6.7
%
 
4,555

 
7.1
%
RMBS
8,973

 
12.4
%
 
7,995

 
12.4
%
CMBS
1,847

 
2.5
%
 
1,738

 
2.7
%
ABS
2,936

 
4.1
%
 
2,918

 
4.5
%
Equity securities
353

 
0.5
%
 
407

 
0.6
%
Trading securities, at fair value
2,581

 
3.6
%
 
2,468

 
3.8
%
Mortgage loans, net of allowances
5,470

 
7.6
%
 
5,500

 
8.5
%
Investment funds
689

 
1.0
%
 
733

 
1.1
%
Policy loans
602

 
0.8
%
 
642

 
1.0
%
Funds withheld at interest
6,538

 
9.0
%
 
3,482

 
5.4
%
Derivative assets
1,370

 
1.9
%
 
871

 
1.3
%
Real estate
542

 
0.7
%
 
566

 
0.9
%
Short-term investments
189

 
0.3
%
 
135

 
0.2
%
Other investments
81

 
0.1
%
 
83

 
0.1
%
Total investments
70,448

 
97.2
%
 
62,703

 
97.2
%
Investment in related parties:
 
 
 
 
 
 
 
Available for sale securities at fair value:
 
 
 
 
 
 
 
Fixed maturity securities
335

 
0.5
%
 
308

 
0.5
%
Equity securities
20

 
%
 

 
%
Trading securities, at fair value
195

 
0.3
%
 
217

 
0.3
%
Investment funds
1,198

 
1.7
%
 
997

 
1.5
%
Other investments
237

 
0.3
%
 
245

 
0.4
%
Short term investments

 
%
 
55

 
0.1
%
Total related party investments
1,985

 
2.8
%
 
1,822

 
2.8
%
Total investments, including related parties
$
72,433

 
100.0
%
 
$
64,525

 
100.0
%



15


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Fixed maturity securities by sector
 
December 31, 2016
 
December 31, 2015
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Amortized Cost
 
Fair Value
 
Percent of Total
Corporate:
 
 
 
 
 
 
 
 
 
 
 
Industrial other1
$
10,417

 
$
10,645

 
20.3
%
 
$
9,907

 
$
9,918

 
20.6
%
Financial
8,957

 
9,156

 
17.5
%
 
7,819

 
7,941

 
16.5
%
Utilities
6,512

 
6,588

 
12.6
%
 
6,082

 
5,864

 
12.2
%
Communication
2,182

 
2,235

 
4.3
%
 
1,801

 
1,820

 
3.8
%
Transportation
1,365

 
1,396

 
2.7
%
 
1,370

 
1,393

 
2.9
%
Total corporate
29,433

 
30,020

 
57.4
%
 
26,979

 
26,936

 
56.0
%
Other government-related securities
 
 
 
 
 
 
 
 
 
 
 
State, municipals and political subdivisions
1,024

 
1,140

 
2.2
%
 
1,075

 
1,165

 
2.4
%
Foreign governments
2,098

 
2,235

 
4.3
%
 
2,467

 
2,464

 
5.1
%
U.S. treasuries
59

 
60

 
0.1
%
 
44

 
45

 
0.1
%
Total non-structured securities
32,614

 
33,455

 
64.0
%
 
30,565

 
30,610

 
63.6
%
Structured securities:
 
 
 
 
 
 
 
 
 
 
 
CLOs
5,234

 
5,101

 
9.7
%
 
5,214

 
4,803

 
10.0
%
ABS
3,037

 
2,992

 
5.7
%
 
3,005

 
2,978

 
6.2
%
CMBS
1,835

 
1,847

 
3.5
%
 
1,725

 
1,738

 
3.6
%
RMBS
 
 
 
 
 
 
 
 
 
 
 
Agency
110

 
112

 
0.2
%
 
140

 
142

 
0.3
%
Non-agency
8,621

 
8,861

 
16.9
%
 
7,910

 
7,853

 
16.3
%
Total structured securities
18,837

 
18,913

 
36.0
%
 
17,994

 
17,514

 
36.4
%
Total fixed maturity securities, including related parties
$
51,451

 
$
52,368

 
100.0
%
 
$
48,559

 
$
48,124

 
100.0
%

1 Includes securities within various industry segments including capital goods, basic industry, consumer cyclical, consumer non-cyclical, industrial, and technology.


