0001527469-18-000018.txt : 20180503 0001527469-18-000018.hdr.sgml : 20180503 20180503162226 ACCESSION NUMBER: 0001527469-18-000018 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20180503 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180503 DATE AS OF CHANGE: 20180503 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: 18804113 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 a8kq12018pr.htm 8-K Document


 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
 
 
 
 
 
 
Washington, D.C. 20549
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FORM 8-K
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT REPORT
 
 
 
 
 
 
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
 
 
 
 
 
Date of report (Date of earliest event reported): May 3, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ATHENE HOLDING LTD.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bermuda
001-37963
98-0630022
 
 
(State or other jurisdiction of
(Commission
(I.R.S. Employer
 
 
incorporation or organization)
file number)
Identification Number)
 
 
 
 
 
 
 
 
96 Pitts Bay Road
Pembroke, HM08, Bermuda
(Address of principal executive offices and zip code)
 
 
 
 
 
 
 
(441) 279-8400
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
 
 
 
 
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
 
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
 
 
 
 
 
Emerging growth company o
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o






Item 2.02        Results of Operations and Financial Condition

On May 3, 2018, Athene Holding Ltd. (the “Company”) issued a press release to announce its financial results for the first quarter 2018. A copy of the press release containing this information is furnished as Exhibit 99.1 hereto and is incorporated by reference in this Item 2.02. The Company's financial supplement for the first quarter 2018 is attached as Exhibit 99.2 hereto and is incorporated by reference in this Item 2.02.

The foregoing information, including the Exhibits referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits
 
 
(d)
Exhibits
 
 
99.1
Press release of Athene Holding Ltd., dated May 3, 2018 (furnished and not filed).
 
 
99.2
Quarterly Financial Supplement for Athene Holding Ltd. for the first quarter 2018 (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 hereunto duly authorized.

 
 
ATHENE HOLDING LTD.
 
 
 
Date:
May 3, 2018
/s/ Martin P. Klein
 
 
Martin P. Klein
 
 
Executive Vice President and Chief Financial Officer
 
 
 



EX-99.1 2 q12018pressrelease.htm EXHIBIT 99.1 Exhibit


athenelogoa11.jpg

News Release

ATHENE HOLDING LTD. REPORTS
FIRST QUARTER 2018 RESULTS
Q1 net income of $268 million
Q1 adjusted operating income of $237 million
Q1 ROE of 12.0%, Q1 Retirement Services adjusted operating ROE of 17.3%
Q1 new deposits up 7% year-over-year to $2.1 billion
Q1 net investment earned rate increased 12 basis points to 4.60%

PEMBROKE, Bermuda – May 3, 2018 – Athene Holding Ltd. ("Athene") (NYSE: ATH), a leading provider of retirement savings products, today announced financial results for the first quarter 2018.
Net income for the first quarter 2018 was $268 million, or $1.36 per diluted Class A share ("diluted share"), compared to net income for the first quarter 2017 of $384 million, or $1.92 per diluted share.
Adjusted operating income1 for the first quarter 2018 was $237 million, or $1.21 per adjusted operating share, compared to adjusted operating income for the first quarter 2017 of $266 million, or $1.36 per adjusted operating share.
“In the first quarter, Athene continued to generate best in class operating performance,” said Jim Belardi, CEO of Athene. “In our Retirement Services segment, excluding notable items, we produced $247 million of adjusted operating income and generated an adjusted operating ROE of 18.2%."
“For the rest of 2018, our unwavering focus on profitability will allow us to increase our investment margin while generating significant organic and inorganic growth, “ Mr. Belardi continued.






1This news release references certain Non-GAAP measures. See Non-GAAP Measures for additional discussion.


1




Other Highlights
Book value per share increased 13% year-over-year to $44.09; adjusted book value per share increased 18% to $40.66
Total investments, including related parties, increased 7% year-over-year to $80.3 billion
Total invested assets, excluding Germany, increased 15% year-over-year to $78.7 billion
ALRe RBC of 557%1 as of March 31, 2018
U.S. RBC of 478%, as of March 31, 2018
Ranked #2 carrier in fixed indexed annuity sales for the eighteen months ended December 31, 20172 
Inaugural debt issuance in January of $1 billion
Deconsolidation of AGER Bermuda Holding Ltd. (now Athora Holding Ltd.) on January 1, 2018
In March, conducted secondary offering of 10,320,544 of Class A common shares
Subsequent to quarter-end, Athene entered into its sixth pension buyout agreement


1ALRe RBC ratio is used in evaluating our capital position and the amount of capital needed to support our Retirement Services segment, and is calculated by applying the NAIC RBC factors to the statutory financial statements of ALRe and its non-U.S. reinsurance subsidiary, on an aggregate basis.
2Rankings as of December 31, 2017 per LIMRA.

First Quarter Results
Net income for the first quarter was $268 million, a decrease of $116 million, or 30%, from the prior year. The decrease was driven by a $29 million decrease in adjusted operating income as well as unfavorable impacts from assumed reinsurance embedded derivatives primarily related to increases in U.S. Treasury rates.
Adjusted operating income for the first quarter was $237 million, a decrease of $29 million, or 11%, from the prior year. Adjusted operating income, excluding notable items, was $249 million, an increase of $33 million, or 15%, driven by an increase in investment income due to invested asset growth and increased floating rate investment income which resulted from higher short-term interest rates and strong performance in alternative investments.
Deposit Highlights
In the first quarter, Athene generated deposits of $2.1 billion, an increase of 7% compared to the prior year.
Retail Sales: In the first quarter, Athene generated $1.3 billion of new deposits, up 17% from the prior year. During the quarter we expanded our distribution with the addition of new partners, in both the bank and broker-dealer channels.
Flow Reinsurance: In the first quarter, Athene generated $204 million of new deposits, up 23% from the prior year. The increase from prior year was driven by new reinsurance partners, the launch of new products and a shift in product mix.
Institutional: In the first quarter, Athene generated $566 million of new deposits from a pension risk transfer transaction and the issuance of a funding agreement.


2



Selected Results
 
Three Months Ended 
 March 31,
(In millions, except percentages and per share data)
2018
 
2017
Deposits
$
2,056

 
$
1,915

Investments, including related parties
80,261

 
75,119

Invested assets
78,723

 
73,563

Debt to capital ratio
10.2
%
 
%
Adjusted debt to capital ratio1
11.0
%
 
%
Book value per share
$
44.09

 
$
39.07

Adjusted book value per share2
$
40.66

 
$
34.45

Common shares outstanding3
197.2

 
193.5

Adjusted operating common shares outstanding4
196.8

 
196.8

Total shareholders' equity
$
8,695

 
$
7,561

Adjusted shareholders' equity
8,003

 
6,781

ROE
12.0
%
 
21.3
%
Adjusted ROE
16.5
%
 
20.7
%
Adjusted operating ROE
12.1
%
 
16.1
%
 
 
 
 
Retirement Services
 
 
 
  Adjusted operating income
$
235

 
$
275

  Adjusted operating ROE
17.3
%
 
24.1
%
  Investment margin on deferred annuities
2.76
%
 
2.85
%
1In January 2018, we issued $1.0 billion of senior unsecured debt.
2Adjusted book value per share is calculated as the ending AHL adjusted shareholders' equity divided by the adjusted operating common shares outstanding.
3Represents common shares outstanding for all classes eligible to participate in dividends for each period presented. Utilized for the book value per share calculation.
4Adjusted operating 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 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. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of book value metrics.


3



 
Three Months Ended 
 March 31,
(In millions, except per share data)
2018
 
2017
Adjusted operating income by segment
 
 
 
Retirement Services
$
235

 
$
275

Corporate and Other
2

 
(9
)
Adjusted operating income
237

 
266

 
 
 
 
Investment gains (losses), net of offsets
(33
)
 
57

Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
95

 
94

Integration, restructuring and other non-operating expenses
(8
)
 
(9
)
Stock compensation expense
(3
)
 
(10
)
Income tax (expense) benefit - non-operating
(20
)
 
(14
)
Total non-operating adjustments
31

 
118

Net income
$
268

 
$
384

 
 
 
 
Earnings per share – basic1
$
1.36

 
$
2.00

Earnings per share – diluted Class A2
$
1.36

 
$
1.92

Adjusted operating earnings per share3
$
1.21

 
$
1.36

Weighted average shares outstanding – basic1
197.1

 
192.5

Weighted average shares outstanding – diluted Class A2
149.0

 
81.3

Weighted average shares outstanding – adjusted operating3
196.0

 
195.6




 
Three Months Ended 
 March 31,
(In millions)
2018
 
2017
Notable items
 
 
 
Retirement Services adjusted operating income
$
235

 
$
275

Rider reserve and DAC equity market performance
14

 
(40
)
Proceeds from a bond previously written down

 
(14
)
Tax impact of notable items

(2
)
 
4

Retirement Services notable items
12

 
(50
)
Retirement Services adjusted operating income excluding notable items
247

 
225

 
 
 
 
Corporate and Other adjusted operating income
2

 
(9
)
Adjusted operating income excluding notable items
$
249

 
$
216


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 258,203 weighted average shares for the quarter. Diluted earnings per share on a GAAP basis for Class A common shares are based on allocated net income of $202 million (75% of net income) and $156 million (41% of net income) for the three months ended March 31, 2018 and 2017, respectively.
3 Weighted average shares outstanding adjusted operating 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 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. We believe this non-GAAP measure is an appropriate economic representation of our share counts for use in an economic view of adjusted operating earnings per share.


