ATHENE HOLDING LTD – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations

Index to Management's Discussion and Analysis of Financial Condition and Results
                                 of Operations

              Overview                                              80

              Industry Trends and Competition                       83

              Key Operating and Non-GAAP Measures                   87

              Consolidated Results of Operations                    91

              Consolidated Investment Portfolio                     97

              Non-GAAP Measure Reconciliations                     115

              Liquidity and Capital Resources                      120

              Critical Accounting Estimates and Judgments          126




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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with Forward-Looking Statements, Item
1A. Risk Factors, and Item 8. Financial Statements and Supplementary Data
included within this report.

Overview

We are a leading financial services company specializing in retirement services
that issues, reinsures and acquires retirement savings products designed for the
increasing number of individuals and institutions seeking to fund retirement
needs. We generate attractive financial results for our policyholders and
shareholders by combining our two core competencies of (1) sourcing long-term,
generally illiquid liabilities and (2) investing in a high-quality investment
portfolio, which takes advantage of the illiquid nature of our liabilities. Our
steady and significant base of earnings generates capital that we
opportunistically invest across our business to source attractively priced
liabilities and capitalize on opportunities. Effective January 1, 2022, as a
result of the closing of the merger involving us and Apollo, Apollo Global
Management, Inc. (NYSE: APO) became the beneficial owner of 100% of our Class A
common shares and controls all of the voting power to elect members to our board
of directors.

We have established a significant base of earnings and, as of December 31, 2021,
have an expected annual net investment spread for our Retirement Services
segment, which measures our investment performance less the total cost of our
liabilities, of 1-2% over the 8.6 year weighted-average life of our reserve
liabilities. The weighted-average life includes deferred annuities, pension
group annuities, funding agreements, payout annuities and other products.

We operate our core business strategies out of one reportable segment,
Retirement Services. In addition to Retirement Services, we report certain other
operations in Corporate and Other. Retirement Services is comprised of our US
and Bermuda operations which issue and reinsure retirement savings products and
institutional products. Corporate and Other includes certain other operations
related to our corporate activities.

Our total assets have grown to $235.1 billion for the year ended December 31,
2021. Our book value per common share for the year ended December 31, 2021 was
$92.83. Our adjusted book value per common share was $73.84. Our consolidated
ROE for the year ended December 31, 2021 was 19.3% and our consolidated adjusted
operating ROE was 23.1%. For the year ended December 31, 2021, in our Retirement
Services segment, we generated a net investment spread of 1.77% and adjusted
operating ROE of 25.1%. Our Retirement Services segment generated an investment
margin on deferred annuities of 2.45%. As of December 31, 2021, our deferred
annuities had a weighted-average life of 8.4 years and made up a significant
portion of our reserve liabilities.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following table presents the inflows generated from our organic and
inorganic channels:

                                                                       Years ended December 31,
(In millions, except percentages)                             2021               2020               2019
Retail                                                    $   8,781          $   7,801          $   6,782
Flow reinsurance                                              2,564              6,002              3,950
Funding agreements1                                          11,852              8,277              1,301
Pension group annuities2                                     13,837              5,467              6,042
Gross organic inflows                                        37,034             27,547             18,075
Gross inorganic inflows                                           -             28,792                  -
Total gross inflows                                          37,034             56,339             18,075

Inflows attributable to ACRA noncontrolling interest (10,239)

   (19,448)              (544)
Net outflows3                                               (14,761)           (11,949)           (10,991)
Net flows                                                 $  12,034          $  24,942          $   6,540

Gross organic inflows                                     $  37,034         

$ 27,547 $ 18,075
Organic inflows attributable to ACRA noncontrolling
interest

                                                    (10,239)            (1,180)              (544)
Net organic inflows                                          26,795             26,367             17,531
Net outflows3                                               (14,761)           (11,949)           (10,991)
Net organic flows                                         $  12,034         

$ 14,418 $ 6,540

Net organic growth rate4                                        7.4  %            10.8  %             5.7  %
Average net invested assets4                              $ 161,654         

$ 133,687 $ 115,719

1 Funding agreements are comprised of funding agreements issued under our FABN and FABR programs, funding
agreements issued to the FHLB and long-term repurchase agreements. 2 Pension group annuities was previously
referenced as pension risk transfer (PRT). 3 Net outflows consist of full and partial policyholder
withdrawals on deferred annuities, death benefits, pension group annuity benefit payments, payments on
payout annuities and funding agreement maturities net of the ACRA noncontrolling interest. In 2021, we
revised the net outflows metric, for all periods presented, to include all outflows while previously this
metric excluded inorganic business. 4 Net organic growth rate is calculated as net organic flows divided by
average net invested assets, on an annualized basis. In 2021, we revised the net organic growth rate and
average net invested assets metrics, for all periods presented, to include all outflows and net invested
assets while previously these metrics excluded inorganic business.