Credit quality of fixed maturity securities
 
December 31, 2016
 
December 31, 2015
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
1
$
30,211

 
57.7
%
 
$
29,022

 
60.3
%
2
18,617

 
35.5
%
 
16,696

 
34.7
%
Total investment grade
48,828

 
93.2
%
 
45,718

 
95.0
%
3
2,812

 
5.4
%
 
2,182

 
4.5
%
4
622

 
1.2
%
 
194

 
0.4
%
5
82

 
0.2
%
 
14

 
%
6
24

 
%
 
16

 
%
Total below investment grade
3,540

 
6.8
%
 
2,406

 
5.0
%
Total fixed maturity securities, including related parties
$
52,368

 
100.0
%
 
$
48,124

 
100.0
%

* Germany fixed maturity securities, including related parties applying NRSRO ratings to map to NAIC ratings.


16


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

 
December 31, 2016
 
December 31, 2015
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NRSRO rating agency designation
 
 
 
 
 
 
 
AAA/AA/A
$
18,791

 
35.9
%
 
$
17,906

 
37.2
%
BBB
18,002

 
34.4
%
 
16,481

 
34.2
%
Non-rated1
5,650

 
10.8
%
 
5,325

 
11.1
%
Total investment grade2
42,443

 
81.1
%
 
39,712

 
82.5
%
BB
3,286

 
6.3
%
 
2,937

 
6.1
%
B
1,372

 
2.6
%
 
729

 
1.5
%
CCC
2,374

 
4.5
%
 
2,104

 
4.4
%
CC and lower
2,404

 
4.6
%
 
2,211

 
4.6
%
Non-rated 1
489

 
0.9
%
 
431

 
0.9
%
Total below investment grade
9,925

 
18.9
%
 
8,412

 
17.5
%
Total fixed maturity securities, including related parties
$
52,368

 
100.0
%
 
$
48,124

 
100.0
%

1 Securities denoted as non-rated by the NRSRO were classified as investment or non-investment grade according to the security's respective NAIC rating.
2 We view the NAIC ratings methodology as the most appropriate way to view our fixed maturity portfolio from a ratings perspective since a large portion of our holdings were purchased at a significant discount to par. NRSRO ratings methodology is focused on the likelihood of recovery of all contractual payments, including principal at par regardless of entry price, while the NAIC ratings methodology considers our investment and amortized cost, and the likelihood of recovery of that book value as opposed to the likelihood of default of the security.


Credit quality of residential mortgage backed securities
 
December 31, 2016
 
December 31, 2015
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
$
9,960

 
$
8,414

 
$
8,652

 
96.4
%
 
$
8,663

 
$
7,399

 
$
7,351

 
91.9
%
2
152

 
141

 
140

 
1.6
%
 
517

 
467

 
463

 
5.8
%
Total investment grade
10,112

 
8,555

 
8,792

 
98.0
%
 
9,180

 
7,866

 
7,814

 
97.7
%
3
104

 
92

 
96

 
1.1
%
 
180

 
160

 
157

 
2.0
%
4
31

 
29

 
29

 
0.3
%
 
29

 
20

 
20

 
0.3
%
5
54

 
53

 
54

 
0.6
%
 
5

 
1

 
1

 
%
6
2

 
2

 
2

 
%
 
4

 
3

 
3

 
%
Total below investment grade
191

 
176

 
181

 
2.0
%
 
218

 
184

 
181

 
2.3
%
Total
$
10,303

 
$
8,731

 
$
8,973

 
100.0
%
 
$
9,398

 
$
8,050

 
$
7,995

 
100.0
%



17


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Mortgage loans by property type and region
 
December 31, 2016
 
December 31, 2015
 
Net Carrying Value
 
Percent of Total
 
Net Carrying Value
 
Percent of Total
Property type
 
 
 
 
 
 
 
