0001527469-17-000055.txt : 20170809 0001527469-17-000055.hdr.sgml : 20170809 20170809162027 ACCESSION NUMBER: 0001527469-17-000055 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20170809 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20170809 DATE AS OF CHANGE: 20170809 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 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-37963 FILM NUMBER: 171018211 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 ath8k080917.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): August 9, 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 August 9, 2017, Athene Holding Ltd. (the “Company”) issued a press release to announce its financial results for the three and six months ended June 30, 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 second quarter ended June 30, 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 August 9, 2017 (furnished and not filed).
 
 
99.2
Quarterly Financial Supplement for Athene Holding Ltd. for the second 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: August 9, 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 August 9, 2017 (furnished and not filed).
 
 
99.2
Quarterly Financial Supplement for Athene Holding Ltd. for second quarter 2017 (furnished and not filed).



EX-99.1 2 q22017pressrelease.htm EXHIBIT 99.1 Exhibit


athenelogoa03.jpg
News Release

ATHENE HOLDING LTD. REPORTS
SECOND QUARTER 2017 RESULTS
Q2 net income increased 69% year-over-year to $326 million
Q2 operating income, net of tax, increased 56% year-over-year to $280 million
Q2 ROE of 16.4%, Q2 Retirement Services operating ROE ex. AOCI of 21.4%
Q2 new deposits up 31% year-over-year to $3.2 billion
Q2 Retirement Services investment margin of 2.96%, up 37 basis points year-over-year
Executed first pension buyout transaction
PEMBROKE, Bermuda - August 9, 2017 - Athene Holding Ltd. ("Athene") (NYSE: ATH), a leading provider of retirement savings products, today announced financial results for the second quarter 2017.
Net income for the second quarter 2017 was $326 million, or $1.65 per diluted Class A share ("diluted share"), compared to net income in the second quarter 2016 of $193 million, or $1.04 per diluted share.
Operating income, net of tax for the second quarter 2017 was $280 million, or $1.43 per operating diluted Class A share ("operating diluted share"), compared to operating income, net of tax for the second quarter 2016 of $179 million, or $0.96 per operating diluted share.
“We have delivered another quarter of strong financial performance resulting in further strengthening of our balance sheet and capital position,” said Jim Belardi, CEO of Athene.
“Our differentiated, multi-channel distribution platform generated record deposits of $3.2 billion resulting from growth in both our retail and institutional channels. I am pleased to announce that we successfully entered the pension risk transfer (PRT) market in the second quarter, securing our first deal in which we assumed approximately $320 million in pension liabilities. Further demonstrating the diversity and flexibility of our model, we issued $1.1 billion of funding agreements during the quarter, a market in which we continue to gain significant traction,” Mr. Belardi noted.
“We have had a great first half of the year, executing our strategic plan and delivering increases in operating income, net income and shareholders’ equity. We are a strong, growing and disciplined financial services company and are well positioned to capitalize on future opportunities that will continue to generate significant shareholder value.”






1




Other Highlights1 
Subsequent to quarter-end, Athene executed a new flow reinsurance treaty with Lincoln Financial Group (NYSE: LNC) to reinsure traditional fixed and fixed indexed annuities, effective August 1, 2017
Total investments, including related parties, increased 14% year-over-year to $78.7 billion; total invested assets increased 9% year-over-year to $76.3 billion
Athene shareholders' equity increased 29% year-over-year to $8.3 billion and Athene shareholders' equity ex. AOCI increased 23% year-over-year to $7.2 billion, as of June 30, 2017
Estimated Q2 U.S. RBC of 458%, as of June 30, 2017
Estimated Q2 ALRe RBC of 539%2 as of June 30, 2017; BSCR of 228%3 as of December 31, 2016
In June, priced a secondary offering of 18,630,000 of Class A common shares; Athene did not receive any proceeds from the sale

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%.


Second Quarter Results
Net income for the second quarter increased by $133 million, or 69%, over the prior year to $326 million. The increase was driven by a $101 million increase in operating income, net of tax, and a $33 million favorable change in FIA derivatives primarily driven by strong equity market performance.
Operating income, net of tax for the second quarter increased by $101 million, or 56%, over the prior year to $280 million. The increase was driven by higher investment income due to invested asset growth, higher short-term interest rates resulting in increased floating rate investment income and strength in our alternatives portfolio. The increase in investment income was partially offset by higher liability costs due to higher rider reserve changes and DAC amortization attributed to growth in the block of business and higher gross profits, partially offset by approximately $25 million of favorable impacts related to improved equity market performance and out of period actuarial adjustments compared to the prior period.
Deposit Highlights
In the second quarter of 2017, we generated record deposits of $3.2 billion, an increase of 31% compared to the prior year.
Retail Sales: For the second quarter, we generated new deposits of $1.6 billion, an increase of 43% over the prior year, making us one of the largest and fastest growing writers of fixed indexed annuities. During the quarter, we expanded our distribution with the addition of new partners, in both the bank and broker-dealer channels, as we continue to build a strong reputation for competitive products and high quality service.
Flow Reinsurance: Flow reinsurance deposits were $214 million in the second quarter, down from the prior year. Subsequent to quarter-end we entered into a new flow reinsurance partnership with Lincoln Financial to reinsure traditional fixed and fixed indexed annuities, effective August 1, 2017. We continue to pursue new reinsurance partners and develop new products to diversify our portfolio.
Institutional: For the second quarter, we generated $1.4 billion of new deposits within our institutional channel, mainly comprised of $1.1 billion of funding agreements. In the third quarter to date, we have issued $700 million of funding agreements, and we expect demand will continue for this product.

2



In addition, Athene entered into its first pension buyout agreement during the second quarter 2017. The transaction is structured as a buyout arrangement in which Athene's Iowa life insurance subsidiary agrees to provide annuity benefits to more than 10,000 retirees, representing pension obligations of approximately $320 million. Athene will issue a group annuity to the organization and individual annuity certificates to applicable retirees and will have direct payment responsibility for all liabilities covered in this transaction.
Selected Results
 
As of and for the three months ended June 30,
(In millions, except percentages and share data)
2017
 
2016
Deposits
$
3,226

 
$
2,461

Investments, including related parties
78,699

 
68,860

Invested assets
76,279

 
69,859

Debt to equity
%
 
%
Book value per share
$
42.20

 
$
34.57

Book value per share, ex. AOCI1
$
36.72

 
$
31.40

Common shares outstanding2
196.3

 
185.9

Operating diluted Class A common shares outstanding3
196.7

 
186.5

Total AHL shareholders' equity
$
8,284

 
$
6,426

Total AHL shareholders' equity excluding AOCI
7,224

 
5,857

 
 
 
 
ROE
16.4
%
 
12.8
%
ROE ex. AOCI
18.4
%
 
13.4
%
Operating ROE ex. AOCI
15.9
%
 
12.4
%
 
 
 
 
Retirement Services
 
 
 
  Operating income, net of tax
$
267

 
$
196

  Operating ROE ex. AOCI
21.4
%
 
18.8
%
  Investment margin on deferred annuities
2.96
%
 
2.59
%
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, but excluding any awards for which the exercise or conversion price exceeds the market value of Class A common shares on the applicable measurement date. 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 June 30,
(In millions, except share data)
2017
 
2016
Operating income, net of tax by segment
 
 
 
Retirement Services
$
267

 
$
196

Corporate and Other
13

 
(17
)
Operating income, net of tax
280

 
179

 
 
 
 
Investment gains (losses), net of offsets
58

 
61

Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
15

 
(18
)
Integration, restructuring and other non-operating expenses
(11
)
 
(5
)
Stock compensation expense
(13
)
 
(28
)
Income tax (expense) benefit - non-operating
(3
)
 
4

Total non-operating adjustments
46

 
14

Net income available to AHL shareholders
$
326

 
$
193

 
 
 
 
Earnings per share - basic1
$
1.66

 
$
1.04

Earnings per share - diluted Class A2
$
1.65

 
$
1.04

Operating earnings per share - operating diluted Class A3
$
1.43

 
$
0.96

Weighted average shares outstanding - basic1
195.7

 
186.0

Weighted average shares outstanding - diluted Class A2
109.0

 
50.1

Weighted average shares outstanding - operating diluted Class A3
195.9

 
186.1


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. Such dilutive securities totaled 2.7 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 $181 million (55% of net income) and $52 million (27% of net income) for the three months ended June 30, 2017 and 2016, respectively. The increase in shares is mainly driven by Class B shares converting to Class A shares through the various offerings in 2016 and 2017.
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 but excluding any awards for which the exercise or conversion price exceeds the market value of Class A common shares on the applicable measurement date. 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
Q2 Results
In the second quarter, our Retirement Services segment generated an operating ROE excluding AOCI of 21.4% and operating income, net of tax of $267 million, an increase of $71 million over the prior year. The increase was driven by higher fixed, other and alternative investment income.
Investment income increased due to invested asset growth, higher short-term interest rates increasing floating rate investment income and strength in our alternatives portfolio. In 2016, fixed income and other investment income benefited from $15 million of bond call income from a large redemption. The increase in investment income was partially offset by higher liability costs due to higher rider reserve changes and DAC amortization attributed to growth in the block of business and higher gross profits, partially offset by approximately $25 million of favorable impacts related to improved equity market performance and out of period actuarial adjustments compared to the prior period.
Investment margin on deferred annuities was 2.96%, an increase of 37 basis points over the prior year. The net investment earned rate was 4.85%, an increase of 27 basis points over the prior year. Cost of crediting was 1.89%, a decrease of 10 basis points compared to the prior year, as a result of recent rate actions and lower option costs.

4



Corporate Segment
Q2 Results
In the second quarter, Corporate and Other operating income, net of tax was $13 million, as compared to a loss of $17 million in the prior year. Operating income in the quarter was partially driven by higher alternative investment income due to higher credit fund income resulting from favorable economics as well as an increase in the market value of public equity positions in one of our funds.  Additionally, in the prior year alternative investment income was lower due to a decline in the market value of public equity positions in one of our funds. Partially offsetting the increase in the second quarter 2017 was lower Germany operating income as compared to prior year.
Conference Call Information
This press release and the second quarter 2017 financial supplement will be posted to the Company’s website at ir.athene.com.
Athene will conduct a conference call on Thursday, August 10, 2017 at 9:00 a.m. ET to discuss second quarter 2017 results. Additionally, the company will post an earnings presentation deck on the ir.athene.com website prior to market open on August 10, 2017.
Live conference call: Toll-free at 1-888-317-6003 (domestic) or 1-412-317-6061 (international)
Participant entry number: 6776192
Replay available through August 24, 2017 at 1-877-344-7529 (domestic) or 1-412-317-0088 (international)
Replay access code: 10110252
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 and group annuity contracts related to pension risk transfers.