Our organic channels, including retail, flow reinsurance and institutional
products, provided gross inflows of $37.0 billion, $27.5 billion and $18.1
billion for the years ended December 31, 2021, 2020 and 2019, respectively,
which were underwritten to attractive, above target returns despite the
historically low interest rate environment. Gross organic inflows for the year
ended December 31, 2021 increased by $9.5 billion, or 34% from 2020, reflecting
the strength of our multi-channel distribution platform and our ability to
quickly pivot into optimal and profitable channels as opportunities arise.
Withdrawals on our deferred annuities, maturities of our funding agreements,
payments on payout annuities and pension group annuity benefit payments
(collectively, net outflows), in the aggregate and net of the ACRA
noncontrolling interest, were $14.8 billion, $11.9 billion and $11.0 billion for
the years ended December 31, 2021, 2020 and 2019, respectively. The increase in
net outflows compared to the prior year was consistent with our expectations and
pricing assumptions as it was primarily related to a large number of 5 year MYGA
contracts issued in 2016 through our flow reinsurance channel, which came out of
the surrender charge period in 2021. Net organic growth rates were 7.4%, 10.8%
and 5.7% for the years ended December 31, 2021, 2020 and 2019, respectively. The
net organic growth rate for the year ended December 31, 2021 decreased from 2020
mainly due to an increase in organic inflows ceded to ACRA resulting in higher
noncontrolling interests and the significant growth in our average net invested
assets. We believe that our credit profile, our current product offerings and
product design capabilities as well as our growing reputation as both a seasoned
funding agreement issuer and a reliable pension group annuity counterparty will
continue to enable us to grow our existing organic channels and allow us to
source additional volumes of profitably underwritten liabilities in various
market environments. We plan to continue to grow organically by expanding each
of our retail, flow reinsurance and institutional distribution channels. We
believe that we have the right people, infrastructure, scale and capital
discipline to position us for continued growth.

Within our retail channel, we had fixed annuity sales of $8.8 billion, $7.8
billion and $6.8 billion for the years ended December 31, 2021, 2020 and 2019,
respectively. The increase in our retail channel was primarily driven by the
strong performance of our FIA products in the IMO and broker-dealer channels,
exhibiting strong sales execution despite the challenging sales environment. IMO
sales rebounded back to historic levels, recovering from lower sales in 2020 as
a result of the economic impact of COVID-19. We have maintained our disciplined
approach to pricing, including with respect to targeted underwritten returns. We
aim to grow our retail channel by deepening our relationships with our
approximately 53 IMOs; approximately 65,000 independent agents; and our growing
network of 16 banks and 119 regional broker-dealers. Our strong financial
position and diverse, capital efficient products allow us to be dependable
partners with IMOs, banks and broker-dealers as well as consistently write new
business. We expect our retail channel to continue to benefit from our credit
profile and recent product launches. We believe this should support growth in
sales at our desired cost of funds through increased volumes via current IMOs,
while also allowing us to continue to expand our bank and broker-dealer
channels. Additionally, we continue to focus on hiring and training a
specialized sales force and creating products to capture new potential
distribution opportunities.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

In our flow reinsurance channel, we target reinsurance business consistent with
our preferred liability characteristics and, as such, flow reinsurance provides
another opportunistic channel for us to source liabilities with attractive
crediting rates. We generated inflows through our flow reinsurance channel of
$2.6 billion, $6.0 billion and $4.0 billion for the years ended December 31,
2021, 2020 and 2019, respectively. The decrease in our flow reinsurance channel
from prior year was driven by our rate discipline in the lower interest rate
environment amid a very competitive market. During the third quarter 2021, we
added a new Japanese partner reinsuring FIA products, increasing our presence in
the Japanese market. We expect that our credit profile and our reputation as a
solutions provider will help us continue to source additional reinsurance
partners, which will further diversify our flow reinsurance channel.