Hotels
$
1,025

 
18.7
%
 
$
877

 
15.9
%
Retail
1,134

 
20.7
%
 
1,230

 
22.4
%
Office building
1,217

 
22.2
%
 
1,274

 
23.2
%
Industrial
742

 
13.6
%
 
821

 
14.9
%
Apartment
616

 
11.3
%
 
907

 
16.5
%
Other commercial 1
397

 
7.3
%
 
291

 
5.3
%
Total commercial mortgage loans
5,132

 
93.8
%
 
5,400

 
98.2
%
Residential loans
338

 
6.2
%
 
99

 
1.8
%
Total mortgage loans, net of allowances
$
5,470

 
100.0
%
 
$
5,500

 
100.0
%
 
 
 
 
 
 
 
 
US Region:
 
 
 
 
 
 
 
East North Central
$
450

 
8.2
%
 
$
443

 
8.1
%
East South Central
158

 
2.9
%
 
129

 
2.3
%
Middle Atlantic
628

 
11.5
%
 
804

 
14.6
%
Mountain
543

 
9.9
%
 
583

 
10.6
%
New England
194

 
3.5
%
 
181

 
3.3
%
Pacific
833

 
15.2
%
 
838

 
15.2
%
South Atlantic
1,284

 
23.5
%
 
1,231

 
22.4
%
West North Central
306

 
5.6
%
 
291

 
5.3
%
West South Central
662

 
12.1
%
 
792

 
14.4
%
Total US Region
5,058

 
92.4
%
 
5,292

 
96.2
%
International Region
74

 
1.4
%
 
108

 
2.0
%
Total commercial mortgage loans
5,132

 
93.8
%
 
5,400

 
98.2
%
Residential loans
338

 
6.2
%
 
99

 
1.8
%
Total mortgage loans, net of allowances
$
5,470

 
100.0
%
 
$
5,500

 
100.0
%

1 Other commercial loans include investments in nursing homes, parking garages, restaurants, mobile home parks and other commercial properties.



18


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Investment funds including related party
 
December 31, 2016
 
December 31, 2015
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Investment funds
 
 
 
 
 
 
 
Private equity
$
268

 
10.9
%
 
$
263

 
11.6
%
Mortgage and real estate
118

 
4.8
%
 
101

 
4.5
%
Natural resources
5

 
0.2
%
 
6

 
0.3
%
Hedge funds
72

 
2.9
%
 
86

 
3.8
%
Credit funds
226

 
9.2
%
 
277

 
12.2
%
Total investment funds
689

 
28.0
%
 
733

 
32.5
%
Investment funds - related parties
 
 
 
 
 
 
 
Private equity - A-A Mortgage
343

 
13.9
%
 
225

 
9.9
%
Private equity
131

 
5.3
%
 
36

 
1.6
%
Mortgage and real estate
247

 
10.0
%
 
234

 
10.3
%
Natural resources
49

 
2.0
%
 
46

 
2.0
%
Hedge funds
191

 
7.8
%
 
256

 
11.3
%
Credit funds
236

 
9.6
%
 
200

 
8.8
%
Total investment funds - related parties
1,198

 
48.7
%
 
997

 
43.9
%
Total investment funds - assets of consolidated VIEs
 
 
 
 
 
 
 
Private equity - MidCap 1
524

 
21.3
%
 
482

 
21.3
%
Credit funds
38

 
1.5
%
 
34

 
1.5
%
Mortgage and real assets
11

 
0.4
%
 
18

 
0.8
%
Total investment funds - assets of consolidated VIEs
573

 
23.3
%
 
534

 
23.6
%
Total investment funds, including related parties and VIEs
$
2,460

 
100.0
%
 
$
2,264

 
100.0
%

1 Midcap is an underlying investment of one of our consolidated VIE investment funds.


Funds withheld at interest
 
December 31, 2016
 
December 31, 2015
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities
 
 
 
 
 
 
 