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, a New York-domiciled insurance company, 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 information that may enhance an investor's understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP

5



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 certain 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 useful 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 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, but excluding any awards for which the exercise or conversion price

6



exceeds the market value of our Class A common shares on the applicable measurement date. For certain historical periods, Class M shares were not included due to issuance restrictions which were contingent upon our IPO. 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 assets represent the investments that directly back our policyholder liabilities as well as surplus assets. Invested assets is used in the computation of net investment earned rate, which allows us to analyze the profitability of our investment portfolio. Invested assets includes (a) total investments on the consolidated balance sheets with AFS securities at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) the consolidated VIE assets, liabilities and noncontrolling interest, (f) net investment payables and receivables and (g) policy loans ceded (which offset the direct policy loans in total investments). Invested assets also excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Our invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period.


7



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)
 
June 30,
 
December 31,
(In millions)
2017
 
2016
Assets
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
$
56,813

 
$
52,033

Equity securities
429

 
353

Trading securities, at fair value
2,692

 
2,581

Mortgage loans, net of allowances
6,024

 
5,470

Investment funds
697

 
689

Policy loans
579

 
602

Funds withheld at interest
6,834

 
6,538

Derivative assets
1,808

 
1,370

Real estate
597

 
542

Short-term investments, at fair value
106

 
189

Other investments
91

 
81

Total investments
76,670

 
70,448

Cash and cash equivalents
3,478

 
2,445

Restricted cash
105

 
57

Investments in related parties
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
337

 
335

Equity securities

 
20

Trading securities, at fair value
166

 
195

Investment funds
1,260

 
1,198

Short-term investments
28

 

Other investments
238

 
237

Accrued investment income
566

 
554

Reinsurance recoverable
5,958

 
6,001

Deferred acquisition costs, deferred sales inducements, and value of business acquired
2,886

 
2,940

Current income tax recoverable
29

 
107

Deferred tax assets
55

 
372

Other assets
824

 
869

Assets of consolidated variable interest entities:
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Equity securities - related party
206

 
161

Trading securities, at fair value – related party
185

 
167

Investment funds
595

 
573

Cash and cash equivalents
2

 
14

Other assets
6

 
6

Total assets
$
93,594

 
$
86,699



9



 
June 30,
 
December 31,
(In millions)
2017
 
2016
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
64,911

 
$
61,532

Future policy benefits
15,481

 
14,592

Other policy claims and benefits
205

 
217

Dividends payable to policyholders
980

 
974

Derivative liabilities
63

 
40

Payables for collateral on derivatives
1,860

 
1,383

Funds withheld liability
391

 
380

Other liabilities
1,374

 
688

Liabilities of consolidated variable interest entities
45

 
34

Total liabilities
85,310

 
79,840

Equity
 
 
 
Common stock

 

Additional paid-in capital
3,452

 
3,421

Retained earnings
3,772

 
3,070

Accumulated other comprehensive income
1,060

 
367

Total Athene Holding Ltd. shareholders' equity
8,284

 
6,858

Noncontrolling interest

 
1

Total equity
8,284

 
6,859

Total liabilities and equity
$
93,594

 
$
86,699
















10



Athene Holding Ltd.
Condensed Consolidated Statement of Income (unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Revenue
 
 
 
 
 
 
 
Premiums
$
379

 
$
60

 
$
431

 
$
120

Product charges
85

 
69

 
166

 
135

Net investment income
821

 
700

 
1,607

 
1,394

Investment related gains (losses)
460

 
227

 
1,142

 
143

OTTI investment losses:
 
 
 
 
 
 
 
OTTI losses
(12
)
 
(2
)
 
(12
)
 
(24
)
OTTI losses (gains) recognized in OCI
1

 
(9
)
 

 
3

Net OTTI losses
(11
)
 
(11
)
 
(12
)
 
(21
)
Other revenues
8

 
9

 
16

 
17

Revenues of consolidated variable interest entities:
 
 
 
 
 
 
 
Net investment income
10

 
22

 
20

 
33

Investment related gains (losses)
11

 
(31
)
 
12

 
(54
)
Total revenues
1,763

 
1,045

 
3,382

 
1,767

Benefits and Expenses
 
 
 
 
 
 
 
Interest sensitive contract benefits
553

 
335

 
1,245

 
590

Amortization of DSI
11

 
2

 
29

 
6

Future policy and other policy benefits
578

 
258

 
792

 
482

Amortization of DAC and VOBA
67

 
61

 
171

 
90

Dividends to policyholders
49

 
13

 
81

 
30

Policy and other operating expenses
168

 
163

 
321

 
267

Operating expenses of consolidated variable interest entities

 
5

 

 
9

Total benefits and expenses
1,426

 
837

 
2,639

 
1,474

Income before income taxes
337

 
208

 
743

 
293

Income tax expense
11

 
15

 
33

 
15

Net income
326

 
193

 
710

 
278

Less: Net income attributable to noncontrolling interests

 

 

 

Net income available to AHL shareholders
$
326

 
$
193

 
$
710

 
$
278










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 June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
Operating income, net of tax – per operating dilutive Class A common share
$
1.43

 
$
0.96

 
$
2.79

 
$
1.78

Investment gains (losses), net of offsets
0.29

 
0.33

 
0.59

 
0.22

Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
0.08

 
(0.10
)
 
0.56

 
(0.47
)
Integration, restructuring and other non-operating expenses
(0.06
)
 
(0.02
)
 
(0.10
)
 
(0.03
)
Stock compensation expense
(0.07
)
 
(0.16
)
 
(0.12
)
 
(0.07
)
Income tax (expense) benefit - non-operating
(0.02
)
 
0.03

 
(0.09
)
 
0.07

Total non-operating adjustments
0.22

 
0.08

 
0.84

 
(0.28
)
Effect of items convertible to or settled in Class A common shares
0.01

 

 
0.03

 

Basic earnings per share – Class A common shares
$
1.66

 
$
1.04

 
$
3.66

 
$
1.50

The reconciliation of basic weighted average Class A shares to weighted average operating diluted Class A shares is as follows:
 
Three months ended June 30,
 
Six months ended June 30,
(In millions)
2017
 
2016
 
2017
 
2016
Basic weighted average shares outstanding - Class A
106.3

 
50.0

 
92.4

 
50.0

Conversion of Class B shares to Class A shares
82.9

 
136.0

 
96.7

 
136.0

Conversion of Class M shares to Class A shares
6.2

 

 
6.2

 

Effect of other stock compensation plans
0.5

 
0.1

 
0.5

 
0.1

Weighted average shares outstanding - operating diluted Class A common shares
195.9

 
186.1

 
195.8

 
186.1

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:
 
June 30,
(In millions)
2017
 
2016
Total AHL shareholders' equity
$
8,284

 
$
6,426

Less: AOCI
1,060

 
569

Total AHL shareholders' equity excluding AOCI
$
7,224

 
$
5,857

 
 
 
 
Retirement Services
$
5,165

 
$
4,232

Corporate and Other
2,059

 
1,625

Total AHL shareholders' equity excluding AOCI
$
7,224

 
$
5,857


12



The reconciliation of basic Class A shares outstanding to operating diluted Class A outstanding shares is as follows:
 
June 30,
(In millions)
2017
 
2016
Class A common shares outstanding
119.3

 
50.2

Conversion of Class B shares to Class A shares
70.1

 
136.0

Conversion of Class M shares to Class A shares
6.4

 

Effect of other stock compensation plans
0.9

 
0.3

Operating diluted Class A common shares outstanding
196.7

 
186.5

The reconciliation of book value per share to book value per share, excluding AOCI is as follows:
 
June 30,
 
2017
 
2016
Book value per share
$
42.20

 
$
34.57

AOCI
(5.40
)
 
(3.07
)
Effect of items convertible to or settled in Class A common shares
(0.08
)
 
(0.10
)
Book value per share, excluding AOCI
$
36.72

 
$
31.40


13



The reconciliation of net investment income to net investment earnings and earned rate is as follows:
 
Three months ended June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
 
Dollar
 
Rate
 
Dollar
 
Rate
GAAP net investment income
$
821

 
4.38
 %
 
$
700

 
4.06
 %
 
$
1,607

 
4.35
 %
 
$
1,394

 
4.08
 %
Reinsurance embedded derivative impacts
52

 
0.28
 %
 
53

 
0.31
 %
 
97

 
0.26
 %
 
89

 
0.26
 %
Net VIE earnings
21

 
0.11
 %
 
(14
)
 
(0.08
)%
 
32

 
0.09
 %
 
(30
)
 
(0.09
)%
Alternative income gain (loss)
6

 
0.03
 %
 

 
 %
 
(7
)
 
(0.02
)%
 
(32
)
 
(0.09
)%
Other
(15
)
 
(0.08
)%
 
(15
)
 
(0.09
)%
 
(30
)
 
(0.08
)%
 
(15
)
 
(0.04
)%
Total adjustments to arrive at net investment earnings/earned rate
64

 
0.34
 %
 
24

 
0.14
 %
 
92

 
0.25
 %
 
12

 
0.04
 %
Total net investment earnings/earned rate
$
885

 
4.72
 %
 
$
724

 
4.20
 %
 
$
1,699

 
4.60
 %
 
$
1,406

 
4.12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
$
821

 
4.85
 %
 
$
708

 
4.58
 %
 
$
1,601

 
4.80
 %
 
$
1,401

 
4.58
 %
Corporate and Other
64

 
3.53
 %
 
16

 
0.93
 %
 
98

 
2.71
 %
 
5

 
0.16
 %
Total net investment earnings/earned rate
$
885

 
4.72
 %
 
$
724

 
4.20
 %
 
$
1,699

 
4.60
 %
 
$
1,406

 
4.12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services average invested assets
$
67,577

 
 
 
$
61,804

 
 
 
$
66,635

 
 
 
$
61,168

 
 
Corporate and Other average invested assets
7,345

 
 
 
7,177

 
 
 
7,258

 
 
 
7,139

 
 
