Athene income surges on investment result

Financial services company Athene has reported net income of $1.38 billion for the second quarter of 2021, compared with $824 million for the same period last year.

The company attributed the surge to higher adjusted operating income and a favorable change in the net fair value of fixed indexed annuity (FIA) derivatives.

Adjusted operating income more than doubled from last year, moving from $490 million to $1.00 billion, with the increase primarily driven by higher income from alternative investments.

Overall investment income increased from $1.34 billion in Q2 of 2020 to $2.04 billion in Q2 this year.

Athene noted that these positive factors were partially offset by an unfavorable change in fair value of reinsurance assets driven by less favorable credit spread tightening compared to the prior year.

Over Q2, Athene generated gross organic inflows of $7.6 billion, its third highest quarter of organic inflows, representing an increase of 9% year-over-year.

For its Retail segment, Athene generated retail inflows of $1.7 billion, a slight decrease of only 2% year-over-year despite increasing competition for traditional fixed annuity / MYGA business.

For Flow Reinsurance, the company recorded inflows of $279 million, a decrease of 88% year-over-year that it says reflects the current competitive market environment issuing traditional fixed annuities at target returns.

Turning to Pension Risk Transfer, Athene completed two PRT transactions totaling $1.5 billion, representing a six fold increase from the prior year quarter and continuing a strong pace of year-to-date activity.

And finally, for Funding Agreements, Athene generated $4.1 billion of funding agreement activity in Q2, the strongest quarterly inflow result for this channel to date, representing a 55% increase year-over-year and 26% increase quarter-over-quarter.

“In the second quarter, we once again demonstrated excellent management of both sides of the balance sheet, with strong organic growth, asset outperformance, and a significant gain on our investment in Apollo combining to drive a second consecutive quarter of record adjusted operating income,” said Athene CEO Jim Belardi. “This is a truly impressive outcome, which resulted in a 32% year-over-year increase in our adjusted book value per share.

He continued: “As we draw closer to the completion of our merger with Apollo, which remains on track for January, I am more confident than ever that Athene’s best days are ahead. It is increasingly apparent that our track record of consistent excellence over the past 12 years is compounding to drive significant momentum at scale, and I believe that this will accelerate upon fully aligning our business through the merger.”

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