0001527469-17-000029.txt : 20170510 0001527469-17-000029.hdr.sgml : 20170510 20170510162337 ACCESSION NUMBER: 0001527469-17-000029 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20170510 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170510 DATE AS OF CHANGE: 20170510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Athene Holding Ltd CENTRAL INDEX KEY: 0001527469 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 980628973 STATE OF INCORPORATION: D0 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37963 FILM NUMBER: 17830609 BUSINESS ADDRESS: STREET 1: 96 PITTS BAY ROAD CITY: PEMBROKE STATE: D0 ZIP: HM08 BUSINESS PHONE: 441-279-8400 MAIL ADDRESS: STREET 1: 96 PITTS BAY ROAD CITY: PEMBROKE STATE: D0 ZIP: HM08 8-K 1 q120178k051017pr.htm 8-K Document


 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
 
 
 
 
 
 
Washington, D.C. 20549
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FORM 8-K
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT REPORT
 
 
 
 
 
 
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
Date of report (Date of earliest event reported): May 10, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ATHENE HOLDING LTD.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bermuda
001-37963
98-0630022
 
 
(State or other jurisdiction of
(Commission
(I.R.S. Employer
 
 
incorporation or organization)
file number)
Identification Number)
 
 
 
 
 
 
 
 
96 Pitts Bay Road
Pembroke, HM08, Bermuda
(Address of principal executive offices and zip code)
 
 
 
 
 
 
 
(441) 279-8400
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
 
 
 
 
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
 
 
 
 
 
Emerging growth company o
 
 
 
 
 
 
 
 
 
 
 
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. o






Item 2.02        Results of Operations and Financial Condition

On May 10, 2017, Athene Holding Ltd. (the “Company”) issued a press release to announce its financial results for the three months ended March 31, 2017. A copy of the press release containing this information is furnished as Exhibit 99.1 hereto and is incorporated by reference in this Item 2.02. The Company's financial supplement for the first quarter ended March 31, 2017 is attached as Exhibit 99.2 hereto and is incorporated by reference in this Item 2.02.
 
The foregoing information, including the Exhibits referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01        Financial Statements and Exhibits
(d)
Exhibits
 
 
99.1
Press release of Athene Holding Ltd., dated May 10, 2017 (furnished and not filed).
 
 
99.2
Quarterly Financial Supplement for Athene Holding Ltd. for first quarter 2017 (furnished and not filed).






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
ATHENE HOLDING LTD.
 
 
Date: May 10, 2017
/s/ Martin P. Klein
 
Martin P. Klein
 
Executive Vice President and Chief Financial Officer
 
 






EXHIBIT INDEX

Exhibit No.
Description
99.1
Press release of Athene Holding Ltd., dated May 10, 2017 (furnished and not filed).
 
 
99.2
Quarterly Financial Supplement for Athene Holding Ltd. for first quarter 2017 (furnished and not filed).



EX-99.1 2 q12017pressrelease.htm EXHIBIT 99.1 Exhibit


athenelogoa02.jpg
News Release

ATHENE HOLDING LTD. REPORTS
FIRST QUARTER 2017 RESULTS
Q1 net income increased 329% year-over-year to $373 million
Q1 operating income, net of tax, increased 70% year-over-year to $258 million
Q1 ROE of 20.6%, Q1 Retirement Services operating ROE ex. AOCI of 22.8%
Q1 new deposits up 22% year-over-year to $1.9 billion
Q1 Retirement Services investment margin of 2.85%, up 22 basis points year-over-year

PEMBROKE, Bermuda - May 10, 2017 - Athene Holding Ltd. ("Athene") (NYSE: ATH), a leading provider of retirement savings products, today announced financial results for the first quarter 2017.
Net income for the first quarter 2017 was $373 million, or $1.87 per diluted Class A share ("diluted share"), compared to net income in the first quarter 2016 of $87 million, or $0.47 per diluted share.
Operating income, net of tax for the first quarter 2017 was $258 million, or $1.32 per operating diluted Class A share ("operating diluted share"), compared to operating income, net of tax for the first quarter 2016 of $152 million, or $0.82 per operating diluted share.
“Our first quarter results reflect a very strong start to the year," said Jim Belardi, CEO of Athene. "Significant liability growth combined with investment margin expansion drove a large increase in operating income, net income and shareholders' equity. With respect to our financial strength, we continue to have high risk-based capital ratios, more than $1.5 billion of excess equity capital and no financial leverage."

"We achieved strong organic growth in the first quarter and this year we have already issued $1.7 billion of funding agreements, which we believe will be a consistent source of attractively priced liabilities and further demonstrates the flexibility of Athene's distribution platform to achieve growth and profitability," Mr. Belardi noted.

"In recognition of our strong financial performance, market leadership, capital growth and superior management team, A.M. Best upgraded the financial strength ratings of Athene’s operating companies to “A" on April 13. With this ratings upgrade, we are now even better positioned to expand organically and inorganically and to continue to create significant shareholder value."






1



Other Highlights1 
Total investments, including related parties, increased 14% year-over-year to $75.1 billion; total invested assets increased 8% year-over-year to $73.6 billion
Athene shareholders' equity increased 35% year-over-year to $7.6 billion and Athene shareholders' equity ex. AOCI increased 22% year-over-year to $6.9 billion, as of March 31, 2017
Estimated Q1 U.S. RBC of 466%, as of March 31, 2017
Estimated Q1 ALRe RBC of 530%2 as of March 31, 2017; BSCR of 228%3 as of December 31, 2016
Ranked #2 writer of fixed indexed annuity sales for the second half of 20164 
In March, Athene and Apollo agreed, subject to shareholder approval, to implement a new fee framework in support of further prudent growth, reducing fees from 40bps to 30bps on AUM in excess of $65.8 billion
Added to the Russell 1000 index, effective March 31, 2017
In March, priced an upsized secondary offering of 31,625,000 of Class A common shares; Athene did not receive any proceeds from the sale
A.M. Best upgraded the financial strength ratings of our operating companies to “A" on April 13, 2017

1 This news release references certain Non-GAAP measures. See Non-GAAP Measures for additional discussion.
2 ALRe RBC ratio, which is used in evaluating our capital position and the amount of capital needed to support our segment, is calculated by applying the NAIC RBC factors to the Statutory Financial Statements of ALRe.
3 Effective January 1, 2016, in connection with the implementation of its broader regulatory regime, the BMA integrated the EBS framework into the determination of BSCR. The European Commission has granted the BMA's regulatory regime for reinsurance, group solvency calculation and group supervision full equivalence to Solvency II. Under the EBS framework, ALRe's assets are recorded at market value and its insurance reserves are determined by reference to nine prescribed scenarios, with the scenario resulting in the highest reserve balance required to be selected. This ratio is not comparable to prior year end BSCR ratios given the change in the solvency regime; however, consistent with the previous regime the minimum required capital ratio to be considered solvent by the BMA is 100%.
4 Rankings as of December 31, 2016 per LIMRA.


First Quarter Results
Net income for the first quarter increased by $286 million, or 329%, over the prior year. The increase was driven by a $106 million increase in operating income, net of tax, a $163 million favorable change in FIA derivatives primarily due to equity market performance and the favorable change in discount rates compared to the prior year, as well as $76 million of favorable investment gains primarily driven by credit spreads tightening.
Operating income, net of tax for the first quarter increased by $106 million, or 70%, over the prior year. The increase was driven by higher fixed, other and alternative investment income as well as favorable rider reserve changes and DAC amortization.
Investment income increased primarily due to the growth in invested assets, proceeds from a bond previously written down, higher interest rates and strength in our alternatives portfolio. In 2016 fixed income and other investment income benefited from bond call income from a large redemption partially offset by lower alternative investment income driven by lower credit fund income due to credit spreads widening and a decline in market value of public equity positions in one of our funds. Cost of crediting increased primarily from growth in the block of business partially offset by recent rate actions and lower option costs. Other liability costs were in line with prior year having benefited from rider reserve changes and favorable DAC amortization driven by strong equity market performance in 2017 compared to 2016, offset by growth in the block of business.
Deposit Highlights
In the first quarter of 2017, we generated retail sales, new flow reinsurance and funding agreement deposits of $1.9 billion, an increase of 22% compared to the prior year.
Retail Sales: Athene ranked as the #2 writer of fixed indexed annuities for the second half of 2016, based on LIMRA data as of December 31, 2016. For the first quarter, we generated new deposits of $1.1 billion, an increase of 66% over the prior year. During the quarter, we launched new products, expanded our distribution and added new partners, which drove strong growth over the prior year.    

2



Flow Reinsurance: Flow reinsurance deposits were $166 million in the first quarter, down from the prior year due in part to a decline in the overall fixed-rate deferred annuity market, which is largely comprised of MYGA products. We are pursuing new reinsurance partners and developing new products to diversify our portfolio.
Institutional: For the first quarter, funding agreements contributed $650 million of new deposits within our institutional channel; we did not issue any funding agreements in the prior year. Additionally, in the second quarter of 2017 to date, we have issued more than $1 billion of funding agreements, and we expect demand will continue for this product.
Selected Results
 
As of and for the three months ended March 31,
(In millions, except percentages and share data)
2017
 
2016
Deposits
$
1,915

 
$
1,575

Investments, including related parties
75,129

 
66,071

Invested assets
73,573

 
67,865

Debt to equity
%
 
%
Book value per share
$
39.26

 
$
30.28

Book value per share, ex. AOCI1
$
35.17

 
$
30.55

Common shares outstanding2
193.5

 
186.2

Operating diluted Class A common shares outstanding3
196.8

 
186.2

Total AHL shareholders' equity
7,597

 
5,638

Total AHL shareholders' equity excluding AOCI
6,924

 
5,690

 
 
 
 
ROE
20.6
%
 
6.3
%
ROE ex. AOCI
22.2
%
 
6.2
%
Operating ROE ex. AOCI
15.3
%
 
10.8
%
 
 
 
 
Retirement Services
 
 
 
  Operating income, net of tax
$
267

 
$
197

  Operating ROE ex. AOCI
22.8
%
 
19.7
%
  Investment margin on deferred annuities
2.85
%
 
2.63
%
1Book value per share, ex AOCI is calculated as the ending AHL shareholders' equity excluding AOCI divided by the operating diluted Class A common shares outstanding.
2Represents common shares outstanding for all classes eligible to participate in dividends for each period presented. Utilized for the book value per share calculation.
3Operating diluted Class A common shares outstanding assumes 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 outstanding on a one-for-one basis, the impacts of all Class M common shares outstanding net of the conversion price and any other stock-based awards 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 1-for-1 basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of book value metrics.