Average invested assets
$
74,922

 
 
 
$
68,981

 
 
 
$
73,893

 
 
 
$
68,307

 
 
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 June 30,
 
Six months ended June 30,
 
2017
 
2016
 
2017
 
2016
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
 
Dollar
 
Rate
 
Dollar
 
Rate
GAAP interest sensitive contract benefits
$
553

 
3.95
 %
 
$
335

 
2.64
 %
 
$
1,245

 
4.48
 %
 
$
590

 
2.34
 %
Interest credited other than deferred annuities
(42
)
 
(0.30
)%
 
(27
)
 
(0.21
)%
 
(68
)
 
(0.24
)%
 
(57
)
 
(0.23
)%
FIA option costs
149

 
1.07
 %
 
139

 
1.08
 %
 
294

 
1.05
 %
 
275

 
1.10
 %
Product charges (strategy fees)
(17
)
 
(0.12
)%
 
(13
)
 
(0.10
)%
 
(34
)
 
(0.12
)%
 
(24
)
 
(0.10
)%
Reinsurance embedded derivative impacts
9

 
0.06
 %
 
7

 
0.06
 %
 
18

 
0.06
 %
 
13

 
0.05
 %
Change in fair values of embedded derivatives - FIAs
(399
)
 
(2.85
)%
 
(206
)
 
(1.62
)%
 
(933
)
 
(3.35
)%
 
(343
)
 
(1.37
)%
Negative VOBA amortization
10

 
0.07
 %
 
15

 
0.12
 %
 
22

 
0.08
 %
 
24

 
0.10
 %
Unit linked change in reserve
1

 
0.01
 %
 
4

 
0.03
 %
 
(17
)
 
(0.06
)%
 
19

 
0.08
 %
Other changes in interest sensitive contract liabilities

 
 %
 
(1
)
 
(0.01
)%
 

 
 %
 
(1
)
 
 %
Total adjustments to arrive at cost of crediting on deferred annuities
(289
)
 
(2.06
)%
 
(82
)
 
(0.65
)%
 
(718
)
 
(2.58
)%
 
(94
)
 
(0.37
)%
Retirement Services cost of crediting on deferred annuities
$
264

 
1.89
 %
 
$
253

 
1.99
 %
 
$
527

 
1.90
 %
 
$
496

 
1.97
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average account value on deferred annuities
$
56,001

 
 
 
$
50,817

 
 
 
$
55,627

 
 
 
$
50,297

 
 


14



The reconciliation of total investments, including related parties, to invested assets is as follows:
 
June 30,
(In millions)
2017
 
2016
Total investments, including related parties
$
78,699

 
$
68,860

Derivative assets
(1,808
)
 
(961
)
Cash and cash equivalents (including restricted cash)
3,583

 
3,385

Accrued income
566

 
507

Derivative collateral
(1,860
)
 
(743
)
Reinsurance funds withheld and modified coinsurance
(444
)
 
(275
)
VIE assets, liabilities and noncontrolling interest
949

 
1,024

AFS unrealized (gain) loss
(2,335
)
 
(1,593
)
Ceded policy loans
(332
)
 
(345
)
Net investment receivables (payables)
(739
)
 

Total adjustments to arrive at invested assets
(2,420
)
 
999

Total invested assets
$
76,279

 
$
69,859



15
EX-99.2 3 financialsupplementq22017.htm EXHIBIT 99.2 Exhibit
financialsupplementcover001.jpg



Athene Holding Ltd.
Financial Supplement - June 30, 2017
Table of Contents







Athene Holding Ltd.
Financial Supplement - June 30, 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 information that may enhance an investor's understanding of our results of operations and the underlying profitability drivers of our business. The majority of these non-GAAP measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period-to-period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.
 
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 guaranteed living withdrawal benefits (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 - June 30, 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 useful 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, but excluding any awards for which the exercise or conversion price exceeds the market value of our Class A common shares on the applicable measurement date. For certain historical periods, Class M shares were not included due to issuance restrictions which were contingent upon our IPO. 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 - June 30, 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, (f) net investment payables and receivables and (g) policy loans ceded (which offset the direct policy loans in total investments). Invested assets also excludes assets associated with funds withheld liabilities related to business exited through reinsurance agreements and derivative collateral (offsetting the related cash positions). We include the underlying investments supporting our assumed funds withheld and modco agreements in our invested assets calculation in order to match the assets with the income received. We believe the adjustments for reinsurance provide a view of the assets for which we have economic exposure. Our invested assets are averaged over the number of quarters in the relevant period to compute our net investment earned rate for such period.

Reserve Liabilities

In managing our business we also analyze reserve liabilities, which does not correspond to total liabilities as disclosed in our consolidated financial statements and notes thereto. Reserve liabilities represents our policyholder liability obligations net of reinsurance and is used to analyze the costs of our liabilities. Reserve liabilities includes (a) the interest sensitive contract liabilities, (b) future policy benefits, (c) dividends payable to policyholders, and (d) other policy claims and benefits, offset by reinsurance 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 - June 30, 2017
Financial Highlights
Unaudited (In millions, except percentages and per share data)







Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
$
2,734

 
$
1,806

 
Retail sales
$
1,635

 
$
1,099

 
$
1,492

 
$
2,011

 
$
1,143

380

 
2,230

 
Flow reinsurance
214

 
166

 
348

 
871

 
1,318

1,700

 

 
Funding agreements
1,050

 
650

 

 

 

327

 

 
Pension risk transfer
327

 

 

 

 

$
5,141

 
$
4,036

 
Total deposits
$
3,226

 
$
1,915

 
$
1,840

 
$
2,882

 
$
2,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated results of operations
 
 
 
 
 
 
 
 
 
$
710

 
$
278

 
Net income
$
326

 
$
384

 
$
364

 
$
126

 
$
193

546

 
331

 
Operating income, net of taxes
280

 
266

 
280

 
117

 
179

 
 
 
 
 
 
 
 
 
 
 
 
 
 
18.7
%
 
9.4
%
 
ROE
16.4
%
 
21.3
%
 
20.9
%
 
7.6
%
 
12.8
%
20.7
%
 
9.7
%
 
ROE excluding AOCI
18.4
%
 
23.0
%
 
23.1
%
 
8.4
%
 
13.4
%
15.9
%
 
11.6
%
 
Operating ROE excluding AOCI
15.9
%
 
15.9
%
 
17.7
%
 
7.9
%
 
12.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
 
 
 
 
 
 
 
 
 
$
542

 
$
393

 
Operating income, net of taxes
$
267

 
$
275

 
$
242

 
$
142

 
$
196

22.5
%
 
19.2
%
 
Operating ROE excluding AOCI
21.4
%
 
23.7
%
 
21.6
%
 
13.0
%
 
18.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
$
3.66

 
$
1.50

 
Basic1
$
1.66

 
$
2.00

 
$
1.92

 
$
0.68

 
$
1.04

$
3.59

 
$
1.49

 
Diluted - Class A2
$
1.65

 
$
1.92

 
$
1.78

 
$
0.68

 
$
1.04

$
2.79

 
$
1.78

 
Operating earnings per share - operating diluted Class A3
$
1.43

 
$
1.36

 
$
1.43

 
$
0.64

 
$
0.96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value per share:
 
 
 
 
 
 
 
 
 
$
42.20

 
$
34.57

 
Book value per share
$
42.20

 
$
39.07

 
$
35.66

 
$
37.77

 
$
34.57

$
36.72

 
$
31.40

 
Book value per share, excluding AOCI3
$
36.72

 
$
34.99

 
$
33.05

 
$
31.54

 
$
31.40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
 
 
 
 
$
93,594

 
$
84,295

 
Total assets
$
93,594

 
$
89,193

 
$
86,699

 
$
86,996

 
$
84,295

76,279

 
69,859

 
Invested assets
76,279

 
73,563

 
71,834

 
71,602

 
69,859

85,310

 
77,868

 
Total liabilities
85,310

 
81,632

 
79,840

 
79,964

 
77,868

75,290

 
68,336

 
Reserve liabilities
75,290

 
72,225

 
70,974

 
70,916

 
68,336

8,284

 
6,426

 
Total Athene Holding Ltd. shareholders' equity
8,284

 
7,561

 
6,858

 
7,031

 
6,426

7,224

 
5,857

 
Athene Holding Ltd. shareholders' equity excluding AOCI
7,224

 
6,888

 
6,491

 
6,111

 
5,857

%
 
%
 
Debt to equity (excluding AOCI) ratio
%
 
%
 
%
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share data:
 
 
 
 
 
 
 
 
 
194.1

 
186.0

 
Weighted average shares outstanding - basic1
195.7

 
192.5

 
189.2

 
185.8

 
186.0

95.6

 
50.1

 
Weighted average shares outstanding - diluted - Class A common shares2
109.0

 
81.3

 
63.9

 
49.9

 
50.1

195.8

 
186.1

 
Weighted average shares outstanding - operating diluted Class A common shares3
195.9

 
195.6

 
194.2

 
185.9

 
186.1

196.3

 
185.9

 
Common shares outstanding4
196.3

 
193.5

 
192.3

 
185.9

 
185.9

196.7

 
186.5

 
Operating diluted Class A common shares outstanding3
196.7

 
196.8

 
196.4

 
193.8

 
186.5

* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on operating income, net of taxes, ROE excluding AOCI, operating ROE excluding AOCI and book value per share excluding AOCI.
1 Basic earnings per share, including basic weighted average shares outstanding, includes all classes eligible to participate in dividends for each period presented.
2 Diluted earnings per share on a GAAP basis for Class A common shares, including diluted Class A weighted average shares outstanding, includes the dilutive impacts, if any, of Class B common shares, Class M common shares and any other stock-based awards.
3 Represents Class A common shares outstanding or weighted average common shares outstanding assuming conversion or settlement of all outstanding items that are able to be converted to or settled in Class A common shares, including the impacts of Class B common shares, Class M common shares and any other stock-based awards, but excluding any awards for which the exercise or conversion price exceeds the market value of our Class A common shares on the applicable measurement date. 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 - June 30, 2017
Capitalization and Equity
Unaudited (In millions, except percentages)


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

 
$

 
Total debt1
$

 
$

 
$

 
$

 
$

8,284

 
6,426

 
Total Athene Holding Ltd. shareholders' equity
8,284

 
7,561

 
6,858

 
7,031

 
6,426

8,284

 
6,426

 
Total capitalization
8,284

 
7,561

 
6,858

 
7,031

 
6,426

1,060

 
569

 
Less: AOCI
1,060

 
673

 
367

 
920

 
569

$
7,224

 
$
5,857

 
Total capitalization excluding AOCI
$
7,224

 
$
6,888

 
$
6,491

 
$
6,111

 
$
5,857

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity by segment
 
 
 
 
 
 
 
 
 
$
5,165

 
$
4,232

 
Retirement Services
$
5,165

 
$
4,817

 
$
4,448

 
$
4,542

 
$
4,232

2,059

 
1,625

 
Corporate and Other
2,059

 
2,071

 
2,043

 
1,569

 
1,625

7,224

 
5,857

 
Total AHL shareholders' equity excluding AOCI
7,224

 
6,888

 
6,491

 
6,111

 
5,857

1,060

 
569

 
AOCI
1,060

 
673

 
367

 
920

 
569

$
8,284

 
$
6,426

 
Total AHL shareholders' equity
$
8,284

 
$
7,561

 
$
6,858

 
$
7,031

 
$
6,426

 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
%
 
Debt to equity (excluding AOCI) ratio
%
 
%
 
%
 
%
 
%
1 Total debt does not include debt within a consolidated VIE.