4



Segment Results
Retirement Services
Q1 Results
In the first quarter, Retirement Services adjusted operating income was $235 million, a decrease of $40 million, or 15%, from the prior year. Adjusted operating income, excluding notable items, was $247 million, an increase of $22 million, or 10%, resulting in an adjusted operating ROE of 18.2%. The increase was driven by an increase in investment income of $100 million. Investment income increased primarily due to invested asset growth, $21 million of additional floating rate investment income due to higher short-term interest rates and strong alternative performance. Partially offsetting this was $10 million of drag from an elevated level of cash in the portfolio, higher other liability costs due to growth in the block of business and higher income tax expense due to higher taxable income in the current year.
Notable items included $14 million of unfavorable rider reserves and DAC amortization this quarter due to equity market performance, compared with a $40 million benefit in the prior year. Additionally, the prior year had a favorable $14 million of proceeds from a bond previously written down.
Investment margin on deferred annuities was 2.76%, a decrease of 9 basis points from the prior year. The net investment earned rate was 4.63%, a decrease of 4 basis points from the prior year, excluding notable items. Strong alternative returns of 12.34% and higher floating rate investment income in the quarter were offset by an elevated level of cash from sizable deposits in the fourth quarter of 2017.
Cost of crediting was 1.87%, a favorable decrease of 4 basis points compared to the prior year, as a result of rate actions on business that renewed in 2017.
Corporate Segment
Q1 Results
In the first quarter, Corporate and Other adjusted operating income was $2 million, an increase of $11 million over the prior year. The increase in Corporate and Other, excluding Germany, was $8 million driven by higher fixed and other investment income primarily related to the increase in excess capital and favorable alternative performance, partially offset by debt costs from our inaugural debt issuance in January.
Conference Call Information
This press release and the first quarter 2018 financial supplement will be posted to the Company’s website at ir.athene.com.
Athene will conduct a conference call on Friday, May 4, 2018 at 9:00 a.m. ET to discuss first quarter 2018 results. Additionally, the company will post an earnings presentation deck on the ir.athene.com website prior to market open on May 4, 2018.
Live conference call: Toll-free at 1-888-317-6003 (domestic) or 1-412-317-6061 (international)
Participant entry number: 2689674
Replay available through May 18, 2018 at 1-877-344-7529 (domestic) or 1-412-317-0088 (international)
Replay access code: 10118764
Live and archived webcast available at ir.athene.com

Investor Relations Contact:
Media Contact:
Paige Hart
Cyndi Harmeyer Fisher
+1 441-279-8527
+1 441-279-8533
+1 310-698-4478
+1 515-342-3719
phart@athene.com
cfisher@athene.com


5




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 had total assets of $93.6 billion as of March 31, 2018. 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 and Athene Life Re Ltd., a Bermuda-domiciled reinsurer.
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 measures are intended to remove from the results of operations the impact of market volatility (other than with respect to alternative investments) as well as integration, restructuring and certain other expenses which are not part of our underlying profitability drivers or likely to re-occur in the foreseeable future, as such items fluctuate from period to period in a manner inconsistent with these drivers. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. See Non-GAAP Measure Reconciliations for the appropriate reconciliations to the GAAP measures.

Adjusted operating income is a non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation, and other expenses. Our adjusted operating income equals net income adjusted to eliminate the impact of the following (collectively, the “non-operating adjustments”):

Investment Gains (Losses), Net of Offsets
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 for the reasons discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is effective in analyzing the trends in our results of operations. Together with net income, we believe adjusted operating income, provides a meaningful financial metric that helps investors understand our underlying results and profitability. Adjusted operating income should not be used as a substitute for net income.

Adjusted ROE, adjusted operating ROE and adjusted net income are non-GAAP measures used to evaluate our financial performance excluding the impacts of AOCI and funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. Adjusted ROE is calculated as adjusted net income, divided by adjusted shareholders’ equity. Adjusted shareholders’ equity is calculated as the ending shareholders’ equity excluding AOCI and funds withheld and modco reinsurance unrealized gains and losses. Adjusted operating ROE is calculated as the adjusted operating income, divided by adjusted shareholders’ equity. Adjusted net income is calculated as net income excluding funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. These adjustments fluctuate period to period in a manner inconsistent with


6



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

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

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


7



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

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


8



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, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exercise Act of 1934, as amended. 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; the implementation and the accuracy of our interpretation of the Tax Act; 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, 2017, 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 operating results.
# # #


9



Athene Holding Ltd.
Condensed Consolidated Balance Sheets (unaudited)
 
March 31,
 
December 31,
(In millions)
2018
 
2017
Assets
 
 
 
Investments
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
$
58,575

 
$
61,012

Trading securities
2,088

 
2,196

Equity securities, at fair value
160

 
790

Mortgage loans, net of allowances
6,139

 
6,233

Investment funds
647

 
699

Policy loans
510

 
530

Funds withheld at interest
7,093

 
7,085

Derivative assets
2,031

 
2,551

Real estate

 
624

Short-term investments, at fair value
235

 
201

Other investments
113

 
133

Total investments
77,591

 
82,054

Cash and cash equivalents
2,735

 
4,888

Restricted cash
87

 
105

Investments in related parties
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
505

 
406

Trading securities
305

 
307

Investment funds
1,499

 
1,310

Short-term investments
123

 
52

Other investments
238

 
238

Accrued investment income
620

 
652

Reinsurance recoverable
4,834

 
4,972

Deferred acquisition costs, deferred sales inducements and value of business acquired
3,142

 
2,930

Other assets
1,067

 
969

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Fixed maturity securities, trading, at fair value – related party
47

 
48

Equity securities – related party
177

 
240

Investment funds
582

 
571

Cash and cash equivalents
3

 
4

Other assets
2

 
1

Total assets
$
93,557

 
$
99,747

(Continued)



10



Athene Holding Ltd.
Condensed Consolidated Balance Sheets (unaudited)
 
March 31,
 
December 31,
(In millions)
2018
 
2017
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
67,551

 
$
67,708

Future policy benefits
13,059

 
17,507

Other policy claims and benefits
137

 
211

Dividends payable to policyholders
119

 
1,025

Long-term debt
992

 

Derivative liabilities
186

 
134

Payables for collateral on derivatives
1,145

 
2,323

Funds withheld liability
395

 
407

Other liabilities
1,277

 
1,222

Liabilities of consolidated variable interest entities
1

 
2

Total liabilities
84,862

 
90,539

Equity
 
 
 
Common stock

 

Additional paid-in capital
3,485

 
3,472

Retained earnings
4,625

 
4,321

Accumulated other comprehensive income
585

 
1,415

Total shareholders' equity
8,695

 
9,208

Total liabilities and equity
$
93,557

 
$
99,747

(Concluded)


11



Athene Holding Ltd.
Condensed Consolidated Statements of Income (unaudited)
 
Three Months Ended 
 March 31,
(In millions)
2018
 
2017
Revenue
 
 
 
Premiums
$
278

 
$
52

Product charges
96

 
81

Net investment income
855

 
786

Investment related gains (losses)
(236
)
 
682

OTTI investment losses
 
 
 
OTTI losses
(3
)
 

OTTI losses (gains) recognized in OCI

 
(1
)
Net OTTI losses
(3
)
 
(1
)
Other revenues
6

 
8

Revenues of consolidated variable interest entities
 
 
 
Net investment income
10

 
10

Investment related gains (losses)
5

 
1

Total revenues
1,011

 
1,619

Benefits and Expenses
 
 
 
Interest sensitive contract benefits
19

 
692

Amortization of DSI
20

 
18

Future policy and other policy benefits
401

 
214

Amortization of DAC and VOBA
89

 
104

Dividends to policyholders
13

 
32

Policy and other operating expenses
142

 
153

Total benefits and expenses
684

 
1,213

Income before income taxes
327

 
406

Income tax expense (benefit)
59

 
22

Net income
$
268

 
$
384




12



Non-GAAP Measure Reconciliations

The reconciliation of adjusted operating income excluding notable items to net income is as follows:
 
Three Months Ended 
 March 31,
(In millions)
2018
 
2017
Adjusted operating income excluding notable items
 
 
 
Retirement Services adjusted operating income excluding notable items

$
247

 
$
225

Rider reserve and DAC equity market performance
(14
)
 
40

Proceeds from a bond previously written down

 
14

Tax impact of notable items
2

 
(4
)
Retirement Services notable items
(12
)
 
50

Retirement Services adjusted operating income
235

 
275

Corporate and Other adjusted operating income
2

 
(9
)
Adjusted operating income
237

 
266

Total non-operating adjustments
31

 
118

Net income
$
268

 
$
384

 
The reconciliation of adjusted operating earnings per share to basic earnings per Class A common shares is as follows:
 
Three Months Ended 
 March 31,
 
2018
 
2017
Adjusted operating earnings per share
$
1.21

 
$
1.36

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

Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
0.49

 
0.48

Integration, restructuring and other non-operating expenses
(0.04
)
 
(0.05
)
Stock compensation expense
(0.01
)
 
(0.05
)
Income tax (expense) benefit – non-operating
(0.10
)
 
(0.07
)
Total non-operating adjustments
0.17

 
0.61

Effect of items convertible to or settled in Class A common shares
(0.02
)
 
0.03

Basic earnings per share – Class A common shares
$
1.36

 
$
2.00


The reconciliation of basic weighted average Class A shares to weighted average shares outstanding – adjusted operating, is as follows:
 
Three Months Ended 
 March 31,
(In millions)
2018
 
2017
Basic weighted average shares outstanding – Class A
148.7

 
78.2

Conversion of Class B shares to Class A shares
41.1

 
110.8

Conversion of Class M shares to Class A shares
5.8

 
6.2

Effect of other stock compensation plans
0.4

 
0.4

Weighted average shares outstanding – adjusted operating
196.0

 
195.6




13



The reconciliation of shareholders’ equity to adjusted shareholders’ equity included in adjusted book value per share, adjusted debt to capital ratio, adjusted ROE and adjusted operating ROE is as follows:
 
March 31,
(In millions)
2018
 
2017
Total shareholders' equity
$
8,695

 
$
7,561

Less: AOCI
585

 
673

Less: Reinsurance unrealized gains and losses
107

 
107

Total adjusted shareholders' equity
$
8,003

 
$
6,781

 
 
 
 
Retirement Services
$
5,552

 
$
4,710

Corporate and Other
2,451

 
2,071

Total adjusted shareholders' equity
$
8,003

 
$
6,781


The reconciliation of net income to adjusted net income included in adjusted ROE is as follows:
 
March 31,
(In millions)
2018
 
2017
Net income
$
268

 
$
384

Reinsurance unrealized gains and losses
54

 
(43
)
Adjusted net income
$
322

 
$
341


The reconciliation of basic Class A shares outstanding to adjusted operating common shares outstanding is as follows:
 
March 31,
(In millions)
2018
 
2017
Class A common shares outstanding
164.5

 
101.3

Conversion of Class B shares to Class A shares
25.5

 
87.8

Conversion of Class M shares to Class A shares
5.8

 
6.8

Effect of other stock compensation plans
1.0

 
0.9

Adjusted operating common shares outstanding
196.8

 
196.8


The reconciliation of book value per share to adjusted book value per share is as follows:
 
March 31,
 
2018
 
2017
Book value per share
$
44.09

 
$
39.07

AOCI
(2.97
)
 
(3.47
)
Reinsurance unrealized gains and losses
(0.54
)
 
(0.55
)
Effect of items convertible to or settled in Class A common shares
0.08

 
(0.60
)
Adjusted book value per share
$
40.66

 
$
34.45




14



The reconciliation of debt to capital ratio to adjusted debt to capital ratio is as follows:
 
March 31,
 
2018
 
2017
Total debt
$
992

 
$

Total shareholders' equity
8,695

 
7,561

Total capitalization
9,687

 
7,561

Less: AOCI
585

 
673

Less: Reinsurance unrealized gains and losses
107

 
107

Total adjusted capitalization
$
8,995

 
$
6,781

 
 
 
 
Debt to capital ratio
10.2
%
 
%
AOCI
0.7
%
 
%
Reinsurance unrealized gains and losses
0.1
%
 
%
Adjusted debt to capital ratio
11.0
%
 
%

The reconciliation of net investment income to net investment earnings and earned rate is as follows:
 
Three months ended March 31,
 
2018
 
2017
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
GAAP net investment income
$
855

