Form: 8-K

Current report filing

October 31, 2018

athfsq32018.jpg



Athene Holding Ltd.
Financial Supplement—September 30, 2018
Table of Contents



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



Table of Contents

Athene Holding Ltd.
Financial Supplement—September 30, 2018
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 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 Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.

Adjusted Operating Income

Adjusted operating income 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 adjusted operating income equals net income 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 guaranteed lifetime withdrawal benefit (GLWB) and guaranteed minimum death benefits (GMDB) reserves (together, GLWB and GMDB reserves represent rider 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 rider 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 acquisitions and block reinsurance costs 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—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.

Income Taxes (Expense) Benefit – 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 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, we believe adjusted operating income, provides a meaningful financial metric that helps investors understand our underlying results and profitability. Adjusted operating income should not be used as a substitute for net income.



1

Table of Contents

Athene Holding Ltd.
Financial Supplement—September 30, 2018
Note to the Financial Supplement

Adjusted ROE, Adjusted Operating ROE and Adjusted Net Income

Adjusted ROE, adjusted operating ROE and adjusted net income are non-GAAP measures used to evaluate our financial performance excluding the impacts of AOCI and funds withheld and modco reinsurance unrealized gains and losses, in each case net of DAC, DSI, rider reserve and tax offsets. Adjusted ROE is calculated as adjusted net income, divided by average adjusted shareholders’ equity. Adjusted shareholders’ equity is calculated as the ending shareholders’ equity excluding AOCI and funds withheld and modco reinsurance unrealized gains and losses. Adjusted operating ROE is calculated as the adjusted operating income, divided by average adjusted shareholders’ equity. Adjusted net income is calculated as net income excluding funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. These adjustments fluctuate 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 adjusted operating fundamentals or future performance. Accordingly, we believe using measures which exclude AOCI and funds withheld and modco reinsurance unrealized gains and losses are useful in analyzing trends in our operating results. To enhance the ability to analyze these measures across periods, interim periods are annualized. Adjusted ROE, adjusted operating ROE and adjusted net income should not be used as a substitute for ROE and net income. However, we believe the adjustments to equity are significant to gaining an understanding of our overall results of operations.

Adjusted Operating Earnings Per Share, Weighted Average Shares Outstanding Adjusted Operating and Adjusted Book Value Per Share

Adjusted operating earnings per share, weighted average shares outstanding – adjusted operating and adjusted book value per share 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 represents an economic view of our share counts and provides a simplified and consistent view of our outstanding shares. Adjusted operating earnings per share is calculated as the adjusted operating income, over the weighted average shares outstanding – adjusted operating. Adjusted book value per share is calculated as the adjusted shareholders’ equity divided by the adjusted operating 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 payment 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 – adjusted operating and adjusted operating 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, but excluding any awards for which the exercise or conversion price exceeds the market value of our Class A common shares on the applicable measurement date. For certain historical periods, Class M shares were not included due to issuance restrictions which were contingent upon our IPO. Adjusted operating earnings per share, weighted average shares outstanding – adjusted operating and adjusted book value per share 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.

Adjusted Debt to Capital Ratio

Adjusted debt to capital ratio is a non-GAAP measure used to evaluate our financial condition excluding the impacts of AOCI and funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. Adjusted debt to capital ratio is calculated as total debt excluding consolidated VIEs divided by adjusted shareholders’ equity. Adjusted debt to capital ratio should not be used as a substitute for the debt to capital ratio. However, we believe the adjustments to shareholders’ equity are significant to gaining an understanding of our capitalization, debt utilization, and debt capacity.

Retirement Services Net Investment Earned Rate, Cost of Crediting, Investment Margin on Deferred Annuities, Other Liability Costs and Operating Expenses
    
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.


2

Table of Contents

Athene Holding Ltd.
Financial Supplement—September 30, 2018
Note to the Financial Supplement

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 indexed 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 indexed annuity strategies are divided by the average account value of our deferred annuities. 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.

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.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.

Other liability costs include DAC, DSI and VOBA amortization, rider reserves, institutional costs, the cost of liabilities on products other than deferred annuities, premiums, product charges and other revenues. Along with our cost of crediting, other liability costs give a view of the total costs of our liabilities. We believe a measure like other liability costs is effective in analyzing the trends of our core business operations and profitability. While we believe other liability costs is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total benefits and expenses presented under GAAP.

Operating expenses excludes integration, restructuring and other non-operating expenses, stock compensation expense, interest expense and policy acquisition expenses. We believe a measure like operating expenses is effective in analyzing the trends of our core business operations and profitability. While we believe operating expenses is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for policy and other operating expenses 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, (f) net investment payables and receivables and (g) 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 and 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 recoverable, 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.


3

Table of Contents

Athene Holding Ltd.
Financial Supplement—September 30, 2018
Note to the Financial Supplement

Sales

Sales statistics do not correspond to revenues under GAAP, but are used as relevant measures to understand our business performance as it relates to deposits generated during a specific period of time. Our sales statistics include deposits for 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).





4

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Financial Highlights
Unaudited (In millions, except percentages and per share data)







Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
$
5,524

 
$
4,071

 
Retail sales
$
2,200

 
$
2,038

 
$
1,286

 
$
1,282

 
$
1,337

1,287

 
570

 
Flow reinsurance
610

 
473

 
204

 
305

 
190

425

 
3,000

 
Funding agreements

 
125

 
300

 

 
1,300

796

 
327

 
Pension risk transfer
476

 
54

 
266

 
1,926

 

8,032

 
7,968

 
Total organic deposits
3,286

 
2,690

 
2,056

 
3,513

 
2,827

19,104

 

 
Inorganic deposits

 
19,104

 

 

 

$
27,136

 
$
7,968

 
Total deposits
$
3,286

 
$
21,794

 
$
2,056

 
$
3,513

 
$
2,827

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated results of operations
 
 
 
 
 
 
 
 
 
$
1,172

 
$
984

 
Net income
$
640

 
$
264

 
$
268

 
$
464

 
$
274

908

 
777

 
Adjusted operating income
381

 
290

 
237

 
332

 
231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
17.1
%
 
16.9
%
 
ROE
29.1
%
 
12.3
%
 
12.0
%
 
20.8
%
 
13.0
%
21.8
%
 
17.1
%
 
Adjusted ROE
31.4
%
 
17.5
%
 
16.5
%
 
24.9
%
 
14.6
%
14.5
%
 
15.0
%
 
Adjusted operating ROE
17.5
%
 
14.2
%
 
12.1
%
 
17.7
%
 
12.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
 
 
 
 
 
 
 
 
 
$
913

 
$
786

 
Adjusted operating income
$
389

 
$
289

 
$
235

 
$
306

 
$
244

19.6
%
 
21.8
%
 
Adjusted operating ROE
23.6
%
 
19.8
%
 
17.3
%
 
23.3
%
 
19.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
$
5.94

 
$
5.05

 
Basic1
$
3.24

 
$
1.34

 
$
1.36

 
$
2.36

 
$
1.40

$
5.92

 
$
5.00

 
Diluted – Class A2
$
3.23

 
$
1.33

 
$
1.36

 
$
2.35

 
$
1.39

$
4.63

 
$
3.97

 
Adjusted operating earnings per share3
$
1.95

 
$
1.48

 
$
1.21

 
$
1.69

 
$
1.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value per share:
 
 
 
 
 
 
 
 
 
$
45.97

 
$
44.16

 
Book value per share
$
45.97

 
$
43.10

 
$
44.09

 
$
46.76

 
$
44.16

$
45.94

 
$
37.27

 
Adjusted book value per share3
$
45.94

 
$
42.60

 
$
40.66

 
$
38.77

 
$
37.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
 
 
 
 
$
118,204

 
$
96,061

 
Total assets
$
118,204

 
$
114,755

 
$
93,557

 
$
99,747

 
$
96,061

101,384

 
81,183

 
Total investments, including related parties
101,384

 
98,669

 
80,261

 
84,367

 
81,183

100,620

 
78,804

 
Invested assets
100,620

 
98,609

 
78,723

 
82,298

 
78,804

109,135

 
87,392

 
Total liabilities
109,135

 
106,250

 
84,862

 
90,539

 
87,392

98,422

 
77,850

 
Reserve liabilities
98,422

 
96,140

 
75,746

 
81,183

 
77,850

9,069

 
8,669

 
Total shareholders’ equity
9,069

 
8,505

 
8,695

 
9,208

 
8,669

9,057

 
7,343

 
Adjusted shareholders’ equity
9,057

 
8,367

 
8,003

 
7,632

 
7,343

9.9
%
 
%
 
Debt to capital ratio
9.9
%
 
12.1
%
 
10.2
%
 
%
 
%
9.9
%
 
%
 
Adjusted debt to capital ratio
9.9
%
 
12.3
%
 
11.0
%
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share data:
 
 
 
 
 
 
 
 
 
197.2

 
194.9

 
Weighted average shares outstanding – basic1
197.3

 
197.3

 
197.1

 
196.7

 
196.3

159.8

 
104.8

 
Weighted average shares outstanding – diluted – Class A common shares2
165.1

 
164.8

 
149.0

 
126.4

 
119.9

196.0

 
195.8

 
Weighted average shares outstanding  adjusted operating3
196.1

 
195.1

 
196.0

 
196.1

 
196.0

197.3

 
196.3

 
Common shares outstanding4
197.3

 
197.3

 
197.2

 
196.9

 
196.3

197.2

 
197.0

 
Adjusted operating common shares outstanding3
197.2

 
196.4

 
196.8

 
196.9

 
197.0

* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on adjusted operating income, adjusted ROE, adjusted operating ROE, adjusted book value and adjusted debt to capital ratio.
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, but excluding any awards for which the exercise or conversion price exceeds the market value of our Class A common shares on the applicable measurement date.
4 Represents common shares outstanding for all classes eligible to participate in dividends for each period presented.