5


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
June 30, 2017
 
December 31, 2016
Assets
 
 
 
Investments:
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
$
56,813

 
$
52,033

Equity securities
429

 
353

Trading securities, at fair value
2,692

 
2,581

Mortgage loans, net of allowances
6,024

 
5,470

Investment funds
697

 
689

Policy loans
579

 
602

Funds withheld at interest
6,834

 
6,538

Derivative assets
1,808

 
1,370

Real estate
597

 
542

Short-term investments, at fair value
106

 
189

Other investments
91

 
81

Total investments
76,670

 
70,448

Cash and cash equivalents
3,478

 
2,445

Restricted cash
105

 
57

Investments in related parties
 
 
 
Available-for-sale securities, at fair value
 
 
 
Fixed maturity securities
337

 
335

Equity securities

 
20

Trading securities, at fair value
166

 
195

Investment funds
1,260

 
1,198

Short-term investments, at fair value
28

 

Other investments
238

 
237

Accrued investment income
566

 
554

Reinsurance recoverable
5,958

 
6,001

Deferred acquisition costs, deferred sales inducements and value of business acquired
2,886

 
2,940

Current income tax recoverable
29

 
107

Deferred tax assets
55

 
372

Other assets
824

 
869

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Available-for-sale securities, at fair value
 
 
 
Equity securities - related party
206

 
161

Trading securities, at fair value - related party
185

 
167

Investment funds
595

 
573

Cash and cash equivalents
2

 
14

Other assets
6

 
6

Total assets
$
93,594

 
$
86,699

 
 
 
(Continued)


6


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
June 30, 2017
 
December 31, 2016
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
64,911

 
$
61,532

Future policy benefits
15,481

 
14,592

Other policy claims and benefits
205

 
217

Dividends payable to policyholders
980

 
974

Derivative liabilities
63

 
40

Payables for collateral on derivatives
1,860

 
1,383

Funds withheld liability
391

 
380

Other liabilities
1,374

 
688

Liabilities of consolidated variable interest entities
45

 
34

Total liabilities
85,310

 
79,840

Equity
 
 
 
Common Stock

 

Additional paid-in-capital
3,452

 
3,421

Retained earnings
3,772

 
3,070

Accumulated other comprehensive income
1,060

 
367

Total Athene Holding Ltd. shareholders' equity
8,284

 
6,858

Noncontrolling interests

 
1

Total equity
8,284

 
6,859

Total liabilities and equity
$
93,594

 
$
86,699

 
 
 
(Concluded)




7


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Consolidated Statements of Income
Unaudited (In millions)

Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
$
431

 
$
120

 
Premiums
$
379


$
52

 
$
35

 
$
85

 
$
60

166

 
135

 
Product charges
85


81

 
75

 
71

 
69

1,607

 
1,394

 
Net investment income
821


786

 
777

 
743

 
700

1,142

 
143

 
Investment related gains (losses)
460


682

 
129

 
380

 
227

 
 
 
 
Other-than-temporary impairment investment losses
 
 
 
 
 
 
 
 
 
(12
)
 
(24
)
 
Other-than-temporary impairment losses
(12
)


 
(1
)
 
(7
)
 
(2
)

 
3

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


(1
)
 
(2
)
 
1

 
(9
)
(12
)
 
(21
)
 
Net other-than-temporary impairment losses
(11
)
 
(1
)
 
(3
)
 
(6
)
 
(11
)
16

 
17

 
Other revenues
8

 
8

 
9

 
8

 
9

 
 
 
 
Revenues related to consolidated variable interest entities
 
 
 
 
 
 
 
 
 
20

 
33

 
Net investment income
10

 
10

 
27

 
7

 
22

12

 
(54
)
 
Investment related gains (losses)
11

 
1

 
17

 
(16
)
 
(31
)
3,382

 
1,767

 
Total revenues
1,763

 
1,619

 
1,066

 
1,272

 
1,045

 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
1,245

 
590

 
Interest sensitive contract benefits
553

 
692

 
215

 
491

 
335

29

 
6

 
Amortization of deferred sales inducements
11

 
18

 
20

 
13

 
2

792

 
482

 
Future policy and other policy benefits
578

 
214

 
186

 
391

 
258

171

 
90

 
Amortization of deferred acquisition costs and value of business acquired
67

 
104

 
108

 
120

 
61

81

 
30

 
Dividends to policyholders
49

 
32

 
(28
)
 
35

 
13

321

 
267

 
Policy and other operating expenses
168

 
153

 
180

 
180

 
163


 
9

 
Operating expenses of consolidated variable interest entities

 

 

 
4

 
5

2,639

 
1,474

 
Total benefits and expenses
1,426

 
1,213

 
681

 
1,234

 
837

743

 
293

 
Income before income taxes
337

 
406

 
385

 
38

 
208

33

 
15

 
Income tax expense (benefit)
11

 
22

 
21

 
(88
)
 
15

710

 
278

 
Net income
326

 
384

 
364

 
126

 
193


 

 
Less: Net income attributable to noncontrolling interests

 

 

 

 

$
710

 
$
278

 
Net income available to Athene Holding Ltd. shareholders
$
326

 
$
384

 
$
364

 
$
126

 
$
193




8


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Segment Results of Operations
Unaudited (In millions, except per share data)


Results of operations by segment
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
 
 
 
Operating income, net of tax by segment
 
 
 
 
 
 
 
 
 
$
542

 
$
393

 
Retirement Services
$
267

 
$
275

 
$
242

 
$
142

 
$
196

4

 
(62
)
 
Corporate and Other
13

 
(9
)
 
38

 
(25
)
 
(17
)
546

 
331

 
Operating income, net of tax
280

 
266

 
280

 
117

 
179

 
 
 
 
 
 
 
 
 
 
 
 
 
 
35

 
19

 
Realized gains (losses) on sale of AFS securities
24

 
11

 
40

 
18

 
11

(12
)
 
(24
)
 
Unrealized, impairments, and other investment gains (losses)
(15
)
 
3

 
(20
)
 
(12
)
 
3

133

 
71

 
Assumed modco and funds withheld reinsurance embedded derivatives
65

 
68

 
(76
)
 
73

 
74

(41
)
 
(26
)
 
Offsets to investment gains (losses)
(16
)
 
(25
)
 
5

 
(21
)
 
(27
)
115

 
40

 
Investment gains (losses), net of offsets
58

 
57

 
(51
)
 
58

 
61

109

 
(87
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
15

 
94

 
183

 
(1
)
 
(18
)
(20
)
 
(6
)
 
Integration, restructuring and other non-operating expenses
(11
)
 
(9
)
 
(14
)
 
(2
)
 
(5
)
(23
)
 
(13
)
 
Stock compensation expense
(13
)
 
(10
)
 
(23
)
 
(46
)
 
(28
)
(17
)
 
13

 
Income tax (expense) benefit - non-operating
(3
)
 
(14
)
 
(11
)
 

 
4

164

 
(53
)
 
Total non-operating adjustments
46

 
118

 
84

 
9

 
14

$
710

 
$
278

 
Net income available to AHL shareholders
$
326

 
$
384

 
$
364

 
$
126

 
$
193

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2.79

 
$
1.78

 
Operating income, net of tax – per operating dilutive Class A common share
$
1.43

 
$
1.36

 
$
1.43

 
$
0.64

 
$
0.96

 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.18

 
0.10

 
Realized gains (losses) on sale of AFS securities
0.12

 
0.07

 
0.21

 
0.09

 
0.05

(0.06
)
 
(0.13
)
 
Unrealized, impairments, and other investment gains (losses)
(0.08
)
 
0.02

 
(0.10
)
 
(0.07
)
 
0.02

0.68

 
0.39

 
Assumed modco and funds withheld reinsurance embedded derivatives
0.34

 
0.34

 
(0.39
)
 
0.40

 
0.40

(0.21
)
 
(0.14
)
 
Offsets to investment gains (losses)
(0.09
)
 
(0.13
)
 
0.03

 
(0.11
)
 
(0.14
)
0.59

 
0.22

 
Investment gains (losses), net of offsets
0.29

 
0.30

 
(0.25
)
 
0.31

 
0.33

0.56

 
(0.47
)
 
Change in fair values of derivatives and embedded derivatives - FIAs, net of offsets
0.08

 
0.48

 
0.95

 

 
(0.10
)
(0.10
)
 
(0.03
)
 
Integration, restructuring and other non-operating expenses
(0.06
)
 
(0.05
)
 
(0.07
)
 
(0.02
)
 
(0.02
)
(0.12
)
 
(0.07
)
 
Stock compensation expense
(0.07
)
 
(0.05
)
 
(0.10
)
 
(0.25
)
 
(0.16
)
(0.09
)
 
0.07

 
Income tax (expense) benefit - non-operating
(0.02
)
 
(0.07
)
 
(0.07
)
 
0.01

 
0.03

0.84

 
(0.28
)
 
Total non-operating adjustments
0.22

 
0.61

 
0.46

 
0.05

 
0.08

0.03

 

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

 
0.03

 
0.03

 
(0.01
)
 

$
3.66

 
$
1.50

 
Basic earnings per share – Class A common shares
$
1.66

 
$
2.00

 
$
1.92

 
$
0.68

 
$
1.04


* Please refer to Note to the Financial Supplement section for discussion on operating income, net of taxes.