3



 
Three months ended March 31,
(In millions, except share data)
2017
 
2016
Operating income, net of tax by segment
 
 
 
Retirement Services
$
267

 
$
197

Corporate and Other
(9
)
 
(45
)
Operating income, net of tax
258

 
152

 
 
 
 
Investment gains (losses), net of offsets
57

 
(19
)
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
94

 
(69
)
Integration, restructuring and other non-operating expenses
(9
)
 
(1
)
Stock compensation expense
(13
)
 
15

Income tax (expense) benefit - non-operating
(14
)
 
9

Total non-operating adjustments
115

 
(65
)
Net income available to AHL shareholders
$
373

 
$
87

 
 
 
 
Earnings per share - basic1
$
1.94

 
$
0.47

Earnings per share - diluted Class A2
$
1.87

 
$
0.47

Operating earnings per share - operating diluted Class A3
$
1.32

 
$
0.82

Weighted average shares outstanding - basic1
192.5

 
186.0

Weighted average shares outstanding - diluted Class A2
81.3

 
50.1

Weighted average shares outstanding - operating diluted Class A3
195.6

 
186.0


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, which totaled 3.1 million weighted average shares in the quarter. Diluted earnings per share on a GAAP basis for Class A common shares are based on allocated net income of $152 million (41% of net income) and $23 million (27% of net income) for the three months ended March 31, 2017 and 2016, respectively.
3 Weighted average shares outstanding - operating diluted Class A assumes 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. Our Class B common shares are economically equivalent to Class A common shares and can be converted to Class A common shares on a 1-for-1 basis at any time. Our Class M common shares are in the legal form of shares but economically function as options as they are convertible into Class A shares after vesting and settlement of the conversion price. In calculating Class A diluted earnings per share on a GAAP basis, we are required to apply sequencing rules to determine the dilutive impacts, if any, of our Class B common shares, Class M common shares and any other stock-based awards. To the extent our Class B common shares, Class M common shares and/or any other stock-based awards are not dilutive they are excluded. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of diluted operating earnings per share.
Segment Results
Retirement Services
Q1 Results
In the first quarter, our Retirement Services segment generated an operating ROE excluding AOCI of 22.8% and operating income, net of tax of $267 million, an increase of $70 million over the prior year. Operating income, net of tax was driven by strong fixed, other and alternative investment income as well as favorable rider reserve changes and DAC amortization.
Higher investment income was driven mainly by earnings from growth in invested assets of $5.8 billion, proceeds of $14 million from a bond previously written down, higher interest rates and strength in the alternatives portfolio. In 2016, fixed income and other investment income benefited from $45 million of bond call income from a large redemption partially offset by lower alternative investment income driven by lower credit fund income due to credit spreads widening. Cost of crediting increased $20 million, primarily driven by growth in the block of business partially offset by recent rate actions and lower option costs.  Other liability costs were in line with the prior year having benefited from approximately $40 million of rider reserve changes and favorable DAC amortization driven by strong equity market performance in 2017 compared to 2016, offset by growth in the block of business.
Investment margin on deferred annuities was 2.85%, an increase of 22 basis points over the prior year, which includes 9 basis points from the proceeds on a bond previously written down, as compared to 30 basis points in the prior year of bond call income from a large redemption. The net investment earned rate was 4.76%, an increase of

4



17 basis points over the prior year.  Cost of crediting decreased by 5 basis points compared to the prior year due to recent rate actions and lower option costs.
Corporate Segment
Q1 Results
For the first quarter of 2017, Corporate and Other operating loss, net of tax was $9 million, as compared to a loss of $45 million in the prior year. The improvement was largely driven by higher alternative investment income, partially offset by an $11 million unfavorable change in fair value within one of our funds in 2017.  Additionally, in 2016 we had lower credit fund income due to credit spreads widening and a decline in the market value of public equity positions in one of our funds. For the first quarter, results for our German business were in line with the prior year.
Subsequent to the quarter Athene's Bermuda subsidiary (AGER), that holds our business in Germany, received binding subscriptions for a capital raise that was conducted through a private placement of common equity securities. The offering received subscriptions representing approximately €2.2 billion from a number of global institutional investors, including Athene and Apollo, and is intended to support capital and reinsurance transactions in the German and European guaranteed life insurance market. The capital raised is permanent equity capital, does not include any financial leverage and will result in the deconsolidation of our business in Germany once capital is drawn. At that time, AGER and its subsidiaries will be separately managed from Athene.
As capital is drawn by AGER under the subscription agreement, Athene will become a large minority shareholder in AGER and AGER will no longer be a consolidated subsidiary. In addition, Athene expects to be a long-term strategic partner for AGER and will support its business in a number of ways. As part of the long-term partnership, Athene is expected to be a preferred reinsurer for AGER’s spread liabilities.
Conference Call Information
This press release and the first quarter 2017 financial supplement will be posted to the Company’s website at ir.athene.com.
Athene will conduct a conference call on Thursday, May 11, 2017 at 9:00 a.m. ET to discuss first quarter 2017 results. Additionally, the company will post an earnings presentation deck on the ir.athene.com website prior to market open on May 11, 2017.
Live conference call: Toll-free at 1-888-317-6003 (domestic) or 1-412-317-6061 (international)
Participant entry number: 2435204
Replay available through May 25, 2017 at 1-877-344-7529 (domestic) or 1-412-317-0088 (international)
Replay access code: 10103915
Live and archived webcast available at ir.athene.com
Investor Relations Contact:             Media Contact:
Paige Hart                         Karen Lynn
+1 441-279-8527                    +1 441-279-8460        
+1 310-698-4478                    +1 515-342-3910
phart@athene.com                    klynn@athene.com
About Athene Holding Ltd.
Athene, through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products offered by Athene include:

Retail fixed and fixed indexed annuity products;
Reinsurance arrangements with third-party annuity providers; and
Institutional products, such as funding agreements.

5




Athene's principal subsidiaries include Athene Annuity & Life Assurance Company, a Delaware-domiciled insurance company, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York and Athene Life Insurance Company of New York, New York-domiciled insurance companies, Athene Life Re Ltd., a Bermuda-domiciled reinsurer and Athene Lebensversicherung AG, a German-based life insurance company.
Further information about our companies can be found at www.athene.com.
Non-GAAP Measures
In addition to our results presented in accordance with GAAP, our results of operations include certain non-GAAP measures commonly used in our industry. Management believes the use of these non-GAAP measures, together with the relevant GAAP measures, provides a better understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.

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

Investment Gains (Losses), Net of Offsets
Change in Fair Values of Derivatives and Embedded Derivatives - FIAs, Net of Offsets
Integration, Restructuring, and Other Non-operating Expenses
Stock Compensation Expense
Bargain Purchase Gain
Income Tax (Expense) Benefit - Non-operating

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

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

Operating earnings per share - operating diluted Class A, weighted average shares outstanding - operating diluted Class A common shares and book value per share excluding AOCI are non-GAAP measures used to evaluate our financial performance and financial condition. The non-GAAP measures adjust the number of shares included in the corresponding GAAP measures to reflect the conversion or settlement of all shares and other stock-based awards outstanding. We believe using these measures represent an economic view of our share counts and provide a

6



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

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

Net investment earned rate is a non-GAAP measure we use to evaluate the performance of our invested assets that does not correspond to GAAP net investment income. Net investment earned rate is computed as the income from our invested assets divided by the average invested assets for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. The adjustments to arrive at our net investment earned rate add alternative investment gains and losses, gains and losses related to trading securities for CLOs, net VIE impacts (revenues, expenses and noncontrolling interest) and the change in reinsurance embedded derivatives. We include the income and assets supporting our assumed reinsurance by evaluating the underlying investments of the funds withheld at interest receivables and we include the net investment income from those underlying investments which does not correspond to the GAAP presentation of reinsurance embedded derivatives. We exclude the income and assets supporting business that we have exited through ceded reinsurance including funds withheld agreements. We believe the adjustments for reinsurance provide a net investment earned rate on the assets for which we have economic exposure.
Cost of crediting is the interest credited to the policyholders on our fixed strategies as well as the option costs on the index annuity strategies. With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. The interest credited on fixed strategies and option costs on index annuity strategies are divided by the average account value of our deferred annuities. Under GAAP, deposits and withdrawals for fixed indexed and fixed rate annuities are reported as deposit liabilities (or policyholder funds). Our average account values are averaged over the number of quarters in the relevant period to obtain our cost of crediting for such period. To enhance the ability to analyze these measures across periods, interim periods are annualized.

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

7



assets represent the investments that directly back our policyholder liabilities as well as surplus assets. Invested assets is used in the computation of net investment earned rate, which allows us to analyze the profitability of our investment portfolio. Invested assets includes (a) total investments on the consolidated balance sheets with AFS securities at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) the consolidated VIE assets, liabilities and noncontrolling interest and (f) policy loans ceded (which offset the direct policy loans in total investments). Invested assets also excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Our invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period.

Sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of understanding our business performance. Our sales statistics include fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers).
Safe Harbor for Forward Looking Statements
This press release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in, or implied by, such statements. These statements are based on the beliefs and assumptions of AHL’s management and the management of AHL’s subsidiaries. Generally, forward-looking statements include actions, events, results, strategies and expectations and are often identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions. Factors that could cause actual results, events and developments to differ include, without limitation:  the accuracy of our assumptions and estimates; our ability to maintain or improve financial strength ratings; our ability to manage our business in a highly regulated industry; regulatory changes or actions; the impact of our reinsurers failing to meet their assumed obligations; the impact of interest rate fluctuations; changes in the federal income tax laws and regulations; litigation (including class action litigation), enforcement investigations or regulatory scrutiny; the performance of third parties; the loss of key personnel; telecommunication, information technology and other operational systems failures; the continued availability of capital; new accounting rules or changes to existing accounting rules; general economic conditions; our ability to protect our intellectual property; the ability to maintain or obtain approval of the Delaware Department of Insurance, the Iowa Insurance Division and other regulatory authorities as required for our operations; and other factors discussed from time to time in AHL’s filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2016, which can be found at the SEC’s website www.sec.gov.
All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. We do not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results.
# # #

8



Athene Holding Ltd.
Condensed Consolidated Balance Sheets (unaudited)
 
March 31,
 
December 31,
(In millions)
2017
 
2016
Assets
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
$
54,225

 
$
52,033

Equity securities
422

 
353

Trading securities, at fair value
2,595

 
2,581

Mortgage loans, net of allowances
5,453

 
5,470

Investment funds
689

 
689

Policy loans
579

 
602

Funds withheld at interest
6,593

 
6,538

Derivative assets
1,708

 
1,370

Real estate
553

 
542

Short-term investments, at fair value
166

 
189

Other investments
82

 
81

Total investments
73,065

 
70,448

Cash and cash equivalents
2,563

 
2,445

Restricted cash
73

 
57

Investments in related parties
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
361

 
335

Equity securities

 
20

Trading securities, at fair value
169

 
195

Investment funds
1,276

 
1,198

Short-term investments
20

 

Other investments
238

 
237

Accrued investment income
575

 
554

Reinsurance recoverable
5,960

 
6,001

Deferred acquisition costs, deferred sales inducements, and value of business acquired
2,895

 
2,964

Current income tax recoverable
12

 
107

Deferred tax assets
233

 
369

Other assets
817

 
869

Assets of consolidated variable interest entities:
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Equity securities - related party
191

