February 27, 2024 - 10-K: Annual report pursuant to Section 13 and 15(d) | Athene Holding Ltd. ()

February 27, 2024 > Form 10-K > Athene Holding Ltd.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37963

ATHENE HOLDING LTD.

(Exact name of registrant as specified in its charter)

Delaware

98-0630022

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

7700 Mills Civic Pkwy

West Des Moines, Iowa 50266

1-(515) 342-4678

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Depositary Shares, each representing a 1/1,000th interest in a share of

6.35% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series A

ATHPrA

New York Stock Exchange

Depositary Shares, each representing a 1/1,000th interest in a share of

5.625% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series B

ATHPrB

New York Stock Exchange

Depositary Shares, each representing a 1/1,000th interest in a share of

6.375% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series C

ATHPrC

New York Stock Exchange

Depositary Shares, each representing a 1/1,000th interest in a share of

4.875% Fixed-Rate Perpetual Non-Cumulative Preferred Stock, Series D

ATHPrD

New York Stock Exchange

Depositary Shares, each representing a 1/1,000th interest in a share of

7.75% Fixed-Rate Reset Perpetual Non-Cumulative Preferred Stock, Series E

ATHPrE

New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☑

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of February 23, 2024, 203,805,432 shares of our common stock were outstanding, all of which are held by Apollo Global Management, Inc.

TABLE OF CONTENTS

PART I


Item 1.			Business			9
Item 1A.			Risk Factors			42
Item 1B.			Unresolved Staff Comments			62
Item 1C.			Cybersecurity			62
Item 2.			Properties			63
Item 3.			Legal Proceedings			63
Item 4.			Mine Safety Disclosures			63

PART II


Item 5.			Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			64
Item 7.			Management's Discussion and Analysis of Financial Condition and Results of Operations			65
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			113
Item 8.			Financial Statements			117
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			195
Item 9A.			Controls and Procedures			195
Item 9B.			Other Information			195

PART III


Item 10.			Directors, Executive Officers and Corporate Governance			196
Item 11.			Executive Compensation			205
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			219
Item 13.			Certain Relationships and Related Transactions, and Director Independence			221
Item 14.			Principal Accountant Fees and Services			232

PART IV


Item 15.			Exhibits, Financial Statement Schedules			233

Table of Contents

As used in this Annual Report on Form 10-K (report), unless the context otherwise indicates, any reference to “Athene,” “our Company,” “the Company,” “us,” “we” and “our” refer to Athene Holding Ltd. together with its consolidated subsidiaries and any reference to “AHL” refers to Athene Holding Ltd. only.

Forward-Looking Statements

Certain statements in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “seek,” “assume,” “believe,” “may,” “will,” “should,” “could,” “would,” “likely” and other words and terms of similar meaning, including the negative of these or similar words and terms, in connection with any discussion of the timing or nature of future operating or financial performance or other events. However, not all forward-looking statements contain these identifying words. Forward-looking statements appear in a number of places throughout and give our current expectations and projections relating to our business, financial condition, results of operations, plans, strategies, objectives, future performance and other matters.

We caution you that forward-looking statements are not guarantees of future performance and that our actual consolidated financial condition, results of operations, liquidity, cash flows and performance may differ materially from that made in or suggested by the forward-looking statements contained in this report. A number of important factors could cause actual results or conditions to differ materially from those contained or implied by the forward-looking statements, including the risks discussed in Item 1A. Risk Factors. Factors that could cause actual results or conditions to differ from those reflected in the forward-looking statements contained in this report include:

•the accuracy of management’s assumptions and estimates;

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

•interest rate and/or foreign currency fluctuations;

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

•major public health issues, such as the pandemic caused by the effects of the spread of the Coronavirus Disease of 2019 (COVID-19);

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

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

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

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

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

•our dependence on key executives and inability to attract qualified personnel;

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

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

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

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

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

•interruption or other operational failures in telecommunication and information technology and other operating systems, including as a result of threat actors attempting to attack those systems, as well as our ability to maintain the security of those systems;

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

•the accuracy of our estimates regarding the future performance of our investment portfolio;

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

•potential changes to laws or regulations affecting, among other things, group supervision and/or group capital requirements, entity-level regulatory capital standards, transactions with our affiliates, the ability of our subsidiaries to make dividend payments or distributions to AHL, acquisitions by or of us, minimum capitalization and statutory reserve requirements for insurance companies and fiduciary obligations on parties who distribute our products;