9


Athene Holding Ltd.
Financial Supplement - June 30, 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
1,519

 
$
1,347

 
Fixed income and other investment income
$
774

 
$
745

 
$
725

 
$
695

 
$
664

180

 
59

 
Alternative investment income
111

 
69

 
122

 
82

 
60

1,699

 
1,406

 
Net investment earnings
885

 
814

 
847

 
777

 
724

(527
)
 
(496
)
 
Cost of crediting on deferred annuities
(264
)
 
(263
)
 
(264
)
 
(259
)
 
(253
)
(456
)
 
(411
)
 
Other liability costs1
(253
)
 
(203
)
 
(219
)
 
(421
)
 
(202
)
(154
)
 
(140
)
 
Operating expenses
(80
)
 
(74
)
 
(74
)
 
(68
)
 
(71
)
562

 
359

 
Operating income, before tax
288

 
274

 
290

 
29

 
198

(16
)
 
(28
)
 
Income tax (expense) benefit - operating income
(8
)
 
(8
)
 
(10
)
 
88

 
(19
)
$
546

 
$
331

 
Operating income, net of tax
$
280

 
$
266

 
$
280

 
$
117

 
$
179


* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
1,451

 
$
1,293

 
Fixed income and other investment income
$
739

 
$
712

 
$
694

 
$
664

 
$
636

150

 
108

 
Alternative investment income
82

 
68

 
104

 
90

 
72

1,601

 
1,401

 
Net investment earnings
821

 
780

 
798

 
754

 
708

(527
)
 
(496
)
 
Cost of crediting on deferred annuities
(264
)
 
(263
)
 
(264
)
 
(259
)
 
(253
)
(406
)
 
(385
)
 
Other liability costs
(225
)
 
(181
)
 
(223
)
 
(389
)
 
(194
)
(106
)
 
(100
)
 
Operating expenses
(54
)
 
(52
)
 
(56
)
 
(50
)
 
(51
)
562

 
420

 
Operating income, before tax
278

 
284

 
255

 
56

 
210

(20
)
 
(27
)
 
Income tax (expense) benefit - operating income
(11
)
 
(9
)
 
(13
)
 
86

 
(14
)
$
542

 
$
393

 
Operating income, net of tax
$
267

 
$
275

 
$
242

 
$
142

 
$
196


Corporate and Other summary of operating income, net of tax
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
68

 
$
54

 
Fixed income and other investment income
$
35

 
$
33

 
$
31

 
$
31

 
$
28

30

 
(49
)
 
Alternative investment income
29

 
1

 
18

 
(8
)
 
(12
)
98

 
5

 
Net investment earnings
64

 
34

 
49

 
23

 
16


 

 
Cost of crediting on deferred annuities

 

 

 

 

(50
)
 
(26
)
 
Other liability costs
(28
)
 
(22
)
 
4

 
(32
)
 
(8
)
(48
)
 
(40
)
 
Operating expenses
(26
)
 
(22
)
 
(18
)
 
(18
)
 
(20
)

 
(61
)
 
Operating income, before tax
10

 
(10
)
 
35

 
(27
)
 
(12
)
4

 
(1
)
 
Income tax (expense) benefit - operating income
3

 
1

 
3

 
2

 
(5
)
$
4

 
$
(62
)
 
Operating income, net of tax
$
13

 
$
(9
)
 
$
38

 
$
(25
)
 
$
(17
)


10


Athene Holding Ltd.
Financial Supplement - June 30, 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
4.80
%
 
4.58
%
 
Net investment earned rate
4.85
%
 
4.76
%
 
4.93
%
 
4.75
%
 
4.58
%
1.90
%
 
1.97
%
 
Cost of crediting on deferred annuities
1.89
%
 
1.91
%
 
1.95
%
 
1.96
%
 
1.99
%
2.90
%
 
2.61
%
 
Investment margin on deferred annuities
2.96
%
 
2.85
%
 
2.98
%
 
2.79
%
 
2.59
%

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

Summary of net investment earned rate
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
4.53
%
 
4.40
%
 
Fixed income and other investments
4.55
%
 
4.52
%
 
4.47
%
 
4.36
%
 
4.28
%
11.48
%
 
9.02
%
 
Alternative investments
12.28
%
 
10.59
%
 
16.25
%
 
14.26
%
 
11.82
%
4.80
%
 
4.58
%
 
Total net investment earned rate
4.85
%
 
4.76
%
 
4.93
%
 
4.75
%
 
4.58
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,451

 
$
1,293

 
Fixed income and other investment income
$
739

 
$
712

 
$
694

 
$
664

 
$
636

150

 
108

 
Alternatives investment income
82

 
68

 
104

 
90

 
72

$
1,601

 
$
1,401

 
Total net investment earnings
$
821

 
$
780

 
$
798

 
$
754

 
$
708

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average invested assets
 
 
 
 
 
 
 
 
 
$
64,038

 
$
58,762

 
Fixed income and other investments
$
64,955

 
$
62,982

 
$
62,100

 
$
61,120

 
$
59,353

2,597

 
2,406

 
Alternative investments
2,622

 
2,594

 
2,543

 
2,521

 
2,451

$
66,635

 
$
61,168

 
Total average invested assets
$
67,577

 
$
65,576

 
$
64,643

 
$
63,641

 
$
61,804


* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
277

 
$
263

 
FIA option costs
$
140

 
$
137

 
$
136

 
$
135

 
$
133

250

 
233

 
Fixed interest credited to policyholders
124

 
126

 
128

 
124

 
120

$
527

 
$
496

 
Cost of crediting on deferred annuities
$
264

 
$
263

 
$
264

 
$
259

 
$
253

1.90
%
 
1.97
%
 
Cost of crediting on deferred annuities rate
1.89
%
 
1.91
%
 
1.95
%
 
1.96
%
 
1.99
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
55,627

 
$
50,297

 
Average account value on deferred annuities
$
56,001

 
$
55,154

 
$
54,358

 
$
52,739

 
$
50,817




11


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


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

 
$
49,257

 
Account value at beginning of period
$
55,429

 
$
54,880

 
$
53,837

 
$
51,640

 
$
49,994

3,194

 
4,095

 
Deposits1
1,886

 
1,308

 
1,878

 
2,914

 
2,497

80

 
84

 
Premium and interest bonuses
44

 
36

 
56

 
60

 
47

925

 
338

 
Fixed and index credits to policyholders
464

 
461

 
304

 
268

 
174

(2,377
)
 
(2,034
)
 
Surrenders and benefits paid
(1,183
)
 
(1,194
)
 
(1,135
)
 
(990
)
 
(1,020
)
(128
)
 
(100
)
 
Fee and product charges
(66
)
 
(62
)
 
(60
)
 
(55
)
 
(52
)
$
56,574

 
$
51,640

 
Account value at end of period
$
56,574

 
$
55,429

 
$
54,880

 
$
53,837

 
$
51,640


* 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

 
5.3

 
8.0
%
 
$
43,337

 
76.6
%
Single-year fixed rate guaranteed annuities
7.1

 
1.9

 
3.0
%
 
7,981

 
14.1
%
Multi-year fixed rate guaranteed annuities
5.3

 
3.7

 
8.0
%
 
5,256

 
9.3
%
Total
 
 
 
 
 
 
$
56,574

 
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
$
8,065

 
14.3
%
 
$
8,065

 
14.3
%
0.0% < 2.0%
226

 
0.4
%
 
701

 
1.2
%
2.0% < 4.0%
1,211

 
2.1
%
 
3,293

 
5.8
%
4.0% < 6.0%
4,008

 
7.1
%
 
8,936

 
15.8
%
6.0% < 8.0%
11,941

 
21.1
%
 
8,219

 
14.5
%
8.0% < 10.0%
14,591

 
25.8
%
 
9,845

 
17.4
%
10.0% or greater
16,532

 
29.2
%
 
17,515

 
31.0
%
 
$
56,574

 
100.0
%
 
$
56,574

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Surrender charge (gross)
 
MVA benefit
 
Surrender charge (net)
Aggregate surrender charge protection
 
 
7.4
%
 
0.2
%
 
7.6
%


12


Athene Holding Ltd.
Financial Supplement - June 30, 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
$
8,065

 
14.3
%
 
%
> 0 to less than 2
9,468

 
16.7
%
 
5.1
%
2 to less than 4
11,546

 
20.4
%
 
7.4
%
4 to less than 6
10,936

 
19.3
%
 
8.8
%
6 to less than 8
6,009

 
10.6
%
 
10.1
%
8 to less than 10
6,961

 
12.3
%
 
11.3
%
10 to less than 12
2,521

 
4.5
%
 
14.1
%
12 or greater
1,068

 
1.9
%
 
14.9
%
 
$
56,574

 
100.0
%
 
 

Minimum guarantees on deferred annuities
 
At minimum guarantees
 
Total account value
 
Percent of total account value at minimum guarantees
Fixed indexed annuities
$
15,806

 
$
43,337

 
36.5
%
Fixed rate annuities
6,515

 
13,237

 
49.2
%
Total deferred annuities
$
22,321

 
$
56,574

 
39.5
%
 
 
 
 
 
 
 
 
 
 
 
June 30, 2017
Distance to guarantees1
 
 
 
 
80 - 90


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 - June 30, 2017
Consolidated Reserve Liabilities
Unaudited (In millions, except percentages)


Consolidated reserve liabilities
 
June 30, 2017
 
December 31, 2016
 
Dollars
 
Percent of Total
 
Dollars
 
Percent of Total
Fixed indexed annuities
$
45,800

 
60.8
 %
 
$
43,527

 
61.3
 %
Fixed rate annuities
13,479

 
17.9
 %
 
13,490

 
19.0
 %
Total deferred annuities
59,279

 
78.7
 %
 
57,017

 
80.3
 %
Payout annuities
5,671

 
7.5
 %
 
5,443

 
7.6
 %
Funding agreements
2,568

 
3.4
 %
 
1,109

 
1.6
 %
Life and other (excluding German products)
2,201

 
3.0
 %
 
2,176

 
3.1
 %
Retirement Services reserve liabilities
69,719

 
92.6
 %
 
65,745

 
92.6
 %
Germany products
5,737

 
7.6
 %
 
5,381

 
7.6
 %
Intersegment eliminations
(166
)
 