 
161

Trading securities, at fair value – related party
166

 
167

Investment funds
599

 
573

Cash and cash equivalents
2

 
14

Other assets
5

 
6

Total assets
$
89,220

 
$
86,720



9



 
March 31,
 
December 31,
(In millions)
2017
 
2016
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
62,634

 
$
61,532

Future policy benefits
14,727

 
14,569

Other policy claims and benefits
214

 
217

Dividends payable to policyholders
917

 
974

Derivative liabilities
32

 
40

Payables for collateral on derivatives
1,681

 
1,383

Funds withheld liability
382

 
380

Other liabilities
999

 
685

Liabilities of consolidated variable interest entities
37

 
34

Total liabilities
81,623

 
79,814

Equity
 
 
 
Common stock

 

Additional paid-in capital
3,436

 
3,421

Retained earnings
3,488

 
3,117

Accumulated other comprehensive income
673

 
367

Total Athene Holding Ltd. shareholders' equity
7,597

 
6,905

Noncontrolling interest

 
1

Total equity
7,597

 
6,906

Total liabilities and equity
$
89,220

 
$
86,720
















10



Athene Holding Ltd.
Condensed Consolidated Statement of Income (unaudited)
 
Three months ended March 31,
(In millions, except per share data)
2017
 
2016
Revenue
 
 
 
Premiums
$
52

 
$
60

Product charges
81

 
66

Net investment income
786

 
692

Investment related gains (losses)
682

 
(82
)
OTTI investment losses:
 
 
 
OTTI losses

 
(22
)
OTTI losses (gains) recognized in OCI
(1
)
 
12

Net OTTI losses
(1
)
 
(10
)
Other revenues
8

 
8

Revenues of consolidated variable interest entities:
 
 
 
Net investment income
10

 
11

Investment related gains (losses)
1

 
(23
)
Total revenues
1,619

 
722

Benefits and Expenses
 
 
 
Interest sensitive contract benefits
696

 
253

Amortization of DSI
18

 
4

Future policy and other policy benefits
214

 
224

Amortization of DAC and VOBA
108

 
28

Dividends to policyholders
32

 
17

Policy and other operating expenses
156

 
104

Operating expenses of consolidated variable interest entities

 
4

Total benefits and expenses
1,224

 
634

Income before income taxes
395

 
88

Income tax expense
22

 
1

Net income
373

 
87

Less: Net income attributable to noncontrolling interests

 

Net income available to AHL shareholders
$
373

 
$
87











11



Non-GAAP Measure Reconciliations
The reconciliation of operating earnings per operating dilutive Class A common share to basic earnings per Class A common shares is as follows:
 
Three months ended March 31,
 
2017
 
2016
Operating income, net of tax – per operating dilutive Class A common share
$
1.32

 
$
0.82

Investment gains (losses), net of offsets
0.30

 
(0.10
)
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
0.48

 
(0.36
)
Integration, restructuring and other non-operating expenses
(0.05
)
 
(0.01
)
Stock compensation expense
(0.07
)
 
0.08

Income tax (expense) benefit - non-operating
(0.07
)
 
0.04

Total non-operating adjustments
0.59

 
(0.35
)
Effect of items convertible to or settled in Class A common shares
0.03

 

Basic earnings per share – Class A common shares
$
1.94

 
$
0.47

The reconciliation of basic weighted average Class A shares to weighted average operating diluted Class A shares is as follows:
 
Three months ended March 31,
(In millions)
2017
 
2016
Basic weighted average shares outstanding - Class A
78.2

 
50.0

Conversion of Class B shares to Class A shares
110.8

 
136.0

Conversion of Class M shares to Class A shares
6.2

 

Effect of other stock compensation plans
0.4

 

Weighted average shares outstanding - operating diluted Class A common shares
195.6

 
186.0

The reconciliation of AHL shareholders’ equity to AHL shareholders’ equity excluding AOCI included in ROE excluding AOCI, operating income ROE excluding AOCI and book value per share excluding AOCI is as follows:
 
March 31,
(In millions)
2017
 
2016
Total AHL shareholders' equity
$
7,597

 
$
5,638

Less: AOCI
673

 
(52
)
Total AHL shareholders' equity excluding AOCI
$
6,924

 
$
5,690

 
 
 
 
Retirement Services
$
4,853

 
$
4,071

Corporate and Other
2,071

 
1,619

Total AHL shareholders' equity excluding AOCI
$
6,924

 
$
5,690


12



The reconciliation of basic Class A shares outstanding to operating diluted Class A outstanding shares is as follows:
 
March 31,
(In millions)
2017
 
2016
Class A common shares outstanding
101.3

 
50.2

Conversion of Class B shares to Class A shares
87.8

 
136.0

Conversion of Class M shares to Class A shares
6.8

 

Effect of other stock compensation plans
0.9

 

Operating diluted Class A common shares outstanding
196.8

 
186.2

The reconciliation of book value per share to book value per share, excluding AOCI is as follows:
 
March 31,
 
2017
 
2016
Book value per share
$
39.26

 
$
30.28

AOCI
(3.48
)
 
0.27

Effect of items convertible to or settled in Class A common shares
(0.61
)
 

Book value per share, excluding AOCI
$
35.17

 
$
30.55


13



The reconciliation of net investment income to net investment earnings and earned rate is as follows:
 
Three months ended March 31,
 
2017
 
2016
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
GAAP net investment income
$
786

 
4.32
 %
 
$
692

 
4.10
 %
Reinsurance embedded derivative impacts
45

 
0.25
 %
 
36

 
0.21
 %
Net VIE earnings
11

 
0.06
 %
 
(16
)
 
(0.09
)%
Alternative income gain (loss)
(13
)
 
(0.07
)%
 
(32
)
 
(0.19
)%
Other
(15
)
 
(0.08
)%
 

 
 %
Total adjustments to arrive at net investment earnings/earned rate
28

 
0.16
 %
 
(12
)
 
(0.07
)%
Total net investment earnings/earned rate
$
814

 
4.48
 %
 
$
680

 
4.03
 %
 
 
 
 
 
 
 
 
Retirement Services
$
780

 
4.76
 %
 
$
691

 
4.59
 %
Corporate and Other
34

 
1.88
 %
 
(11
)
 
(0.62
)%
Total net investment earnings/earned rate
$
814

 
4.48
 %
 
$
680

 
4.03
 %
 
 
 
 
 
 
 
 
Retirement Services average invested assets
$
65,580

 
 
 
$
60,259

 
 
Corporate and Other average invested assets
7,123

 
 
 
7,153

 
 
Average invested assets
$
72,703

 
 
 
$
67,412

 
 
The reconciliation of interest sensitive contract benefits to Retirement Services' cost of crediting on deferred annuities, and the respective rates, is as follows:
 
Three months ended March 31,
 
2017
 
2016
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
GAAP interest sensitive contract benefits
$
696

 
5.05
 %
 
$
253

 
2.03
 %
Interest credited other than deferred annuities
(30
)
 
(0.22
)%
 
(29
)
 
(0.23
)%
FIA option costs
145

 
1.04
 %
 
136

 
1.11
 %
Product charges (strategy fees)
(17
)
 
(0.12
)%
 
(11
)
 
(0.09
)%
Reinsurance embedded derivative impacts
9

 
0.07
 %
 
6

 
0.05
 %
Change in fair values of embedded derivatives - FIAs
(534
)
 
(3.87
)%
 
(136
)
 
(1.10
)%
Negative VOBA amortization
12

 
0.09
 %
 
9

 
0.07
 %
Unit linked change in reserve
(18
)
 
(0.13
)%
 
15

 
0.12
 %
Total adjustments to arrive at cost of crediting on deferred annuities
(433
)
 
(3.14
)%
 
(10
)
 
(0.07
)%
Retirement Services cost of crediting on deferred annuities
$
263

 
1.91
 %
 
$
243

 
1.96
 %
 
 
 
 
 
 
 
 
Average account value on deferred annuities
$
55,154

 
 
 
$
49,626

 
 





14



The reconciliation of total investments, including related parties, to invested assets is as follows:
 
March 31,
(In millions)
2017
 
2016
Total investments, including related parties
$
75,129

 
$
66,071

Derivative assets
(1,708
)
 
(835
)
Cash and cash equivalents (including restricted cash)
2,636

 
2,798

Accrued income
575

 
519

Derivative collateral
(1,681
)
 
(761
)
Reinsurance funds withheld and modified coinsurance
(410
)
 
(179
)
VIE assets, liabilities and noncontrolling interest
926

 
1,061

AFS unrealized (gain) loss
(1,561
)
 
(459
)
Ceded policy loans
(333
)
 
(350
)
Total adjustments to arrive at invested assets
(1,556
)
 
1,794

Total invested assets
$
73,573

 
$
67,865



15
EX-99.2 3 financialsupplementq12017.htm EXHIBIT 99.2 Exhibit
financialsupplementcover001.jpg



Athene Holding Ltd.
Financial Supplement - March 31, 2017
Table of Contents







Athene Holding Ltd.
Financial Supplement - March 31, 2017
Note to the Financial Supplement


Key Operating and Non-GAAP Measures

In addition to our results presented in accordance with GAAP, our results of operations include certain non-GAAP measures commonly used in our industry. Management believes the use of these non-GAAP measures, together with the relevant GAAP measures, provides a better understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.
 
Operating Income, Net of Tax

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

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

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

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

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

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

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

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

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

1


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Note to the Financial Supplement



ROE Excluding AOCI and Operating ROE Excluding AOCI

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

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

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

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

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

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


2


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Note to the Financial Supplement


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

Invested Assets

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

Reserve Liabilities

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

Sales

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



3


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Financial Highlights
Unaudited (In millions, except percentages and per share data)







Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
$
1,099

 
$
663

 
Retail sales
$
1,099

 
$
1,492

 
$
2,011

 
$
1,143

 
$
663

166

 
912

 
Flow reinsurance
166

 
348

 
871

 
1,318

 
912

650

 

 
FABN
650

 

 

 

 

$
1,915

 
$
1,575

 
Total deposits
$
1,915

 
$
1,840

 
$
2,882

 
$
2,461

 
$
1,575

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated results of operations
 
 
 
 
 
 
 
 
 
$
373

 
$
87

 
Net income
$
373

 
$
368

 
$
158

 
$
192

 
$
87

258

 
152

 
Operating income, net of taxes
258

 
284

 
146

 
178

 
152

 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.6
%
 
6.3
%
 
ROE
20.6
%
 
21.0
%
 
9.4
%
 
12.7
%
 
6.3
%
22.2
%
 
6.2
%
 
ROE excluding AOCI
22.2
%
 
23.2
%
 
10.5
%
 
13.3
%
 
6.2
%
15.3
%
 
10.8
%
 
Operating ROE excluding AOCI
15.3
%
 
17.9
%
 
9.7
%
 
12.3
%
 
10.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
 
 
 
 
 
 
 
 
 