•the failure to obtain or maintain licenses and/or other regulatory approvals as required for the operation of our insurance subsidiaries;

•increases in our tax liability resulting from the implementation in various jurisdictions of measures to introduce the Organisation for Economic Cooperation and Development’s (OECD) “Pillar Two” global minimum tax initiative, or similar rules in other jurisdictions (including the recently enacted corporate income tax in Bermuda or otherwise);

•certain of our non-United States (US) subsidiaries becoming subject to US federal income taxation in amounts greater than expected;

•adverse changes in tax law;

•adverse impacts of AHL changing its domicile from Bermuda to the US, causing AHL to become a US-domiciled corporation and a US taxpayer (Redomicile);

•changes in our ability to pay dividends or make distributions, including as a result of the Redomicile;

•the failure to achieve the economic benefits expected to be derived from Athene Co-Invest Reinsurance Affiliate Holding Ltd. (together with its subsidiaries, ACRA 1) and Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd. (together with its subsidiaries, ACRA 2), collectively defined as ACRA, or future ACRA capital raises;

•the failure of third-party ACRA investors to fund their capital commitment obligations; and

•other risks and factors listed under Item 1A. Risk Factors and those discussed elsewhere in this report.

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We caution you that the important factors referenced above may not be exhaustive. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect or anticipate. In light of these risks, you should not place undue reliance upon any forward-looking statements contained in this report. Unless an earlier date is specified, the forward-looking statements included in this report are made only as of the date that this report was filed with the US Securities and Exchange Commission (SEC). We undertake no obligation, except as may be required by law, to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends, or indications of future performance, unless expressed as such, and should only be viewed as historical data.

Risk Factor Summary

Our business faces significant risks. In addition to the summary below, you should carefully review Item 1A. Risk Factors. These risks should be read in conjunction with the other information in this report. Capitalized terms used below and not previously defined herein shall have the respective meanings set forth elsewhere in this report. The factors that make an investment in our business speculative or risky include:

•Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results.

•Interruption or other operational failures in telecommunications, information technology and other operational systems, including as a result of threat actors attacking those systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on those systems, including as a result of human error, could have a material adverse effect on our business.

•A financial strength rating downgrade, potential downgrade or any other negative action by a rating agency could make our product offerings less attractive, inhibit our ability to acquire future business through acquisitions or reinsurance and increase our cost of capital, which could have a material adverse effect on our business.

•We rely significantly on third parties for various services, and we may be held responsible for obligations that arise from the acts or omissions of third parties under their respective agreements with us.

•We are subject to significant operating and financial restrictions imposed by our credit agreements and certain letters of credit, and we are also subject to certain operating restrictions imposed by the indenture to which we are a party.

•We operate in a highly competitive industry that includes a number of competitors, which could limit our ability to achieve our growth strategies and could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

•If we are unable to attract and retain IMOs, banks and broker-dealers, sales of certain of our products may be adversely affected.

•Our growth strategy includes acquisitions and block reinsurance transactions, and our ability to consummate these transactions on economically advantageous terms acceptable to us in the future is unknown.

•We are subject to risks associated with pandemics, epidemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, which could impact our business, financial condition and results of operations in the future.

•As a financial services company, we are exposed to liquidity risk, which is the risk that we are unable to meet near-term obligations as they come due.

•The amount of statutory capital that our insurance and reinsurance subsidiaries have, or that they are required to hold, can vary significantly from time to time and is sensitive to a number of factors outside of our control.

•Repurchase agreement programs subject us to potential liquidity and other risks.

•Our investments are subject to market and credit risks that could diminish their value and these risks could be greater during periods of extreme volatility or disruption in the financial and credit markets, which could adversely impact our business, financial condition, results of operations, liquidity and cash flows.

•Interest rate fluctuations could adversely affect our business, financial condition, results of operations, liquidity and cash flows.

•We are subject to the credit risk of our counterparties, including ceding companies, reinsurers, plan sponsors and derivative counterparties.

•Our investment portfolio may be subject to concentration risk, particularly with respect to single issuers, including Athora, among others; industries, including financial services; and asset classes, including real estate.