U.S. state, municipal, and political subdivisions
$
118

 
1.8
%
 
$
118

 
3.4
 %
Corporate
1,800

 
27.6
%
 
734

 
21.1
 %
CLOs
591

 
9.0
%
 
432

 
12.4
 %
ABS
736

 
11.3
%
 
402

 
11.5
 %
CMBS
292

 
4.5
%
 
132

 
3.8
 %
RMBS
1,551

 
23.7
%
 
672

 
19.3
 %
Equity securities
29

 
0.4
%
 
28

 
0.8
 %
Mortgage loans
773

 
11.8
%
 
469

 
13.5
 %
Investment funds
329

 
5.0
%
 
273

 
7.8
 %
Derivative assets
53

 
0.8
%
 
15

 
0.4
 %
Short-term investments
80

 
1.2
%
 
51

 
1.5
 %
Cash and cash equivalents
105

 
1.6
%
 
162

 
4.7
 %
Accrued investment income and other assets
81

 
1.3
%
 
(6
)
 
(0.2
)%
Total funds withheld at interest
$
6,538

 
100.0
%
 
$
3,482

 
100.0
 %


19


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Invested assets summary
 
December 31, 2016
 
December 31, 2015
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value
 
Total Invested Asset Value1
 
Percent of Total
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value
 
Total Invested Asset Value1
 
Percent of Total
Corporates
$
31,000

 
$
1,682

 
$
32,682

 
45.4
%
 
$
27,677

 
$
1,614

 
$
29,291

 
43.7
%
CLOs
5,798

 

 
5,798

 
8.1
%
 
5,648

 

 
5,648

 
8.4
%
Credit
36,798

 
1,682

 
38,480

 
53.5
%
 
33,325

 
1,614

 
34,939

 
52.1
%
RMBS
10,619

 

 
10,619

 
14.8
%
 
8,870

 

 
8,870

 
13.2
%
Mortgage loans
6,145

 
95

 
6,240

 
8.7
%
 
5,826

 
140

 
5,966

 
8.9
%
CMBS
2,202

 

 
2,202

 
3.1
%
 
1,951

 

 
1,951

 
2.9
%
Real estate held for investment

 
542

 
542

 
0.8
%
 

 
566

 
566

 
0.8
%
Real estate
18,966

 
637

 
19,603

 
27.4
%
 
16,647

 
706

 
17,353

 
25.8
%
State, municipals, political subdivisions and foreign government
1,387

 
1,936

 
3,323

 
4.6
%
 
1,401

 
2,343

 
3,744

 
5.6
%
Alternative investments
3,297

 
128

 
3,425

 
4.8
%
 
3,441

 
54

 
3,495

 
5.2
%
ABS
3,873

 

 
3,873

 
5.4
%
 
3,504

 

 
3,504

 
5.2
%
Short-term investments
250

 

 
250

 
0.3
%
 
186

 

 
186

 
0.3
%
Unit-linked assets

 
363

 
363

 
0.5
%
 

 
391

 
391

 
0.6
%
Equity securities
199

 
185

 
384

 
0.5
%
 
179

 
217

 
396

 
0.6
%
U.S. government and agencies
32

 
27

 
59

 
0.1
%
 
44

 

 
44

 
0.1
%
Other investments
9,038

 
2,639

 
11,677

 
16.2
%
 
8,755

 
3,005

 
11,760

 
17.6
%
Cash and equivalents
1,111

 
111

 
1,222

 
1.7
%
 
2,009

 
114

 
2,123

 
3.2
%
Policy loans and other
631

 
221

 
852

 
1.2
%
 
577

 
207

 
784

 
1.2
%
Total invested assets
$
66,544

 
$
5,290

 
$
71,834

 
100.0
%
 
$
61,313

 
$
5,646

 
$
66,959

 
100.0
%

1 Please refer to Note to the Financial Supplement section for discussion on invested assets.


Alternative investments summary
 
December 31, 2016
 
December 31, 2015
 
Invested Asset Value
 
Percent of Total
 
Invested Asset Value
 
Percent of Total
Credit funds
$
834

 
24.3
%
 
$
1,135

 
32.5
%
Private equity - MidCap
524

 
15.3
%
 
482

 
13.8
%
Private equity - A-A Mortgage
417

 
12.2
%
 
252

 
7.2
%
Private equity - other
519

 
15.2
%
 
430

 
12.3
%
Mortgage and real assets
470

 
13.7
%
 
408

 
11.7
%
Hedge funds
311

 
9.1
%
 
383

 
11.0
%
Public equities
215

 
6.3
%
 
270

 
7.7
%
Natural resources and other real assets
135

 
3.9
%
 
135

 
3.9
%
Alternative investments
$
3,425

 
100.0
%
 
$
3,495

 
100.0
%

1 Please refer to Note to the Financial Supplement section for discussion on invested assets including alternative investments and the Non-GAAP Financial Measures Reconciliations section for the reconciliation of investment funds to alternative investments.