$
267

 
$
197

 
Operating income, net of taxes
$
267

 
$
246

 
$
171

 
$
195

 
$
197

22.8
%
 
19.7
%
 
Operating ROE excluding AOCI
22.8
%
 
21.8
%
 
15.4
%
 
18.6
%
 
19.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
$
1.94

 
$
0.47

 
Basic1
$
1.94

 
$
1.94

 
$
0.85

 
$
1.03

 
$
0.47

$
1.87

 
$
0.47

 
Diluted - Class A2
$
1.87

 
$
1.80

 
$
0.85

 
$
1.03

 
$
0.47

$
1.32

 
$
0.82

 
Operating earnings per share - operating diluted Class A3
$
1.32

 
$
1.46

 
$
0.78

 
$
0.95

 
$
0.82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value per share:
 
 
 
 
 
 
 
 
 
$
39.26

 
$
30.28

 
Book value per share
$
39.26

 
$
35.91

 
$
38.00

 
$
34.62

 
$
30.28

$
35.17

 
$
30.55

 
Book value per share, excluding AOCI3
$
35.17

 
$
33.29

 
$
31.76

 
$
31.46

 
$
30.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
 
 
 
 
$
89,220

 
$
81,601

 
Total assets
$
89,220

 
$
86,720

 
$
87,000

 
$
84,301

 
$
81,601

73,573

 
67,865

 
Invested assets
73,573

 
71,834

 
71,595

 
69,859

 
67,865

81,623

 
75,962

 
Total liabilities
81,623

 
79,814

 
79,926

 
77,863

 
75,962

72,202

 
66,461

 
Reserve liabilities
72,202

 
70,951

 
70,892

 
68,335

 
66,461

7,597

 
5,638

 
Total Athene Holding Ltd. shareholders' equity
7,597

 
6,905

 
7,073

 
6,437

 
5,638

6,924

 
5,690

 
Athene Holding Ltd. shareholders' equity excluding AOCI
6,924

 
6,538

 
6,153

 
5,868

 
5,690

%
 
%
 
Debt to equity (excluding AOCI) ratio
%
 
%
 
%
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share data:
 
 
 
 
 
 
 
 
 
192.5

 
186.0

 
Weighted average shares outstanding - basic1
192.5

 
189.2

 
185.8

 
186.0

 
186.0

81.3

 
50.1

 
Weighted average shares outstanding - diluted - Class A common shares2
81.3

 
63.9

 
49.9

 
50.1

 
50.1

195.6

 
186.0

 
Weighted average shares outstanding - operating diluted Class A common shares3
195.6

 
194.2

 
185.9

 
186.1

 
186.0

193.5

 
186.2

 
Common shares outstanding4
193.5

 
192.3

 
185.9

 
185.9

 
186.2

196.8

 
186.2

 
Operating diluted Class A common shares outstanding3
196.8

 
196.4

 
193.8

 
186.5

 
186.2

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

4


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Capitalization and Equity
Unaudited (In millions, except percentages)


Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Capitalization
 
 
 
 
 
 
 
 
 
$

 
$

 
Total debt1
$

 
$

 
$

 
$

 
$

7,597

 
5,638

 
Total Athene Holding Ltd. shareholders' equity
7,597

 
6,905

 
7,073

 
6,437

 
5,638

7,597

 
5,638

 
Total capitalization
7,597

 
6,905

 
7,073

 
6,437

 
5,638

673

 
(52
)
 
Less: AOCI
673

 
367

 
920

 
569

 
(52
)
$
6,924

 
$
5,690

 
Total capitalization excluding AOCI
$
6,924

 
$
6,538

 
$
6,153

 
$
5,868

 
$
5,690

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity by segment
 
 
 
 
 
 
 
 
 
$
4,853

 
$
4,071

 
Retirement Services
$
4,853

 
$
4,495

 
$
4,584

 
$
4,243

 
$
4,071

2,071

 
1,619

 
Corporate and Other
2,071

 
2,043

 
1,569

 
1,625

 
1,619

6,924

 
5,690

 
Total AHL shareholders' equity excluding AOCI
6,924

 
6,538

 
6,153

 
5,868

 
5,690

673

 
(52
)
 
AOCI
673

 
367

 
920

 
569

 
(52
)
$
7,597

 
$
5,638

 
Total AHL shareholders' equity
$
7,597

 
$
6,905

 
$
7,073

 
$
6,437

 
$
5,638

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

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





5


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
March 31, 2017
 
December 31, 2016
Assets
 
 
 
Investments:
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
$
54,225

 
$
52,033

Equity securities
422

 
353

Trading securities, at fair value
2,595

 
2,581

Mortgage loans, net of allowances
5,453

 
5,470

Investment funds
689

 
689

Policy loans
579

 
602

Funds withheld at interest
6,593

 
6,538

Derivative assets
1,708

 
1,370

Real estate
553

 
542

Short-term investments, at fair value
166

 
189

Other investments
82

 
81

Total investments
73,065

 
70,448

Cash and cash equivalents
2,563

 
2,445

Restricted cash
73

 
57

Investments in related parties
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
361

 
335

Equity securities

 
20

Trading securities, at fair value
169

 
195

Investment funds
1,276

 
1,198

Short-term investments
20

 

Other investments
238

 
237

Accrued investment income
575

 
554

Reinsurance recoverable
5,960

 
6,001

Deferred acquisition costs, deferred sales inducements, and value of business acquired
2,895

 
2,964

Current income tax recoverable
12

 
107

Deferred tax assets
233

 
369

Other assets
817

 
869

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Equity securities
191

 
161

Trading securities, at fair value
166

 
167

Investment funds
599

 
573

Cash and cash equivalents
2

 
14

Other assets
5

 
6

Total assets
$
89,220

 
$
86,720

 
 
 
(Continued)


6


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
March 31, 2017
 
December 31, 2016
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
62,634

 
$
61,532

Future policy benefits
14,727

 
14,569

Other policy claims and benefits
214

 
217

Dividends payable to policyholders
917

 
974

Derivative liabilities
32

 
40

Payables for collateral on derivatives
1,681

 
1,383

Funds withheld liability
382

 
380

Other liabilities
999

 
685

Liabilities of consolidated variable interest entities
37

 
34

Total liabilities
81,623

 
79,814

Equity
 
 
 
Common Stock

 

Additional paid-in-capital
3,436

 
3,421

Retained earnings
3,488

 
3,117

Accumulated other comprehensive income (loss)
673

 
367

Total Athene Holding Ltd. shareholders' equity
7,597

 
6,905

Noncontrolling interests

 
1

Total equity
7,597

 
6,906

Total liabilities and equity
$
89,220

 
$
86,720

 
 
 
(Concluded)




7


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Statements of Income
Unaudited (In millions)

Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
$
52

 
$
60

 
Premiums
$
52


$
35

 
$
85

 
$
60

 
$
60

81

 
66

 
Product charges
81


75

 
71

 
69

 
66

786

 
692

 
Net investment income
786


773

 
747

 
704

 
692

682

 
(82
)
 
Investment related gains (losses)
682


129

 
380

 
225

 
(82
)
 
 
 
 
Other-than-temporary impairment investment losses
 
 
 
 
 
 
 
 
 

 
(22
)
 
Other-than-temporary impairment losses


(1
)
 
(7
)
 
(2
)
 
(22
)
(1
)
 
12

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

(2
)
 
1

 
(9
)
 
12

(1
)
 
(10
)
 
Net other-than-temporary impairment losses
(1
)
 
(3
)
 
(6
)
 
(11
)
 
(10
)
8

 
8

 
Other revenues
8

 
9

 
8

 
9

 
8

 
 
 
 
Revenues related to consolidated variable interest entities
 
 
 
 
 
 
 
 
 
10

 
11

 
Net investment income
10

 
27

 
7

 
22

 
11

1

 
(23
)
 
Investment related gains (losses)
1

 
17

 
(16
)
 
(31
)
 
(23
)
1,619

 
722

 
Total revenues
1,619

 
1,062

 
1,276

 
1,047

 
722

 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
696

 
253

 
Interest sensitive contract benefits
696

 
225

 
482

 
333

 
253

18

 
4

 
Amortization of deferred sales inducements
18

 
20

 
14

 
2

 
4

214

 
224

 
Future policy and other policy benefits
214

 
181

 
377

 
261

 
224

108

 
28

 
Amortization of deferred acquisition costs and value of business acquired
108

 
101

 
113

 
62

 
28

32

 
17

 
Dividends to policyholders
32

 
(28
)
 
35

 
13

 
17

156

 
104

 
Policy and other operating expenses
156

 
177

 
180

 
163

 
104


 
4

 
Operating expenses of consolidated variable interest entities

 

 
4

 
5

 
4

1,224

 
634

 
Total benefits and expenses
1,224

 
676

 
1,205

 
839

 
634

395

 
88

 
Income before income taxes
395

 
386

 
71

 
208

 
88

22

 
1

 
Income tax expense (benefit)
22

 
18

 
(87
)
 
16

 
1

373

 
87

 
Net income
373

 
368

 
158

 
192

 
87


 

 
Less: Net income attributable to noncontrolling interests

 

 

 

 

$
373

 
$
87

 
Net income available to Athene Holding Ltd. shareholders
$
373

 
$
368

 
$
158

 
$
192

 
$
87


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


8


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Segment Results of Operations
Unaudited (In millions, except per share data)


Results of operations by segment
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Operating income, net of tax by segment
 
 
 
 
 
 
 
 
 
$
267

 
$
197

 
Retirement Services
$
267

 
$
246

 
$
171

 
$
195

 
$
197

(9
)
 
(45
)
 
Corporate and Other
(9
)
 
38

 
(25
)
 
(17
)
 
(45
)
258

 
152

 
Operating income, net of tax
258

 
284

 
146

 
178

 
152

 
 
 
 
 
 
 
 
 
 
 
 
 
 
11

 
8

 
Realized gains (losses) on sale of AFS securities
11

 
40

 
18

 
11

 
8

3

 
(25
)
 
Unrealized, impairments, and other investment gains (losses)
3

 
(19
)
 
(13
)
 
1

 
(25
)
68

 
(3
)
 
Assumed modco and funds withheld reinsurance embedded derivatives
68

 
(76
)
 
73

 
74

 
(3
)
(25
)
 
1

 
Offsets to investment gains (losses)
(25
)
 
5

 
(21
)
 
(27
)
 
1

57

 
(19
)
 
Investment gains (losses), net of offsets
57

 
(50
)
 
57

 
59

 
(19
)
94

 
(69
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
94

 
179

 
3

 
(16
)
 
(69
)
(9
)
 
(1
)
 
Integration, restructuring and other non-operating expenses
(9
)
 
(14
)
 
(2
)
 
(5
)
 
(1
)
(13
)
 
15

 
Stock compensation expense
(13
)
 
(20
)
 
(46
)
 
(28
)
 
15

(14
)
 
9

 
Income tax (expense) benefit - non-operating
(14
)
 
(11
)
 

 
4

 
9

115

 
(65
)
 
Total non-operating adjustments
115

 
84

 
12

 
14

 
(65
)
$
373

 
$
87

 
Net income available to AHL shareholders
$
373

 
$
368

 
$
158

 
$
192

 
$
87

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1.32

 
$
0.82

 
Operating income, net of tax – per operating dilutive Class A common share
$
1.32