•Many of our invested assets are relatively illiquid and we may fail to realize profits from these assets for a considerable period of time, or lose some or all of the principal amount we invest in these assets if we are required to sell our invested assets at a loss at inopportune times.

•Our investments linked to real estate are subject to credit risk, market risk, servicing risk, loss from catastrophic events and other risks, which could diminish the value that we obtain from such investments.

•Our investment portfolio may include investments in securities of issuers based outside the US, including emerging markets, which may be riskier than securities of US issuers.

•While we seek to hedge foreign currency risks, foreign currency fluctuations may reduce our net income and our capital levels, adversely affecting our financial condition.

•Climate change and regulatory and other efforts to reduce climate change, as well as environmental, social and governance requirements could adversely affect our business.

•Financial markets have been subject to inflationary pressures, and continued rising inflation may adversely impact our business and results of operations.

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•There are potential conflicts of interests between Apollo, our corporate parent, and the holders of our preferred stock.

•We rely on our investment management agreements with Apollo for the management of our investment portfolio. Apollo may terminate these arrangements at any time, and there are limitations on our ability to terminate investment management agreements covering assets backing reserves and surplus in ACRA, which may adversely affect our investment results.

•Interruption or other operational failures in telecommunications, information technology and other operational systems at Apollo or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on Apollo’s systems, including as a result of human error, could have a material adverse effect on our business.

•The historical investment portfolio performance of Apollo should not be considered as indicative of the future results of our investment portfolio, or our future results or our ability to declare and pay dividends on our preferred stock.

•The returns that we expect to achieve on our investment portfolio may not be realized.

•Our industry is highly regulated and we are subject to significant legal restrictions and obligations, and these restrictions and obligations may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.

•Our failure to obtain or maintain licenses and/or other regulatory approvals as required for the operations of our insurance subsidiaries may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.

•Changes in the laws and regulations governing the insurance industry or otherwise applicable to our business, may have a material adverse effect on our business, financial condition, results of operations, liquidity, cash flows and prospects.

•The Redomicile may adversely affect the US federal income tax relating to the ownership of our shares by non-US holders.

•Our structure involves complex provisions of tax law for which no clear precedent or authority may be available. Our structure is also subject to ongoing future potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.

•Changes in non-US tax law could adversely affect our ability to raise funds from certain investors.

•Certain of our non-US subsidiaries may be subject to US federal income taxation in an amount greater than expected.

•AHL may be subject to UK taxation by reason of its historic UK tax residency or as a result of ceasing to be a UK tax resident.

•The Base Erosion and Anti-Abuse Tax (BEAT) may significantly increase our tax liability.

•Changes in US tax law might adversely affect demand for our products.

•There is US income tax risk associated with reinsurance between US insurance companies and their Bermuda affiliates.

•The recently enacted Bermuda corporate income tax, or other changes in Bermuda tax laws, may negatively affect our earnings and results from operations.

•AHL is a holding company with limited operations of its own. As a consequence, AHL’s ability to pay dividends on its securities and to make timely payments on its debt obligations will depend on the ability of its subsidiaries to make distributions or other payments to it, which may be restricted by law.

•Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or employees, and the enforceability of the exclusive forum provision may be subject to uncertainty.

•We may be the target or subject of, and may be required to defend against or respond to, litigation, regulatory investigations or enforcement actions.

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GLOSSARY OF SELECTED TERMS

Unless otherwise indicated in this report, the following terms have the meanings set forth below:

