Apollo co-founders Marc Rowan, Leon Black and Josh Harris funded Athene as a separate annuity company in 2009. The investment firm is Athene's biggest shareholder, with Apollo and related entities owning a 35% stake.
The Apollo-Athene marriage proved prescient when interest rates plunged, causing many insurers to dump their annuity blocks or seek reinsurance deals. Some sought deals with private equity firms, on the theory they could better invest the funds than traditional insurance companies.
Fully merging Athene into the firm creates enticing possibilities to tie investment strategies with retirement income, the executives said today. That likely leads to more annuity sales in the long run.
"The stronger capital base and complete alignment will allow the company to rapidly scale asset and liability origination, broaden distribution channels and act as a leading global solutions provider," Apollo said in a news release.
The all-stock deal is expected to be completed in January 2022, the release said.
"For Apollo and Athene, we will have total alignment to optimize our strategy and allocate capital efficiently, which will include rapidly scaling our capability to originate attractive risk/reward assets, which are the limiter of growth for both firms," Rowan said in a statement.
Huge FIA Seller
Athene is a market leader in sales of fixed indexed annuities, tax-deferred, long-term retirement savings products that combine protection from loss due to market downturns with the opportunity for growth based in part on the performance of a market index.
In fourth-quarter 2020 results announced three weeks ago, Athene executives reported net income up 147% over the $432 million reported in the fourth quarter 2019. Net income was up 71% on the $622 million in the third quarter 2020.
Athene formed in 2009 under the leadership of ex-American International Group executive Jim Belardi. He directed swift, bold moves to buy up blocks of business cheaply following the economic downturn of 2008-09. Athene grew quickly and Belardi took the company public in 2016.
On the recent earnings call, Belardi was again promising bold moves. He noted that Athene exceeded $200 billion in total assets and plenty of capital to work with.
"2021 is setting up to be our best year ever," he told analysts. "Our large excess capital position and access to additional capital make us the best positioned company to continue to take advantage of the accelerating restructuring in the life insurance industry."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.