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Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Capitalization and Equity
Unaudited (In millions, except percentages)


 
2018
 
2017
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
Capitalization
 
 
 
 
 
 
 
 
 
Total debt
$
991

 
$
1,174

 
$
992

 
$

 
$

Total shareholders’ equity
9,069

 
8,505

 
8,695

 
9,208

 
8,669

Total capitalization
10,060

 
9,679

 
9,687

 
9,208

 
8,669

Less: AOCI
43

 
126

 
585

 
1,415

 
1,162

Less: Accumulated reinsurance unrealized gains and losses
(31
)
 
12

 
107

 
161

 
164

Total adjusted capitalization
$
10,048

 
$
9,541

 
$
8,995

 
$
7,632

 
$
7,343

 
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
$
9,069

 
$
8,505

 
$
8,695

 
$
9,208

 
$
8,669

Less: AOCI
43

 
126

 
585

 
1,415

 
1,162

Less: Accumulated reinsurance unrealized gains and losses
(31
)
 
12

 
107

 
161

 
164

Total adjusted shareholders’ equity
$
9,057

 
$
8,367

 
$
8,003

 
$
7,632

 
$
7,343

 
 
 
 
 
 
 
 
 
 
Retirement Services
$
7,105

 
$
6,114

 
$
5,552

 
$
5,304

 
$
5,207

Corporate and Other
1,952

 
2,253

 
2,451

 
2,328

 
2,136

Total adjusted shareholders’ equity
$
9,057

 
$
8,367

 
$
8,003

 
$
7,632

 
$
7,343

 
 
 
 
 
 
 
 
 
 
Debt to capital ratio
9.9
 %
 
12.1
%
 
10.2
%
 
%
 
%
AOCI
0.0
 %
 
0.2
%
 
0.7
%
 
%
 
%
Accumulated reinsurance unrealized gains and losses
0.0
 %
 
0.0
%
 
0.1
%
 
%
 
%
Adjusted debt to capital ratio1
9.9
 %
 
12.3
%
 
11.0
%
 
%
 
%

1 Total debt in Q2 2018 includes a short-term borrowing of $183 million that was repaid in Q3 2018.


6

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
September 30, 2018
 
December 31, 2017
Assets
 
 
 
Investments
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
$
59,882

 
$
61,012

Trading securities
1,977

 
2,196

Equity securities, at fair value
292

 
790

Mortgage loans, net of allowances
8,982

 
6,233

Investment funds
692

 
699

Policy loans
512

 
530

Funds withheld at interest
7,841

 
7,085

Derivative assets
2,515

 
2,551

Real estate

 
624

Short-term investments, at fair value
234

 
201

Other investments
114

 
133

Total investments
83,041

 
82,054

Cash and cash equivalents
3,723

 
4,888

Restricted cash
218

 
105

Investments in related parties
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
1,243

 
406

Trading securities
259

 
307

Mortgage loans
389

 

Investment funds
2,093

 
1,310

Funds withheld at interest
13,963

 

Short-term investments, at fair value
10

 
52

Other investments
386

 
238

Accrued investment income
686

 
652

Reinsurance recoverable
5,201

 
4,972

Deferred acquisition costs, deferred sales inducements and value of business acquired
4,972

 
2,930

Other assets
1,187

 
969

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Fixed maturity securities, trading, at fair value – related party
48

 
48

Equity securities, at fair value – related party
176

 
240

Investment funds
605

 
571

Cash and cash equivalents
2

 
4

Other assets
2

 
1

Total assets
$
118,204

 
$
99,747

 
 
 
(Continued)


7

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
September 30, 2018
 
December 31, 2017
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
88,903

 
$
67,708

Future policy benefits
14,771

 
17,507

Other policy claims and benefits
140

 
211

Dividends payable to policyholders
120

 
1,025

Long-term debt
991

 

Derivative liabilities
124

 
134

Payables for collateral on derivatives
2,315

 
2,323

Funds withheld liability
389

 
407

Other liabilities
1,380

 
1,222

Liabilities of consolidated variable interest entities
2

 
2

Total liabilities
109,135

 
90,539

Equity
 
 
 
Common Stock

 

Additional paid-in-capital
3,499

 
3,472

Retained earnings
5,527

 
4,321

Accumulated other comprehensive income
43

 
1,415

Total shareholders’ equity
9,069

 
9,208

Total liabilities and equity
$
118,204

 
$
99,747

 
 
 
(Concluded)




8

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Condensed Consolidated Statements of Income
Unaudited (In millions)

Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
$
1,535

 
$
503

 
Premiums
$
531

 
$
726

 
$
278

 
$
1,962

 
$
72

321

 
252

 
Product charges
119

 
106

 
96

 
88

 
86

2,883

 
2,427

 
Net investment income
1,070

 
958

 
855

 
842

 
820

585

 
1,615

 
Investment related gains (losses)
823

 
(2
)
 
(236
)
 
957

 
473

 
 
 
 
Other-than-temporary impairment investment losses
 
 
 
 
 
 
 
 
 
(10
)
 
(23
)
 
Other-than-temporary impairment losses
(7
)
 

 
(3
)
 
(6
)
 
(11
)
4

 
(2
)
 
Other-than-temporary impairment losses reclassified to (from) other comprehensive income
4

 

 

 
(2
)
 
(2
)
(6
)
 
(25
)
 
Net other-than-temporary impairment losses
(3
)
 

 
(3
)
 
(8
)
 
(13
)
22

 
24

 
Other revenues
10

 
6

 
6

 
13

 
8

 
 
 
 
Revenues related to consolidated variable interest entities
 
 
 
 
 
 
 
 
 
39

 
30

 
Net investment income
15

 
14

 
10

 
12

 
10

17

 
29

 
Investment related gains (losses)
23

 
(11
)
 
5

 
6

 
17

5,396

 
4,855

 
Total revenues
2,588

 
1,797

 
1,011

 
3,872

 
1,473

 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
1,092

 
1,866

 
Interest sensitive contract benefits
741

 
332

 
19

 
960

 
621

66

 
42

 
Amortization of deferred sales inducements
23

 
23

 
20

 
21

 
13

2,178

 
1,051

 
Future policy and other policy benefits
920

 
857

 
401

 
2,112

 
259

211

 
251

 
Amortization of deferred acquisition costs and value of business acquired
30

 
92

 
89

 
99

 
80

32

 
129

 
Dividends to policyholders
10

 
9

 
13

 
(11
)
 
48

453

 
479

 
Policy and other operating expenses
158

 
153

 
142

 
193

 
158

1

 

 
Operating expenses of consolidated variable interest entities

 
1

 

 

 

4,033

 
3,818

 
Total benefits and expenses
1,882

 
1,467

 
684

 
3,374

 
1,179

1,363

 
1,037

 
Income before income taxes
706

 
330

 
327

 
498

 
294

191

 
53

 
Income tax expense
66

 
66

 
59

 
34

 
20

$
1,172

 
$
984

 
Net income
$
640

 
$
264

 
$
268

 
$
464

 
$
274




9

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Segment Results of Operations
Unaudited (In millions, except per share data)


Results of operations by segment
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
1,172

 
$
984

 
Net income
$
640

 
$
264

 
$
268

 
$
464

 
$
274

 
 
 
 
Non-operating adjustments
 
 
 
 
 
 
 
 
 
33

 
64

 
Realized gains (losses) on sale of AFS securities
5

 
11

 
17

 
73

 
29

27

 
(15
)
 
Unrealized, impairments and other investment gains (losses)
11

 
10

 
6

 
8

 
(3
)
(300
)
 
153

 
Assumed modco and funds withheld reinsurance embedded derivatives
(93
)
 
(129
)
 
(78
)
 
(1
)
 
20

85

 
(62
)
 
Offsets to investment gains (losses)
29

 
34

 
22

 
(21
)
 
(21
)
(155
)
 
140

 
Investment gains (losses), net of offsets
(48
)
 
(74
)
 
(33
)
 
59

 
25

550

 
155

 
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
380

 
75

 
95

 
111

 
46

(18
)
 
(34
)
 
Integration, restructuring and other non-operating expenses
(2
)
 
(8
)
 
(8
)
 
(34
)
 
(14
)
(8
)
 
(30
)
 
Stock compensation expense
(3
)
 
(2
)
 
(3
)
 
(3
)
 
(7
)
(105
)
 
(24
)
 
Income tax (expense) benefit – non-operating
(68
)
 
(17
)
 
(20
)
 
(1
)
 