20


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Net investment earned rates by asset class
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
3.91
%
 
3.79
%
 
Corporate securities
3.91
%
 
4.06
%
 
3.81
%
 
3.93
 %
 
3.89
%
 
 
 
 
Structured securities
 
 
 
 
 
 
 
 
 
5.18
%
 
5.10
%
 
RMBS
5.30
%
 
5.21
%
 
4.92
%
 
5.30
 %
 
5.20
%
4.74
%
 
5.43
%
 
CLO
4.96
%
 
4.81
%
 
4.73
%
 
4.37
 %
 
5.66
%
6.30
%
 
4.39
%
 
ABS
4.24
%
 
4.16
%
 
6.54
%
 
10.93
 %
 
4.39
%
3.92
%
 
3.12
%
 
CMBS
4.19
%
 
3.79
%
 
4.10
%
 
3.66
 %
 
3.84
%
5.12
%
 
4.79
%
 
Total structured securities
4.92
%
 
4.79
%
 
5.05
%
 
5.82
 %
 
5.04
%
4.82
%
 
4.59
%
 
State, municipal, political subdivisions and U.S. and foreign government
5.80
%
 
3.57
%
 
5.46
%
 
4.57
 %
 
4.54
%
5.95
%
 
5.42
%
 
Mortgage loans
6.26
%
 
6.22
%
 
5.82
%
 
5.42
 %
 
5.43
%
7.76
%
 
5.89
%
 
Alternative investments
14.82
%
 
9.77
%
 
7.11
%
 
(0.40
)%
 
4.28
%
1.03
%
 
1.00
%
 
Other U.S. and Bermuda invested assets
1.27
%
 
1.04
%
 
1.29
%
 
0.32
 %
 
2.03
%
4.59
%
 
4.28
%
 
U.S. and Bermuda
4.96
%
 
4.64
%
 
4.47
%
 
4.27
 %
 
4.37
%
1.67
%
 
2.00
%
 
Germany
1.51
%
 
1.94
%
 
1.62
%
 
1.56
 %
 
1.60
%
4.35
%
 
4.24
%
 
Consolidated total
4.69
%
 
4.42
%
 
4.23
%
 
4.03
 %
 
4.13
%


Invested assets NAIC 1 & 2 designation by asset class
 
December 31, 2016
 
December 31, 2015
Corporate securities
92.4
%
 
93.8
%
Structured securities
 
 
 
RMBS
98.0
%
 
97.9
%
CLO
83.1
%
 
83.6
%
ABS
91.5
%
 
95.6
%
CMBS
97.7
%
 
99.3
%
Total structured securities
93.0
%
 
93.6
%
State, municipal, political subdivisions and U.S. and foreign government
96.5
%
 
97.3
%
Germany fixed maturity securities1
95.0
%
 
96.8
%

1 NAIC 1 and 2 for Germany indicates the percentage of total AFS fixed maturities by applying NRSRO ratings to map to NAIC ratings.



21


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Financial Strength Ratings and RBC
Unaudited