 
4.41
 %
 
$
786

 
4.32
 %
Reinsurance embedded derivative impacts
45

 
0.22
 %
 
45

 
0.25
 %
Net VIE earnings
15

 
0.08
 %
 
11

 
0.06
 %
Alternative income gain (loss)
1

 
0.01
 %
 
(13
)
 
(0.07
)%
Other
(23
)
 
(0.12
)%
 
(15
)
 
(0.08
)%
Total adjustments to arrive at net investment earnings/earned rate
38

 
0.19
 %
 
28

 
0.16
 %
Total net investment earnings/earned rate
$
893

 
4.60
 %
 
$
814

 
4.48
 %
 
 
 
 
 
 
 
 
Retirement Services
$
866

 
4.63
 %
 
$
780

 
4.76
 %
Corporate and Other
27

 
3.76
 %
 
34

 
1.88
 %
Total net investment earnings/earned rate
$
893

 
4.60
 %
 
$
814

 
4.48
 %
 
 
 
 
 
 
 
 
Retirement Services average invested assets
$
74,735

 
 
 
$
65,576

 
 
Corporate and Other average invested assets
2,844

 
 
 
7,123

 
 
Average invested assets
$
77,579

 
 
 
$
72,699

 
 



15



The reconciliation of interest sensitive contract benefits to Retirement Services' cost of crediting on deferred annuities, and the respective rates, is as follows:
 
Three months ended March 31,
 
2018
 
2017
(In millions)
Dollar
 
Rate
 
Dollar
 
Rate
GAAP interest sensitive contract benefits
$
19

 
0.13
 %
 
$
692

 
5.02
 %
Interest credited other than deferred annuities
(40
)
 
(0.27
)%
 
(26
)
 
(0.19
)%
FIA option costs
174

 
1.18
 %
 
145

 
1.04
 %
Product charges (strategy fees)
(22
)
 
(0.15
)%
 
(17
)
 
(0.12
)%
Reinsurance embedded derivative impacts
3

 
0.02
 %
 
9

 
0.07
 %
Change in fair values of embedded derivatives – FIAs
133

 
0.90
 %
 
(534
)
 
(3.87
)%
Negative VOBA amortization
10

 
0.07
 %
 
12

 
0.09
 %
Unit linked change in reserve

 
 %
 
(18
)
 
(0.13
)%
Other changes in interest sensitive contract liabilities
(2
)
 
(0.01
)%
 

 
 %
Total adjustments to arrive at cost of crediting on deferred annuities
256

 
1.74
 %
 
(429
)
 
(3.11
)%
Retirement Services cost of crediting on deferred annuities
$
275

 
1.87
 %
 
$
263

 
1.91
 %
 
 
 
 
 
 
 
 
Average account value on deferred annuities
$
58,993

 
 
 
$
55,154

 
 

The reconciliation of total investments, including related parties, to invested assets is as follows:
 
March 31,
(In millions)
2018
 
2017
Total investments, including related parties
$
80,261

 
$
75,119

Derivative assets
(2,031
)
 
(1,708
)
Cash and cash equivalents (including restricted cash)
2,822

 
2,636

Accrued income
620

 
575

Derivative collateral
(1,145
)
 
(1,681
)
Reinsurance funds withheld and modified coinsurance
(467
)
 
(410
)
VIE assets, liabilities and noncontrolling interest
810

 
926

AFS unrealized (gain) loss
(1,332
)
 
(1,561
)
Ceded policy loans
(286
)
 
(333
)
Net investment receivables (payables)
(529
)
 

Total adjustments to arrive at invested assets
(1,538
)
 
(1,556
)
Total invested assets
$
78,723

 
$
73,563



16
EX-99.2 3 financialsupplementq12018.htm EXHIBIT 99.2 Exhibit
financialsupplementcover001.jpg



Athene Holding Ltd.
Financial Supplement—March 31, 2018
Table of Contents



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




Athene Holding Ltd.
Financial Supplement—March 31, 2018
Note to the Financial Supplement

Key Operating and Non-GAAP Measures

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

Adjusted Operating Income

Adjusted operating income is a non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation, and other expenses. Our adjusted operating income equals net income adjusted to eliminate the impact of the following (collectively, the “non-operating adjustments”):

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

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

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

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

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

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

Income Taxes (Expense) Benefit – Non-operating—The non-operating income tax expense is comprised of the appropriate jurisdiction’s tax rate applied to the non-operating adjustments that are subject to income tax.

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



1


Athene Holding Ltd.
Financial Supplement—March 31, 2018
Note to the Financial Supplement

Adjusted ROE, Adjusted Operating ROE and Adjusted Net Income

Adjusted ROE, adjusted operating ROE and adjusted net income are non-GAAP measures used to evaluate our financial performance excluding the impacts of AOCI and funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. Adjusted ROE is calculated as adjusted net income, divided by adjusted shareholders’ equity. Adjusted shareholders’ equity is calculated as the ending shareholders’ equity excluding AOCI and funds withheld and modco reinsurance unrealized gains and losses. Adjusted operating ROE is calculated as the adjusted operating income, divided by adjusted shareholders’ equity. Adjusted net income is calculated as net income excluding funds withheld and modco reinsurance unrealized gains and losses, net of DAC, DSI, rider reserve and tax offsets. These adjustments fluctuate period to period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities. Once we have reinvested acquired blocks of businesses, we typically buy and hold AFS investments to maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current adjusted operating fundamentals or future performance. Accordingly, we believe using measures which exclude AOCI and funds withheld and modco reinsurance unrealized gains and losses are useful in analyzing trends in our operating results. To enhance the ability to analyze these measures across periods, interim periods are annualized. Adjusted ROE, adjusted operating ROE and adjusted net income should not be used as a substitute for ROE and net income. However, we believe the adjustments to equity are significant to gaining an understanding of our overall results of operations.

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

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

Adjusted Debt to Capital Ratio

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


2


Athene Holding Ltd.
Financial Supplement—March 31, 2018
Note to the Financial Supplement

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

Cost of crediting is the interest credited to the policyholders on our fixed strategies as well as the option costs on the indexed annuity strategies. With respect to FIAs, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. The interest credited on fixed strategies and option costs on indexed annuity strategies are divided by the average account value of our deferred annuities. Our average account values are averaged over the number of quarters in the relevant period to obtain our cost of crediting for such period. To enhance the ability to analyze these measures across periods, interim periods are annualized.
Net investment earned rate, cost of crediting and investment margin on deferred annuities are non-GAAP measures we use to evaluate the profitability of our core deferred annuities business.We believe measures like net investment earned rate, cost of crediting and investment margin on deferred annuities are effective in analyzing the trends of our core business operations, profitability and pricing discipline. While we believe net investment earned rate, cost of crediting and investment margin on deferred annuities are meaningful financial metrics and enhance our understanding of the underlying profitability drivers of our business, they should not be used as a substitute for net investment income and interest sensitive contract benefits presented under GAAP.

Invested Assets

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

Reserve Liabilities

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

Sales

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





3

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Financial Highlights
Unaudited (In millions, except percentages and per share data)








Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
$
1,286

 
$
1,099

 
Retail sales
$
1,286

 
$
1,282

 
$
1,337

 
$
1,635

 
$
1,099

204

 
166

 
Flow reinsurance
204

 
305

 
190

 
214

 
166

300

 
650

 
Funding agreements
300

 

 
1,300

 
1,050

 
650

266

 

 
Pension risk transfer
266

 
1,926

 

 
327

 

$
2,056

 
$
1,915

 
Total deposits
$
2,056

 
$
3,513

 
$
2,827

 
$
3,226

 
$
1,915

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated results of operations
 
 
 
 
 
 
 
 
 
$
268

 
$
384

 
Net income
$
268

 
$
464

 
$
274

 
$
326

 
$
384

237

 
266

 
Adjusted operating income
237

 
332

 
231

 
280

 
266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12.0
%
 
21.3
%
 
ROE
12.0
%
 
20.8
%
 
13.0
%
 
16.4
%
 
21.3
%
16.5
%
 
20.7
%
 
Adjusted ROE
16.5
%
 
24.9
%
 
14.6
%
 
16.2
%
 
20.7
%
12.1
%
 
16.1
%
 
Adjusted operating ROE
12.1
%
 
17.7
%
 
12.8
%
 
16.2
%
 
16.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retirement Services
 
 
 
 
 
 
 
 
 
$
235

 
$
275

 
Adjusted operating income
$
235

 
$
306

 
$
244

 
$
267

 
$
275

17.3
%
 
24.1
%
 
Adjusted operating ROE
17.3
%
 
23.3
%
 
19.1
%
 
22.0
%
 
24.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
 
$
1.36

 
$
2.00

 
Basic1
$
1.36

 
$
2.36

 
$
1.40

 
$
1.66

 
$
2.00

$
1.36

 
$
1.92

 
Diluted – Class A2
$
1.36

 
$
2.35

 
$
1.39

 
$
1.65

 
$
1.92

$
1.21

 
$
1.36

 
Adjusted operating earnings per share3
$
1.21

 
$
1.69

 
$
1.18

 
$
1.43

 
$
1.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book Value per share:
 
 
 
 
 
 
 
 
 
$
44.09

 
$
39.07

 
Book value per share
$
44.09

 
$
46.76

 
$
44.16

 
$
42.20

 
$
39.07

$
40.66

 
$
34.45

 
Adjusted book value per share3
$
40.66

 
$
38.77

 
$
37.27

 
$
35.95

 
$
34.45

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet items:
 
 
 
 
 
 
 
 
 
$
93,557

 
$
89,193

 
Total assets
$
93,557

 
$
99,747

 
$
96,061

 
$
93,594

 
$
89,193

78,723

 
73,563

 
Invested assets
78,723

 
82,298

 
78,804

 
76,279

 
73,563

84,862

 
81,632

 
Total liabilities
84,862

 
90,539

 
87,392

 
85,310

 
81,632

75,746

 
72,225

 
Reserve liabilities
75,746

 
81,183

 
77,850

 
75,290

 
72,225

8,695

 
7,561

 
Total shareholders’ equity
8,695

 
9,208

 
8,669

 
8,284

 
7,561

8,003

 
6,781

 
Adjusted shareholders’ equity
8,003

 
7,632

 
7,343

 
7,072

 
6,781

10.2
%
 
%
 
Debt to capital ratio
10.2
%
 
%
 
%
 
%
 
%
11.0
%
 
%
 
Adjusted debt to capital ratio
11.0
%
 
%
 
%
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share data:
 
 
 
 
 
 
 
 
 
197.1

 
192.5

 
Weighted average shares outstanding – basic1
197.1

 
196.7

 
196.3

 
195.7

 
192.5

149.0

 
81.3

 
Weighted average shares outstanding – diluted – Class A common shares2
149.0

 
126.4

 
119.9

 
109.0

 
81.3

196.0

 
195.6

 
Weighted average shares outstanding  adjusted operating3
196.0

 
196.1

 
196.0

 
195.9

 
195.6

197.2

 
193.5

 
Common shares outstanding4
197.2

 
196.9

 
196.3

 
196.3

 
193.5

196.8

 
196.8

 
Adjusted operating common shares outstanding3
196.8

 
196.9

 
197.0

 
196.7

 
196.8

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

4

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Capitalization and Equity
Unaudited (In millions, except percentages)