(7
)
264

 
207

 
Less: Total non-operating adjustments
259

 
(26
)
 
31

 
132

 
43

$
908

 
$
777

 
Adjusted operating income
$
381

 
$
290

 
$
237

 
$
332

 
$
231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted operating income by segment
 
 
 
 
 
 
 
 
 
$
913

 
$
786

 
Retirement Services
$
389

 
$
289

 
$
235

 
$
306

 
$
244

(5
)
 
(9
)
 
Corporate and Other
(8
)
 
1

 
2

 
26

 
(13
)
$
908

 
$
777

 
Adjusted operating income
$
381

 
$
290

 
$
237

 
$
332

 
$
231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
5.94

 
$
5.05

 
Basic earnings per share – Class A common shares
$
3.24

 
$
1.34

 
$
1.36

 
$
2.36

 
$
1.40

 
 
 
 
Non-operating adjustments
 
 
 
 
 
 
 
 
 
0.17

 
0.32

 
Realized gains (losses) on sale of AFS securities
0.02

 
0.05

 
0.09

 
0.37

 
0.15

0.13

 
(0.08
)
 
Unrealized, impairments and other investment gains (losses)
0.05

 
0.05

 
0.03

 
0.04

 
(0.02
)
(1.53
)
 
0.78

 
Assumed modco and funds withheld reinsurance embedded derivatives
(0.48
)
 
(0.66
)
 
(0.40
)
 

 
0.10

0.43

 
(0.31
)
 
Offsets to investment gains (losses)
0.14

 
0.18

 
0.11

 
(0.11
)
 
(0.10
)
(0.80
)
 
0.71

 
Investment gains (losses), net of offsets
(0.27
)
 
(0.38
)
 
(0.17
)
 
0.30

 
0.13

2.81

 
0.79

 
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
1.93

 
0.39

 
0.49

 
0.57

 
0.23

(0.10
)
 
(0.17
)
 
Integration, restructuring and other non-operating expenses
(0.02
)
 
(0.05
)
 
(0.04
)
 
(0.18
)
 
(0.07
)
(0.04
)
 
(0.15
)
 
Stock compensation expense
(0.01
)
 
(0.02
)
 
(0.01
)
 
(0.02
)
 
(0.04
)
(0.53
)
 
(0.12
)
 
Income tax (expense) benefit – non-operating
(0.35
)
 
(0.09
)
 
(0.10
)
 
(0.01
)
 
(0.03
)
1.34

 
1.06

 
Less: Total non-operating adjustments
1.28

 
(0.15
)
 
0.17

 
0.66

 
0.22

(0.03
)
 
0.02

 
Effect of items convertible to or settled in Class A common shares
0.01

 
0.01

 
(0.02
)
 
0.01

 

$
4.63

 
$
3.97

 
Adjusted operating earnings per share
$
1.95

 
$
1.48

 
$
1.21

 
$
1.69

 
$
1.18


* Please refer to Note to the Financial Supplement section for discussion on adjusted operating income.



10

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Segment Results of Operations
Unaudited (In millions, except per share data)


Consolidated summary of adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
2,755

 
$
2,301

 
Fixed income and other investment income
$
1,036

 
$
921

 
$
798

 
$
810

 
$
782

273

 
261

 
Alternative investment income
90

 
88

 
95

 
51

 
81

3,028

 
2,562

 
Net investment earnings
1,126

 
1,009

 
893

 
861

 
863

(988
)
 
(795
)
 
Cost of crediting on deferred annuities
(395
)
 
(318
)
 
(275
)
 
(271
)
 
(268
)
(788
)
 
(725
)
 
Other liability costs1
(261
)
 
(268
)
 
(259
)
 
(136
)
 
(273
)
(37
)
 
(5
)
 
Interest expense
(13
)
 
(14
)
 
(10
)
 
(2
)
 
(1
)
(221
)
 
(231
)
 
Operating expenses
(78
)
 
(70
)
 
(73
)
 
(87
)
 
(77
)
994

 
806

 
Pre-tax adjusted operating income
379

 
339

 
276

 
365

 
244

(86
)
 
(29
)
 
Income tax (expense) benefit – operating
2

 
(49
)
 
(39
)
 
(33
)
 
(13
)
$
908

 
$
777

 
Adjusted operating income
$
381

 
$
290

 
$
237

 
$
332

 
$
231


* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on adjusted operating income.
1 Other liability costs include DAC, DSI and VOBA amortization and rider reserve changes 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 adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
2,693

 
$
2,196

 
Fixed income and other investment income
$
1,021

 
$
897

 
$
775

 
$
772

 
$
745

264

 
216

 
Alternative investment income
87

 
86

 
91

 
57

 
66

2,957

 
2,412

 
Net investment earnings
1,108

 
983

 
866

 
829

 
811

(988
)
 
(795
)
 
Cost of crediting on deferred annuities
(395
)
 
(318
)
 
(275
)
 
(271
)
 
(268
)
(788
)
 
(632
)
 
Other liability costs
(261
)
 
(268
)
 
(259
)
 
(172
)
 
(228
)
(5
)
 
(3
)
 
Interest expense
(2
)
 
(3
)
 

 

 
(1
)
(177
)
 
(157
)
 
Operating expenses
(63
)
 
(56
)
 
(58
)
 
(55
)
 
(51
)
999

 
825

 
Pre-tax adjusted operating income
387

 
338

 
274

 
331

 
263

(86
)
 
(39
)
 
Income tax (expense) benefit – operating
2

 
(49
)
 
(39
)
 
(25
)
 
(19
)
$
913

 
$
786

 
Adjusted operating income
$
389

 
$
289

 
$
235

 
$
306

 
$
244


Corporate and Other summary of adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
62

 
$
105

 
Fixed income and other investment income
$
15

 
$
24

 
$
23

 
$
38

 
$
37

9

 
45

 
Alternative investment income
3

 
2

 
4

 
(6
)
 
15

71

 
150

 
Net investment earnings
18

 
26

 
27

 
32

 
52


 
(93
)
 
Other liability costs

 

 

 
36

 
(45
)
(32
)
 
(2
)
 
Interest expense
(11
)
 
(11
)
 
(10
)
 
(2
)
 

(44
)
 
(74
)
 
Operating expenses
(15
)
 
(14
)
 
(15
)
 
(32
)
 
(26
)
(5
)
 
(19
)
 
Pre-tax adjusted operating income
(8
)
 
1

 
2

 
34

 
(19
)

 
10

 
Income tax (expense) benefit - operating

 

 

 
(8
)
 
6

$
(5
)
 
$
(9
)
 
Adjusted operating income
$
(8
)
 
$
1

 
$
2

 
$
26

 
$
(13
)



11

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Other Liability Costs
Unaudited (In millions)

Retirement Services summary of other liability costs
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
425

 
$
237

 
Change in rider reserve
$
235

 
$
81

 
$
109

 
$
28

 
$
87

143

 
186

 
DAC, DSI, and VOBA amortization
(49
)
 
102

 
90

 
63

 
62

155

 
50

 
Institutional costs1
58

 
50

 
47

 
40

 
26

65

 
159

 
Other2
17

 
35

 
13

 
41

 
53

$
788

 
$
632

 
Other liability costs
$
261

 
$
268

 
$
259

 
$
172

 
$
228


1 Institutional costs include both funding agreement and PRT benefits and obligations.
2 Other primarily includes payout annuities, policy maintenance costs, reinsurance expense allowances, excise taxes, and non-deferred acquisition costs, net of product charges.


12

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Net Investment Earned Rate and Investment Margin on Deferred Annuities
Unaudited (In millions, except percentages)

Consolidated summary of net investment earned rate (a non-GAAP measure)
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
4.38
%
 
4.29
%
 
Fixed income and other investments
4.33
%
 
4.49
%
 
4.32
%
 
4.22
%
 
4.23
%
9.57
%
 
9.92
%
 
Alternative investments
9.13
%
 
9.37
%
 
10.38
%
 
5.46
%
 
9.07
%
4.61
%
 
4.55
%
 
Total net investment earned rate
4.52
%
 
4.71
%
 
4.60
%
 
4.28
%
 
4.45
%

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

Retirement Services investment margin on deferred annuities (a non-GAAP measure)
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
4.63
%
 
4.75
%
 
Net investment earned rate
4.55
%
 
4.74
%
 
4.63
%
 
4.57
%
 
4.64
%
1.93
%
 
1.89
%
 
Cost of crediting on deferred annuities
1.98
%
 
1.92
%
 
1.87
%
 
1.87
%
 
1.88
%
2.70
%
 
2.86
%
 
Investment margin on deferred annuities
2.57
%
 
2.82
%
 
2.76
%
 
2.70
%
 
2.76
%

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

Retirement Services summary of net investment earned rate
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
4.38
%
 
4.50
%
 
Fixed income and other investments
4.33
%
 
4.49
%
 
4.32
%
 
4.43
%
 
4.44
%
11.30
%
 
10.86
%
 
Alternative investments
10.65
%
 
11.28
%
 
12.34
%
 
7.92
%
 
9.79
%
4.63
%
 
4.75
%
 
Total net investment earned rate
4.55
%
 
4.74
%
 
4.63
%
 
4.57
%
 
4.64
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,693

 
$
2,196

 
Fixed income and other investment income
$
1,021

 
$
897

 
$
775

 
$
772

 
$
745

264

 
216

 
Alternatives investment income
87

 
86

 
91

 
57

 
66

$
2,957

 
$
2,412

 
Total net investment earnings
$
1,108

 
$
983

 
$
866

 
$
829

 
$
811

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average invested assets
 
 
 
 
 
 
 
 
 
$
82,056

 
$
65,086

 
Fixed income and other investments
$
94,239

 
$
79,847

 
$
71,778

 
$
69,690

 
$
67,190

3,113

 
2,636

 
Alternative investments
3,273

 
3,032

 
2,957

 
2,897

 
2,678

$
85,169

 
$
67,722

 
Total average invested assets
$
97,512

 
$
82,879

 
$
74,735

 
$
72,587

 
$
69,868


* The investment results above are presented net of investment management fees.