Financial strength ratings
 
A.M. Best
 
Standard & Poor's
 
Fitch
Athene Annuity & Life Assurance Company
A-
 
A-
 
A-
Athene Annuity and Life Company
A-
 
A-
 
A-
Athene Annuity & Life Assurance Company of New York
A-
 
A-
 
A-
Athene Life Insurance Company of New York
A-
 
Not Rated
 
Not Rated
Athene Life Re Ltd.
A-
 
A-
 
A-


Credit ratings
 
A.M. Best
 
Standard & Poor's
 
Fitch
Athene Holding Ltd.
bbb-
 
BBB
 
BBB


Capital Metrics
 
December 31,
 
2016
 
2015
U.S. RBC - Athene Annuity & Life Assurance Company
478
%
 
552
%
BSCR - Athene Life Re Ltd.1
228
%
 
323
%
Athene Life Re Ltd. RBC2
529
%
 
468
%

1 Effective January 1, 2016, in connection with the implementation of its broader regulatory regime, the BMA integrated the economic balance sheet (EBS) framework into the determination of BSCR. The European Commission has granted the BMA's regulatory regime for reinsurance, group solvency calculation and group supervision full equivalence to Solvency II. Under the EBS framework, ALRe's assets are recorded at market value and its insurance reserves are determined by reference to nine prescribed scenarios, with the scenario resulting in the highest reserve balance being ultimately required to be selected. This ratio is not comparable to prior year end BSCR ratios given the change in the solvency regime; however, consistent with the previous regime the minimum required capital ratio to be considered solvent by the BMA is 100%.
2 ALRe RBC ratio, which is used in evaluating our capital position and the amount of capital needed to support our segment, is calculated by applying the NAIC RBC factors.

22


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to basic weighted average shares outstanding - Class A common shares to arrive at weighted average shares outstanding - operating diluted Class A common shares
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
52.1

 
41.2

 
Basic weighted average shares outstanding - Class A
58.3

 
49.8

 
50.1

 
50.0

 
49.9

134.4

 
133.9

 
Conversion of Class B shares to Class A shares
130.0

 
136.0

 
136.0

 
136.0

 
136.0

6.6

 

 
Conversion of Class M shares to Class A shares
5.5

 

 

 

 

0.2

 
0.1

 
Effect of other stock compensation plans
0.4

 
0.1

 
0.1

 
0.1

 
0.1

193.4

 
175.2

 
Weighted average shares outstanding - operating diluted Class A common shares
194.2

 
185.9

 
186.1

 
186.0

 
186.0


Summary of adjustments to Class A common shares outstanding to arrive at operating diluted Class A common shares outstanding
 
2016
 
2015
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
Class A common shares outstanding
77.0

 
50.2

 
50.2

 
50.3

 
50.2

Conversion of Class B shares to Class A shares
111.8

 
136.0

 
136.0

 
136.0

 
136.0

Conversion of Class M shares to Class A shares
6.8

 
7.2

 

 

 

Effect of other stock compensation plans
0.7

 
0.4

 
0.4

 

 

Operating diluted Class A common shares outstanding
196.4

 
193.8

 
186.5

 
186.2

 
186.1

 
 
 
 
 
 
 
 
 
 


Summary of adjustments to book value per share to arrive at book value per share, excluding AOCI
 
2016
 
2015
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
Book value per share
$
35.91

 
$
38.00

 
$
34.62

 
$
30.28

 
$
28.81

AOCI
(1.91
)
 
(4.94
)
 
(3.06
)
 
0.27

 
1.28

Effect of items convertible to or settled in Class A common shares
(0.71
)
 
(1.30
)
 
(0.10
)
 

 

Book value per share, excluding AOCI
$
33.29

 
$
31.76

 
$
31.46

 
$
30.55

 
$
30.09


23


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to net investment income to arrive at net investment earned rate
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
2,916

 
$
2,508

 
GAAP net investment income
$
773

 
$
747

 
$
704

 
$
692

 
$
678

189

 
84

 
Reinsurance embedded derivative impacts
45

 
55

 
53

 
36

 
26

1

 
67

 
Net VIE earnings
44

 
(13
)
 
(14
)
 
(16
)
 
26

(39
)
 
(42
)
 
Alternative income gain (loss)
(4
)
 
(3
)
 

 
(32
)
 
(40
)
(35
)
 
(9
)
 
Other
(16
)
 
(4
)
 
(15
)
 

 

116

 
100

 
Total adjustments to arrive at net investment earnings
69

 
35

 
24

 
(12
)
 
12

$
3,032

 
$
2,608

 
Total net investment earnings
$
842

 
$
782

 
$
728

 
$
680

 
$
690

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,955

 
$
2,572

 
Retirement Services
$
793

 
$
759

 
$
712

 
$
691

 
$
675

77

 
36

 
Corporate and Other
49

 
23

 
16

 
(11
)
 