Within our institutional channel, we generated inflows of $25.7 billion, $13.7
billion and $7.3 billion for the years ended December 31, 2021, 2020 and 2019,
respectively. The increase in our institutional channel was driven by
significantly higher pension group annuity and funding agreement inflows. During
the year ended December 31, 2021, we closed nine pension group annuity
transactions, including our largest transaction to date of $4.9 billion with
Lockheed Martin, and issued annuity contracts in the aggregate principal amount
of $13.8 billion, $5.5 billion and $6.0 billion for the years ended December 31,
2021, 2020 and 2019, respectively. Since entering the pension group annuities
channel in 2017 through December 31, 2021, we have closed 33 deals involving
more than 375,000 plan participants resulting in the issuance or reinsurance of
group annuities of $30.2 billion. We issued funding agreements in the aggregate
principal amount of $11.9 billion, $8.3 billion and $1.3 billion for the years
ended December 31, 2021, 2020 and 2019, respectively, including issuances in
multiple currencies. Funding agreements are comprised of funding agreements
issued under our FABN and FABR programs, funding agreements issued to the FHLB
and repurchase agreements with maturities exceeding one year at issuance, with
inflows in the aggregate principal amount of $11.1 billion under our FABN
program and $750 million under our FHLB program for the year ended December 31,
2021. We expect to grow our institutional channel by continuing to engage in
pension group annuity transactions and programmatic issuances of funding
agreements.

Our inorganic channel has contributed significantly to our growth through both
acquisitions and block reinsurance transactions. On June 18, 2020, we entered
into an agreement with Jackson, effective June 1, 2020, pursuant to which we
agreed to reinsure a block of fixed and fixed indexed annuities on a funds
withheld coinsurance basis providing $28.8 billion of gross inflows. Utilizing
the strategic benefits of ACRA, approximately 63% of the total capital
deployment for the transaction was funded by third-party investors and
approximately 37% was funded by ALRe. As part of the Jackson reinsurance
transaction, ACRA made an equity investment in Jackson, which closed on July 17,
2020. In September 2021, Prudential plc completed a dividend demerger
transaction, which resulted in Jackson becoming a publicly traded company. We
expect that our inorganic channel will continue to be an important source of
profitable growth in the future. We believe our internal transactions team, with
support from Apollo, has an industry-leading ability to source, underwrite and
expeditiously close transactions. With support from Apollo, we are a solutions
provider with a proven track record of closing transactions, which we believe
makes us the ideal partner to insurance companies seeking to restructure their
business.

Executing our growth strategy requires that we have sufficient capital available
to deploy. We believe that we have significant capital available to us to
support our growth aspirations. As of December 31, 2021, we estimate that we
have approximately $7.35 billion in capital available to deploy, consisting of
approximately $3.35 billion in excess capital, $2.7 billion in untapped debt
capacity (assuming a peer average adjusted debt to capitalization ratio of 25%)
and $1.3 billion in available undrawn capital at ACRA, subject, in the case of
debt capacity, to favorable market conditions and general availability.

In order to support our growth strategies and capital deployment opportunities,
we established ACRA as a long-duration, on-demand capital vehicle. Effective
April 1, 2020, ALRe purchased additional shares in ACRA, increasing our
ownership from 33% to 36.55% of the economic interests, with the remaining
63.45% of the economic interests being owned by ADIP, a series of funds managed
by an affiliate of Apollo. ACRA participates in certain transactions by drawing
a portion of the required capital for such transactions from third-party
investors equal to ADIP's proportionate economic interest in ACRA. This
shareholder-friendly, strategic capital solution allows us the flexibility to
simultaneously deploy capital across multiple accretive avenues, while
maintaining a strong financial position.