Retirement Services summary of cost of crediting on deferred annuities
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
576

 
$
421

 
FIA option costs
$
235

 
$
186

 
$
155

 
$
149

 
$
144

412

 
374

 
Fixed interest credited to policyholders
160

 
132

 
120

 
122

 
124

$
988

 
$
795

 
Cost of crediting on deferred annuities
$
395

 
$
318

 
$
275

 
$
271

 
$
268

1.93
%
 
1.89
%
 
Cost of crediting on deferred annuities rate
1.98
%
 
1.92
%
 
1.87
%
 
1.87
%
 
1.88
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
68,421

 
$
56,102

 
Average account value on deferred annuities
$
79,673

 
$
66,241

 
$
58,993

 
$
58,033

 
$
57,050


13

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


Deferred annuities account value rollforward
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
58,539

 
$
54,880

 
Account value at beginning of period
$
78,848

 
$
59,447

 
$
58,539

 
$
57,526

 
$
56,574

6,828

 
4,740

 
Deposits1
2,783

 
2,529

 
1,516

 
1,613

 
1,546

17,721

 

 
Acquisition and block reinsurance2

 
17,721

 

 

 

197

 
120

 
Premium and interest bonuses
77

 
73

 
47

 
39

 
40

2,085

 
1,411

 
Fixed and index credits to policyholders
754

 
672

 
659

 
544

 
486

(4,616
)
 
(3,428
)
 
Surrenders and benefits paid
(1,867
)
 
(1,511
)
 
(1,238
)
 
(1,110
)
 
(1,051
)
(255
)
 
(197
)
 
Fee and product charges
(96
)
 
(83
)
 
(76
)
 
(73
)
 
(69
)
$
80,499

 
$
57,526

 
Account value at end of period
$
80,499

 
$
78,848

 
$
59,447

 
$
58,539

 
$
57,526


* The account value rollforwards on deferred annuities include our fixed rate and fixed indexed annuities and are net of ceded reinsurance activity.
1 Deposits equal deposits from our retail and flow reinsurance channels as well as renewal deposits on older blocks of business and annuitizations.
2 Acquisition and block reinsurance includes the Voya block reinsurance account value in Q2 2018.

Deferred annuity rider reserve summary
 
September 30, 2018
 
December 31, 2017
Rider reserve
$
3,036

 
$
2,442

Account value with rider reserves
36,017

 
29,727

Rider reserve as a percentage of account value with rider reserves
8.4
%
 
8.2
%

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
10.0

 
4.9

 
7
%
 
$
63,788

 
79.2
%
Single-year fixed rate guaranteed annuities
7.3

 
1.0

 
2
%
 
10,073

 
12.5
%
Multi-year fixed rate guaranteed annuities
5.9

 
3.1

 
7
%
 
6,638

 
8.3
%
Total
 
 
 
 
 
 
$
80,499

 
100.0
%


14

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


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
$
15,469

 
19.2
%
 
$
15,469

 
19.2
%
0.0% < 2.0%
536

 
0.7
%
 
713

 
0.9
%
2.0% < 4.0%
2,130

 
2.6
%
 
2,884

 
3.6
%
4.0% < 6.0%
8,502

 
10.6
%
 
8,665

 
10.8
%
6.0% < 8.0%
14,984

 
18.6
%
 
8,918

 
11.1
%
8.0% < 10.0%
17,454

 
21.7
%
 
13,308

 
16.5
%
10.0% or greater
21,424

 
26.6
%
 
30,542

 
37.9
%
 
$
80,499

 
100.0
%
 
$
80,499

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Surrender charge (gross)
 
MVA benefit
 
Surrender charge (net)
Aggregate surrender charge protection
 
 
6.7
%
 
1.5
%
 
8.2
%

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
$
15,469

 
19.2
%
 
%
Less than 2
13,110

 
16.3
%
 
4.7
%
2 to less than 4
16,571

 
20.6
%
 
7.3
%
4 to less than 6
12,660

 
15.7
%
 
8.5
%
6 to less than 8
8,755

 
10.9
%
 
9.9
%
8 to less than 10
10,034

 
12.5
%
 
10.9
%
10 to less than 12
2,508

 
3.1
%
 
14.1
%
12 or greater
1,392

 
1.7
%
 
14.6
%
 
$
80,499

 
100.0
%
 
 

Minimum guarantees on deferred annuities
 
At minimum guarantees
 
Total account value
 
Percent of total account value at minimum guarantees
Fixed indexed annuities
$
16,659

 
$
63,788

 
26
%
Fixed rate annuities
8,399

 
16,711

 
50
%
Total deferred annuities
$
25,058

 
$
80,499

 
31
%
 
 
 
 
 
 
 
 
 
 
 
September 30, 2018
Distance to guarantees1
 
 
 
 
95 – 105


1 The distance to guarantee reflects the average distance in option costs between the current and guaranteed rates for indexed strategies and between current and guaranteed fixed rates for fixed strategies. The option costs used reflects an estimate of option cost in the market.


15

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Reserve Liabilities
Unaudited (In millions, except percentages)


Consolidated reserve liabilities
 
September 30, 2018
 
December 31, 2017
 
Dollars
 
Percent of Total
 
Dollars
 
Percent of Total
Fixed indexed annuities
$
66,377

 
67.4
%
 
$
48,431

 
59.6
 %
Fixed rate annuities
16,983

 
17.3
%
 
13,412

 
16.5
 %
Total deferred annuities
83,360

 
84.7
%
 
61,843

 
76.1
 %
Payout annuities
6,066

 
6.1
%
 
5,216

 
6.4
 %
Pension risk transfer annuities
2,966

 
3.0
%
 
2,252

 
2.8
 %
Funding agreements
3,896

 
4.0
%
 
3,786

 
4.7
 %
Life and other (excluding German products)
2,134

 
2.2
%
 
2,281

 
2.8
 %
Retirement Services reserve liabilities
98,422

 
100.0
%
 
75,378

 
92.8
 %
Germany products1

 
%
 
5,979

 
7.4
 %
Intersegment eliminations

 
%
 
(174
)
 
(0.2
)%
Total reserve liabilities
$
98,422

 
100.0
%
 
$
81,183

 
100.0
 %

* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on reserve liabilities.
1 On January 1, 2018, Germany was deconsolidated and our equity interest was exchanged for common shares of Athora Holding Ltd.


Reserve liability rollforward
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
75,378

 
$
65,745

 
Retirement Services reserve liabilities – beginning
$
96,140

 
$
75,746

 
$
75,378

 
$
72,100

 
$
69,719

8,336

 
8,276

 
Deposits1
3,412

 
2,789

 
2,135

 
3,592

 
2,910

19,104

 

 
Acquisition and block reinsurance2

 
19,104

 

 

 

(5,734
)
 
(4,389
)
 
Withdrawals
(2,167
)
 
(1,812
)
 
(1,755
)
 
(1,361
)
 
(1,311
)
1,338

 
2,468

 
Other reserve changes
1,037

 
313

 
(12
)
 
1,047

 
782

98,422

 
72,100

 
Retirement Services reserve liabilities – ending
98,422

 
96,140

 
75,746

 
75,378

 
72,100


 
5,921

 
Germany reserve liabilities3

 

 

 
5,979

 
5,921


 
(171
)
 
Intersegment eliminations

 

 

 
(174
)
 
(171
)
$
98,422

 
$
77,850

 
Consolidated reserve liabilities – ending
$
98,422

 
$
96,140

 
$
75,746

 
$
81,183

 
$
77,850


1 Deposits equal deposits from our retail, flow reinsurance and institutional channels as well as premiums and deposits for life and products other than deferred annuities or our institutional products, renewal deposits on older blocks of business and annuitizations.
2 Acquisition and block reinsurance includes total reserves at inception. Q2 2018 includes the Voya block reinsurance.
3 On January 1, 2018, Germany was deconsolidated and our equity interest was exchanged for common shares of Athora Holding Ltd.