15

$
3,032

 
$
2,608

 
Total net investment earnings
$
842

 
$
782

 
$
728

 
$
680

 
$
690

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.19
 %
 
4.06
 %
 
GAAP net investment income rate
4.30
 %
 
4.22
 %
 
4.09
 %
 
4.10
 %
 
4.05
 %
0.27
 %
 
0.15
 %
 
Reinsurance embedded derivative impacts
0.25
 %
 
0.31
 %
 
0.31
 %
 
0.21
 %
 
0.16
 %
 %
 
0.11
 %
 
Net VIE earnings
0.25
 %
 
(0.07
)%
 
(0.08
)%
 
(0.09
)%
 
0.16
 %
(0.06
)%
 
(0.07
)%
 
Alternative income gain (loss)
(0.02
)%
 
(0.02
)%
 
 %
 
(0.19
)%
 
(0.24
)%
(0.05
)%
 
(0.01
)%
 
Other
(0.09
)%
 
(0.02
)%
 
(0.09
)%
 
 %
 
 %
0.16
 %
 
0.18
 %
 
Total adjustments to arrive at net investment earned rate
0.39
 %
 
0.20
 %
 
0.14
 %
 
(0.07
)%
 
0.08
 %
4.35
 %
 
4.24
 %
 
Consolidated net investment earned rate
4.69
 %
 
4.42
 %
 
4.23
 %
 
4.03
 %
 
4.13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.73
 %
 
4.37
 %
 
Retirement Services
4.91
 %
 
4.77
 %
 
4.62
 %
 
4.59
 %
 
4.53
 %
1.08
 %
 
1.38
 %
 
Corporate and Other
2.76
 %
 
1.26
 %
 
0.93
 %
 
(0.62
)%
 
0.83
 %
4.35
 %
 
4.24
 %
 
Consolidated net investment earned rate
4.69
 %
 
4.42
 %
 
4.23
 %
 
4.03
 %
 
4.13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
62,509

 
$
58,917

 
Retirement Services average invested assets
$
64,639

 
$
63,638

 
$
61,686

 
$
60,259

 
$
59,587

7,113

 
2,567

 
Corporate and Other average invested assets
7,074

 
7,089

 
7,177

 
7,153

 
7,246

$
69,622

 
$
61,484

 
Average invested assets
$
71,713

 
$
70,727

 
$
68,863

 
$
67,412

 
$
66,833





24


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to interest sensitive contract benefits to arrive at cost of crediting on deferred annuities
Year-to-date
 
 
2016
 
2015
2016
 
2015
 
 
Q4
 
Q3
 
Q2
 
Q1
 
Q4
$
1,293

 
$
690

 
GAAP interest sensitive contract benefits
$
225

 
$
482

 
$
333

 
$
253

 
$
417

(110
)
 
(94
)
 
Interest credited other than deferred annuities
(21
)
 
(33
)
 
(27
)
 
(29
)
 
(30
)
559

 
510

 
FIA option costs
143

 
141

 
139

 
136

 
133

(53
)
 
(33
)
 
Product charges (strategy fees)
(15
)
 
(14
)
 
(13
)
 
(11
)
 
(10
)
29

 
18

 
Reinsurance embedded derivative impacts
8

 
8

 
7

 
6

 
5

(730
)
 
(174
)
 
Change in fair values of embedded derivatives - FIAs
(72
)
 
(318
)
 
(204
)
 
(136
)
 
(269
)
48

 
68

 
Negative VOBA amortization
12

 
12

 
15

 
9

 
17

(15
)
 
(27
)
 
Unit linked change in reserve
(14
)
 
(20
)
 
4

 
15

 
(27
)
(2
)
 
(18
)
 
Other changes in interest sensitive contract liabilities
(2
)
 
1

 
(1
)
 

 
2

(274
)
 
250

 
Total adjustments to arrive at cost of crediting on deferred annuities
39

 
(223
)
 
(80
)
 
(10
)
 