(0.2
)%
 
(152
)
 
(0.2
)%
Total reserve liabilities
$
75,290

 
100.0
 %
 
$
70,974

 
100.0
 %

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


Reserve liability rollforward
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
65,745

 
$
59,854

 
Retirement Services reserve liabilities - beginning
$
67,013

 
$
65,745

 
$
65,097

 
$
62,651

 
$
60,710

5,366

 
4,217

 
Deposits1
3,307

 
2,059

 
1,884

 
2,979

 
2,537

(3,078
)
 
(2,635
)
 
Withdrawals
(1,408
)
 
(1,670
)
 
(1,351
)
 
(1,413
)
 
(1,282
)
1,686

 
1,215

 
Other reserve changes
807

 
879

 
115

 
880

 
686

69,719

 
62,651

 
Retirement Services reserve liabilities - ending
69,719

 
67,013

 
65,745

 
65,097

 
62,651

5,737

 
5,846

 
Germany reserve liabilities
5,737

 
5,367

 
5,381

 
5,982

 
5,846

(166
)
 
(161
)
 
Intersegment eliminations
(166
)
 
(155
)
 
(152
)
 
(163
)
 
(161
)
$
75,290

 
$
68,336

 
Consolidated reserve liabilities - ending
$
75,290

 
$
72,225

 
$
70,974

 
$
70,916

 
$
68,336


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 - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)


Investments and investments in related parties summary
 
June 30, 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
$
57

 
0.1
%
 
$
60

 
0.1
%
U.S. state, municipal and political subdivisions
1,156

 
1.5
%
 
1,140

 
1.6
%
Foreign governments
2,213

 
2.8
%
 
2,235

 
3.1
%
Corporate
33,220

 
42.2
%
 
30,020

 
41.4
%
CLO
5,170

 
6.6
%
 
4,822

 
6.7
%
RMBS
9,528

 
12.1
%
 
8,973

 
12.4
%
CMBS
1,865

 
2.4
%
 
1,847

 
2.5
%
ABS
3,604

 
4.6
%
 
2,936

 
4.0
%
Equity securities
429

 
0.5
%
 
353

 
0.5
%
Trading securities, at fair value
2,692

 
3.4
%
 
2,581

 
3.6
%
Mortgage loans, net of allowances
6,024

 
7.7
%
 
5,470

 
7.5
%
Investment funds
697

 
0.9
%
 
689

 
1.0
%
Policy loans
579

 
0.7
%
 
602

 
0.8
%
Funds withheld at interest
6,834

 
8.7
%
 
6,538

 
9.0
%
Derivative assets
1,808

 
2.3
%
 
1,370

 
1.9
%
Real estate
597

 
0.8
%
 
542

 
0.7
%
Short-term investments
106

 
0.1
%
 
189

 
0.3
%
Other investments
91

 
0.1
%
 
81

 
0.1
%
Total investments
76,670

 
97.5
%
 
70,448

 
97.2
%
Investment in related parties:
 
 
 
 
 
 
 
Available for sale securities at fair value:
 
 
 
 
 
 
 
Fixed maturity securities
337

 
0.4
%
 
335

 
0.5
%
Equity securities

 
%
 
20

 
%
Trading securities, at fair value
166

 
0.2
%
 
195

 
0.3
%
Investment funds
1,260

 
1.6
%
 
1,198

 
1.7
%
Short term investments
28

 
%
 

 
%
Other investments
238

 
0.3
%
 
237

 
0.3
%
Total related party investments
2,029

 
2.5
%
 
1,985

 
2.8
%
Total investments, including related parties
$
78,699

 
100.0
%
 
$
72,433

 
100.0
%



15


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Fixed maturity securities by sector
 
June 30, 2017
 
December 31, 2016
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Amortized Cost
 
Fair Value
 
Percent of Total
Corporate:
 
 
 
 
 
 
 
 
 
 
 
Industrial other1
$
10,848

 
$
11,275

 
19.6
%
 
$
10,417

 
$
10,645

 
20.3
%
Financial
10,087

 
10,495

 
18.4
%
 
8,957

 
9,156

 
17.5
%
Utilities
7,162

 
7,347

 
12.9
%
 
6,512

 
6,588

 
12.6
%
Communication
2,292

 
2,382

 
4.2
%
 
2,182

 
2,235

 
4.3
%
Transportation
1,668

 
1,721

 
3.0
%
 
1,365

 
1,396

 
2.7
%
Total corporate
32,057

 
33,220

 
58.1
%
 
29,433

 
30,020

 
57.4
%
Other government-related securities
 
 
 
 
 
 
 
 
 
 
 
U.S. state, municipal and political subdivisions
1,010

 
1,156

 
2.0
%
 
1,024

 
1,140

 
2.2
%
Foreign governments
2,133

 
2,213

 
3.9
%
 
2,098

 
2,235

 
4.3
%
U.S. government and agencies
58

 
57

 
0.1
%
 
59

 
60

 
0.1
%
Total non-structured securities
35,258

 
36,646

 
64.1
%
 
32,614

 
33,455

 
64.0
%
Structured securities:
 
 
 
 
 
 
 
 
 
 
 
CLO
5,441

 
5,453

 
9.5
%
 
5,234

 
5,101

 
9.7
%
ABS
3,651

 
3,658

 
6.4
%
 
3,037

 
2,992

 
5.7
%
CMBS
1,828

 
1,865

 
3.3
%
 
1,835

 
1,847

 
3.5
%
RMBS
 
 
 
 
 
 
 
 
 
 
 
Agency
97

 
99

 
0.2
%
 
110

 
112

 
0.2
%
Non-agency
8,834

 
9,429

 
16.5
%
 
8,621

 
8,861

 
16.9
%
Total structured securities
19,851

 
20,504

 
35.9
%
 
18,837

 
18,913

 
36.0
%
Total fixed maturity securities, including related parties
$
55,109

 
$
57,150

 
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
 
June 30, 2017
 
December 31, 2016
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
1
$
31,587

 
55.4
%
 
$
30,211

 
57.7
%
2
21,721

 
38.0
%
 
18,617

 
35.5
%
Total investment grade
53,308

 
93.4
%
 
48,828

 
93.2
%
3
3,079

 
5.4
%
 
2,812

 
5.4
%
4
654

 
1.1
%
 
622

 
1.2
%
5
83

 
0.1
%
 
82

 
0.2
%
6
26

 
%
 
24

 
%
Total below investment grade
3,842

 
6.6
%
 
3,540

 
6.8
%
Total fixed maturity securities, including related parties
$
57,150

 
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 - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

 
June 30, 2017
 
December 31, 2016
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NRSRO rating agency designation
 
 
 
 
 
 
 
AAA/AA/A
$
19,574

 
34.3
%
 
$
18,791

 
35.9
%
BBB
20,868

 
36.4
%
 
18,002

 
34.4
%
Non-rated1
6,657

 
11.6
%
 
5,650

 
10.8
%
Total investment grade2
47,099

 
82.3
%
 
42,443

 
81.1
%
BB
3,244

 
5.7
%
 
3,286

 
6.3
%
B
1,291

 
2.3
%
 
1,372

 
2.6
%
CCC
2,674

 
4.7
%
 
2,374

 
4.5
%
CC and lower
2,219

 
3.9
%
 
2,404

 
4.6
%
Non-rated 1
623

 
1.1
%
 
489

 
0.9
%
Total below investment grade
10,051

 
17.7
%
 
9,925

 
18.9
%
Total fixed maturity securities, including related parties
$
57,150

 
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
 
June 30, 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
$
10,086

 
$
8,533

 
$
9,116

 
95.7
%
 
$
9,960

 
$
8,414

 
$
8,652

 
96.4
%
2
172

 
148

 
153

 
1.6
%
 
152

 
141

 
140

 
1.6
%
Total investment grade
10,258

 
8,681

 
9,269

 
97.3
%
 
10,112

 
8,555

 
8,792

 
98.0
%
3
172

 
159

 
164

 
1.7
%
 
104

 
92

 
96

 
1.1
%
4
55

 
43

 
46

 
0.5
%
 
31

 
29

 
29

 
0.3
%
5
47

 
46

 
47

 
0.5
%
 
54

 
53

 
54

 
0.6
%
6
3

 
2

 
2

 
%
 
2

 
2

 
2

 
%
Total below investment grade
277

 
250

 
259

 
2.7
%
 
191

 
176

 
181

 
2.0
%
Total
$
10,535

 
$
8,931

 
$
9,528

 
100.0
%
 
$
10,303

 
$
8,731

 
$
8,973

 
100.0
%



17


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Mortgage loans by property type and region
 
June 30, 2017
 
December 31, 2016
 
Net Carrying Value
 
Percent of Total
 
Net Carrying Value
 
Percent of Total
Property type
 
 
 
 
 
 
 
Office building
$
1,277

 
21.2
%
 
$
1,217

 
22.2
%
Retail
1,113

 
18.5
%
 
1,135

 
20.7
%
Hotels
1,040

 
17.2
%
 
1,025

 
18.7
%
Industrial
787

 
13.1
%
 
742

 
13.6
%
Apartment
536

 
8.9
%
 
616

 
11.3
%
Other commercial 1
445

 
7.4
%
 
397

 
7.3
%
Total commercial mortgage loans
5,198

 
86.3
%
 
5,132

 
93.8
%
Residential loans
826

 
13.7
%
 
338

 
6.2
%
Total mortgage loans, net of allowances
$
6,024

 
100.0
%
 
$
5,470

 
100.0
%
 
 
 
 
 
 
 
 
US Region:
 
 
 
 
 
 
 
East North Central
$
576

 
9.6
%
 
$
450

 
8.2
%
East South Central
147

 
2.4
%
 
158

 
2.9
%
Middle Atlantic
769

 
12.8
%
 
628

 
11.5
%
Mountain
609

 
10.1
%
 
543

 
9.9
%
New England
186

 
3.1
%
 
194

 
3.5
%
Pacific
895

 
14.9
%
 
833

 
15.2
%
South Atlantic
1,113

 
18.4
%
 
1,284

 
23.5
%
West North Central
285

 
4.7
%
 
306

 
5.6
%
West South Central
541

 
9.0
%
 
662

 
12.1
%
Total US Region
5,121

 
85.0
%
 
5,058

 
92.4
%
International Region
77

 
1.3
%
 
74

 
1.4
%
Total commercial mortgage loans
5,198

 
86.3
%
 
5,132

 
93.8
%
Residential loans
826

 
13.7
%
 
338

 
6.2
%
Total mortgage loans, net of allowances
$
6,024

 
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 - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Investment funds including related party
 