March 31,
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Capitalization
 
 
 
 
 
 
 
 
 
$
992

 
$

 
Total debt
$
992

 
$

 
$

 
$

 
$

8,695

 
7,561

 
Total shareholders’ equity
8,695

 
9,208

 
8,669

 
8,284

 
7,561

9,687

 
7,561

 
Total capitalization
9,687

 
9,208

 
8,669

 
8,284

 
7,561

585

 
673

 
Less: AOCI
585

 
1,415

 
1,162

 
1,060

 
673

107

 
107

 
Less: Reinsurance unrealized gains and losses
107

 
161

 
164

 
152

 
107

$
8,995

 
$
6,781

 
Total adjusted capitalization
$
8,995

 
$
7,632

 
$
7,343

 
$
7,072

 
$
6,781

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity by segment
 
 
 
 
 
 
 
 
 
$
5,552

 
$
4,710

 
Retirement Services
$
5,552

 
$
5,304

 
$
5,207

 
$
5,013

 
$
4,710

2,451

 
2,071

 
Corporate and Other
2,451

 
2,328

 
2,136

 
2,059

 
2,071

8,003

 
6,781

 
Total adjusted shareholders’ equity
8,003

 
7,632

 
7,343

 
7,072

 
6,781

585

 
673

 
AOCI
585

 
1,415

 
1,162

 
1,060

 
673

107

 
107

 
Reinsurance unrealized gains and losses
107

 
161

 
164

 
152

 
107

$
8,695

 
$
7,561

 
Total shareholders’ equity
$
8,695

 
$
9,208

 
$
8,669

 
$
8,284

 
$
7,561

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.2
%
 
%
 
Debt to capital ratio
10.2
%
 
%
 
%
 
%
 
%
0.7
%
 
%
 
AOCI
0.7
%
 
%
 
%
 
%
 
%
0.1
%
 
%
 
Reinsurance unrealized gains and losses
0.1
%
 
%
 
%
 
%
 
%
11.0
%
 
%
 
Adjusted debt to capital ratio
11.0
%
 
%
 
%
 
%
 
%




5

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
Investments
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
$
58,575

 
$
61,012

Trading securities
2,088

 
2,196

Equity securities, at fair value
160

 
790

Mortgage loans, net of allowances
6,139

 
6,233

Investment funds
647

 
699

Policy loans
510

 
530

Funds withheld at interest
7,093

 
7,085

Derivative assets
2,031

 
2,551

Real estate

 
624

Short-term investments, at fair value
235

 
201

Other investments
113

 
133

Total investments
77,591

 
82,054

Cash and cash equivalents
2,735

 
4,888

Restricted cash
87

 
105

Investments in related parties
 
 
 
Fixed maturity securities, at fair value
 
 
 
Available-for-sale securities
505

 
406

Trading Securities
305

 
307

Investment funds
1,499

 
1,310

Short-term investments, at fair value
123

 
52

Other investments
238

 
238

Accrued investment income
620

 
652

Reinsurance recoverable
4,834

 
4,972

Deferred acquisition costs, deferred sales inducements and value of business acquired
3,142

 
2,930

Other assets
1,067

 
969

Assets of consolidated variable interest entities
 
 
 
Investments
 
 
 
Fixed maturity securities, trading, at fair value – related party
47

 
48

Equity securities, at fair value – related party
177

 
240

Investment funds
582

 
571

Cash and cash equivalents
3

 
4

Other assets
2

 
1

Total assets
$
93,557

 
$
99,747

 
 
 
(Continued)


6

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Condensed Consolidated Balance Sheets
Unaudited (In millions)

 
March 31, 2018
 
December 31, 2017
Liabilities and Equity
 
 
 
Liabilities
 
 
 
Interest sensitive contract liabilities
$
67,551

 
$
67,708

Future policy benefits
13,059

 
17,507

Other policy claims and benefits
137

 
211

Dividends payable to policyholders
119

 
1,025

Long-term debt
992

 

Derivative liabilities
186

 
134

Payables for collateral on derivatives
1,145

 
2,323

Funds withheld liability
395

 
407

Other liabilities
1,277

 
1,222

Liabilities of consolidated variable interest entities
1

 
2

Total liabilities
84,862

 
90,539

Equity
 
 
 
Common Stock

 

Additional paid-in-capital
3,485

 
3,472

Retained earnings
4,625

 
4,321

Accumulated other comprehensive income
585

 
1,415

Total shareholders’ equity
8,695

 
9,208

Total liabilities and equity
$
93,557

 
$
99,747

 
 
 
(Concluded)




7

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Condensed Consolidated Statements of Income
Unaudited (In millions)

Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
$
278

 
$
52

 
Premiums
$
278


$
1,962

 
$
72

 
$
379

 
$
52

96

 
81

 
Product charges
96


88

 
86

 
85

 
81

855

 
786

 
Net investment income
855


842

 
820

 
821

 
786

(236
)
 
682

 
Investment related gains (losses)
(236
)

957

 
473

 
460

 
682

 
 
 
 
Other-than-temporary impairment investment losses
 
 
 
 
 
 
 
 
 
(3
)
 

 
Other-than-temporary impairment losses
(3
)

(6
)
 
(11
)
 
(12
)
 


 
(1
)
 
Other-than-temporary impairment losses reclassified to (from) other comprehensive income


(2
)
 
(2
)
 
1

 
(1
)
(3
)
 
(1
)
 
Net other-than-temporary impairment losses
(3
)
 
(8
)
 
(13
)
 
(11
)
 
(1
)
6

 
8

 
Other revenues
6

 
13

 
8

 
8

 
8

 
 
 
 
Revenues related to consolidated variable interest entities
 
 
 
 
 
 
 
 
 
10

 
10

 
Net investment income
10

 
12

 
10

 
10

 
10

5

 
1

 
Investment related gains (losses)
5

 
6

 
17

 
11

 
1

1,011

 
1,619

 
Total revenues
1,011

 
3,872

 
1,473

 
1,763

 
1,619

 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
19

 
692

 
Interest sensitive contract benefits
19

 
960

 
621

 
553

 
692

20

 
18

 
Amortization of deferred sales inducements
20

 
21

 
13

 
11

 
18

401

 
214

 
Future policy and other policy benefits
401

 
2,112

 
259

 
578

 
214

89

 
104

 
Amortization of deferred acquisition costs and value of business acquired
89

 
99

 
80

 
67

 
104

13

 
32

 
Dividends to policyholders
13

 
(11
)
 
48

 
49

 
32

142

 
153

 
Policy and other operating expenses
142

 
193

 
158

 
168

 
153

684

 
1,213

 
Total benefits and expenses
684

 
3,374

 
1,179

 
1,426

 
1,213

327

 
406

 
Income before income taxes
327

 
498

 
294

 
337

 
406

59

 
22

 
Income tax expense
59

 
34

 
20

 
11

 
22

$
268

 
$
384

 
Net income
$
268

 
$
464

 
$
274

 
$
326

 
$
384




8

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Segment Results of Operations
Unaudited (In millions, except per share data)


Results of operations by segment
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
 
 
Adjusted operating income by segment
 
 
 
 
 
 
 
 
 
$
235

 
$
275

 
Retirement Services
$
235

 
$
306

 
$
244

 
$
267

 
$
275

2

 
(9
)
 
Corporate and Other
2

 
26

 
(13
)
 
13

 
(9
)
237

 
266

 
Adjusted operating income
237

 
332

 
231

 
280

 
266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
17

 
11

 
Realized gains (losses) on sale of AFS securities
17

 
73

 
29

 
24

 
11

6

 
3

 
Unrealized, impairments, and other investment gains (losses)
6

 
8

 
(3
)
 
(15
)
 
3

(78
)
 
68

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

 
65

 
68

22

 
(25
)
 
Offsets to investment gains (losses)
22

 
(21
)
 
(21
)
 
(16
)
 
(25
)
(33
)
 
57

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

 
25

 
58

 
57

95

 
94

 
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
95

 
111

 
46

 
15

 
94

(8
)
 
(9
)
 
Integration, restructuring and other non-operating expenses
(8
)
 
(34
)
 
(14
)
 
(11
)
 
(9
)
(3
)
 
(10
)
 
Stock compensation expense
(3
)
 
(3
)
 
(7
)
 
(13
)
 
(10
)
(20
)
 
(14
)
 
Income tax (expense) benefit – non-operating
(20
)
 
(1
)
 
(7
)
 
(3
)
 
(14
)
31

 
118

 
Total non-operating adjustments
31

 
132

 
43

 
46

 
118

$
268

 
$
384

 
Net income
$
268

 
$
464

 
$
274

 
$
326

 
$
384

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1.21

 
$
1.36

 
Adjusted operating earnings per share
$
1.21

 
$
1.69

 
$
1.18

 
$
1.43

 
$
1.36

0.09

 
0.07

 
Realized gains (losses) on sale of AFS securities
0.09

 
0.37

 
0.15

 
0.12

 
0.07

0.03

 
0.02

 
Unrealized, impairments, and other investment gains (losses)
0.03

 
0.04

 
(0.02
)
 
(0.08
)
 
0.02

(0.40
)
 
0.34

 
Assumed modco and funds withheld reinsurance embedded derivatives
(0.40
)
 

 
0.10

 
0.34

 
0.34

0.11

 
(0.13
)
 
Offsets to investment gains (losses)
0.11

 
(0.11
)
 
(0.10
)
 
(0.09
)
 
(0.13
)
(0.17
)
 
0.30

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

 
0.13

 
0.29

 
0.30

0.49

 
0.48

 
Change in fair values of derivatives and embedded derivatives – FIAs, net of offsets
0.49

 
0.57

 
0.23

 
0.08

 
0.48

(0.04
)
 
(0.05
)
 
Integration, restructuring and other non-operating expenses
(0.04
)
 
(0.18
)
 
(0.07
)
 
(0.06
)
 
(0.05
)
(0.01
)
 
(0.05
)
 
Stock compensation expense
(0.01
)
 
(0.02
)
 
(0.04
)
 
(0.07
)
 
(0.05
)
(0.10
)
 
(0.07
)
 
Income tax (expense) benefit – non-operating
(0.10
)
 
(0.01
)
 
(0.03
)
 
(0.02
)
 
(0.07
)
0.17

 
0.61

 
Total non-operating adjustments
0.17

 
0.66

 
0.22

 
0.22

 
0.61

(0.02
)
 
0.03

 
Effect of items convertible to or settled in Class A common shares
(0.02
)
 
0.01

 

 
0.01

 
0.03

$
1.36

 
$
2.00

 
Basic earnings per share – Class A common shares
$
1.36

 
$
2.36

 
$
1.40

 
$
1.66

 
$
2.00


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



9

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Segment Results of Operations
Unaudited (In millions, except per share data)


Consolidated summary of adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
798

 
$
745

 
Fixed income and other investment income
$
798

 
$
810

 
$
782

 
$
774

 
$
745

95

 
69

 
Alternative investment income
95

 
51

 
81

 
111

 
69

893

 
814

 
Net investment earnings
893

 
861

 
863

 
885

 
814

(275
)
 
(263
)
 
Cost of crediting on deferred annuities
(275
)
 
(271
)
 
(268
)
 
(264
)
 
(263
)
(259
)
 
(201
)
 
Other liability costs1
(259
)
 
(136
)
 
(273
)
 
(251
)
 
(201
)
(10
)
 
(2
)
 
Interest expense
(10
)
 
(2
)
 
(1
)
 
(2
)
 
(2
)
(73
)
 
(74
)
 
Operating expenses
(73
)
 
(87
)
 
(77
)
 
(80
)
 
(74
)
276

 
274

 
Pre-tax adjusted operating income
276

 
365

 
244

 
288

 
274

(39
)
 
(8
)
 
Income tax (expense) benefit – operating
(39
)
 
(33
)
 
(13
)
 
(8
)
 
(8
)
$
237

 
$
266

 
Adjusted operating income
$
237

 
$
332

 
$
231

 
$
280

 
$
266


* Please refer to Note to the Financial Supplement section and the Non-GAAP Measure Reconciliations for discussion on adjusted operating income.
1 Other liability costs include DAC, DSI and VOBA amortization and rider reserve changes for all products, the cost of liabilities on products other than deferred annuities including offsets for premiums, product charges and other revenues.