 
$
1.46

 
$
0.78

 
$
0.95

 
$
0.82

 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.07

 
0.06

 
Realized gains (losses) on sale of AFS securities
0.07

 
0.21

 
0.09

 
0.05

 
0.06

0.02

 
(0.14
)
 
Unrealized, impairments, and other investment gains (losses)
0.02

 
(0.10
)
 
(0.07
)
 
0.01

 
(0.14
)
0.34

 
(0.02
)
 
Assumed modco and funds withheld reinsurance embedded derivatives
0.34

 
(0.39
)
 
0.40

 
0.40

 
(0.02
)
(0.13
)
 

 
Offsets to investment gains (losses)
(0.13
)
 
0.03

 
(0.11
)
 
(0.14
)
 

0.30

 
(0.10
)
 
Investment gains (losses), net of offsets
0.30

 
(0.25
)
 
0.31

 
0.32

 
(0.10
)
0.48

 
(0.36
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
0.48

 
0.92

 
0.02

 
(0.09
)
 
(0.36
)
(0.05
)
 
(0.01
)
 
Integration, restructuring and other non-operating expenses
(0.05
)
 
(0.07
)
 
(0.02
)
 
(0.02
)
 
(0.01
)
(0.07
)
 
0.08

 
Stock compensation expense
(0.07
)
 
(0.10
)
 
(0.25
)
 
(0.16
)
 
0.08

(0.07
)
 
0.04

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

 
0.03

 
0.04

0.59

 
(0.35
)
 
Total non-operating adjustments
0.59

 
0.43

 
0.07

 
0.08

 
(0.35
)
0.03

 

 
Effect of items convertible to or settled in Class A common shares
0.03

 
0.05

 

 

 

$
1.94

 
$
0.47

 
Basic earnings per share – Class A common shares
$
1.94

 
$
1.94

 
$
0.85

 
$
1.03

 
$
0.47


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


9


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Segment Results of Operations
Unaudited (In millions, except per share data)


Consolidated summary of operating income, net of tax
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
745

 
$
683

 
Fixed income and other investment income
$
745

 
$
720

 
$
696

 
$
668

 
$
683

69

 
(3
)
 
Alternative investment income
69

 
122

 
86

 
60

 
(3
)
814

 
680

 
Net investment earnings
814

 
842

 
782

 
728

 
680

(263
)
 
(243
)
 
Cost of crediting on deferred annuities
(263
)
 
(264
)
 
(259
)
 
(253
)
 
(243
)
(211
)
 
(206
)
 
Other liability costs1
(211
)
 
(213
)
 
(396
)
 
(206
)
 
(206
)
(74
)
 
(69
)
 
Operating expenses
(74
)
 
(74
)
 
(68
)
 
(71
)
 
(69
)
266

 
162

 
Operating income, before tax
266

 
291

 
59

 
198

 
162

(8
)
 
(10
)
 
Income tax (expense) benefit - operating income
(8
)
 
(7
)
 
87

 
(20
)
 
(10
)
$
258

 
$
152

 
Operating income, net of tax
$
258

 
$
284

 
$
146

 
$
178

 
$
152


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

Retirement Services summary of operating income, net of tax
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
712

 
$
657

 
Fixed income and other investment income
$
712

 
$
689

 
$
665

 
$
640

 
$
657

68

 
34

 
Alternative investment income
68

 
104

 
94

 
72

 
34

780

 
691

 
Net investment earnings
780

 
793

 
759

 
712

 
691

(263
)
 
(243
)
 
Cost of crediting on deferred annuities
(263
)
 
(264
)
 
(259
)
 
(253
)
 
(243
)
(189
)
 
(188
)
 
Other liability costs
(189
)
 
(217
)
 
(364
)
 
(198
)
 
(188
)
(52
)
 
(49
)
 
Operating expenses
(52
)
 
(56
)
 
(50
)
 
(51
)
 
(49
)
276

 
211

 
Operating income, before tax
276

 
256

 
86

 
210

 
211

(9
)
 
(14
)
 
Income tax (expense) benefit - operating income
(9
)
 
(10
)
 
85

 
(15
)
 
(14
)
$
267

 
$
197

 
Operating income, net of tax
$
267

 
$
246

 
$
171

 
$
195

 
$
197


Corporate and Other summary of operating income, net of tax
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
33

 
$
26

 
Fixed income and other investment income
$
33

 
$
31

 
$
31

 
$
28

 
$
26

1

 
(37
)
 
Alternative investment income
1

 
18

 
(8
)
 
(12
)
 
(37
)
34

 
(11
)
 
Net investment earnings
34

 
49

 
23

 
16

 
(11
)

 

 
Cost of crediting on deferred annuities

 

 

 

 

(22
)
 
(18
)
 
Other liability costs
(22
)
 
4

 
(32
)
 
(8
)
 
(18
)
(22
)
 
(20
)
 
Operating expenses
(22
)
 
(18
)
 
(18
)
 
(20
)
 
(20
)
(10
)
 
(49
)
 
Operating income, before tax
(10
)
 
35

 
(27
)
 
(12
)
 
(49
)
1

 
4

 
Income tax (expense) benefit - operating income
1

 
3

 
2

 
(5
)
 
4

$
(9
)
 
$
(45
)
 
Operating income, net of tax
$
(9
)
 
$
38

 
$
(25
)
 
$
(17
)
 
$
(45
)


10


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Retirement Services Product Summary
Unaudited (In millions, except percentages)

Retirement Services investment margin on deferred annuities (a non-GAAP measure)
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
4.76
%
 
4.59
%
 
Net investment earned rate
4.76
%
 
4.91
%
 
4.77
%
 
4.62
%
 
4.59
%
1.91
%
 
1.96
%
 
Cost of crediting on deferred annuities
1.91
%
 
1.95
%
 
1.96
%
 
1.99
%
 
1.96
%
2.85
%
 
2.63
%
 
Investment margin on deferred annuities
2.85
%
 
2.96
%
 
2.81
%
 
2.63
%
 
2.63
%

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

Summary of net investment earned rate
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
4.52
%
 
4.54
%
 
Fixed income and other investments
4.52
%
 
4.44
%
 
4.36
%
 
4.32
%
 
4.54
%
10.58
%
 
5.79
%
 
Alternative investments
10.58
%
 
16.25
%
 
14.90
%
 
11.82
%
 
5.79
%
4.76
%
 
4.59
%
 
Total net investment earned rate
4.76
%
 
4.91
%
 
4.77
%
 
4.62
%
 
4.59
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
712

 
$
657

 
Fixed income and other investment income
$
712

 
$
689

 
$
665

 
$
640

 
$
657

68

 
34

 
Alternatives investment income
68

 
104

 
94

 
72

 
34

$
780

 
$
691

 
Total net investment earnings
$
780

 
$
793

 
$
759

 
$
712

 
$
691

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average invested assets
 
 
 
 
 
 
 
 
 
$
62,986

 
$
57,902

 
Fixed income and other investments
$
62,986

 
$
62,096

 
$
61,117

 
$
59,235

 
$
57,902

2,594

 
2,357

 
Alternative investments
2,594

 
2,543

 
2,521

 
2,451

 
2,357

$
65,580

 
$
60,259

 
Total average invested assets
$
65,580

 
$
64,639

 
$
63,638

 
$
61,686

 
$
60,259


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

Summary of cost of crediting on deferred annuities
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
137

 
$
130

 
FIA option costs
$
137

 
$
136

 
$
135

 
$
133

 
$
130

126

 
113

 
Fixed interest credited to policyholders
126

 
128

 
124

 
120

 
113

$
263

 
$
243

 
Cost of crediting on deferred annuities
$
263

 
$
264

 
$
259

 
$
253

 
$
243

1.91
%
 
1.96
%
 
Cost of crediting on deferred annuities rate
1.91
%
 
1.95
%
 
1.96
%
 
1.99
%
 
1.96
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
55,154

 
$
49,626

 
Average account value on deferred annuities
$
55,154

 
$
54,358

 
$
52,739

 
$
50,817

 
$
49,626




11


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


Deferred annuities account value rollforward
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
54,880

 
$
49,257

 
Account value at beginning of period
$
54,880

 
$
53,837

 
$
51,640

 
$
49,994

 
$
49,257

1,308

 
1,598

 
Deposits1
1,308

 
1,878

 
2,914

 
2,497

 
1,598

36

 
37

 
Premium and interest bonuses
36

 
56

 
60

 
47

 
37

461

 
164

 
Fixed and index credits to policyholders
461

 
304

 
268

 
174

 
164

(1,194
)
 
(1,014
)
 
Surrenders and benefits paid
(1,194
)
 
(1,135
)
 
(990
)
 
(1,020
)
 
(1,014
)
(62
)
 
(48
)
 
Fee and product charges
(62
)
 
(60
)
 
(55
)
 
(52
)
 
(48
)
$
55,429

 
$
49,994

 
Account value at end of period
$
55,429

 
$
54,880

 
$
53,837

 
$
51,640

 
$
49,994


* 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.

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

 
5.6

 
8.0
%
 
$
42,273

 
76.3
%
Single-year fixed rate guaranteed annuities
7

 
1.7

 
3.0
%
 
8,000

 
14.4
%
Multi-year fixed rate guaranteed annuities
5.3

 
3.8

 
9.0
%
 
5,156

 
9.3
%
Total
 
 
 
 
 
 
$
55,429

 
100.0
%

Summary of surrender charge percentages
 
 
 
Net account value
 
 
 
Surrender charge (gross)
 
Percent of Total
 
Surrender charge (net of MVA)
 
Percent of Total
No surrender charge
$
7,951

 
14.3
%
 
$
7,951

 
14.3
%
0.0% < 2.0%
151

 
0.3
%
 
524

 
0.9
%
2.0% < 4.0%
1,609

 
2.9
%
 
2,971

 
5.4
%
4.0% < 6.0%
3,647

 
6.6
%
 
8,448

 
15.2
%
6.0% < 8.0%
11,466

 
20.7
%
 
8,460

 
15.3
%
8.0% < 10.0%
14,299

 
25.8
%
 
9,292

 
16.8
%
10.0% or greater
16,306

 
29.4
%
 
17,783

 
32.1
%
 
$
55,429

 
100.0
%
 
$
55,429

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Surrender charge (gross)
 
MVA benefit
 
Surrender charge (net)
Aggregate surrender charge protection
 
 
7.5
%
 
0.3
%
 
7.8
%


12


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


Surrender charge expiration by year
Years of surrender charge remaining
Deferred annuities account value
 
Percent of total
 
Average surrender charge percent (gross of MVA)
No Surrender Charge
$
7,951

 
14.4
%
 
%
> 0 to less than 2
8,690

 
15.7
%
 
5.2
%
2 to less than 4
10,768

 
19.4
%
 
7.3
%
4 to less than 6
11,911

 
21.5
%
 
8.9
%
6 to less than 8
6,361

 
11.5
%
 
10.1
%
8 to less than 10
6,178

 
11.1
%
 
11.4
%
10 to less than 12
2,547

 
4.6
%
 
14.1
%
12 or greater
1,023

 
1.8
%
 
14.8
%
 
$
55,429

 
100.0
%
 
 