June 30, 2017
 
December 31, 2016
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Investment funds
 
 
 
 
 
 
 
Private equity
$
244

 
9.6
%
 
$
268

 
10.9
%
Mortgage and real estate
155

 
6.1
%
 
118

 
4.8
%
Natural resources
5

 
0.2
%
 
5

 
0.2
%
Hedge funds
66

 
2.6
%
 
72

 
2.9
%
Credit funds
227

 
8.9
%
 
226

 
9.2
%
Total investment funds
697

 
27.4
%
 
689

 
28.0
%
Investment funds - related parties
 
 
 
 
 
 
 
Private equity - A-A Mortgage
389

 
15.2
%
 
343

 
13.9
%
Private equity
167

 
6.5
%
 
131

 
5.3
%
Mortgage and real estate
231

 
9.1
%
 
247

 
10.1
%
Natural resources
67

 
2.6
%
 
49

 
2.0
%
Hedge funds
156

 
6.1
%
 
192

 
7.8
%
Credit funds
250

 
9.8
%
 
236

 
9.6
%
Total investment funds - related parties
1,260

 
49.3
%
 
1,198

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

 
20.7
%
 
524

 
21.3
%
Credit funds
34

 
1.3
%
 
38

 
1.6
%
Mortgage and real assets
33

 
1.3
%
 
11

 
0.4
%
Total investment funds - assets of consolidated VIEs
595

 
23.3
%
 
573

 
23.3
%
Total investment funds, including related parties and VIEs
$
2,552

 
100.0
%
 
$
2,460

 
100.0
%

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


Funds withheld at interest
 
June 30, 2017
 
December 31, 2016
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities
 
 
 
 
 
 
 
U.S. state, municipal and political subdivisions
$
117

 
1.7
 %
 
$
118

 
1.8
%
Corporate
1,963

 
28.8
 %
 
1,800

 
27.6
%
CLO
732

 
10.7
 %
 
591

 
9.0
%
ABS
793

 
11.6
 %
 
736

 
11.3
%
CMBS
273

 
4.0
 %
 
292

 
4.5
%
RMBS
1,621

 
23.7
 %
 
1,551

 
23.7
%
Equity securities
29

 
0.4
 %
 
29

 
0.4
%
Mortgage loans
851

 
12.5
 %
 
773

 
11.8
%
Investment funds
308

 
4.5
 %
 
329

 
5.0
%
Derivative assets
58

 
0.8
 %
 
53

 
0.8
%
Short-term investments
8

 
0.1
 %
 
80

 
1.2
%
Cash and cash equivalents
123

 
1.8
 %
 
105

 
1.6
%
Other assets and liabilities
(42
)
 
(0.6
)%
 
81

 
1.3
%
Total funds withheld at interest
$
6,834

 
100.0
 %
 
$
6,538

 
100.0
%


19


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Invested assets summary
 
June 30, 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
Corporate
$
33,522

 
$
1,734

 
$
35,256

 
46.1
%
 
$
31,000

 
$
1,682

 
$
32,682

 
45.4
%
CLO
5,712

 

 
5,712

 
7.5
%
 
5,798

 

 
5,798

 
8.1
%
Credit
39,234

 
1,734

 
40,968

 
53.6
%
 
36,798

 
1,682

 
38,480

 
53.5
%
RMBS
10,826

 

 
10,826

 
14.2
%
 
10,619

 

 
10,619

 
14.8
%
Mortgage loans
6,771

 
99

 
6,870

 
9.0
%
 
6,145

 
95

 
6,240

 
8.7
%
CMBS
2,114

 

 
2,114

 
2.8
%
 
2,202

 

 
2,202

 
3.1
%
Real estate held for investment

 
597

 
597

 
0.8
%
 

 
542

 
542

 
0.8
%
Real estate
19,711

 
696

 
20,407

 
26.8
%
 
18,966

 
637

 
19,603

 
27.4
%
ABS
4,387

 

 
4,387

 
5.8
%
 
3,873

 

 
3,873

 
5.4
%
Alternative investments
3,322

 
140

 
3,462

 
4.5
%
 
3,297

 
128

 
3,425

 
4.8
%
State, municipals, political subdivisions and foreign government
1,362

 
1,973

 
3,335

 
4.4
%
 
1,387

 
1,936

 
3,323

 
4.6
%
Equity securities
223

 
201

 
424

 
0.6
%
 
199

 
185

 
384

 
0.5
%
Unit linked assets

 
395

 
395

 
0.5
%
 

 
363

 
363

 
0.5
%
Short-term investments
108

 

 
108

 
0.1
%
 
250

 

 
250

 
0.3
%
U.S. government and agencies
30

 
27

 
57

 
0.1
%
 
32

 
27

 
59

 
0.1
%
Other investments
9,432

 
2,736

 
12,168

 
16.0
%
 
9,038

 
2,639

 
11,677

 
16.2
%
Cash and equivalents
1,513

 
331

 
1,844

 
2.4
%
 
1,111

 
111

 
1,222

 
1.7
%
Policy loans and other
674

 
218

 
892

 
1.2
%
 
631

 
221

 
852

 
1.2
%
Total invested assets
$
70,564

 
$
5,715

 
$
76,279

 
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 including alternative investments and the Non-GAAP Measure Reconciliations section for the reconciliation of investment funds to alternative investments.


Alternative investments summary
 
June 30, 2017
 
December 31, 2016
 
Invested Asset Value1
 
Percent of Total
 
Invested Asset Value1
 
Percent of Total
Credit funds
$
776

 
22.3
%
 
$
834

 
24.3
%
Private equity - MidCap
528

 
15.3
%
 
524

 
15.3
%
Private equity - A-A Mortgage
478

 
13.8
%
 
417

 
12.2
%
Private equity - other
490

 
14.2
%
 
519

 
15.2
%
Mortgage and real assets
506

 
14.6
%
 
470

 
13.7
%
Hedge funds
270

 
7.8
%
 
311

 
9.1
%
Public equities
246

 
7.1
%
 
215

 
6.3
%
Natural resources and other real assets
168

 
4.9
%
 
135

 
3.9
%
Alternative investments
$
3,462

 
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 Measure Reconciliations section for the reconciliation of investment funds to alternative investments.



20


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Net investment earned rates by asset class
Year-to-date
 
 
2017
 
2016
2017
 
2016
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
3.95
%
 
3.85
%
 
Corporate securities
3.98
%
 
3.91
%
 
3.91
%
 
4.06
%
 
3.79
%
 
 
 
 
Structured securities
 
 
 
 
 
 
 
 
 
5.71
%
 
5.11
%
 
RMBS
5.96
%
 
5.45
%
 
5.30
%
 
5.21
%
 
4.92
%
5.05
%
 
4.55
%
 
CLO
5.10
%
 
4.94
%
 
4.96
%
 
4.81
%
 
4.73
%
4.22
%
 
8.36
%
 
ABS
4.28
%
 
4.15
%
 
4.67
%
 
4.16
%
 
6.06
%
4.09
%
 
3.87
%
 
CMBS
4.13
%
 
4.03
%
 
4.19
%
 
3.79
%
 
4.10
%
5.12
%
 
5.38
%
 
Total structured securities
5.26
%
 
4.95
%
 
4.99
%
 
4.79
%
 
4.98
%
7.05
%
 
4.93
%
 
State, municipal, political subdivisions and U.S. and foreign government
4.82
%
 
9.35
%
 
5.80
%
 
3.57
%
 
5.46
%
5.86
%
 
5.63
%
 
Mortgage loans
5.92
%
 
5.90
%
 
6.26
%
 
6.22
%
 
5.82
%
10.64
%
 
3.48
%
 
Alternative investments
13.11
%
 
8.12
%
 
14.82
%
 
9.30
%
 
7.11
%
1.56
%
 
0.85
%
 
Other U.S. and Bermuda invested assets
1.58
%
 
1.66
%
 
1.26
%
 
1.04
%
 
1.29
%
4.83
%
 
4.35
%
 
U.S. and Bermuda
4.96
%
 
4.70
%
 
4.98
%
 
4.62
%
 
4.44
%
1.72
%
 
1.60
%
 
Germany
1.73
%
 
1.74
%
 
1.51
%
 
1.94
%
 
1.62
%
4.60
%
 
4.12
%
 
Consolidated total
4.72
%
 
4.48
%
 
4.72
%
 
4.40
%
 
4.20
%


Invested assets NAIC 1 & 2 designation by asset class
 
June 30, 2017
 
December 31, 2016
Corporate securities
93.2
%
 
92.4
%
Structured securities
 
 
 
RMBS
97.4
%
 
98.0
%
CLO
90.0
%
 
83.1
%
ABS
95.7
%
 
91.5
%
CMBS
99.6
%
 
97.7
%
Total structured securities
95.4
%
 
93.0
%
State, municipal, political subdivisions and U.S. and foreign government
95.5
%
 
96.5
%
Germany fixed maturity securities1
93.0
%
 
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 - June 30, 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 - June 30, 2017
Non-GAAP Measure 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
92.4

 
50.0

 
Basic weighted average shares outstanding - Class A
106.3

 
78.2

 
58.3

 
49.8

 
50.0

96.7

 
136.0

 
Conversion of Class B shares to Class A shares
82.9

 
110.8

 
130.0

 
136.0

 
136.0

6.2

 

 
Conversion of Class M shares to Class A shares
6.2

 
6.2

 
5.5

 

 

0.5

 
0.1

 
Effect of other stock compensation plans
0.5

 
0.4

 
0.4

 
0.1

 
0.1

195.8

 
186.1

 
Weighted average shares outstanding - operating diluted Class A common shares
195.9

 
195.6

 
194.2

 
185.9

 
186.1


Summary of adjustments to Class A common shares outstanding to arrive at operating diluted Class A common shares outstanding
 
2017
 
2016
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
Class A common shares outstanding
119.3

 
101.3

 
77.0

 
50.2

 
50.2

Conversion of Class B shares to Class A shares
70.1

 
87.8

 
111.8

 
136.0

 
136.0

Conversion of Class M shares to Class A shares
6.4

 
6.8

 
6.8

 
7.2

 