Strategic Transaction with Apollo

On February 28, 2020, we closed a strategic transaction with Apollo in which
Apollo acquired an incremental stake in us for AOG units valued at $1.1 billion,
upon close, and $350 million of cash. Additionally, we converted our Class B
common shares to Class A common shares and our Class M common shares to Class A
common shares and warrants, eliminating our multi-class share structure. Changes
in the value of the AOG units are reflected within the change in fair value of
Apollo investment, net of tax line item. Subsequent to our merger with AGM
described in Note 1 - Business, Basis of Presentation and Significant Accounting
Policies, our investment in Apollo was distributed to AGM. See Note 14 - Related
Parties to the consolidated financial statements for further discussion.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Merger with Apollo

On March 8, 2021, we entered into a Merger Agreement, by and among the Company,
AGM, HoldCo, AHL Merger Sub, and AGM Merger Sub. The Company and AGM agreed,
subject to the terms and conditions of the Merger Agreement, to effect an
all-stock merger transaction to combine our respective businesses by: (1) AGM
merging with AGM Merger Sub, with AGM surviving such merger as a direct wholly
owned subsidiary of HoldCo, (2) the Company merging with AHL Merger Sub, with
the Company surviving such merger as a direct wholly owned subsidiary of HoldCo,
and (3) as of the effective time of the Mergers, changing the name of HoldCo to
be Apollo Global Management, Inc.

On January 1, 2022, the Mergers were completed. The total preliminary purchase
price for the transaction was approximately $12.2 billion, subject to completion
of the purchase accounting analysis. The preliminary purchase price was
calculated based on AGM's December 31, 2021 closing share price multiplied by
the AGM common shares issued in the exchange, as well as the fair value of
stock-based compensation awards acquired, fair value of warrants converted to
AGM common shares and other equity consideration. At the closing of the Mergers,
Athene became a direct wholly owned subsidiary of AGM.

Each issued and outstanding AHL Class A common share (other than AHL Class A
common shares held by AHL Merger Sub, the AOG or the respective direct or
indirect wholly owned subsidiaries of Athene or the AOG) was converted
automatically into 1.149 shares of AGM common shares and any cash paid in lieu
of fractional AGM common shares. In connection with the Mergers, AGM issued to
Athene's equity holders 158.2 million AGM common shares in exchange for 137.6
million AHL Class A common shares that were issued and outstanding as of the
acquisition date, exclusive of the 54.6 million shares previously held by AGM
immediately before the acquisition date.

Industry Trends and Competition

Market Conditions

During the fourth quarter of 2021, despite the impact of the emergence of
another variant of COVID-19 (Omicron), equity and fixed income markets broadly
rallied, with equity markets ending the quarter at or near record highs.
However, the performance of equity markets was short-lived, with certain
companies in the technology sector as well as companies that had benefited from
social media platforms and blockchain enthusiasm experiencing underperformance.
Investment grade credit widened during the fourth quarter of 2021 and continued
to widen in January. The US Federal Reserve (Federal Reserve) has indicated that
it expects rate hikes during 2022, which would be accompanied by
underperformance of fixed income markets broadly.

Despite recent indications of easing of supply chain challenges, it is unlikely
that we will see widespread improvement until mid-2022, if not later. As well,
although some pressure on oil prices eased in late 2021, oil price per barrel is
expected to move to new heights in 2022. Continued low mortgage interest rates
and a severely distorted supply/demand housing imbalance are expected to move
housing prices higher throughout 2022 and beyond, even as new supply is being
brought online. These factors contribute to the increasing concern of
longer-term inflation.

COVID-19 continues to disrupt the markets and the economy with the emergence of
variants. While the recent variant, Omicron, may be less severe in terms of
hospitalizations and deaths than its precursors, the transmissibility of such
variant significantly outweighs prior variants. It is still too early to predict
the full impact of Omicron on growth and growth projections.

Interest Rate Environment

The US anticipates higher rates for 2022. Eurodollar futures currently predict a
Federal Reserve Funds rate at year end of 1.25%, with a further move to 2.00% by
the end of 2023, in which case a US ten-year above 2.00% level should be
expected in the first half of 2022. Curve flattening should also continue, with
underperformance expected in the 2- to 5-year portion of the curve, as we have
seen since the Federal Reserves' change in its outlook on timing of rate hikes
and inflation. Although we expect rates to generally increase across the board,
energy price pressures as well as COVID-19 transmission rates are far more
severe in Europe than they are at present in the US, which could result in an
emerging bid for US Treasury yields. Growth elsewhere in the world, notably
China, is also challenged, but given the Federal Reserve's change in outlook and
its commitment to combat inflation, the upward pressures on US rates seem likely
to outweigh the emergence of a foreign bid which might create a ceiling on
rates.