Minimum guarantees on deferred annuities
 
At minimum guarantees
 
Total account value
 
Percent of total account value at minimum guarantees
Fixed indexed annuities
$
15,573

 
$
42,273

 
36.8
%
Fixed rate annuities
6,639

 
13,156

 
50.5
%
Total deferred annuities
$
22,212

 
$
55,429

 
40.1
%
 
 
 
 
 
 
 
 
 
 
 
March 31, 2017
Distance to guarantees1
 
 
 
 
75 - 85 bps


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


13


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Reserve Liabilities
Unaudited (In millions, except percentages)


Consolidated reserve liabilities
 
March 31, 2017
 
December 31, 2016
 
Dollars
 
Percent of Total
 
Dollars
 
Percent of Total
Fixed indexed annuities
$
44,502

 
61.6
 %
 
$
43,501

 
61.3
 %
Fixed rate annuities
13,398

 
18.6
 %
 
13,490

 
19.0
 %
Total deferred annuities
57,900

 
80.2
 %
 
56,991

 
80.3
 %
Payout annuities
5,378

 
7.4
 %
 
5,446

 
7.7
 %
Funding agreements
1,531

 
2.1
 %
 
1,109

 
1.6
 %
Life and other (excluding German products)
2,181

 
3.1
 %
 
2,176

 
3.0
 %
Retirement Services reserve liabilities
66,990

 
92.8
 %
 
65,722

 
92.6
 %
Germany products
5,367

 
7.4
 %
 
5,381

 
7.6
 %
Intersegment eliminations
(155
)
 
(0.2
)%
 
(152
)
 
(0.2
)%
Total reserve liabilities
$
72,202

 
100.0
 %
 
$
70,951

 
100.0
 %

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


Reserve liability rollforward
Year-to-date
 
 
2017
 
2016
March 31, 2017
 
March 31, 2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
65,722

 
$
59,854

 
Retirement Services reserve liabilities - beginning
$
65,722

 
$
65,073

 
$
62,650

 
$
60,708

 
$
59,854

2,059

 
1,680

 
Deposits1
2,059

 
1,884

 
2,979

 
2,537

 
1,680

(1,674
)
 
(1,352
)
 
Withdrawals
(1,674
)
 
(1,350
)
 
(1,412
)
 
(1,282
)
 
(1,352
)
883

 
526

 
Other reserve changes
883

 
115

 
856

 
687

 
526

66,990

 
60,708

 
Retirement Services reserve liabilities - ending
66,990

 
65,722

 
65,073

 
62,650

 
60,708

5,367

 
5,918

 
Germany reserve liabilities
5,367

 
5,381

 
5,982

 
5,846

 
5,918

(155
)
 
(165
)
 
Intersegment eliminations
(155
)
 
(152
)
 
(163
)
 
(161
)
 
(165
)
$
72,202

 
$
66,461

 
Consolidated reserve liabilities - ending
$
72,202

 
$
70,951

 
$
70,892

 
$
68,335

 
$
66,461


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.

14


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)


Investments and investments in related parties summary
 
March 31, 2017
 
December 31, 2016
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Available for sale securities at fair value:
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
U.S. government and agencies
$
60

 
0.1
%
 
$
60

 
0.1
%
State, municipals and political subdivisions
1,140

 
1.5
%
 
1,140

 
1.6
%
Foreign governments
2,031

 
2.7
%
 
2,235

 
3.1
%
Corporate
31,567

 
42.0
%
 
30,020

 
41.4
%
CLOs
5,021

 
6.7
%
 
4,822

 
6.7
%
RMBS
9,286

 
12.4
%
 
8,973

 
12.4
%
CMBS
1,860

 
2.5
%
 
1,847

 
2.5
%
ABS
3,260

 
4.3
%
 
2,936

 
4.0
%
Equity securities
422

 
0.6
%
 
353

 
0.5
%
Trading securities, at fair value
2,595

 
3.5
%
 
2,581

 
3.6
%
Mortgage loans, net of allowances
5,453

 
7.2
%
 
5,470

 
7.5
%
Investment funds
689

 
0.9
%
 
689

 
1.0
%
Policy loans
579

 
0.8
%
 
602

 
0.8
%
Funds withheld at interest
6,593

 
8.8
%
 
6,538

 
9.0
%
Derivative assets
1,708

 
2.3
%
 
1,370

 
1.9
%
Real estate
553

 
0.7
%
 
542

 
0.7
%
Short-term investments
166

 
0.2
%
 
189

 
0.3
%
Other investments
82

 
0.1
%
 
81

 
0.1
%
Total investments
73,065

 
97.3
%
 
70,448

 
97.2
%
Investment in related parties:
 
 
 
 
 
 
 
Available for sale securities at fair value:
 
 
 
 
 
 
 
Fixed maturity securities
361

 
0.5
%
 
335

 
0.5
%
Equity securities

 
%
 
20

 
%
Trading securities, at fair value
169

 
0.2
%
 
195

 
0.3
%
Investment funds
1,276

 
1.7
%
 
1,198

 
1.7
%
Other investments
238

 
0.3
%
 
237

 
0.3
%
Short term investments
20

 
%
 

 
%
Total related party investments
2,064

 
2.7
%
 
1,985

 
2.8
%
Total investments, including related parties
$
75,129

 
100.0
%
 
$
72,433

 
100.0
%



15


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Fixed maturity securities by sector
 
March 31, 2017
 
December 31, 2016
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Amortized Cost
 
Fair Value
 
Percent of Total
Corporate:
 
 
 
 
 
 
 
 
 
 
 
Industrial other1
$
10,877

 
$
11,167

 
20.5
%
 
$
10,417

 
$
10,645

 
20.3
%
Financial
9,455

 
9,724

 
17.8
%
 
8,957

 
9,156

 
17.5
%
Utilities
6,726

 
6,843

 
12.5
%
 
6,512

 
6,588

 
12.6
%
Communication
2,260

 
2,313

 
4.2
%
 
2,182

 
2,235

 
4.3
%
Transportation
1,488

 
1,520

 
2.8
%
 
1,365

 
1,396

 
2.7
%
Total corporate
30,806

 
31,567

 
57.8
%
 
29,433

 
30,020

 
57.4
%
Other government-related securities
 
 
 
 
 
 
 
 
 
 
 
State, municipals and political subdivisions
1,016

 
1,140

 
2.1
%
 
1,024

 
1,140

 
2.2
%
Foreign governments
1,959

 
2,031

 
3.7
%
 
2,098

 
2,235

 
4.3
%
U.S. treasuries
59

 
60

 
0.1
%
 
59

 
60

 
0.1
%
Total non-structured securities
33,840

 
34,798

 
63.7
%
 
32,614

 
33,455

 
64.0
%
Structured securities:
 
 
 
 
 
 
 
 
 
 
 
CLOs
5,343

 
5,327

 
9.8
%
 
5,234

 
5,101

 
9.7
%
ABS
3,334

 
3,315

 
6.1
%
 
3,037

 
2,992

 
5.7
%
CMBS
1,835

 
1,860

 
3.4
%
 
1,835

 
1,847

 
3.5
%
RMBS
 
 
 
 
 
 
 
 
 
 
 
Agency
104

 
106

 
0.2
%
 
110

 
112

 
0.2
%
Non-agency
8,753

 
9,180

 
16.8
%
 
8,621

 
8,861

 
16.9
%
Total structured securities
19,369

 
19,788

 
36.3
%
 
18,837

 
18,913

 
36.0
%
Total fixed maturity securities, including related parties
$
53,209

 
$
54,586

 
100.0
%
 
$
51,451

 
$
52,368

 
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
 
March 31, 2017
 
December 31, 2016
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
1
$
30,635

 
56.2
%
 
$
30,211

 
57.7
%
2
20,109

 
36.8
%
 
18,617

 
35.5
%
Total investment grade
50,744

 
93.0
%
 
48,828

 
93.2
%
3
3,110

 
5.7
%
 
2,812

 
5.4
%
4
624

 
1.1
%
 
622

 
1.2
%
5
91

 
0.2
%
 
82

 
0.2
%
6
17

 
%
 
24

 
%
Total below investment grade
3,842

 
7.0
%
 
3,540

 
6.8
%
Total fixed maturity securities, including related parties
$
54,586

 
100.0
%
 
$
52,368

 
100.0
%

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


16


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

 
March 31, 2017
 
December 31, 2016
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NRSRO rating agency designation
 
 
 
 
 
 
 
AAA/AA/A
$
19,069

 
34.8
%
 
$
18,791

 
35.9
%
BBB
19,352

 
35.5
%
 
18,002

 
34.4
%
Non-rated1
5,936

 
10.9
%
 
5,650

 
10.8
%
Total investment grade2
44,357

 
81.2
%
 
42,443

 
81.1
%
BB
3,349

 
6.1
%
 
3,286

 
6.3
%
B
1,286

 
2.4
%
 
1,372

 
2.6
%
CCC
2,438

 
4.5
%
 
2,374

 
4.5
%
CC and lower
2,576

 
4.7
%
 
2,404

 
4.6
%
Non-rated 1
580

 
1.1
%
 
489

 
0.9
%
Total below investment grade
10,229

 
18.8
%
 
9,925

 
18.9
%
Total fixed maturity securities, including related parties
$
54,586

 
100.0
%
 
$
52,368

 
100.0
%

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


Credit quality of residential mortgage backed securities
 
March 31, 2017
 
December 31, 2016
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
$
10,032

 
$
8,464

 
$
8,884

 
95.7
%
 
$
9,960

 
$
8,414

 
$
8,652

 
96.4
%
2
214

 
194

 
197

 
2.1
%
 
152

 
141

 
140

 
1.6
%
Total investment grade
10,246

 
8,658

 
9,081

 
97.8
%
 
10,112

 
8,555

 
8,792

 
98.0
%
3
135

 
121

 
124

 
1.3
%
 
104

 
92

 
96

 
1.1
%
4
24

 
23

 
25

 
0.3
%
 
31

 
29

 
29

 
0.3
%
5
54

 
53

 
54

 
0.6
%
 
54

 
53

 
54

 
0.6
%
6
3

 
2

 
2

 
%
 
2

 
2

 
2

 
%
Total below investment grade
216

 
199

 
205

 
2.2
%
 
191

 
176

 
181

 
2.0
%
Total
$
10,462

 
$
8,857

 
$
9,286

 
100.0
%
 
$
10,303

 
$
8,731

 
$
8,973

 
100.0
%



17


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Mortgage loans by property type and region
 
March 31, 2017
 
December 31, 2016
 
Net Carrying Value
 
Percent of Total
 
Net Carrying Value
 
Percent of Total
Property type
 
 
 
 
 
 
 
Hotels
$
998

 
18.3
%
 
$
1,025

 
18.7
%
Retail
1,138

 
20.8
%
 
1,135

 
20.7
%
Office building
1,139

 
20.9
%
 
1,217

 
22.2
%
Industrial
682

 
12.5
%
 
742

 
13.6
%
Apartment
572

 
10.5
%
 
616

 
11.3
%
Other commercial 1
450

 
8.3
%
 
397

 
7.3
%
Total commercial mortgage loans
4,979

 
91.3
%
 
5,132

 
93.8
%
Residential loans
474

 
8.7
%
 
338

 
6.2
%
Total mortgage loans, net of allowances
$
5,453

 
100.0
%
 
$
5,470

 
100.0
%
 
 
 