Entities


Term or Acronym						Definition
AAA						Apollo Aligned Alternatives Aggregator, LP
AADE						Athene Annuity & Life Assurance Company
AAIA						Athene Annuity and Life Company
AAM						Apollo Asset Management, Inc., formerly known as Apollo Global Management, Inc.
AARe						Athene Annuity Re Ltd., a Bermuda reinsurance subsidiary
ACRA						ACRA 1 and ACRA 2
ACRA 1						Athene Co-Invest Reinsurance Affiliate Holding Ltd., together with its subsidiaries
ACRA 1A						Athene Co-Invest Reinsurance Affiliate 1A Ltd., a Bermuda reinsurance subsidiary
ACRA 1 HoldCo						Athene Co-Invest Reinsurance Affiliate Holding Ltd.
ACRA 2						Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd., together with its subsidiaries
ACRA 2A						Athene Co-Invest Reinsurance Affiliate 2A Ltd., a Bermuda reinsurance subsidiary
ACRA 2 HoldCo						Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd.
ADIP						ADIP I and ADIP II
ADIP I						Apollo/Athene Dedicated Investment Program
ADIP II						Apollo/Athene Dedicated Investment Program II
AGM						Apollo Global Management, Inc.
AHL						Athene Holding Ltd.
ALRe						Athene Life Re Ltd., a Bermuda reinsurance subsidiary
ALReI						Athene Life Re International Ltd., a Bermuda reinsurance subsidiary
Apollo						Apollo Global Management, Inc., together with its subsidiaries (other than us or our subsidiaries)
Apollo Group						(1) AGM and its subsidiaries, including AAM, (2) any investment fund or other collective investment vehicle whose general partner or managing member is owned, directly or indirectly, by clause (1), (3) BRH Holdings GP, Ltd. and each of its shareholders, (4) any executive officer or employee of AGM or AGM’s subsidiaries, and (5) any affiliate of a person described in clauses (1), (2), (3) or (4) above; provided none of AHL or its subsidiaries (other than ACRA) will be deemed to be a member of the Apollo Group
AUSA						Athene USA Corporation
Athora						Athora Holding Ltd.
BMA						Bermuda Monetary Authority
ISG						Apollo Insurance Solutions Group LP
Jackson						Jackson Financial, Inc., together with its subsidiaries
LIMRA						Life Insurance and Market Research Association
MidCap Financial						MidCap FinCo Designated Activity Company
NAIC						National Association of Insurance Commissioners
NYSDFS						New York State Department of Financial Services
US Treasury						United States Department of the Treasury
VIAC						Venerable Insurance and Annuity Company
Venerable						Venerable Holdings, Inc., together with its subsidiaries
Wheels						Wheels, Inc.

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Certain Terms & Acronyms


Term or Acronym						Definition
ABS						Asset-backed securities
ACL						Authorized control level RBC as defined by the model created by the NAIC
ALM						Asset liability management
Alternative investments						Alternative investments, including investment funds, VIEs and certain equity securities due to their underlying characteristics
Base of earnings						Earnings generated from our results of operations and the underlying profitability drivers of our business
Bermuda capital						The capital of Athene’s non-US reinsurance subsidiaries calculated under US statutory accounting principles, including that for policyholder reserve liabilities which are subjected to US cash flow testing requirements, but (1) excluding certain items that do not exist under our applicable Bermuda requirements, such as interest maintenance reserves and (2) including certain Bermuda statutory accounting differences, such as marking to market of inception date investment gains or losses relating to reinsurance transactions. Bermuda capital may from time to time materially differ from the calculation of statutory capital under US statutory accounting principles primarily due to the foregoing differences.
Bermuda RBC						The risk-based capital ratio of our non-US reinsurance subsidiaries by applying NAIC risk-based capital factors to the statutory financial statements on an aggregate basis. Adjustments are made to (1) exclude US subsidiaries which are included within our US RBC Ratio and (2) limit RBC concentration charges such that when they are applied to determine target capital, the charges do not exceed 100% of the asset’s carrying value.
Block reinsurance						A transaction in which the ceding company cedes all or a portion of a block of previously issued annuity contracts through a reinsurance agreement
BSCR						Bermuda Solvency Capital Requirement
CAL						Company action level risk-based capital as defined by the model created by the NAIC
CLO						Collateralized loan obligation
CMBS						Commercial mortgage-backed securities
CML						Commercial mortgage loan
Consolidated RBC						The consolidated risk-based capital ratio of our non-US reinsurance and US insurance subsidiaries calculated by applying NAIC risk-based capital factors to the statutory financial statements on an aggregate basis, including interests in other non-insurance subsidiary holding companies; with an adjustment in Bermuda and non-insurance holding companies to limit RBC concentration charges such that when they are applied to determine target capital, the charges do not exceed 100% of the asset’s carrying value.
Cost of funds						Cost of funds includes liability costs related to cost of crediting on both deferred annuities, including, with respect to our fixed indexed annuities, option costs, and institutional costs related to institutional products, as well as other liability costs, but does not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interests. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than deferred annuities and institutional products, premiums and certain product charges and other revenues. We include the costs related to business added through assumed reinsurance transactions and exclude the costs on business related to ceded reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets for the relevant period, presented on an annualized basis for interim periods.
DAC						Deferred acquisition costs
Deferred annuities						Fixed indexed annuities, annual reset annuities, multi-year guaranteed annuities and registered index-linked annuities
DSI						Deferred sales inducement
Excess capital						Capital in excess of the level management believes is needed to support our current operating strategy
FIA						Fixed indexed annuity, which is an insurance contract that earns interest at a crediting rate based on a specified index on a tax-deferred basis
Fixed annuities						FIAs together with fixed rate annuities
Fixed rate annuity						An insurance contract that offers tax-deferred growth and the opportunity to produce a guaranteed stream of retirement income for the lifetime of its policyholder
Flow reinsurance						A transaction in which the ceding company cedes a portion of newly issued policies to the reinsurer
Funds withheld						Funds withheld modified coinsurance
GLWB						Guaranteed lifetime withdrawal benefit
GMDB						Guaranteed minimum death benefit
Gross invested assets						Represent the investments that directly back our gross reserve liabilities as well as surplus assets. Gross invested assets include (a) total investments on the consolidated balance sheet with available-for-sale securities, trading securities and mortgage loans 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) VIE assets, liabilities and noncontrolling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Gross invested assets exclude the derivative collateral offsetting the related cash positions. We include the investments supporting assumed funds withheld and modco agreements and exclude the investments related to ceded reinsurance transactions in order to match the assets with the income received. Gross invested assets include the entire investment balance attributable to ACRA as ACRA is 100% consolidated.
IMA						Investment management agreement
IMO						Independent marketing organization
Liability outflows						The aggregate of withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities, repurchases and maturities of our funding agreements and reinsurance outflows.