Retirement Services summary of adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
775

 
$
712

 
Fixed income and other investment income
$
775

 
$
772

 
$
745

 
$
739

 
$
712

91

 
68

 
Alternative investment income
91

 
57

 
66

 
82

 
68

866

 
780

 
Net investment earnings
866

 
829

 
811

 
821

 
780

(275
)
 
(263
)
 
Cost of crediting on deferred annuities
(275
)
 
(271
)
 
(268
)
 
(264
)
 
(263
)
(259
)
 
(180
)
 
Other liability costs
(259
)
 
(172
)
 
(228
)
 
(224
)
 
(180
)

 
(1
)
 
Interest expense

 

 
(1
)
 
(1
)
 
(1
)
(58
)
 
(52
)
 
Operating expenses
(58
)
 
(55
)
 
(51
)
 
(54
)
 
(52
)
274

 
284

 
Pre-tax adjusted operating income
274

 
331

 
263

 
278

 
284

(39
)
 
(9
)
 
Income tax (expense) benefit – operating
(39
)
 
(25
)
 
(19
)
 
(11
)
 
(9
)
$
235

 
$
275

 
Adjusted operating income
$
235

 
$
306

 
$
244

 
$
267

 
$
275


Corporate and Other summary of adjusted operating income
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
23

 
$
33

 
Fixed income and other investment income
$
23

 
$
38

 
$
37

 
$
35

 
$
33

4

 
1

 
Alternative investment income
4

 
(6
)
 
15

 
29

 
1

27

 
34

 
Net investment earnings
27

 
32

 
52

 
64

 
34


 

 
Cost of crediting on deferred annuities

 

 

 

 


 
(21
)
 
Other liability costs

 
36

 
(45
)
 
(27
)
 
(21
)
(10
)
 
(1
)
 
Interest expense
(10
)
 
(2
)
 

 
(1
)
 
(1
)
(15
)
 
(22
)
 
Operating expenses
(15
)
 
(32
)
 
(26
)
 
(26
)
 
(22
)
2

 
(10
)
 
Pre-tax adjusted operating income
2

 
34

 
(19
)
 
10

 
(10
)

 
1

 
Income tax (expense) benefit - operating

 
(8
)
 
6

 
3

 
1

$
2

 
$
(9
)
 
Adjusted operating income
$
2

 
$
26

 
$
(13
)
 
$
13

 
$
(9
)


10

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Net Investment Earned Rate and Investment Margin on Deferred Annuities
Unaudited (In millions, except percentages)

Consolidated summary of net investment earned rate (a non-GAAP measure)
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
4.32
%
 
4.30
%
 
Fixed income and other investments
4.32
%
 
4.22
%
 
4.23
%
 
4.34
%
 
4.30
%
10.38
%
 
8.06
%
 
Alternative investments
10.38
%
 
5.46
%
 
9.07
%
 
12.69
%
 
8.06
%
4.60
%
 
4.48
%
 
Total net investment earned rate
4.60
%
 
4.28
%
 
4.45
%
 
4.72
%
 
4.48
%

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

Retirement Services investment margin on deferred annuities (a non-GAAP measure)
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
4.63
%
 
4.76
%
 
Net investment earned rate
4.63
%
 
4.57
%
 
4.64
%
 
4.85
%
 
4.76
%
1.87
%
 
1.91
%
 
Cost of crediting on deferred annuities
1.87
%
 
1.87
%
 
1.88
%
 
1.89
%
 
1.91
%
2.76
%
 
2.85
%
 
Investment margin on deferred annuities
2.76
%
 
2.70
%
 
2.76
%
 
2.96
%
 
2.85
%

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

Retirement Services summary of net investment earned rate
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
4.32
%
 
4.52
%
 
Fixed income and other investments
4.32
%
 
4.43
%
 
4.44
%
 
4.55
%
 
4.52
%
12.34
%
 
10.59
%
 
Alternative investments
12.34
%
 
7.92
%
 
9.79
%
 
12.28
%
 
10.59
%
4.63
%
 
4.76
%
 
Total net investment earned rate
4.63
%
 
4.57
%
 
4.64
%
 
4.85
%
 
4.76
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
775

 
$
712

 
Fixed income and other investment income
$
775

 
$
772

 
$
745

 
$
739

 
$
712

91

 
68

 
Alternatives investment income
91

 
57

 
66

 
82

 
68

$
866

 
$
780

 
Total net investment earnings
$
866

 
$
829

 
$
811

 
$
821

 
$
780

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average invested assets
 
 
 
 
 
 
 
 
 
$
71,778

 
$
62,982

 
Fixed income and other investments
$
71,778

 
$
69,690

 
$
67,190

 
$
64,955

 
$
62,982

2,957

 
2,594

 
Alternative investments
2,957

 
2,897

 
2,678

 
2,622

 
2,594

$
74,735

 
$
65,576

 
Total average invested assets
$
74,735

 
$
72,587

 
$
69,868

 
$
67,577

 
$
65,576


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

Retirement Services summary of cost of crediting on deferred annuities
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
155

 
$
137

 
FIA option costs
$
155

 
$
149

 
$
144

 
$
140

 
$
137

120

 
126

 
Fixed interest credited to policyholders
120

 
122

 
124

 
124

 
126

$
275

 
$
263

 
Cost of crediting on deferred annuities
$
275

 
$
271

 
$
268

 
$
264

 
$
263

1.87
%
 
1.91
%
 
Cost of crediting on deferred annuities rate
1.87
%
 
1.87
%
 
1.88
%
 
1.89
%
 
1.91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
58,993

 
$
55,154

 
Average account value on deferred annuities
$
58,993

 
$
58,003

 
$
57,050

 
$
56,001

 
$
55,154


11

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Retirement Services Annuity Liability Characteristics
Unaudited (In millions, except percentages)


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

 
$
54,880

 
Account value at beginning of period
$
58,539

 
$
57,526

 
$
56,574

 
$
55,429

 
$
54,880

1,516

 
1,308

 
Deposits1
1,516

 
1,613

 
1,546

 
1,886

 
1,308

47

 
36

 
Premium and interest bonuses
47

 
39

 
40

 
44

 
36

659

 
461

 
Fixed and index credits to policyholders
659

 
544

 
486

 
464

 
461

(1,238
)
 
(1,194
)
 
Surrenders and benefits paid
(1,238
)
 
(1,110
)
 
(1,051
)
 
(1,183
)
 
(1,194
)
(76
)
 
(62
)
 
Fee and product charges
(76
)
 
(73
)
 
(69
)
 
(66
)
 
(62
)
$
59,447

 
$
55,429

 
Account value at end of period
$
59,447

 
$
58,539

 
$
57,526

 
$
56,574

 
$
55,429


* 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
10.6

 
5.4

 
8
%
 
$
46,388

 
78.0
%
Single-year fixed rate guaranteed annuities
7.3

 
1.0

 
2
%
 
7,783

 
13.1
%
Multi-year fixed rate guaranteed annuities
5.3

 
3.2

 
8
%
 
5,276

 
8.9
%
Total
 
 
 
 
 
 
$
59,447

 
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
$
8,586

 
14.4
%
 
$
8,586

 
14.4
%
0.0% < 2.0%
451

 
0.8
%
 
583

 
1.0
%
2.0% < 4.0%
1,513

 
2.6
%
 
3,795

 
6.4
%
4.0% < 6.0%
6,917

 
11.6
%
 
6,985

 
11.7
%
6.0% < 8.0%
11,141

 
18.7
%
 
8,017

 
13.5
%
8.0% < 10.0%
14,391

 
24.2
%
 
10,754

 
18.1
%
10.0% or greater
16,448

 
27.7
%
 
20,727

 
34.9
%
 
$
59,447

 
100.0
%
 
$
59,447

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
Surrender charge (gross)
 
MVA benefit
 
Surrender charge (net)
Aggregate surrender charge protection
 
 
7.2
%
 
0.9
%
 
8.1
%


12

Athene Holding Ltd.
Financial Supplement—March 31, 2018
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
$
8,586

 
14.4
%
 
%
> 0 to less than 2
10,489

 
17.7
%
 
4.6
%
2 to less than 4
13,340

 
22.5
%
 
7.4
%
4 to less than 6
9,355

 
15.7
%
 
8.6
%
6 to less than 8
5,428

 
9.1
%
 
10.1
%
8 to less than 10
8,504

 
14.3
%
 
11.1
%
10 to less than 12
2,498

 
4.2
%
 
14.0
%
12 or greater
1,247

 
2.1
%
 
14.8
%
 
$
59,447

 
100.0
%
 
 

Minimum guarantees on deferred annuities
 
At minimum guarantees
 
Total account value
 
Percent of total account value at minimum guarantees
Fixed indexed annuities
$
15,716

 
$
46,388

 
33.9
%
Fixed rate annuities
6,149

 
13,059

 
47.1
%
Total deferred annuities
$
21,865

 
$
59,447

 
36.8
%
 
 
 
 
 
 
 
 
 
 
 
March 31, 2018
Distance to guarantees1
 
 
 
 
90-100


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


13

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Reserve Liabilities
Unaudited (In millions, except percentages)