16

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)


Investments and investments in related parties summary
 
September 30, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities, at fair value
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
U.S. government and agencies
$
142

 
0.1
%
 
$
62

 
0.1
%
U.S. state, municipal and political subdivisions
1,237

 
1.2
%
 
1,165

 
1.4
%
Foreign governments
180

 
0.2
%
 
2,683

 
3.2
%
Corporate
37,319

 
36.8
%
 
36,660

 
43.4
%
CLO
5,302

 
5.3
%
 
5,084

 
6.0
%
ABS
4,855

 
4.8
%
 
3,971

 
4.7
%
CMBS
2,324

 
2.3
%
 
2,021

 
2.4
%
RMBS
8,523

 
8.4
%
 
9,366

 
11.1
%
Trading securities
1,977

 
2.0
%
 
2,196

 
2.6
%
Equity securities, at fair value
292

 
0.3
%
 
790

 
0.9
%
Mortgage loans, net of allowances
8,982

 
8.9
%
 
6,233

 
7.4
%
Investment funds
692

 
0.7
%
 
699

 
0.8
%
Policy loans
512

 
0.5
%
 
530

 
0.6
%
Funds withheld at interest
7,841

 
7.7
%
 
7,085

 
8.4
%
Derivative assets
2,515

 
2.5
%
 
2,551

 
3.0
%
Real estate

 
%
 
624

 
0.7
%
Short-term investments, at fair value
234

 
0.2
%
 
201

 
0.2
%
Other investments
114

 
0.1
%
 
133

 
0.2
%
Total investments
83,041

 
82.0
%
 
82,054

 
97.1
%
Investment in related parties
 
 
 
 
 
 
 
Fixed maturity securities, at fair value:
 
 
 
 
 
 
 
Available-for-sale securities
1,243

 
1.2
%
 
406

 
0.5
%
Trading securities
259

 
0.3
%
 
307

 
0.4
%
Mortgage loans
389

 
0.3
%
 

 
%
Investment funds
2,093

 
2.1
%
 
1,310

 
1.6
%
Funds withheld at interest
13,963

 
13.7
%
 

 
%
Short term investments, at fair value
10

 
0.0
%
 
52

 
0.1
%
Other investments
386

 
0.4
%
 
238

 
0.3
%
Total related party investments
18,343

 
18.0
%
 
2,313

 
2.9
%
Total investments, including related parties
$
101,384

 
100.0
%
 
$
84,367

 
100.0
%



17

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Fixed maturity securities by sector
 
September 30, 2018
 
December 31, 2017
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Amortized Cost
 
Fair Value
 
Percent of Total
Corporate
 
 
 
 
 
 
 
 
 
 
 
Industrial other1
$
11,947

 
$
11,773

 
19.3
%
 
$
11,550

 
$
12,026

 
19.6
%
Financial
12,167

 
12,030

 
19.7
%
 
11,299

 
11,824

 
19.3
%
Utilities
9,099

 
8,967

 
14.7
%
 
7,991

 
8,296

 
13.5
%
Communication
2,376

 
2,351

 
3.8
%
 
2,509

 
2,607

 
4.2
%
Transportation
2,230

 
2,198

 
3.6
%
 
1,824

 
1,907

 
3.1
%
Total corporate
37,819

 
37,319

 
61.1
%
 
35,173

 
36,660

 
59.7
%
Other government-related securities
 
 
 
 
 
 
 
 
 
 
 
U.S. state, municipal and political subdivisions
1,142

 
1,237

 
2.0
%
 
996

 
1,165

 
1.9
%
Foreign governments
180

 
180

 
0.3
%
 
2,575

 
2,683

 
4.4
%
U.S. government and agencies
143

 
142

 
0.2
%
 
63

 
62

 
0.1
%
Total non-structured securities
39,284

 
38,878

 
63.6
%
 
38,807

 
40,570

 
66.1
%
Structured securities
 
 
 
 
 
 
 
 
 
 
 
CLO
5,937

 
5,911

 
9.7
%
 
5,392

 
5,444

 
8.9
%
ABS
5,507

 
5,489

 
9.0
%
 
3,991

 
4,017

 
6.5
%
CMBS
2,343

 
2,324

 
3.8
%
 
1,994

 
2,021

 
3.3
%
RMBS
 
 
 
 
 
 
 
 
 
 
 
Agency
102

 
100

 
0.1
%
 
86

 
87

 
0.1
%
Non-agency
7,821

 
8,423

 
13.8
%
 
8,635

 
9,279

 
15.1
%
Total structured securities
21,710

 
22,247

 
36.4
%
 
20,098

 
20,848

 
33.9
%
Total AFS fixed maturity securities, including related parties
$
60,994

 
$
61,125

 
100.0
%
 
$
58,905

 
$
61,418

 
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
 
September 30, 2018
 
December 31, 2017
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
1
$
31,245

 
51.1
%
 
$
32,447

 
52.8
%
2
26,206

 
42.9
%
 
25,082

 
40.9
%
Total investment grade
57,451

 
94.0
%
 
57,529

 
93.7
%
3
2,822

 
4.6
%
 
3,040

 
5.0
%
4
648

 
1.1
%
 
765

 
1.2
%
5
194

 
0.3
%
 
66

 
0.1
%
6
10

 
0.0
%
 
18

 
0.0
%
Total below investment grade
3,674

 
6.0
%
 
3,889

 
6.3
%
Total fixed maturity securities, including related parties
$
61,125

 
100.0
%
 
$
61,418

 
100.0
%

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


18

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

 
September 30, 2018
 
December 31, 2017
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NRSRO rating agency designation
 
 
 
 
 
 
 
AAA/AA/A
$
21,212

 
34.7
%
 
$
21,448

 
34.9
%
BBB
23,860

 
39.0
%
 
23,572

 
38.4
%
Non-rated1
7,035

 
11.5
%
 
6,592

 
10.7
%
Total investment grade2
52,107

 
85.2
%
 
51,612

 
84.0
%
BB
2,835

 
4.7
%
 
3,091

 
5.0
%
B
1,036

 
1.7
%
 
1,198

 
2.0
%
CCC
2,951

 
4.8
%
 
2,696

 
4.4
%
CC and lower
1,435

 
2.4
%
 
2,302

 
3.8
%
Non-rated1
761

 
1.2
%
 
519

 
0.8
%
Total below investment grade
9,018

 
14.8
%
 
9,806

 
16.0
%
Total fixed maturity securities, including related parties
$
61,125

 
100.0
%
 
$
61,418

 
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 designation.
2 We view the NAIC designation methodology as the most appropriate way to view our fixed maturity portfolio when evaluating credit risk 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 designation methodology considers our investment and amortized cost, and the likelihood of recovery of that book value as opposed to the likelihood of the recovery of all contractual payments.


Credit quality of residential mortgage backed securities
 
September 30, 2018
 
December 31, 2017
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
$
8,565

 
$
7,260

 
$
7,837

 
92.0
%
 
$
9,543

 
$
8,089

 
$
8,714

 
93.0
%
2
370

 
346

 
358

 
4.2
%
 
386

 
348

 
360

 
3.8
%
Total investment grade
8,935

 
7,606

 
8,195

 
96.2
%
 
9,929

 
8,437

 
9,074

 
96.8
%
3
223

 
206

 
211

 
2.5
%
 
238

 
209

 
213

 
2.3
%
4
127

 
109

 
114

 
1.3
%
 
83

 
70

 
73

 
0.8
%
5
1

 
1

 
1

 
0.0
%
 
5

 
5

 
6

 
0.1
%
6
2

 
1

 
2

 
0.0
%
 
1

 

 

 
%
Total below investment grade
353

 
317

 
328

 
3.8
%
 
327

 
284

 
292

 
3.2
%
Total
$
9,288

 
$
7,923

 
$
8,523

 
100.0
%
 
$
10,256

 
$
8,721

 
$
9,366

 
100.0
%



19

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Mortgage loans by property type and region
 
September 30, 2018
 
December 31, 2017
 
Net Carrying Value
 
Percent of Total
 
Net Carrying Value
 
Percent of Total
Property type
 
 
 
 
 
 
 
Office building
$
2,168

 
23.1
%
 
$
1,187

 
19.0
%
Retail
1,693

 
18.1
%
 
1,223

 
19.6
%
Hotels
893

 
9.5
%
 
928

 
14.9
%
Industrial
833

 
8.9
%
 
944

 
15.2
%
Apartment
684

 
7.3
%
 
525

 
8.4
%
Other commercial 1
399

 
4.3
%
 
440

 
7.1
%
Total commercial mortgage loans
6,670

 
71.2
%
 
5,247

 
84.2
%
Residential loans
2,701

 
28.8
%
 
986

 
15.8
%
Total mortgage loans, net of allowances
$
9,371

 
100.0
%
 
$
6,233

 
100.0
%
 
 
 
 
 
 
 
 
US Region
 
 
 
 
 
 
 
East North Central
$
893

 
9.5
%
 
$
643

 
10.3
%
East South Central
157

 
1.7
%
 
144

 
2.3
%
Middle Atlantic
1,034

 
11.0
%
 
909

 
14.6
%
Mountain
636

 
6.8
%
 
492

 
7.9
%
New England
329

 
3.5
%
 
162

 
2.6
%
Pacific
1,558

 
16.6
%
 
991

 
15.9
%
South Atlantic
1,224

 
13.1
%
 
873

 
14.0
%
West North Central
185

 
2.0
%
 
233

 
3.8
%
West South Central
654

 
7.0
%
 
655

 
10.5
%
Total US Region
6,670

 
71.2
%
 
5,102

 
81.9
%
International Region

 
%
 
145

 
2.3
%
Total commercial mortgage loans
6,670

 
71.2
%
 
5,247

 
84.2
%
Residential loans
2,701

 
28.8
%
 
986

 
15.8
%
Total mortgage loans, net of allowances
$
9,371

 
100.0
%
 
$
6,233

 
100.0
%

1 Other commercial loans include investments in nursing homes, other healthcare institutions, parking garages, storage facilities and other commercial properties.