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Term or Acronym						Definition
Market risk benefits						Guaranteed lifetime withdrawal benefits and guaranteed minimum death benefits
MCR						Minimum capital requirements
MMS						Minimum margin of solvency
Modco						Modified coinsurance
MVA						Market value adjustment
MYGA						Multi-year guaranteed annuity
Net invested assets						Represent the investments that directly back our net reserve liabilities as well as surplus assets. Net invested assets include (a) total investments on the consolidated balance sheets, with available-for-sale securities, trading securities and mortgage loans 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) VIE assets, liabilities and noncontrolling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash positions. We include the investments supporting assumed funds withheld and modco agreements and exclude the investments related to ceded reinsurance transactions in order to match the assets with the income received. Net invested assets include our economic ownership of ACRA investments but do not include the investments associated with the noncontrolling interests.
Net investment earned rate						Computed as the income from our net invested assets divided by the average net invested assets for the relevant period, presented on an annualized basis for interim periods. The adjustments to net investment income to arrive at our net investment earnings add (a) alternative investment gains and losses, (b) gains and losses related to certain equity securities, (c) net VIE impacts (revenues, expenses and noncontrolling interest), (d) forward points gains and losses on foreign exchange derivative hedges, (e) amortization of premium/discount on held-for-trading securities and (f) the change in fair value of reinsurance assets, and remove the proportionate share of the ACRA net investment income associated with the noncontrolling interests. The gain or loss on our investment in Apollo was removed in prior years. Net investment earned rate includes the income and assets supporting our change in fair value of reinsurance assets by evaluating the underlying investments of the funds withheld at interest receivables and including the net investment income from those underlying investments which does not correspond to the US GAAP presentation of change in fair value of reinsurance assets. Net investment earned rate excludes the income and assets on business related to ceded reinsurance transactions.
Net investment spread						Net investment spread measures our investment performance plus our strategic capital management fees less our total cost of funds, presented on an annualized basis for interim periods.
Net reserve liabilities						Represent our policyholder liability obligations net of reinsurance and used to analyze the costs of our liabilities. Net reserve liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include our economic ownership of ACRA reserve liabilities but do not include the reserve liabilities associated with the noncontrolling interests. Net reserve liabilities are 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. Net reserve liabilities include the underlying liabilities assumed through modco reinsurance agreements in order to match the liabilities with the expenses incurred.
Payout annuities						Annuities with a current cash payment component, which consist primarily of single premium immediate annuities, supplemental contracts and structured settlements