Our investment portfolio consists predominantly of fixed maturity investments.
See -Consolidated Investment Portfolio. If prevailing interest rates were to
rise, we believe the yield on our new investment purchases may also rise and our
investment income from floating rate investments would increase, while the value
of our existing investments may decline. If prevailing interest rates were to
decline, it is likely that the yield on our new investment purchases may decline
and our investment income from floating rate investments would decrease, while
the value of our existing investments may increase. Recent periods of low
interest rates during 2021, as expected, have led to a decrease in our
investment income from floating rate investments, an overall decrease in asset
yields and an increase in the value of our existing investments.

We address interest rate risk through managing the duration of the liabilities
we source with assets we acquire through ALM modeling. As part of our investment
strategy, we purchase floating rate investments, which we expect would perform
well in a rising interest rate environment and which we expect would
underperform in a declining rate environment, which was experienced in the prior
year. Our investment portfolio includes $34.8 billion of floating rate
investments, or 20% of our net invested assets as of December 31, 2021.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

If prevailing interest rates were to rise, we believe our products would be more
attractive to consumers and our sales would likely increase. If prevailing
interest rates were to decline, it is likely that our products would be less
attractive to consumers and our sales would likely decrease. In periods of
prolonged low interest rates, the net investment spread may be negatively
impacted by reduced investment income to the extent that we are unable to
adequately reduce policyholder crediting rates due to policyholder guarantees in
the form of minimum crediting rates or otherwise due to market conditions. As of
December 31, 2021, most of our products were deferred annuities with 21% of our
FIAs at the minimum guarantees and 38% of our fixed rate annuities at the
minimum crediting rates. As of December 31, 2021, minimum guarantees on all of
our deferred annuities, including those with crediting rates already at their
minimum guarantees, were, on average, greater than 95 basis points below the
crediting rates on such deferred annuities, allowing us room to reduce rates
before reaching the minimum guarantees. Our remaining liabilities are associated
with immediate annuities, pension group annuity obligations, funding agreements
and life contracts for which we have little to no discretionary ability to
change the rates of interest payable to the respective policyholder. A
significant majority of our deferred annuity products have crediting rates that
we may reset annually upon renewal following the expiration of the current
guaranteed period. While we have the contractual ability to lower these
crediting rates to the guaranteed minimum levels, our willingness to do so may
be limited by competitive pressures.

See Item 7A. Quantitative and Qualitative Disclosures About Market Risks, which
includes a discussion regarding interest rate and other significant risks and
our strategies for managing these risks.

Discontinuation of LIBOR

On December 31, 2021, (1) most LIBOR settings (i.e., 24 out of 35, including
1-week and 2-month US Dollar (USD) LIBOR as well as all other non-USD LIBOR
settings) ceased to be published and (2) a few of the most widely used GBP and
JPY LIBOR settings (i.e., 1-, 3- and 6- month GBP and JPY LIBOR settings) were
deemed permanently unrepresentative, but will continue to be published on a
synthetic basis, for a limited time period for the purpose of all legacy
contracts (except for cleared derivatives). The remaining USD LIBOR settings
(i.e., 1-, 3-, 6- and 12-month USD LIBOR settings) will continue to be
published, subject to limitations on use, and cease or become unrepresentative
on June 30, 2023. Without the intervention of the UK Financial Conduct Authority
using enhanced powers provided by the UK Government to compel continued panel
bank contribution by the IBA, the LIBOR administrator, LIBOR will cease
publication after June 30, 2023. The discontinuation of LIBOR could have a
significant impact on the financial markets and represents a material
uncertainty to our business. To manage the uncertainty surrounding the
discontinuation of LIBOR, we have established a LIBOR transition team and a
transition plan. We have created an Executive Steering Committee composed of
senior executives to coordinate and oversee the execution of our plan.

It is difficult to predict the full impact of the transition away from LIBOR on
our contracts whose value is tied to LIBOR. The value or profitability of these
contracts may be adversely affected.