 
 
 
 
 
US Region:
 
 
 
 
 
 
 
East North Central
$
405

 
7.4
%
 
$
450

 
8.2
%
East South Central
148

 
2.7
%
 
158

 
2.9
%
Middle Atlantic
662

 
12.1
%
 
628

 
11.5
%
Mountain
538

 
9.9
%
 
543

 
9.9
%
New England
192

 
3.5
%
 
194

 
3.5
%
Pacific
810

 
14.9
%
 
833

 
15.2
%
South Atlantic
1,192

 
21.9
%
 
1,284

 
23.5
%
West North Central
296

 
5.4
%
 
306

 
5.6
%
West South Central
663

 
12.2
%
 
662

 
12.1
%
Total US Region
4,906

 
90.0
%
 
5,058

 
92.4
%
International Region
73

 
1.3
%
 
74

 
1.4
%
Total commercial mortgage loans
4,979

 
91.3
%
 
5,132

 
93.8
%
Residential loans
474

 
8.7
%
 
338

 
6.2
%
Total mortgage loans, net of allowances
$
5,453

 
100.0
%
 
$
5,470

 
100.0
%

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



18


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Investment funds including related party
 
March 31, 2017
 
December 31, 2016
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Investment funds
 
 
 
 
 
 
 
Private equity
$
245

 
9.6
%
 
$
268

 
10.9
%
Mortgage and real estate
143

 
5.6
%
 
118

 
4.8
%
Natural resources
5

 
0.2
%
 
5

 
0.2
%
Hedge funds
69

 
2.7
%
 
72

 
2.9
%
Credit funds
227

 
8.9
%
 
226

 
9.2
%
Total investment funds
689

 
27.0
%
 
689

 
28.0
%
Investment funds - related parties
 
 
 
 
 
 
 
Private equity - A-A Mortgage
366

 
14.3
%
 
343

 
13.9
%
Private equity
152

 
5.9
%
 
131

 
5.3
%
Mortgage and real estate
262

 
10.1
%
 
247

 
10.1
%
Natural resources
76

 
3.0
%
 
49

 
2.0
%
Hedge funds
180

 
7.0
%
 
192

 
7.8
%
Credit funds
240

 
9.4
%
 
236

 
9.6
%
Total investment funds - related parties
1,276

 
49.7
%
 
1,198

 
48.7
%
Total investment funds - assets of consolidated VIEs
 
 
 
 
 
 
 
Private equity - MidCap 1
528

 
20.6
%
 
524

 
21.3
%
Credit funds
39

 
1.5
%
 
38

 
1.6
%
Mortgage and real assets
32

 
1.2
%
 
11

 
0.4
%
Total investment funds - assets of consolidated VIEs
599

 
23.3
%
 
573

 
23.3
%
Total investment funds, including related parties and VIEs
$
2,564

 
100.0
%
 
$
2,460

 
100.0
%

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


Funds withheld at interest
 
March 31, 2017
 
December 31, 2016
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities
 
 
 
 
 
 
 
U.S. state, municipal, and political subdivisions
$
116

 
1.8
 %
 
$
118

 
1.8
%
Corporate
1,901

 
28.8
 %
 
1,800

 
27.6
%
CLOs
668

 
10.1
 %
 
591

 
9.0
%
ABS
756

 
11.5
 %
 
736

 
11.3
%
CMBS
288

 
4.4
 %
 
292

 
4.5
%
RMBS
1,603

 
24.3
 %
 
1,551

 
23.7
%
Equity securities
29

 
0.4
 %
 
29

 
0.4
%
Mortgage loans
768

 
11.6
 %
 
773

 
11.8
%
Investment funds
328

 
5.0
 %
 
329

 
5.0
%
Derivative assets
58

 
0.9
 %
 
53

 
0.8
%
Short-term investments
31

 
0.5
 %
 
80

 
1.2
%
Cash and cash equivalents
61

 
0.9
 %
 
105

 
1.6
%
Accrued investment income and other assets
(14
)
 
(0.2
)%
 
81

 
1.3
%
Total funds withheld at interest
$
6,593

 
100.0
 %
 
$
6,538

 
100.0
%


19


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Invested assets summary
 
March 31, 2017
 
December 31, 2016
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value
 
Total Invested Asset Value1
 
Percent of Total
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value
 
Total Invested Asset Value1
 
Percent of Total
Corporates
$
32,345

 
$
1,789

 
$
34,134

 
46.3
%
 
$
31,000

 
$
1,682

 
$
32,682

 
45.4
%
CLOs
5,978

 

 
5,978

 
8.1
%
 
5,798

 

 
5,798

 
8.1
%
Credit
38,323

 
1,789

 
40,112

 
54.4
%
 
36,798

 
1,682

 
38,480

 
53.5
%
RMBS
10,758

 

 
10,758

 
14.6
%
 
10,619

 

 
10,619

 
14.8
%
Mortgage loans
6,122

 
94

 
6,216

 
8.4
%
 
6,145

 
95

 
6,240

 
8.7
%
CMBS
2,187

 

 
2,187

 
3.0
%
 
2,202

 

 
2,202

 
3.1
%
Real estate held for investment

 
553

 
553

 
0.8
%
 

 
542

 
542

 
0.8
%
Real estate
19,067

 
647

 
19,714

 
26.8
%
 
18,966

 
637

 
19,603

 
27.4
%
ABS
4,187

 

 
4,187

 
5.7
%
 
3,873

 

 
3,873

 
5.4
%
Alternative investments
3,341

 
131

 
3,472

 
4.7
%
 
3,297

 
128

 
3,425

 
4.8
%
State, municipals, political subdivisions and foreign government
1,379

 
1,795

 
3,174

 
4.3
%
 
1,387

 
1,936

 
3,323

 
4.6
%
Equity securities
171

 
257

 
428

 
0.6
%
 
199

 
185

 
384

 
0.5
%
Unit-linked assets

 
370

 
370

 
0.5
%
 

 
363

 
363

 
0.5
%
Short-term investments
188

 

 
188

 
0.3
%
 
250

 

 
250

 
0.3
%
U.S. government and agencies
30

 
29

 
59

 
0.1
%
 
32

 
27

 
59

 
0.1
%
Other investments
9,296

 
2,582

 
11,878

 
16.2
%
 
9,038

 
2,639

 
11,677

 
16.2
%
Cash and equivalents
896

 
113

 
1,009

 
1.4
%
 
1,111

 
111

 
1,222

 
1.7
%
Policy loans and other
645

 
215

 
860

 
1.2
%
 
631

 
221

 
852

 
1.2
%
Total invested assets
$
68,227

 
$
5,346

 
$
73,573

 
100.0
%
 
$
66,544

 
$
5,290

 
$
71,834

 
100.0
%

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


Alternative investments summary
 
March 31, 2017
 
December 31, 2016
 
Invested Asset Value
 
Percent of Total
 
Invested Asset Value
 
Percent of Total
Credit funds
$
800

 
23.0
%
 
$
834

 
24.3
%
Private equity - MidCap
528

 
15.2
%
 
524

 
15.3
%
Private equity - A-A Mortgage
449

 
12.9
%
 
417

 
12.2
%
Private equity - other
491

 
14.1
%
 
519

 
15.2
%
Mortgage and real assets
512

 
14.7
%
 
470

 
13.7
%
Hedge funds
297

 
8.7
%
 
311

 
9.1
%
Public equities
226

 
6.5
%
 
215

 
6.3
%
Natural resources and other real assets
169

 
4.9
%
 
135

 
3.9
%
Alternative investments
$
3,472

 
100.0
%
 
$
3,425

 
100.0
%

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



20


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Net investment earned rates by asset class
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
3.91
%
 
3.93
 %
 
Corporate securities
3.91
%
 
3.91
%
 
4.06
%
 
3.81
%
 
3.93
 %
 
 
 
 
Structured securities
 
 
 
 
 
 
 
 
 
5.45
%
 
5.30
 %
 
RMBS
5.45
%
 
5.30
%
 
5.21
%
 
4.92
%
 
5.30
 %
4.94
%
 
4.37
 %
 
CLO
4.94
%
 
4.96
%
 
4.81
%
 
4.73
%
 
4.37
 %
4.15
%
 
10.93
 %
 
ABS
4.15
%
 
4.24
%
 
4.16
%
 
6.54
%
 
10.93
 %
4.03
%
 
3.66
 %
 
CMBS
4.03
%
 
4.19
%
 
3.79
%
 
4.10
%
 
3.66
 %
4.95
%
 
5.82
 %
 
Total structured securities
4.95
%
 
4.92
%
 
4.79
%
 
5.05
%
 
5.82
 %
9.35
%
 
4.57
 %
 
State, municipal, political subdivisions and U.S. and foreign government
9.35
%
 
5.80
%
 
3.57
%
 
5.46
%
 
4.57
 %
5.90
%
 
5.42
 %
 
Mortgage loans
5.90
%
 
6.26
%
 
6.22
%
 
5.82
%
 
5.42
 %
8.12
%
 
(0.40
)%
 
Alternative investments
8.12
%
 
14.82
%
 
9.77
%
 
7.11
%
 
(0.40
)%
1.66
%
 
0.32
 %
 
Other U.S. and Bermuda invested assets
1.66
%
 
1.27
%
 
1.04
%
 
1.29
%
 
0.32
 %
4.70
%
 
4.27
 %
 
U.S. and Bermuda
4.70
%
 
4.96
%
 
4.64
%
 
4.47
%
 
4.27
 %
1.74
%
 
1.56
 %
 
Germany
1.74
%
 
1.51
%
 
1.94
%
 
1.62
%
 
1.56
 %
4.48
%
 
4.03
 %
 
Consolidated total
4.48
%
 
4.69
%
 
4.42
%
 
4.23
%
 
4.03
 %


Invested assets NAIC 1 & 2 designation by asset class
 
March 31, 2017
 
December 31, 2016
Corporate securities
92.6
%
 
92.4
%
Structured securities
 
 
 
RMBS
97.7
%
 
98.0
%
CLO
81.9
%
 
83.1
%
ABS
90.9
%
 
91.5
%
CMBS
97.7
%
 
97.7
%
Total structured securities
92.4
%
 
93.0
%
State, municipal, political subdivisions and U.S. and foreign government
94.6
%
 
96.5
%
Germany fixed maturity securities1
94.0
%
 
95.0
%

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



21


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Financial Strength Ratings and RBC
Unaudited

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


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


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

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

22


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to basic weighted average shares outstanding - Class A common shares to arrive at weighted average shares outstanding - operating diluted Class A common shares
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
78.2

 
50.0

 
Basic weighted average shares outstanding - Class A
78.2

 
58.3

 
49.8

 
50.0

 
50.0

110.8

 
136.0

 
Conversion of Class B shares to Class A shares
110.8

 
130.0

 
136.0

 
136.0

 
136.0

6.2

 