Consolidated reserve liabilities
 
March 31, 2018
 
December 31, 2017
 
Dollars
 
Percent of Total
 
Dollars
 
Percent of Total
Fixed indexed annuities
$
48,795

 
64.4
%
 
$
48,431

 
59.6
 %
Fixed rate annuities
13,287

 
17.6
%
 
13,412

 
16.5
 %
Total deferred annuities
62,082

 
82.0
%
 
61,843

 
76.1
 %
Payout annuities
5,156

 
6.8
%
 
5,216

 
6.4
 %
Pension risk transfer annuities
2,491

 
3.3
%
 
2,252

 
2.8
 %
Funding agreements
3,820

 
5.0
%
 
3,786

 
4.7
 %
Life and other (excluding German products)
2,197

 
2.9
%
 
2,281

 
2.8
 %
Retirement Services reserve liabilities
75,746

 
100.0
%
 
75,378

 
92.8
 %
Germany products1

 
%
 
5,979

 
7.4
 %
Intersegment eliminations

 
%
 
(174
)
 
(0.2
)%
Total reserve liabilities
$
75,746

 
100.0
%
 
$
81,183

 
100.0
 %

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


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

 
$
65,745

 
Retirement Services reserve liabilities – beginning
$
75,378

 
$
72,100

 
$
69,719

 
$
67,013

 
$
65,745

2,135

 
2,059

 
Deposits1
2,135

 
3,592

 
2,910

 
3,307

 
2,059

(1,755
)
 
(1,670
)
 
Withdrawals
(1,755
)
 
(1,361
)
 
(1,311
)
 
(1,408
)
 
(1,670
)
(12
)
 
879

 
Other reserve changes
(12
)
 
1,047

 
782

 
807

 
879

75,746

 
67,013

 
Retirement Services reserve liabilities – ending
75,746

 
75,378

 
72,100

 
69,719

 
67,013


 
5,367

 
Germany reserve liabilities2

 
5,979

 
5,921

 
5,737

 
5,367


 
(155
)
 
Intersegment eliminations

 
(174
)
 
(171
)
 
(166
)
 
(155
)
$
75,746

 
$
72,225

 
Consolidated reserve liabilities – ending
$
75,746

 
$
81,183

 
$
77,850

 
$
75,290

 
$
72,225


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


14

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)


Investments and investments in related parties summary
 
March 31, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities, at fair value
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
U.S. government and agencies
$
25

 
%
 
$
62

 
0.1
%
U.S. state, municipal and political subdivisions
1,132

 
1.4
%
 
1,165

 
1.4
%
Foreign governments
136

 
0.2
%
 
2,683

 
3.2
%
Corporate
35,867

 
44.7
%
 
36,660

 
43.4
%
CLO
5,642

 
7.0
%
 
5,084

 
6.0
%
ABS
4,607

 
5.8
%
 
3,971

 
4.7
%
RMBS
9,187

 
11.5
%
 
9,366

 
11.1
%
CMBS
1,979

 
2.5
%
 
2,021

 
2.4
%
Trading securities, at fair value
2,088

 
2.6
%
 
2,196

 
2.6
%
Equity securities
160

 
0.2
%
 
790

 
0.9
%
Mortgage loans, net of allowances
6,139

 
7.7
%
 
6,233

 
7.4
%
Investment funds
647

 
0.8
%
 
699

 
0.8
%
Policy loans
510

 
0.6
%
 
530

 
0.6
%
Funds withheld at interest
7,093

 
8.8
%
 
7,085

 
8.4
%
Derivative assets
2,031

 
2.5
%
 
2,551

 
3.0
%
Real estate

 
%
 
624

 
0.7
%
Short-term investments
235

 
0.3
%
 
201

 
0.2
%
Other investments
113

 
0.1
%
 
133

 
0.2
%
Total investments
77,591

 
96.7
%
 
82,054

 
97.1
%
Investment in related parties
 
 
 
 
 
 
 
Fixed maturity securities, at fair value:
 
 
 
 
 
 
 
Available-for-sale securities
505

 
0.6
%
 
406

 
0.5
%
Trading securities
305

 
0.4
%
 
307

 
0.4
%
Investment funds
1,499

 
1.9
%
 
1,310

 
1.6
%
Short term investments
123

 
0.1
%
 
52

 
0.1
%
Other investments
238

 
0.3
%
 
238

 
0.3
%
Total related party investments
2,670

 
3.3
%
 
2,313

 
2.9
%
Total investments, including related parties
$
80,261

 
100.0
%
 
$
84,367

 
100.0
%



15

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Fixed maturity securities by sector
 
March 31, 2018
 
December 31, 2017
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Amortized Cost
 
Fair Value
 
Percent of Total
Corporate:
 
 
 
 
 
 
 
 
 
 
 
Industrial other1
$
11,428

 
$
11,533

 
19.5
%
 
$
11,550

 
$
12,026

 
19.6
%
Financial
11,324

 
11,475

 
19.4
%
 
11,299

 
11,824

 
19.3
%
Utilities
8,335

 
8,400

 
14.2
%
 
7,991

 
8,296

 
13.5
%
Communication
2,422

 
2,447

 
4.2
%
 
2,509

 
2,607

 
4.2
%
Transportation
1,980

 
2,012

 
3.4
%
 
1,824

 
1,907

 
3.1
%
Total corporate
35,489

 
35,867

 
60.7
%
 
35,173

 
36,660

 
59.7
%
Other government-related securities
 
 
 
 
 
 
 
 
 
 
 
U.S. state, municipal and political subdivisions
995

 
1,132

 
1.9
%
 
996

 
1,165

 
1.9
%
Foreign governments
137

 
136

 
0.3
%
 
2,575

 
2,683

 
4.4
%
U.S. government and agencies
25

 
25

 
%
 
63

 
62

 
0.1
%
Total non-structured securities
36,646

 
37,160

 
62.9
%
 
38,807

 
40,570

 
66.1
%
Structured securities:
 
 
 
 
 
 
 
 
 
 
 
CLO
6,073

 
6,102

 
10.3
%
 
5,392

 
5,444

 
8.9
%
ABS
4,640

 
4,652

 
7.9
%
 
3,991

 
4,017

 
6.5
%
CMBS
1,981

 
1,979

 
3.3
%
 
1,994

 
2,021

 
3.3
%
RMBS
 
 
 
 
 
 
 
 
 
 
 
Agency
81

 
81

 
0.1
%
 
86

 
87

 
0.1
%
Non-agency
8,451

 
9,106

 
15.5
%
 
8,635

 
9,279

 
15.1
%
Total structured securities
21,226

 
21,920

 
37.1
%
 
20,098

 
20,848

 
33.9
%
Total fixed maturity securities, including related parties
$
57,872

 
$
59,080

 
100.0
%
 
$
58,905

 
$
61,418

 
100.0
%

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


Credit quality of fixed maturity securities
 
March 31, 2018
 
December 31, 2017
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
1
$
29,740

 
50.4
%
 
$
32,447

 
52.8
%
2
25,744

 
43.6
%
 
25,082

 
40.9
%
Total investment grade
55,484

 
94.0
%
 
57,529

 
93.7
%
3
2,910

 
4.9
%
 
3,040

 
5.0
%
4
608

 
1.0
%
 
765

 
1.2
%
5
69

 
0.1
%
 
66

 
0.1
%
6
9

 
0.0
%
 
18

 
0.0
%
Total below investment grade
3,596

 
6.0
%
 
3,889

 
6.3
%
Total fixed maturity securities, including related parties
$
59,080

 
100.0
%
 
$
61,418

 
100.0
%

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


16

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

 
March 31, 2018
 
December 31, 2017
 
Fair Value
 
Percent of Total
 
Fair Value
 
Percent of Total
NRSRO rating agency designation
 
 
 
 
 
 
 
AAA/AA/A
$
19,353

 
32.7
%
 
$
21,448

 
34.9
%
BBB
23,989

 
40.6
%
 
23,572

 
38.4
%
Non-rated1
6,488

 
11.0
%
 
6,592

 
10.7
%
Total investment grade2
49,830

 
84.3
%
 
51,612

 
84.0
%
BB
2,981

 
5.1
%
 
3,091

 
5.0
%
B
1,016

 
1.7
%
 
1,198

 
2.0
%
CCC
3,202

 
5.4
%
 
2,696

 
4.4
%
CC and lower
1,591

 
2.7
%
 
2,302

 
3.8
%
Non-rated1
460

 
0.8
%
 
519

 
0.8
%
Total below investment grade
9,250

 
15.7
%
 
9,806

 
16.0
%
Total fixed maturity securities, including related parties
$
59,080

 
100.0
%
 
$
61,418

 
100.0
%

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


Credit quality of residential mortgage backed securities
 
March 31, 2018
 
December 31, 2017
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
 
Principal Amount
 
Amortized Cost
 
Fair Value
 
Percent of Total
NAIC designation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
$
9,230

 
$
7,831

 
$
8,460

 
92.1
%
 
$
9,543

 
$
8,089

 
$
8,714

 
93.0
%
2
448

 
407

 
422

 
4.6
%
 
386

 
348

 
360

 
3.8
%
Total investment grade
9,678

 
8,238

 
8,882

 
96.7
%
 
9,929

 
8,437

 
9,074

 
96.8
%
3
215

 
193

 
198

 
2.2
%
 
238

 
209

 
213

 
2.3
%
4
114

 
96

 
102

 
1.1
%
 
83

 
70

 
73

 
0.8
%
5
5

 
5

 
5

 
0.0
%
 
5

 
5

 
6

 
0.1
%
6
1

 

 

 
%
 
1

 

 

 
%
Total below investment grade
335

 
294

 
305

 
3.3
%
 
327

 
284

 
292

 
3.2
%
Total
$
10,013

 
$
8,532

 
$
9,187

 
100.0
%
 
$
10,256

 
$
8,721

 
$
9,366

 
100.0
%



17

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Mortgage loans by property type and region
 
March 31, 2018
 
December 31, 2017
 
Net Carrying Value
 
Percent of Total
 
Net Carrying Value
 
Percent of Total
Property type
 
 
 
 
 
 
 
Office building
$
1,389

 
22.6
%
 
$
1,187

 
19.0
%
Retail
1,167

 
19.0
%
 
1,223

 
19.6
%
Hotels
935

 
15.2
%
 
928

 
14.9
%
Industrial
789

 
12.9
%
 
944

 
15.2
%
Apartment
441

 
7.2
%
 
525

 
8.4
%
Other commercial 1
412

 
6.7
%
 
440

 
7.1
%
Total commercial mortgage loans
5,133

 
83.6
%
 
5,247

 
84.2
%
Residential loans
1,006

 
16.4
%
 
986

 
15.8
%
Total mortgage loans, net of allowances
$
6,139

 
100.0
%
 
$
6,233

 
100.0
%
 
 
 
 
 
 
 
 
US Region:
 
 
 
 
 
 
 