Effect of other stock compensation plans
0.9

 
0.9

 
0.8

 
0.4

 
0.3

Operating diluted Class A common shares outstanding
196.7

 
196.8

 
196.4

 
193.8

 
186.5

 
 
 
 
 
 
 
 
 
 


Summary of adjustments to book value per share to arrive at book value per share, excluding AOCI
 
2017
 
2016
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
Book value per share
$
42.20

 
$
39.07

 
$
35.66

 
$
37.77

 
$
34.57

AOCI
(5.40
)
 
(3.47
)
 
(1.91
)
 
(4.94
)
 
(3.07
)
Effect of items convertible to or settled in Class A common shares
(0.08
)
 
(0.61
)
 
(0.70
)
 
(1.29
)
 
(0.10
)
Book value per share, excluding AOCI
$
36.72

 
$
34.99

 
$
33.05

 
$
31.54

 
$
31.40


23


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Non-GAAP Measure 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
1,607

 
$
1,394

 
GAAP net investment income
$
821

 
$
786

 
$
777

 
$
743

 
$
700

97

 
89

 
Reinsurance embedded derivative impacts
52

 
45

 
45

 
55

 
53

32

 
(30
)
 
Net VIE earnings
21

 
11

 
44

 
(13
)
 
(14
)
(7
)
 
(32
)
 
Alternative income gain (loss)
6

 
(13
)
 
(5
)
 
(2
)
 

(30
)
 
(15
)
 
Held for trading amortization
(15
)
 
(15
)
 
(14
)
 
(6
)
 
(15
)
92

 
12

 
Total adjustments to arrive at net investment earnings
64

 
28

 
70

 
34

 
24

$
1,699

 
$
1,406

 
Total net investment earnings
$
885

 
$
814

 
$
847

 
$
777

 
$
724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,601

 
$
1,401

 
Retirement Services
$
821

 
$
780

 
$
798

 
$
754

 
$
708

98

 
5

 
Corporate and Other
64

 
34

 
49

 
23

 
16

$
1,699

 
$
1,406

 
Total net investment earnings
$
885

 
$
814

 
$
847

 
$
777

 
$
724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.35
 %
 
4.08
 %
 
GAAP net investment income rate
4.38
 %
 
4.32
 %
 
4.33
 %
 
4.20
 %
 
4.06
 %
0.26
 %
 
0.26
 %
 
Reinsurance embedded derivative impacts
0.28
 %
 
0.25
 %
 
0.25
 %
 
0.31
 %
 
0.31
 %
0.09
 %
 
(0.09
)%
 
Net VIE earnings
0.11
 %
 
0.06
 %
 
0.25
 %
 
(0.07
)%
 
(0.08
)%
(0.02
)%
 
(0.09
)%
 
Alternative income gain (loss)
0.03
 %
 
(0.07
)%
 
(0.03
)%
 
(0.01
)%
 
 %
(0.08
)%
 
(0.04
)%
 
Held for trading amortization
(0.08
)%
 
(0.08
)%
 
(0.08
)%
 
(0.03
)%
 
(0.09
)%
0.25
 %
 
0.04
 %
 
Total adjustments to arrive at net investment earned rate
0.34
 %
 
0.16
 %
 
0.39
 %
 
0.20
 %
 
0.14
 %
4.60
 %
 
4.12
 %
 
Consolidated net investment earned rate
4.72
 %
 
4.48
 %
 
4.72
 %
 
4.40
 %
 
4.20
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.80
 %
 
4.58
 %
 
Retirement Services
4.85
 %
 
4.76
 %
 
4.93
 %
 
4.75
 %
 
4.58
 %
2.71
 %
 
0.16
 %
 
Corporate and Other
3.53
 %
 
1.88
 %
 
2.76
 %
 
1.26
 %
 
0.93
 %
4.60
 %
 
4.12
 %
 
Consolidated net investment earned rate
4.72
 %
 
4.48
 %
 
4.72
 %
 
4.40
 %
 
4.20
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
66,635

 
$
61,168

 
Retirement Services average invested assets
$
67,577

 
$
65,576

 
$
64,643

 
$
63,641

 
$
61,804

7,258

 
7,139

 
Corporate and Other average invested assets
7,345

 
7,123

 
7,074

 
7,089

 
7,177

$
73,893

 
$
68,307

 
Average invested assets
$
74,922

 
$
72,699

 
$
71,717

 
$
70,730

 
$
68,981





24


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Non-GAAP Measure 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
 
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
$
1,245

 
$
590

 
GAAP interest sensitive contract benefits
$
553

 
$
692

 
$
215

 
$
491

 
$
335

(68
)
 
(57
)
 
Interest credited other than deferred annuities
(42
)
 
(26
)
 
(17
)
 
(34
)
 
(27
)
294

 
275

 
FIA option costs
149

 
145

 
143

 
141

 
139

(34
)
 
(24
)
 
Product charges (strategy fees)
(17
)
 
(17
)
 
(15
)
 
(14
)
 
(13
)
18

 
13

 
Reinsurance embedded derivative impacts
9

 
9

 
8

 
8

 
7

(933
)
 
(343
)
 
Change in fair values of embedded derivatives - FIAs
(399
)
 
(534
)
 
(66
)
 
(326
)
 
(206
)
22

 
24

 
Negative VOBA amortization
10

 
12

 
12

 
12

 
15

(17
)
 
19

 
Unit linked change in reserve
1

 
(18
)
 
(14
)
 
(20
)
 
4


 
(1
)
 
Other changes in interest sensitive contract liabilities

 

 
(2
)
 
1

 
(1
)
(718
)
 
(94
)
 
Total adjustments to arrive at cost of crediting on deferred annuities
(289
)
 
(429
)
 
49

 
(232
)
 
(82
)
$
527

 
$
496

 
Retirement Services cost of crediting on deferred annuities
$
264

 
$
263

 
$
264

 
$
259

 
$
253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.48
 %
 
2.34
 %
 
GAAP interest sensitive contract benefits
3.95
 %
 
5.02
 %
 
1.59
 %
 
3.72
 %
 
2.64
 %
(0.24
)%
 
(0.23
)%
 
Interest credited other than deferred annuities
(0.30
)%
 
(0.19
)%
 
(0.13
)%
 
(0.26
)%
 
(0.21
)%
1.05
 %
 
1.10
 %
 
FIA option costs
1.07
 %
 
1.04
 %
 
1.05
 %
 
1.07
 %
 
1.08
 %
(0.12
)%
 
(0.10
)%
 
Product charges (strategy fees)
(0.12
)%
 
(0.12
)%
 
(0.11
)%
 
(0.11
)%
 
(0.10
)%
0.06
 %
 
0.05
 %
 
Reinsurance embedded derivative impacts
0.06
 %
 
0.07
 %
 
0.06
 %
 
0.06
 %
 
0.06
 %
(3.35
)%
 
(1.37
)%
 
Change in fair values of embedded derivatives - FIAs
(2.85
)%
 
(3.87
)%
 
(0.49
)%
 
(2.47
)%
 
(1.62
)%
0.08
 %
 
0.10
 %
 
Negative VOBA amortization
0.07
 %
 
0.09
 %
 
0.09
 %
 
0.09
 %
 
0.12
 %
(0.06
)%
 
0.08
 %
 
Unit linked change in reserve
0.01
 %
 
(0.13
)%
 
(0.10
)%
 
(0.15
)%
 
0.03
 %
 %
 
 %
 
Other changes in interest sensitive contract liabilities
 %
 
 %
 
(0.01
)%
 
0.01
 %
 
(0.01
)%
(2.58
)%
 
(0.37
)%
 
Total adjustments to arrive at cost of crediting on deferred annuities
(2.06
)%
 
(3.11
)%
 
0.36
 %
 
(1.76
)%
 
(0.65
)%
1.90
 %
 
1.97
 %
 
Retirement Services cost of crediting on deferred annuities
1.89
 %
 
1.91
 %
 
1.95
 %
 
1.96
 %
 
1.99
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
55,627

 
$
50,297

 
Average account value on deferred annuities
$
56,001

 
$
55,154

 
$
54,358

 
$
52,739

 
$
50,817




25


Athene Holding Ltd.
Financial Supplement - June 30, 2017
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to total investments, including related parties to arrive at invested assets
 
June 30, 2017
 
December 31, 2016
Total investments, including related parties
$
78,699

 
$
72,433

Derivative assets
(1,808
)
 
(1,370
)
Cash and cash equivalents (including restricted cash)
3,583

 
2,502

Accrued investment income
566

 
554

Payables for collateral on derivatives
(1,860
)
 
(1,383
)
Reinsurance funds withheld and modified coinsurance
(444
)
 
(414
)
VIE assets, liabilities and noncontrolling interest
949

 
886

AFS unrealized (gain) loss
(2,335
)
 
(1,030
)
Ceded policy loans
(332
)
 
(344
)
Net investment receivables (payables)
(739
)
 

Total adjustments to arrive at invested assets
(2,420
)
 
(599
)
Total invested assets
$
76,279

 
$
71,834


Summary of adjustments to investment funds, including related parties and VIEs to arrive at alternative investments
 
June 30, 2017
 
December 31, 2016
Investment funds, including related parties and VIEs
$
2,552

 
$
2,460

CLO equities included in trading securities
221

 
260

Investment funds within funds withheld at interest
308

 
329

Royalties, other assets included in other investments and other assets
91

 
81

Net assets of the VIE, excluding investment funds
290

 
295

Total adjustments to arrive at alternative investments
910

 
965

Alternative investments
$
3,462

 
$
3,425


Summary of adjustments to total liabilities to arrive at reserve liabilities
 
June 30, 2017
 
December 31, 2016
Total liabilities
$
85,310

 
$
79,840

Derivative liabilities
(63
)
 
(40
)
Payables for collateral on derivatives
(1,860
)
 
(1,383
)
Funds withheld liability
(391
)
 
(380
)
Other liabilities
(1,374
)
 
(688
)
Liabilities of consolidated VIEs
(45
)
 
(34
)
Reinsurance ceded receivables
(5,958
)
 
(6,001
)
Policy loans ceded
(332
)
 
(344
)
Other
3

 
4

Total adjustments to arrive at reserve liabilities
(10,020
)
 
(8,866
)
Total reserve liabilities
$
75,290

 
$
70,974




26
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