 
Conversion of Class M shares to Class A shares
6.2

 
5.5

 

 

 

0.4

 

 
Effect of other stock compensation plans
0.4

 
0.4

 
0.1

 
0.1

 

195.6

 
186.0

 
Weighted average shares outstanding - operating diluted Class A common shares
195.6

 
194.2

 
185.9

 
186.1

 
186.0


Summary of adjustments to Class A common shares outstanding to arrive at operating diluted Class A common shares outstanding
 
2017
 
2016
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
Class A common shares outstanding
101.3

 
77.0

 
50.2

 
50.2

 
50.2

Conversion of Class B shares to Class A shares
87.8

 
111.8

 
136.0

 
136.0

 
136.0

Conversion of Class M shares to Class A shares
6.8

 
6.8

 
7.2

 

 

Effect of other stock compensation plans
0.9

 
0.8

 
0.4

 
0.3

 

Operating diluted Class A common shares outstanding
196.8

 
196.4

 
193.8

 
186.5

 
186.2

 
 
 
 
 
 
 
 
 
 


Summary of adjustments to book value per share to arrive at book value per share, excluding AOCI
 
2017
 
2016
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
Book value per share
$
39.26

 
$
35.91

 
$
38.00

 
$
34.62

 
$
30.28

AOCI
(3.48
)
 
(1.91
)
 
(4.94
)
 
(3.06
)
 
0.27

Effect of items convertible to or settled in Class A common shares
(0.61
)
 
(0.71
)
 
(1.30
)
 
(0.10
)
 

Book value per share, excluding AOCI
$
35.17

 
$
33.29

 
$
31.76

 
$
31.46

 
$
30.55


23


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to net investment income to arrive at net investment earned rate
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
786

 
$
692

 
GAAP net investment income
$
786

 
$
773

 
$
747

 
$
704

 
$
692

45

 
36

 
Reinsurance embedded derivative impacts
45

 
45

 
55

 
53

 
36

11

 
(16
)
 
Net VIE earnings
11

 
44

 
(13
)
 
(14
)
 
(16
)
(13
)
 
(32
)
 
Alternative income gain (loss)
(13
)
 
(4
)
 
(3
)
 

 
(32
)
(15
)
 

 
Other
(15
)
 
(16
)
 
(4
)
 
(15
)
 

28

 
(12
)
 
Total adjustments to arrive at net investment earnings
28

 
69

 
35

 
24

 
(12
)
$
814

 
$
680

 
Total net investment earnings
$
814

 
$
842

 
$
782

 
$
728

 
$
680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
780

 
$
691

 
Retirement Services
$
780

 
$
793

 
$
759

 
$
712

 
$
691

34

 
(11
)
 
Corporate and Other
34

 
49

 
23

 
16

 
(11
)
$
814

 
$
680

 
Total net investment earnings
$
814

 
$
842

 
$
782

 
$
728

 
$
680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.32
 %
 
4.10
 %
 
GAAP net investment income rate
4.32
 %
 
4.30
 %
 
4.22
 %
 
4.09
 %
 
4.10
 %
0.25
 %
 
0.21
 %
 
Reinsurance embedded derivative impacts
0.25
 %
 
0.25
 %
 
0.31
 %
 
0.31
 %
 
0.21
 %
0.06
 %
 
(0.09
)%
 
Net VIE earnings
0.06
 %
 
0.25
 %
 
(0.07
)%
 
(0.08
)%
 
(0.09
)%
(0.07
)%
 
(0.19
)%
 
Alternative income gain (loss)
(0.07
)%
 
(0.02
)%
 
(0.02
)%
 
 %
 
(0.19
)%
(0.08
)%
 
 %
 
Other
(0.08
)%
 
(0.09
)%
 
(0.02
)%
 
(0.09
)%
 
 %
0.16
 %
 
(0.07
)%
 
Total adjustments to arrive at net investment earned rate
0.16
 %
 
0.39
 %
 
0.20
 %
 
0.14
 %
 
(0.07
)%
4.48
 %
 
4.03
 %
 
Consolidated net investment earned rate
4.48
 %
 
4.69
 %
 
4.42
 %
 
4.23
 %
 
4.03
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.76
 %
 
4.59
 %
 
Retirement Services
4.76
 %
 
4.91
 %
 
4.77
 %
 
4.62
 %
 
4.59
 %
1.88
 %
 
(0.62
)%
 
Corporate and Other
1.88
 %
 
2.76
 %
 
1.26
 %
 
0.93
 %
 
(0.62
)%
4.48
 %
 
4.03
 %
 
Consolidated net investment earned rate
4.48
 %
 
4.69
 %
 
4.42
 %
 
4.23
 %
 
4.03
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
65,580

 
$
60,259

 
Retirement Services average invested assets
$
65,580

 
$
64,639

 
$
63,638

 
$
61,686

 
$
60,259

7,123

 
7,153

 
Corporate and Other average invested assets
7,123

 
7,074

 
7,089

 
7,177

 
7,153

$
72,703

 
$
67,412

 
Average invested assets
$
72,703

 
$
71,713

 
$
70,727

 
$
68,863

 
$
67,412





24


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to interest sensitive contract benefits to arrive at cost of crediting on deferred annuities
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
696

 
$
253

 
GAAP interest sensitive contract benefits
$
696

 
$
225

 
$
482

 
$
333

 
$
253

(30
)
 
(29
)
 
Interest credited other than deferred annuities
(30
)
 
(21
)
 
(33
)
 
(27
)
 
(29
)
145

 
136

 
FIA option costs
145

 
143

 
141

 
139

 
136

(17
)
 
(11
)
 
Product charges (strategy fees)
(17
)
 
(15
)
 
(14
)
 
(13
)
 
(11
)
9

 
6

 
Reinsurance embedded derivative impacts
9

 
8

 
8

 
7

 
6

(534
)
 
(136
)
 
Change in fair values of embedded derivatives - FIAs
(534
)
 
(72
)
 
(318
)
 
(204
)
 
(136
)
12

 
9

 
Negative VOBA amortization
12

 
12

 
12

 
15

 
9

(18
)
 
15

 
Unit linked change in reserve
(18
)
 
(14
)
 
(20
)
 
4

 
15


 

 
Other changes in interest sensitive contract liabilities

 
(2
)
 
1

 
(1
)
 

(433
)
 
(10
)
 
Total adjustments to arrive at cost of crediting on deferred annuities
(433
)
 
39

 
(223
)
 
(80
)
 
(10
)
$
263

 
$
243

 
Retirement Services cost of crediting on deferred annuities
$
263

 
$
264

 
$
259

 
$
253

 
$
243

 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.05
 %
 
2.03
 %
 
GAAP interest sensitive contract benefits
5.05
 %
 
1.65
 %
 
3.65
 %
 
2.63
 %
 
2.03
 %
(0.22
)%
 
(0.23
)%
 
Interest credited other than deferred annuities
(0.22
)%
 
(0.15
)%
 
(0.25
)%
 
(0.21
)%
 
(0.23
)%
1.04
 %
 
1.11
 %
 
FIA option costs
1.04
 %
 
1.05
 %
 
1.07
 %
 
1.08
 %
 
1.11
 %
(0.12
)%
 
(0.09
)%
 
Product charges (strategy fees)
(0.12
)%
 
(0.11
)%
 
(0.11
)%
 
(0.10
)%
 
(0.09
)%
0.07
 %
 
0.05
 %
 
Reinsurance embedded derivative impacts
0.07
 %
 
0.06
 %
 
0.06
 %
 
0.06
 %
 
0.05
 %
(3.87
)%
 
(1.10
)%
 
Change in fair values of embedded derivatives - FIAs
(3.87
)%
 
(0.53
)%
 
(2.41
)%
 
(1.61
)%
 
(1.10
)%
0.09
 %
 
0.07
 %
 
Negative VOBA amortization
0.09
 %
 
0.09
 %
 
0.09
 %
 
0.12
 %
 
0.07
 %
(0.13
)%
 
0.12
 %
 
Unit linked change in reserve
(0.13
)%
 
(0.10
)%
 
(0.15
)%
 
0.03
 %
 
0.12
 %
 %
 
 %
 
Other changes in interest sensitive contract liabilities
 %
 
(0.01
)%
 
0.01
 %
 
(0.01
)%
 
 %
(3.14
)%
 
(0.07
)%
 
Total adjustments to arrive at cost of crediting on deferred annuities
(3.14
)%
 
0.30
 %
 
(1.69
)%
 
(0.64
)%
 
(0.07
)%
1.91
 %
 
1.96
 %
 
Retirement Services cost of crediting on deferred annuities
1.91
 %
 
1.95
 %
 
1.96
 %
 
1.99
 %
 
1.96
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
55,154

 
$
49,626

 
Average account value on deferred annuities
$
55,154

 
$
54,358

 
$
52,739

 
$
50,817

 
$
49,626




25


Athene Holding Ltd.
Financial Supplement - March 31, 2017
Non-GAAP Financial Measures Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to total investments, including related parties to arrive at invested assets
 
March 31, 2017
 
December 31, 2016
Total investments, including related parties
$
75,129

 
$
72,433

Derivative assets
(1,708
)
 
(1,370
)
Cash and cash equivalents (including restricted cash)
2,636

 
2,502

Accrued investment income
575

 
554

Payables for collateral on derivatives
(1,681
)
 
(1,383
)
Reinsurance funds withheld and modified coinsurance
(410
)
 
(414
)
VIE assets, liabilities and noncontrolling interest
926

 
886

AFS unrealized (gain) loss
(1,561
)
 
(1,030
)
Ceded policy loans
(333
)
 
(344
)
Total adjustments to arrive at invested assets
(1,556
)
 
(599
)
Total invested assets
$
73,573

 
$
71,834


Summary of adjustments to investment funds, including related parties and VIEs to arrive at alternative investments
 
March 31, 2017
 
December 31, 2016
Investment funds, including related parties and VIEs
$
2,564

 
$
2,460

CLO equities included in trading securities
218

 
260

Investment funds within funds withheld at interest
328

 
329

Royalties, other assets included in other investments and other assets
82

 
81

Net assets of the VIE, excluding investment funds
280

 
295

Total adjustments to arrive at alternative investments
908

 
965

Alternative investments
$
3,472

 
$
3,425


Summary of adjustments to total liabilities to arrive at reserve liabilities
 
March 31, 2017
 
December 31, 2016
Total liabilities
$
81,623

 
$
79,814

Derivative liabilities
(32
)
 
(40
)
Payables for collateral on derivatives
(1,681
)
 
(1,383
)
Funds withheld liability
(382
)
 
(380
)
Other liabilities
(999
)
 
(685
)
Liabilities of consolidated VIEs
(37
)
 
(34
)
Reinsurance ceded receivables
(5,960
)
 
(6,001
)
Policy loans ceded
(333
)
 
(344
)
Other
3

 
4

Total adjustments to arrive at reserve liabilities
(9,421
)
 
(8,863
)
Total reserve liabilities
$
72,202

 
$
70,951




26
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