20

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Investment funds including related party1 
 
September 30, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Investment funds
 
 
 
 
 
 
 
Private equity
$
254

 
7.5
%
 
$
271

 
10.5
%
Real estate and other real assets
205

 
6.0
%
 
161

 
6.2
%
Natural resources
4

 
0.1
%
 
4

 
0.2
%
Hedge funds
50

 
1.5
%
 
61

 
2.4
%
Credit funds
179

 
5.3
%
 
202

 
7.8
%
Total investment funds
692

 
20.4
%
 
699

 
27.1
%
Investment funds – related parties
 
 
 
 
 
 
 
Private equity – A-A Mortgage
449

 
13.3
%
 
403

 
15.6
%
Private equity – other
680

 
20.1
%
 
180

 
7.0
%
Real estate and other real assets
499

 
14.7
%
 
297

 
11.5
%
Natural resources
95

 
2.8
%
 
74

 
2.9
%
Hedge funds
98

 
2.9
%
 
93

 
3.6
%
Credit funds
272

 
8.0
%
 
263

 
10.2
%
Total investment funds – related parties
2,093

 
61.8
%
 
1,310

 
50.8
%
Total investment funds – assets of consolidated VIEs
 
 
 
 
 
 
 
Private equity – MidCap
549

 
16.2
%
 
528

 
20.4
%
Credit funds
1

 
0.0
%
 
21

 
0.8
%
Real estate and other real assets
55

 
1.6
%
 
22

 
0.9
%
Total investment funds – assets of consolidated VIEs
605

 
17.8
%
 
571

 
22.1
%
Total investment funds, including related parties and funds owned by consolidated VIEs
$
3,390

 
100.0
%
 
$
2,580

 
100.0
%

1 Investment funds, including related parties and investment funds of consolidated VIE’s, is the GAAP measure which does not include investments that we view as alternative investments. Alternative investments include CLO equity tranche securities that are included in trading securities in the GAAP view, investment funds included in our funds withheld at interest reinsurance portfolios, net assets of VIEs other than investment funds as well as royalties and other investments. Please refer to Note to the Financial Supplement section for discussion on invested assets including alternative investments and the Non-GAAP Measure Reconciliations section for the reconciliation of investment funds to alternative investments.



21

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Funds withheld at interest including related party
 
September 30, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities
 
 
 
 
 
 
 
U.S. government and agencies
$
75

 
0.3
 %
 
$

 
%
U.S. state, municipal and political subdivisions
493

 
2.3
 %
 
117

 
1.6
%
Foreign governments
111

 
0.5
 %
 

 
%
Corporate
11,396

 
52.3
 %
 
2,095

 
29.6
%
CLO
987

 
4.5
 %
 
669

 
9.4
%
ABS
1,383

 
6.3
 %
 
886

 
12.5
%
CMBS
855

 
3.9
 %
 
290

 
4.1
%
RMBS
1,807

 
8.3
 %
 
1,551

 
21.9
%
Equity securities
51

 
0.2
 %
 
28

 
0.4
%
Mortgage loans
3,588

 
16.5
 %
 
792

 
11.2
%
Investment funds
505

 
2.3
 %
 
376

 
5.3
%
Derivative assets
302

 
1.4
 %
 
78

 
1.1
%
Short-term investments
275

 
1.3
 %
 
16

 
0.2
%
Cash and cash equivalents
196

 
0.9
 %
 
132

 
1.9
%
Other assets and liabilities
(220
)
 
(1.0
)%
 
55

 
0.8
%
Total funds withheld at interest, including related party
$
21,804

 
100.0
 %
 
$
7,085

 
100.0
%


22

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Invested assets summary
 
September 30, 2018
 
December 31, 2017
 
Total Invested Asset Value1
 
Percent of Total
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value2
 
Total Invested Asset Value1
 
Percent of Total
Corporate
$
50,272

 
50.0
%
 
$
37,059

 
$
1,536

 
$
38,595

 
46.9
%
CLO
6,873

 
6.8
%
 
5,914

 

 
5,914

 
7.2
%
Credit
57,145

 
56.8
%
 
42,973

 
1,536

 
44,509

 
54.1
%
RMBS
9,996

 
9.9
%
 
10,532

 

 
10,532

 
12.8
%
Mortgage loans
12,994

 
12.9
%
 
6,858

 
165

 
7,023

 
8.5
%
CMBS
3,251

 
3.2
%
 
2,322

 

 
2,322

 
2.8
%
Real estate held for investment

 
%
 

 
625

 
625

 
0.8
%
Real estate
26,241

 
26.0
%
 
19,712

 
790

 
20,502

 
24.9
%
ABS
7,206

 
7.2
%
 
4,824

 

 
4,824

 
5.9
%
Alternative investments
4,023

 
4.0
%
 
3,692

 
137

 
3,829

 
4.6
%
State, municipal, political subdivisions and foreign government
2,004

 
2.0
%
 
1,347

 
2,411

 
3,758

 
4.5
%
Unit-linked assets

 
%
 

 
407

 
407

 
0.5
%
Equity securities
353

 
0.4
%
 
192

 
128

 
320

 
0.4
%
Short-term investments
464

 
0.5
%
 
228

 

 
228

 
0.3
%
U.S. government and agencies
220

 
0.2
%
 
29

 
35

 
64

 
0.1
%
Other investments
14,270

 
14.3
%
 
10,312

 
3,118

 
13,430

 
16.3
%
Cash and equivalents
1,823

 
1.8
%
 
2,504

 
296

 
2,800

 
3.4
%
Policy loans and other
1,141

 
1.1
%
 
761

 
296

 
1,057

 
1.3
%
Total invested assets
$
100,620

 
100.0
%
 
$
76,262

 
$
6,036

 
$
82,298

 
100.0
%

1 Please refer to Note to the Financial Supplement section for discussion on invested assets including alternative investments and the Non-GAAP Measure Reconciliations section for the reconciliation of investment funds to alternative investments.
2 On January 1, 2018, Germany was deconsolidated and our equity interest was exchanged for common shares of Athora Holding Ltd.


Alternative investments summary
 
September 30, 2018
 
December 31, 2017
 
Invested Asset Value1
 
Percent of Total
 
Invested Asset Value1
 
Percent of Total
Credit funds
$
651

 
16.2
%
 
$
784

 
20.4
%
Private equity – MidCap
549

 
13.6
%
 
528

 
13.8
%
Private equity – A-A Mortgage (AmeriHome)
551

 
13.7
%
 
496

 
12.9
%
Private equity – other
785

 
19.5
%
 
554

 
14.5
%
Mortgage and real assets
949

 
23.6
%
 
643

 
16.8
%
Hedge funds
176

 
4.4
%
 
467

 
12.2
%
Public equities
119

 
3.0
%
 
171

 
4.5
%
Natural resources and other real assets
243

 
6.0
%
 
186

 
4.9
%
Alternative investments1
$
4,023

 
100.0
%
 
$
3,829

 
100.0
%

1 Alternative investments does not correspond to the total investment funds, including related parties and VIEs, on our condensed consolidated balance sheets. Alternative investments adjusts the GAAP presentation to include CLO equity tranche securities that are included in trading securities in the GAAP view, investment funds included in our funds withheld at interest reinsurance portfolios, net assets of VIEs other than investment funds as well as royalties and other investments. Please refer to Note to the Financial Supplement section for discussion on invested assets including alternative investments and the Non-GAAP Measure Reconciliations section for the reconciliation of investment funds to alternative investments.



23

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Net investment earned rates by asset class
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
3.93
%
 
3.94
%
 
Corporate securities
3.88
%
 
3.97
%
 
3.90
%
 
3.97
%
 
3.91
%
 
 
 
 
Structured securities
 
 
 
 
 
 
 
 
 
5.78
%
 
5.63
%
 
RMBS
6.04
%
 
5.87
%
 
5.42
%
 
5.22
%
 
5.45
%
5.03
%
 
5.10
%
 
CLO
4.95
%
 
5.09
%
 
5.09
%
 
4.93
%
 
5.25
%
4.58
%
 
4.25
%
 
ABS
4.59
%
 
4.95
%
 
4.03
%
 
5.54
%
 
4.33
%
4.33
%
 
4.10
%
 
CMBS
4.24
%
 
4.64
%
 
4.16
%
 
4.12
%
 
4.18
%
5.15
%
 
5.10
%
 
Total structured securities
5.19
%
 
5.33
%
 
4.91
%
 
5.11
%
 
5.06
%
4.40
%
 
6.23
%
 
State, municipal, political subdivisions and U.S. and foreign government
4.02
%
 
4.63
%
 
4.72
%
 
4.59
%
 
4.54
%
5.24
%
 
5.88
%
 
Mortgage loans
4.97
%
 
5.63
%
 
5.57
%
 
5.89
%
 
5.92
%
9.57
%
 
10.03
%
 
Alternative investments
9.13
%
 
9.37
%
 
10.38
%
 
6.04
%
 
8.92
%
2.31
%
 
1.60
%
 
Other U.S. and Bermuda invested assets
2.55
%
 
2.27
%
 
2.14
%
 
1.55
%
 
1.65
%
4.61
%
 
4.76
%
 
U.S. and Bermuda
4.52
%
 
4.71
%
 
4.60
%
 
4.52
%
 
4.65
%
%
 
1.84
%
 
Germany1
%
 
—%

 
—%

 
1.32
%
 
2.04
%
4.61
%
 
4.55
%
 
Consolidated total
4.52
%
 
4.71
%
 
4.60
%
 
4.28
%
 
4.45
%

1 On January 1, 2018, Germany was deconsolidated and our equity interest was exchanged for common shares of Athora Holding Ltd.