East North Central
$
654

 
10.7
%
 
$
643

 
10.3
%
East South Central
128

 
2.1
%
 
144

 
2.3
%
Middle Atlantic
825

 
13.5
%
 
909

 
14.6
%
Mountain
488

 
7.9
%
 
492

 
7.9
%
New England
186

 
3.0
%
 
162

 
2.6
%
Pacific
1,119

 
18.2
%
 
991

 
15.9
%
South Atlantic
900

 
14.7
%
 
873

 
14.0
%
West North Central
223

 
3.6
%
 
233

 
3.8
%
West South Central
610

 
9.9
%
 
655

 
10.5
%
Total US Region
5,133

 
83.6
%
 
5,102

 
81.9
%
International Region

 
%
 
145

 
2.3
%
Total commercial mortgage loans
5,133

 
83.6
%
 
5,247

 
84.2
%
Residential loans
1,006

 
16.4
%
 
986

 
15.8
%
Total mortgage loans, net of allowances
$
6,139

 
100.0
%
 
$
6,233

 
100.0
%

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



18

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Investment funds including related party
 
March 31, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Investment funds
 
 
 
 
 
 
 
Private equity
$
240

 
8.8
%
 
$
271

 
10.5
%
Real estate and other real assets
174

 
6.4
%
 
161

 
6.2
%
Natural resources
4

 
0.1
%
 
4

 
0.2
%
Hedge funds
56

 
2.1
%
 
61

 
2.4
%
Credit funds
173

 
6.3
%
 
202

 
7.8
%
Total investment funds
647

 
23.7
%
 
699

 
27.1
%
Investment funds – related parties
 
 
 
 
 
 
 
Private equity – A-A Mortgage (AmeriHome)
418

 
15.3
%
 
403

 
15.6
%
Private equity
283

 
10.4
%
 
180

 
7.0
%
Real estate and other real assets
322

 
11.8
%
 
297

 
11.5
%
Natural resources
98

 
3.6
%
 
74

 
2.9
%
Hedge funds
99

 
3.6
%
 
93

 
3.6
%
Credit funds
279

 
10.3
%
 
263

 
10.2
%
Total investment funds – related parties
1,499

 
55.0
%
 
1,310

 
50.8
%
Total investment funds – assets of consolidated VIEs
 
 
 
 
 
 
 
Private equity – MidCap
534

 
19.6
%
 
528

 
20.4
%
Credit funds
20

 
0.7
%
 
21

 
0.8
%
Real estate and other real assets
28

 
1.0
%
 
22

 
0.9
%
Total investment funds – assets of consolidated VIEs
582

 
21.3
%
 
571

 
22.1
%
Total investment funds, including related parties and VIEs
$
2,728

 
100.0
%
 
$
2,580

 
100.0
%

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


Funds withheld at interest
 
March 31, 2018
 
December 31, 2017
 
Carrying Value
 
Percent of Total
 
Carrying Value
 
Percent of Total
Fixed maturity securities
 
 
 
 
 
 
 
U.S. state, municipal and political subdivisions
$
111

 
1.6
%
 
$
117

 
1.6
%
Corporate
2,164

 
30.5
%
 
2,095

 
29.6
%
CLO
618

 
8.7
%
 
669

 
9.4
%
ABS
938

 
13.2
%
 
886

 
12.5
%
CMBS
287

 
4.0
%
 
290

 
4.1
%
RMBS
1,515

 
21.4
%
 
1,551

 
21.9
%
Equity securities
28

 
0.4
%
 
28

 
0.4
%
Mortgage loans
788

 
11.1
%
 
792

 
11.2
%
Investment funds
454

 
6.4
%
 
376

 
5.3
%
Derivative assets
56

 
0.8
%
 
78

 
1.1
%
Short-term investments
35

 
0.5
%
 
16

 
0.2
%
Cash and cash equivalents
65

 
0.9
%
 
132

 
1.9
%
Other assets and liabilities
34

 
0.5
%
 
55

 
0.8
%
Total funds withheld at interest
$
7,093

 
100.0
%
 
$
7,085

 
100.0
%


19

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Invested assets summary
 
March 31, 2018
 
December 31, 2017
 
Total Invested Asset Value1
 
Percent of Total
 
U.S. and Bermuda Invested Asset Value
 
Germany Invested Asset Value2
 
Total Invested Asset Value1
 
Percent of Total
Corporate
$
38,896

 
49.4
%
 
$
37,059

 
$
1,536

 
$
38,595

 
46.9
%
CLO
6,241

 
7.9
%
 
5,914

 

 
5,914

 
7.2
%
Credit
45,137

 
57.3
%
 
42,973

 
1,536

 
44,509

 
54.1
%
RMBS
10,288

 
13.1
%
 
10,532

 

 
10,532

 
12.8
%
Mortgage loans
6,925

 
8.8
%
 
6,858

 
165

 
7,023

 
8.5
%
CMBS
2,311

 
2.9
%
 
2,322

 

 
2,322

 
2.8
%
Real estate held for investment

 
%
 

 
625

 
625

 
0.8
%
Real estate
19,524

 
24.8
%
 
19,712

 
790

 
20,502

 
24.9
%
ABS
5,852

 
7.5
%
 
4,824

 

 
4,824

 
5.9
%
Alternative investments
3,615

 
4.6
%
 
3,692

 
137

 
3,829

 
4.6
%
State, municipals, political subdivisions and foreign government
1,309

 
1.7
%
 
1,347

 
2,411

 
3,758

 
4.5
%
Unit linked assets

 
%
 

 
407

 
407

 
0.5
%
Equity securities
194

 
0.2
%
 
192

 
128

 
320

 
0.4
%
Short-term investments
339

 
0.4
%
 
228

 

 
228

 
0.3
%
U.S. government and agencies
32

 
%
 
29

 
35

 
64

 
0.1
%
Other investments
11,341

 
14.4
%
 
10,312

 
3,118

 
13,430

 
16.3
%
Cash and equivalents
1,732

 
2.2
%
 
2,504

 
296

 
2,800

 
3.4
%
Policy loans and other
989

 
1.3
%
 
761

 
296

 
1,057

 
1.3
%
Total invested assets
$
78,723

 
100.0
%
 
$
76,262

 
$
6,036

 
$
82,298

 
100.0
%

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


Alternative investments summary
 
March 31, 2018
 
December 31, 2017
 
Invested Asset Value1
 
Percent of Total
 
Invested Asset Value1
 
Percent of Total
Credit funds
$
720

 
19.9
%
 
$
784

 
20.4
%
Private equity – MidCap
534

 
14.8
%
 
528

 
13.8
%
Private equity – A-A Mortgage (AmeriHome)
514

 
14.2
%
 
496

 
12.9
%
Private equity – other
619

 
17.1
%
 
554

 
14.5
%
Mortgage and real assets
678

 
18.8
%
 
643

 
16.8
%
Hedge funds
184

 
5.1
%
 
467

 
12.2
%
Public equities
124

 
3.4
%
 
171

 
4.5
%
Natural resources and other real assets
242

 
6.7
%
 
186

 
4.9
%
Alternative investments
$
3,615

 
100.0
%
 
$
3,829

 
100.0
%

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



20

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Consolidated Investments Summary
Unaudited (In millions, except percentages)

Net investment earned rates by asset class
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
3.90
%
 
3.91
%
 
Corporate securities
3.90
%
 
3.97
%
 
3.91
%
 
3.98
%
 
3.91
%
 
 
 
 
Structured securities
 
 
 
 
 
 
 
 
 
5.42
%
 
5.45
%
 
RMBS
5.42
%
 
5.22
%
 
5.45
%
 
5.96
%
 
5.45
%
5.09
%
 
4.94
%
 
CLO
5.09
%
 
4.93
%
 
5.25
%
 
5.10
%
 
4.94
%
4.03
%
 
4.15
%
 
ABS
4.03
%
 
5.54
%
 
4.33
%
 
4.28
%
 
4.15
%
4.16
%
 
4.03
%
 
CMBS
4.16
%
 
4.12
%
 
4.18
%
 
4.13
%
 
4.03
%
4.91
%
 
4.95
%
 
Total structured securities
4.91
%
 
5.11
%
 
5.06
%
 
5.26
%
 
4.95
%
4.72
%
 
9.35
%
 
State, municipal, political subdivisions and U.S. and foreign government
4.72
%
 
4.59
%
 
4.54
%
 
4.82
%
 
9.35
%
5.57
%
 
5.90
%
 
Mortgage loans
5.57
%
 
5.89
%
 
5.92
%
 
5.92
%
 
5.90
%
10.38
%
 
8.12
%
 
Alternative investments
10.38
%
 
6.04
%
 
8.92
%
 
13.11
%
 
8.12
%
2.14
%
 
1.66
%
 
Other U.S. and Bermuda invested assets
2.14
%
 
1.55
%
 
1.65
%
 
1.58
%
 
1.66
%
4.60
%
 
4.70
%
 
U.S. and Bermuda
4.60
%
 
4.52
%
 
4.65
%
 
4.96
%
 
4.70
%
%
 
1.74
%
 
Germany1
%
 
1.32
%
 
2.04
%
 
1.73
%
 
1.74
%
4.60
%
 
4.48
%
 
Consolidated total
4.60
%
 
4.28
%
 
4.45
%
 
4.72
%
 
4.48
%

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


Invested assets NAIC 1 & 2 designation by asset class
 
March 31, 2018
 
December 31, 2017
Corporate securities
93.1
%
 
93.1
%
Structured securities
 
 
 
RMBS
96.6
%
 
96.7
%
CLO
88.9
%
 
85.8
%
ABS
94.9
%
 
93.9
%
CMBS
96.3
%
 
96.0
%
Total structured securities
94.2
%
 
93.3
%
State, municipal, political subdivisions and U.S. and foreign government
96.1
%
 
95.5
%
Germany fixed maturity securities1
%
 
95.0
%

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




21

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Financial Strength Ratings and RBC
Unaudited

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


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


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

1 ALRe RBC ratio, which is used in evaluating our capital position and the amount of capital needed to support our segment, is calculated by applying the NAIC RBC factors.