(179
)
$
1,019

 
$
940

 
Retirement Services cost of crediting on deferred annuities
$
264

 
$
259

 
$
253

 
$
243

 
$
238

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.48
 %
 
1.42
 %
 
GAAP interest sensitive contract benefits
1.65
 %
 
3.65
 %
 
2.63
 %
 
2.03
 %
 
3.39
 %
(0.21
)%
 
(0.19
)%
 
Interest credited other than deferred annuities
(0.15
)%
 
(0.25
)%
 
(0.21
)%
 
(0.23
)%
 
(0.24
)%
1.08
 %
 
1.04
 %
 
FIA option costs
1.05
 %
 
1.07
 %
 
1.08
 %
 
1.11
 %
 
1.08
 %
(0.10
)%
 
(0.07
)%
 
Product charges (strategy fees)
(0.11
)%
 
(0.11
)%
 
(0.10
)%
 
(0.09
)%
 
(0.08
)%
0.06
 %
 
0.04
 %
 
Reinsurance embedded derivative impacts
0.06
 %
 
0.06
 %
 
0.06
 %
 
0.05
 %
 
0.04
 %
(1.41
)%
 
(0.36
)%
 
Change in fair values of embedded derivatives - FIAs
(0.53
)%
 
(2.41
)%
 
(1.61
)%
 
(1.10
)%
 
(2.19
)%
0.09
 %
 
0.14
 %
 
Negative VOBA amortization
0.09
 %
 
0.09
 %
 
0.12
 %
 
0.07
 %
 
0.14
 %
(0.03
)%
 
(0.06
)%
 
Unit linked change in reserve
(0.10
)%
 
(0.15
)%
 
0.03
 %
 
0.12
 %
 
(0.22
)%
 %
 
(0.04
)%
 
Other changes in interest sensitive contract liabilities
(0.01
)%
 
0.01
 %
 
(0.01
)%
 
 %
 
0.02
 %
(0.52
)%
 
0.50
 %
 
Total adjustments to arrive at cost of crediting on deferred annuities
0.30
 %
 
(1.69
)%
 
(0.64
)%
 
(0.07
)%
 
(1.45
)%
1.96
 %
 
1.92
 %
 
Retirement Services cost of crediting on deferred annuities
1.95
 %
 
1.96
 %
 
1.99
 %
 
1.96
 %
 
1.94
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
51,921

 
$
48,956

 
Average account value on deferred annuities
$
54,358

 
$
52,739

 
$
50,817

 
$
49,626

 
$
49,139




25


Athene Holding Ltd.
Financial Supplement - December 31, 2016
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to total investments, including related parties to arrive at invested assets
 
December 31, 2016
 
December 31, 2015
Total investments, including related parties
$
72,433

 
$
64,525

Derivative assets
(1,370
)
 
(871
)
Cash and cash equivalents (including restricted cash)
2,502

 
2,830

Accrued investment income
554

 
520

Payables for collateral on derivatives
(1,383
)
 
(867
)
Reinsurance funds withheld and modified coinsurance
(414
)
 
(214
)
VIE assets, liabilities and noncontrolling interest
886

 
1,073

AFS unrealized (gain) loss
(1,030
)
 
362

Ceded policy loans
(344
)
 
(399
)
Total adjustments to arrive at invested assets
(599
)
 
2,434

Total invested assets
$
71,834

 
$
66,959


Summary of adjustments to investment funds, including related parties and VIEs to arrive at alternative investments
 
December 31, 2016
 
December 31, 2015
Investment funds, including related parties and VIEs
$
2,460

 
$
2,264

CLO equities included in trading securities
260

 
337

Investment funds within funds withheld at interest
329

 
273

Royalties, other assets included in other investments and other assets
81

 
83

Net assets of the VIE, excluding investment funds
295

 
538

Total adjustments to arrive at alternative investments
965

 
1,231

Alternative investments
$
3,425

 
$
3,495


Summary of adjustments to total liabilities to arrive at reserve liabilities
 
December 31, 2016
 
December 31, 2015
Total liabilities
$
79,814

 
$
75,491

Derivative liabilities
(40
)
 
(17
)
Payables for collateral on derivatives
(1,383
)
 
(867
)
Funds withheld liability
(380
)
 
(388
)
Other liabilities
(685
)
 
(776
)
Liabilities of consolidated VIEs
(34
)
 
(517
)
Reinsurance ceded receivables
(6,001
)
 
(7,257
)
Policy loans ceded
(344
)
 
(399
)
Other
4

 
1

Total adjustments to arrive at reserve liabilities
(8,863
)
 
(10,220
)
Total reserve liabilities
$
70,951

 
$
65,271




26