Invested assets NAIC 1 & 2 designation by asset class
 
September 30, 2018
 
December 31, 2017
Corporate securities
94.9
%
 
93.1
%
Structured securities
 
 
 
RMBS
96.1
%
 
96.7
%
CLO
88.8
%
 
85.8
%
ABS
92.9
%
 
93.9
%
CMBS
92.8
%
 
96.0
%
Total structured securities
93.0
%
 
93.3
%
State, municipal, political subdivisions and U.S. and foreign government
85.7
%
 
95.5
%
Germany fixed maturity securities1
%
 
95.0
%

1 On January 1, 2018, Germany was deconsolidated and our equity interest was exchanged for common shares of Athora Holding Ltd. As of December 31, 2017, NAIC 1 and 2 for Germany indicates the percentage of total AFS fixed maturities by applying NRSRO ratings to map to NAIC designations.




24

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
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
Senior notes
bbb
 
BBB+
 
BBB-


Capital Metrics
 
December 31,
 
2017
 
2016
U.S. RBC ratio – Athene Annuity & Life Assurance Company
490
%
 
478
%
BSCR – Athene Life Re Ltd.
354
%
 
228
%
Athene Life Re Ltd. RBC ratio1
562
%
 
529
%

1 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.

25

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages and per share data)




Summary of adjustments to basic weighted average shares outstanding – Class A common shares to arrive at weighted average shares outstanding – adjusted operating
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
159.3

 
101.5

 
Basic weighted average shares outstanding – Class A
164.5

 
164.5

 
148.7

 
126.0

 
119.5

30.6

 
87.7

 
Conversion of Class B shares to Class A shares
25.5

 
25.5

 
41.1

 
63.5

 
69.9

5.6

 
6.2

 
Conversion of Class M shares to Class A shares
5.6

 
4.7

 
5.8

 
6.1

 
6.1

0.5

 
0.4

 
Effect of other stock compensation plans
0.5

 
0.4

 
0.4

 
0.5

 
0.5

196.0

 
195.8

 
Weighted average shares outstanding – adjusted operating
196.1

 
195.1

 
196.0

 
196.1

 
196.0


Summary of adjustments to Class A common shares outstanding to arrive at adjusted operating common shares outstanding
 
2018
 
2017
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
Class A common shares outstanding
164.6

 
164.5

 
164.5

 
142.2

 
119.9

Conversion of Class B shares to Class A shares
25.5

 
25.5

 
25.5

 
47.4

 
69.5

Conversion of Class M shares to Class A shares
6.0

 
5.4

 
5.8

 
6.4

 
6.7

Effect of other stock compensation plans
1.1

 
1.0

 
1.0

 
0.9

 
0.9

Adjusted operating common shares outstanding
197.2

 
196.4

 
196.8

 
196.9

 
197.0



Summary of adjustments to book value per share to arrive at adjusted book value per share
 
2018
 
2017
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
Book value per share
$
45.97

 
$
43.10

 
$
44.09

 
$
46.76

 
$
44.16

AOCI
(0.22
)
 
(0.64
)
 
(2.97
)
 
(7.19
)
 
(5.92
)
Accumulated reinsurance unrealized gains and losses
0.16

 
(0.06
)
 
(0.54
)
 
(0.82
)
 
(0.83
)
Effect of items convertible to or settled in Class A common shares
0.03

 
0.20

 
0.08

 
0.02

 
(0.14
)
Adjusted book value per share
$
45.94

 
$
42.60

 
$
40.66

 
$
38.77

 
$
37.27


The reconciliation of net income to adjusted net income included in adjusted ROE
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
1,172

 
$
984

 
Net income
$
640

 
$
264

 
$
268

 
$
464

 
$
274

192

 
(100
)
 
Reinsurance unrealized gains and losses
43

 
95

 
54

 
2

 
(12
)
$
1,364

 
$
884

 
Adjusted net income
$
683

 
$
359

 
$
322

 
$
466

 
$
262



26

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages and per share data)




Summary of adjustments to net investment income to arrive at net investment earned rate
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
2,883

 
$
2,427

 
GAAP net investment income
$
1,070

 
$
958

 
$
855

 
$
842

 
$
820

169

 
137

 
Reinsurance embedded derivative impacts
52

 
72

 
45

 
54

 
40

55

 
59

 
Net VIE earnings
39

 
1

 
15

 
18

 
27

(14
)
 
(11
)
 
Alternative income gain (loss)
(14
)
 
(1
)
 
1

 
(9
)
 
(4
)
(65
)
 
(50
)
 
Held for trading amortization
(21
)
 
(21
)
 
(23
)
 
(44
)
 
(20
)
145

 
135

 
Total adjustments to arrive at net investment earnings
56

 
51

 
38

 
19

 
43

$
3,028

 
$
2,562

 
Total net investment earnings
$
1,126

 
$
1,009

 
$
893

 
$
861

 
$
863

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,957

 
$
2,412

 
Retirement Services
$
1,108

 
$
983

 
$
866

 
$
829

 
$
811

71

 
150

 
Corporate and Other
18

 
26

 
27

 
32

 
52

$
3,028

 
$
2,562

 
Total net investment earnings
$
1,126

 
$
1,009

 
$
893

 
$
861

 
$
863

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.39
 %
 
4.31
 %
 
GAAP net investment income rate
4.30
 %
 
4.47
 %
 
4.41
 %
 
4.18
 %
 
4.23
 %
0.26
 %
 
0.25
 %
 
Reinsurance embedded derivative impacts
0.20
 %
 
0.34
 %
 
0.22
 %
 
0.27
 %
 
0.20
 %
0.08
 %
 
0.10
 %
 
Net VIE earnings
0.16
 %
 
 %
 
0.08
 %
 
0.09
 %
 
0.14
 %
(0.02
)%
 
(0.02
)%
 
Alternative income gain (loss)
(0.06
)%
 
 %
 
0.01
 %
 
(0.04
)%
 
(0.02
)%
(0.10
)%
 
(0.09
)%
 
Held for trading amortization
(0.08
)%
 
(0.10
)%
 
(0.12
)%
 
(0.22
)%
 
(0.10
)%
0.22
 %
 
0.24
 %
 
Total adjustments to arrive at net investment earned rate
0.22
 %
 
0.24
 %
 
0.19
 %
 
0.10
 %
 
0.22
 %
4.61
 %
 
4.55
 %
 
Consolidated net investment earned rate
4.52
 %
 
4.71
 %
 
4.60
 %
 
4.28
 %
 
4.45
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.63
 %
 
4.75
 %
 
Retirement Services
4.55
 %
 
4.74
 %
 
4.63
 %
 
4.57
 %
 
4.64
 %
3.86
 %
 
2.71
 %
 
Corporate and Other
3.51
 %
 
3.71
 %
 
3.76
 %
 
1.61
 %
 
2.72
 %
4.61
 %
 
4.55
 %
 
Consolidated net investment earned rate
4.52
 %
 
4.71
 %
 
4.60
 %
 
4.28
 %
 
4.45
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
85,169

 
$
67,722

 
Retirement Services average invested assets
$
97,512

 
$
82,879

 
$
74,735

 
$
72,587

 
$
69,868

2,473

 
7,398

 
Corporate and Other average invested assets
2,103

 
2,848

 
2,844

 
7,964

 
7,673

$
87,642

 
$
75,120

 
Average invested assets
$
99,615

 
$
85,727

 
$
77,579

 
$
80,551

 
$
77,541

























27

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages and per share data)




Summary of adjustments to interest sensitive contract benefits to arrive at cost of crediting on deferred annuities
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
1,092

 
$
1,866

 
GAAP interest sensitive contract benefits
$
741

 
$
332

 
$
19

 
$
960

 
$
621

(125
)
 
(109
)
 
Interest credited other than deferred annuities
(44
)
 
(41
)
 
(40
)
 
(37
)
 
(41
)
611

 
448

 
FIA option costs
231

 
206

 
174

 
159

 
154

(70
)
 
(53
)
 
Product charges (strategy fees)
(25
)
 
(23
)
 
(22
)
 
(20
)
 
(19
)
35

 
27

 
Reinsurance embedded derivative impacts
29

 
3

 
3

 
10

 
9

(580
)
 