22

Athene Holding Ltd.
Financial Supplement—March 31, 2018
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 – adjusted operating
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
148.7

 
78.2

 
Basic weighted average shares outstanding – Class A
148.7

 
126.0

 
119.5

 
106.3

 
78.2

41.1

 
110.8

 
Conversion of Class B shares to Class A shares
41.1

 
63.5

 
69.9

 
82.9

 
110.8

5.8

 
6.2

 
Conversion of Class M shares to Class A shares
5.8

 
6.1

 
6.1

 
6.2

 
6.2

0.4

 
0.4

 
Effect of other stock compensation plans
0.4

 
0.5

 
0.5

 
0.5

 
0.4

196.0

 
195.6

 
Weighted average shares outstanding – adjusted operating
196.0

 
196.1

 
196.0

 
195.9

 
195.6


Summary of adjustments to Class A common shares outstanding to arrive at adjusted operating common shares outstanding
 
2018
 
2017
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
Class A common shares outstanding
164.5

 
142.2

 
119.9

 
119.3

 
101.3

Conversion of Class B shares to Class A shares
25.5

 
47.4

 
69.5

 
70.1

 
87.8

Conversion of Class M shares to Class A shares
5.8

 
6.4

 
6.7

 
6.4

 
6.8

Effect of other stock compensation plans
1.0

 
0.9

 
0.9

 
0.9

 
0.9

Adjusted operating common shares outstanding
196.8

 
196.9

 
197.0

 
196.7

 
196.8



Summary of adjustments to book value per share to arrive at adjusted book value per share
 
2018
 
2017
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
Book value per share
$
44.09

 
$
46.76

 
$
44.16

 
$
42.20

 
$
39.07

AOCI
(2.97
)
 
(7.19
)
 
(5.92
)
 
(5.40
)
 
(3.47
)
Reinsurance unrealized gains and losses
(0.54
)
 
(0.82
)
 
(0.83
)
 
(0.77
)
 
(0.55
)
Effect of items convertible to or settled in Class A common shares
0.08

 
0.02

 
(0.14
)
 
(0.08
)
 
(0.60
)
Adjusted book value per share
$
40.66

 
$
38.77

 
$
37.27

 
$
35.95

 
$
34.45


The reconciliation of net income to adjusted net income included in adjusted ROE
Year-to-date
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
268

 
$
384

 
Net income
$
268

 
$
464

 
$
274

 
$
326

 
$
384

54

 
(43
)
 
Reinsurance unrealized gains and losses
54

 
2

 
(12
)
 
(45
)
 
(43
)
$
322

 
$
341

 
Adjusted net income
$
322

 
$
466

 
$
262

 
$
281

 
$
341



23

Athene Holding Ltd.
Financial Supplement—March 31, 2018
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
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
855

 
$
786

 
GAAP net investment income
$
855

 
$
842

 
$
820

 
$
821

 
$
786

45

 
45

 
Reinsurance embedded derivative impacts
45

 
54

 
40

 
52

 
45

15

 
11

 
Net VIE earnings
15

 
18

 
27

 
21

 
11

1

 
(13
)
 
Alternative income gain (loss)
1

 
(9
)
 
(4
)
 
6

 
(13
)
(23
)
 
(15
)
 
Held for trading amortization
(23
)
 
(44
)
 
(20
)
 
(15
)
 
(15
)
38

 
28

 
Total adjustments to arrive at net investment earnings
38

 
19

 
43

 
64

 
28

$
893

 
$
814

 
Total net investment earnings
$
893

 
$
861

 
$
863

 
$
885

 
$
814

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
866

 
$
780

 
Retirement Services
$
866

 
$
829

 
$
811

 
$
821

 
$
780

27

 
34

 
Corporate and Other
27

 
32

 
52

 
64

 
34

$
893

 
$
814

 
Total net investment earnings
$
893

 
$
861

 
$
863

 
$
885

 
$
814

 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.41
 %
 
4.32
 %
 
GAAP net investment income rate
4.41
 %
 
4.18
 %
 
4.23
 %
 
4.38
 %
 
4.32
 %
0.22
 %
 
0.25
 %
 
Reinsurance embedded derivative impacts
0.22
 %
 
0.27
 %
 
0.20
 %
 
0.28
 %
 
0.25
 %
0.08
 %
 
0.06
 %
 
Net VIE earnings
0.08
 %
 
0.09
 %
 
0.14
 %
 
0.11
 %
 
0.06
 %
0.01
 %
 
(0.07
)%
 
Alternative income gain (loss)
0.01
 %
 
(0.04
)%
 
(0.02
)%
 
0.03
 %
 
(0.07
)%
(0.12
)%
 
(0.08
)%
 
Held for trading amortization
(0.12
)%
 
(0.22
)%
 
(0.10
)%
 
(0.08
)%
 
(0.08
)%
0.19
 %
 
0.16
 %
 
Total adjustments to arrive at net investment earned rate
0.19
 %
 
0.10
 %
 
0.22
 %
 
0.34
 %
 
0.16
 %
4.60
 %
 
4.48
 %
 
Consolidated net investment earned rate
4.60
 %
 
4.28
 %
 
4.45
 %
 
4.72
 %
 
4.48
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.63
 %
 
4.76
 %
 
Retirement Services
4.63
 %
 
4.57
 %
 
4.64
 %
 
4.85
 %
 
4.76
 %
3.76
 %
 
1.88
 %
 
Corporate and Other
3.76
 %
 
1.61
 %
 
2.72
 %
 
3.53
 %
 
1.88
 %
4.60
 %
 
4.48
 %
 
Consolidated net investment earned rate
4.60
 %
 
4.28
 %
 
4.45
 %
 
4.72
 %
 
4.48
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
74,735

 
$
65,576

 
Retirement Services average invested assets
$
74,735

 
$
72,587

 
$
69,868

 
$
67,577

 
$
65,576

2,844

 
7,123

 
Corporate and Other average invested assets
2,844

 
7,964

 
7,673

 
7,345

 
7,123

$
77,579

 
$
72,699

 
Average invested assets
$
77,579

 
$
80,551

 
$
77,541

 
$
74,922

 
$
72,699





24

Athene Holding Ltd.
Financial Supplement—March 31, 2018
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
 
 
2018
 
2017
2018
 
2017
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
$
19

 
$
692

 
GAAP interest sensitive contract benefits
$
19

 
$
960

 
$
621

 
$
553

 
$
692

(40
)
 
(26
)
 
Interest credited other than deferred annuities
(40
)
 
(37
)
 
(41
)
 
(42
)
 
(26
)
174

 
145

 
FIA option costs
174

 
159

 
154

 
149

 
145

(22
)
 
(17
)
 
Product charges (strategy fees)
(22
)
 
(20
)
 
(19
)
 
(17
)
 
(17
)
3

 
9

 
Reinsurance embedded derivative impacts
3

 
10

 
9

 
9

 
9

133

 
(534
)
 
Change in fair values of embedded derivatives – FIAs
133

 
(799
)
 
(464
)
 
(399
)
 
(534
)
10

 
12

 
Negative VOBA amortization
10

 
10

 
8

 
10

 
12


 
(18
)
 
Unit linked change in reserve

 
(12
)
 

 
1

 
(18
)
(2
)
 

 
Other changes in interest sensitive contract liabilities
(2
)
 

 

 

 

256

 
(429
)
 
Total adjustments to arrive at cost of crediting on deferred annuities
256

 
(689
)
 
(353
)
 
(289
)
 
(429
)
$
275

 
$
263

 
Retirement Services cost of crediting on deferred annuities
$
275

 
$
271

 
$
268

 
$
264

 
$
263

 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.13
 %
 
5.02
 %
 
GAAP interest sensitive contract benefits
0.13
 %
 
6.62
 %
 
4.35
 %
 
3.95
 %
 
5.02
 %
(0.27
)%
 
(0.19
)%
 
Interest credited other than deferred annuities
(0.27
)%
 
(0.26
)%
 
(0.29
)%
 
(0.30
)%
 
(0.19
)%
1.18
 %
 
1.04
 %
 
FIA option costs
1.18
 %
 
1.10
 %
 
1.08
 %
 
1.07
 %
 
1.04
 %
(0.15
)%
 
(0.12
)%
 
Product charges (strategy fees)
(0.15
)%
 
(0.14
)%
 
(0.13
)%
 
(0.12
)%
 
(0.12
)%
0.02
 %
 
0.07
 %
 
Reinsurance embedded derivative impacts
0.02
 %
 
0.07
 %
 
0.06
 %
 
0.06
 %
 
0.07
 %
0.90
 %
 
(3.87
)%
 
Change in fair values of embedded derivatives – FIAs
0.90
 %
 
(5.51
)%
 
(3.25
)%
 
(2.85
)%
 
(3.87
)%
0.07
 %
 
0.09
 %
 
Negative VOBA amortization
0.07
 %
 
0.07
 %
 
0.06
 %
 
0.07
 %
 
0.09
 %
 %
 
(0.13
)%
 
Unit linked change in reserve
 %
 
(0.08
)%
 
 %
 
0.01
 %
 
(0.13
)%
(0.01
)%
 
 %
 
Other changes in interest sensitive contract liabilities
(0.01
)%
 
 %
 
 %
 
 %
 
 %
1.74
 %
 
(3.11
)%
 
Total adjustments to arrive at cost of crediting on deferred annuities
1.74
 %
 
(4.75
)%
 
(2.47
)%
 
(2.06
)%
 
(3.11
)%
1.87
 %
 
1.91
 %
 
Retirement Services cost of crediting on deferred annuities
1.87
 %
 
1.87
 %
 
1.88
 %
 
1.89
 %
 
1.91
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
58,993

 
$
55,154

 
Average account value on deferred annuities
$
58,993

 
$
58,003

 
$
57,050

 
$
56,001

 
$
55,154




25

Athene Holding Ltd.
Financial Supplement—March 31, 2018
Non-GAAP Measure Reconciliations
Unaudited (In millions, except percentages)




Summary of adjustments to total investments, including related parties to arrive at invested assets
 
March 31, 2018
 
December 31, 2017
Total investments, including related parties
$
80,261

 
$
84,367

Derivative assets
(2,031
)
 
(2,551
)
Cash and cash equivalents (including restricted cash)
2,822

 
4,993

Accrued investment income
620

 
652

Payables for collateral on derivatives
(1,145
)
 
(2,323
)
Reinsurance funds withheld and modified coinsurance
(467
)
 
(579
)
VIE assets, liabilities and noncontrolling interest
810

 
862

AFS unrealized (gain) loss
(1,332
)
 
(2,794
)
Ceded policy loans
(286
)
 
(296
)
Net investment receivables (payables)
(529
)
 
(33
)
Total adjustments to arrive at invested assets
(1,538
)
 
(2,069
)
Total invested assets
$
78,723

 
$
82,298


Summary of adjustments to investment funds, including related parties and VIEs to arrive at alternative investments
 
March 31, 2018
 
December 31, 2017
Investment funds, including related parties and VIEs
$
2,728

 
$
2,580

CLO equities included in trading securities
163

 
182

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

 
287

Investment funds within funds withheld at interest
454

 
416

Royalties, other assets included in other investments and other assets
74

 
76

Net assets of the VIE, excluding investment funds
196

 
288

Total adjustments to arrive at alternative investments
887

 
1,249

Alternative investments
$
3,615

 
$
3,829


Summary of adjustments to total liabilities to arrive at reserve liabilities
 
March 31, 2018
 
December 31, 2017
Total liabilities
84,862

 
90,539

Long-term debt
(992
)
 

Derivative liabilities
(186
)
 
(134
)
Payables for collateral on derivatives
(1,145
)
 
(2,323
)
Funds withheld liability
(395
)
 
(407
)
Other liabilities
(1,277
)
 
(1,222
)
Liabilities of consolidated VIEs
(1
)
 
(2
)
Reinsurance ceded receivables
(4,834
)
 
(4,972
)
Policy loans ceded
(286
)
 
(296
)
Total adjustments to arrive at reserve liabilities
(9,116
)
 
(9,356
)
Total reserve liabilities
75,746

 
81,183




26
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