(1,397
)
 
Change in fair values of embedded derivatives – FIAs
(545
)
 
(168
)
 
133

 
(799
)
 
(464
)
22

 
30

 
Negative VOBA amortization
5

 
7

 
10

 
10

 
8


 
(17
)
 
Unit linked change in reserve

 

 

 
(12
)
 

3

 

 
Other changes in interest sensitive contract liabilities
3

 
2

 
(2
)
 

 

(104
)
 
(1,071
)
 
Total adjustments to arrive at cost of crediting on deferred annuities
(346
)
 
(14
)
 
256

 
(689
)
 
(353
)
$
988

 
$
795

 
Retirement Services cost of crediting on deferred annuities
$
395

 
$
318

 
$
275

 
$
271

 
$
268

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.13
 %
 
4.43
 %
 
GAAP interest sensitive contract benefits
3.72
 %
 
2.00
 %
 
0.13
 %
 
6.62
 %
 
4.35
 %
(0.24
)%
 
(0.26
)%
 
Interest credited other than deferred annuities
(0.22
)%
 
(0.25
)%
 
(0.27
)%
 
(0.26
)%
 
(0.29
)%
1.19
 %
 
1.08
 %
 
FIA option costs
1.16
 %
 
1.25
 %
 
1.18
 %
 
1.10
 %
 
1.08
 %
(0.14
)%
 
(0.13
)%
 
Product charges (strategy fees)
(0.13
)%
 
(0.14
)%
 
(0.15
)%
 
(0.14
)%
 
(0.13
)%
0.07
 %
 
0.06
 %
 
Reinsurance embedded derivative impacts
0.14
 %
 
0.02
 %
 
0.02
 %
 
0.07
 %
 
0.06
 %
(1.13
)%
 
(3.32
)%
 
Change in fair values of embedded derivatives – FIAs
(2.74
)%
 
(1.01
)%
 
0.90
 %
 
(5.51
)%
 
(3.25
)%
0.04
 %
 
0.07
 %
 
Negative VOBA amortization
0.03
 %
 
0.04
 %
 
0.07
 %
 
0.07
 %
 
0.06
 %
 %
 
(0.04
)%
 
Unit linked change in reserve
 %
 
 %
 
 %
 
(0.08
)%
 
 %
0.01
 %
 
 %
 
Other changes in interest sensitive contract liabilities
0.02
 %
 
0.01
 %
 
(0.01
)%
 
 %
 
 %
(0.20
)%
 
(2.54
)%
 
Total adjustments to arrive at cost of crediting on deferred annuities
(1.74
)%
 
(0.08
)%
 
1.74
 %
 
(4.75
)%
 
(2.47
)%
1.93
 %
 
1.89
 %
 
Retirement Services cost of crediting on deferred annuities
1.98
 %
 
1.92
 %
 
1.87
 %
 
1.87
 %
 
1.88
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
68,421

 
$
56,102

 
Average account value on deferred annuities
$
79,673

 
$
66,241

 
$
58,993

 
$
58,033

 
$
57,050

























28

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages and per share data)




Summary of adjustments to GAAP benefits and expenses to arrive at other liability costs
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
4,033

 
$
3,818

 
GAAP benefits and expenses
$
1,882

 
$
1,467

 
$
684

 
$
3,374

 
$
1,179

(1,535
)
 
(503
)
 
Premiums
(531
)
 
(726
)
 
(278
)
 
(1,962
)
 
(72
)
(321
)
 
(252
)
 
Product charges
(119
)
 
(106
)
 
(96
)
 
(88
)
 
(86
)
(22
)
 
(24
)
 
Other revenues
(10
)
 
(6
)
 
(6
)
 
(13
)
 
(8
)
(342
)
 
(321
)
 
Cost of crediting
(135
)
 
(109
)
 
(98
)
 
(102
)
 
(105
)
(919
)
 
(1,501
)
 
Change in fair value of embedded derivatives - FIA, net of offsets
(764
)
 
(230
)
 
75

 
(867
)
 
(496
)
72

 
(51
)
 
DAC, DSI and VOBA amortization related to investment gains and losses
26

 
26

 
20

 
(14
)
 
(16
)
8

 
(9
)
 
Rider reserves
1

 
6

 
1

 
(7
)
 
(4
)
(291
)
 
(305
)
 
Policy and other operating expenses, excluding policy acquisition expenses
(98
)
 
(97
)
 
(97
)
 
(130
)
 
(101
)
(1
)
 

 
VIE operating expenses

 
(1
)
 

 

 

98

 
(49
)
 
AmerUs closed block fair value liability
8

 
36

 
54

 
(19
)
 
(4
)
8

 
(78
)
 
Other
1

 
8

 

 
(36
)
 
(14
)
(3,245
)
 
(3,093
)
 
Total adjustments to arrive at other liability costs
(1,621
)
 
(1,199
)
 
(425
)
 
(3,238
)
 
(906
)
$
788

 
$
725

 
Other liability costs
$
261

 
$
268

 
$
259

 
$
136

 
$
273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
788

 
$
632

 
Retirement Services
$
261

 
$
268

 
$
259

 
$
172

 
$
228


 
93

 
Corporate and Other

 

 

 
(36
)
 
45

$
788

 
$
725

 
Consolidated other liability costs
$
261

 
$
268

 
$
259

 
$
136

 
$
273


Summary of adjustments to policy and other operating expenses to arrive at operating expenses
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q3
 
Q2
 
Q1
 
Q4
 
Q3
$
453

 
$
479

 
Policy and other operating expenses
$
158

 
$
153

 
$
142

 
$
193

 
$
158

(44
)
 
(10
)
 
Interest expense
(15
)
 
(16
)
 
(13
)
 
(6
)
 
(2
)
(162
)
 
(174
)
 
Policy acquisition expenses, net of deferrals
(60
)
 
(57
)
 
(45
)
 
(63
)
 
(58
)
(18
)
 
(34
)
 
Integration, restructuring and other non-operating expenses
(2
)
 
(8
)
 
(8
)
 
(34
)
 
(14
)
(8
)
 
(30
)
 
Stock compensation expenses
(3
)
 
(2
)
 
(3
)
 
(3
)
 
(7
)
(232
)
 
(248
)
 
Total adjustments to arrive at operating expenses
(80
)
 
(83
)
 
(69
)
 
(106
)
 
(81
)
$
221

 
$
231

 
Operating expenses
$
78

 
$
70

 
$
73

 
$
87

 
$
77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
177

 
$
157

 
Retirement Services
$
63

 
$
56

 
$
58

 
$
55

 
$
51

44

 
74

 
Corporate and Other
15

 
14

 
15

 
32

 
26

$
221

 
$
231

 
Consolidated operating expenses
$
78

 
$
70

 
$
73

 
$
87

 
$
77



29

Table of Contents
Athene Holding Ltd.
Financial Supplement—September 30, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages and per share data)




Summary of adjustments to total investments, including related parties to arrive at invested assets
 
September 30, 2018
 
December 31, 2017
Total investments, including related parties
$
101,384

 
$
84,367

Derivative assets
(2,515
)
 
(2,551
)
Cash and cash equivalents (including restricted cash)
3,941

 
4,993

Accrued investment income
686

 
652

Payables for collateral on derivatives
(2,315
)
 
(2,323
)
Reinsurance funds withheld and modified coinsurance
(123
)
 
(579
)
VIE and VOE assets, liabilities and noncontrolling interest
835

 
862

AFS unrealized (gain) loss
(186
)
 
(2,794
)
Ceded policy loans
(299
)
 
(296
)
Net investment receivables (payables)
(788
)
 
(33
)
Total adjustments to arrive at invested assets
(764
)
 
(2,069
)
Total invested assets
$
100,620

 
$
82,298


Summary of adjustments to investment funds, including related parties and VIEs to arrive at alternative investments
 
September 30, 2018
 
December 31, 2017
Investment funds, including related parties and VIEs
$
3,390

 
$
2,580

CLO equities included in trading securities
139

 
182

Financial Credit Investment special-purpose vehicle included in trading securities related party

 
287

Investment funds within funds withheld at interest
505

 
416

Royalties, other assets included in other investments and other assets
72

 
76

Net assets of the VIE, excluding investment funds
188

 
288

Unrealized (gain) loss and other adjustments
(271
)
 

Total adjustments to arrive at alternative investments
633

 
1,249

Alternative investments
$
4,023

 
$
3,829


Summary of adjustments to total liabilities to arrive at reserve liabilities
 
September 30, 2018
 
December 31, 2017
Total liabilities
$
109,135

 
$
90,539

Long-term debt
(991
)
 

Derivative liabilities
(124
)
 
(134
)
Payables for collateral on derivatives
(2,315
)
 
(2,323
)
Funds withheld liability
(389
)
 
(407
)
Other liabilities
(1,380
)
 
(1,222
)
Liabilities of consolidated VIEs
(2
)
 
(2
)
Reinsurance ceded receivables
(5,201
)
 
(4,972
)
Policy loans ceded
(299
)
 
(296
)
Other
(12
)
 

Total adjustments to arrive at reserve liabilities
(10,713
)
 
(9,356
)
Total reserve liabilities
$
98,422

 
$
81,183




30