As of December 31, 2021, we had contracts tied to LIBOR in the notional amounts
set forth in the table below:

                                                                                     Extending Beyond
(In millions)                                                Total Exposure           June 30, 2023
Investments                                                $        34,581          $        26,447
Product Liabilities                                                 16,701                    3,589
Derivatives Hedging Product Liabilities                             20,645                    4,127
Other Derivatives                                                    3,553                    3,049
Other Contracts                                                      1,663                    1,113
Total notional of contracts tied to LIBOR                  $        77,143  

$ 38,325

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Investments

As of December 31, 2021, our investments tied to LIBOR were in the following
asset classes:

(In millions)                        Total Exposure       Extending Beyond June 30, 2023
Multi-lateral Arrangements
Corporates                          $           792      $                           566
RMBS                                          3,045                                2,835
CMBS                                            676                                  369
CLO                                          15,586                               15,185
ABS                                           6,586                                3,226
Bank Loans                                      812                                  530
Total Multi-lateral Arrangements             27,497                               22,711
Bi-lateral Arrangements
CML                                           6,957                                3,609
RML                                             127                                  127
Total Bi-lateral Arrangements                 7,084                                3,736
Total investments tied to LIBOR     $        34,581      $                  

26,447

Of the total notional value of investment-related contracts tied to LIBOR,
extending beyond June 30, 2023, $22.7 billion or 85.9% relate to multi-lateral
arrangements. These arrangements are typically characterized by a large, diverse
set of unrelated holders, the majority or all of whom must consent to amendments
to the terms of the underlying investment instrument. Generally, when the
amendments concern a material term such as the determination of interest,
consent must be unanimous. Given the collective action issues inherent in such
structures, such consent is typically impracticable and beyond our control. The
existence and character of fallback provisions affected by the discontinuation
of LIBOR vary widely from instrument to instrument. Many of our legacy contracts
may not contemplate the permanent discontinuation of LIBOR and upon LIBOR's
discontinuation may result in the conversion of the instrument from a floating-
to a fixed-rate instrument or may involve a significant degree of uncertainty as
to the method of determining interest. To the extent that such legacy
arrangements do not contemplate the permanent discontinuation of LIBOR, we would
most likely look to some broad-based solution, such as the New York LIBOR
transition law, to rectify such deficiency. To the extent that such a solution
is ineffective, for example as a result of being ruled unconstitutional, we
would likely be required to undertake a re-evaluation of affected investments,
which might result in the disposition of individual positions. To the extent
that individual positions are retained, we may incur adverse financial
consequences, including any mark-to-market impacts resulting from those
investments that convert from a floating to a fixed rate. To the extent that the
fallback rates ultimately used to determine interest payable on structured
securities do not align with the fallback rates used to determine interest
payable on the underlying assets, economic losses could be sustained on the
overall structure.

The remaining notional value of investment-related contracts tied to LIBOR
extending beyond June 30, 2023 of $3.7 billion or 14.1% relates to bi-lateral
arrangements that are capable of being amended through negotiation with the
relevant counterparty.

As our investment manager, Apollo maintains the documentation associated with
the assets in our investment portfolio. We are therefore dependent upon Apollo
for the successful completion of our LIBOR transition efforts relating to our
investment portfolio. See Part I-Item 1A. Risk Factors-Risks Relating to Our
Business Operations-Uncertainty relating to the LIBOR Calculation process and
the phasing out of LIBOR after a future date may adversely affect the value of
our investment portfolio, our ability to achieve our hedging objectives and our
ability to issue funding agreements bearing a floating rate of interest.
Apollo's failure to fulfill its responsibilities could have an adverse impact on
our results of operations and ability to timely report accurate financial
information.

Product Liabilities and Associated Hedging Instruments

As of December 31, 2021, we had product liabilities with a notional value of
approximately $16.7 billion for which LIBOR is a component in the determination
of interest credited, of which we expect $3.6 billion to have a current
crediting term that extends beyond June 30, 2023. For purposes of evaluating our
exposure to LIBOR, we only consider our exposure to the current crediting term,
which is typically one to two years. Upon renewal of the crediting term, we have
the ability to migrate policyholders into new strategies not involving LIBOR.
Generally, there are two categories of indices that use LIBOR in the
determination of interest credited, "excess return" indices (return of index in
excess of LIBOR) and indices that use LIBOR as a means to control volatility.
The indices to which these products are tied are primarily proprietary indices
for which key inputs are determined by the index sponsor. The index sponsor
generally has the right to unilaterally change the reference rate upon the
discontinuation of LIBOR. As a result, we do not anticipate any administrative
concerns in connection with the transition from LIBOR to a replacement rate with
respect to these products.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

As of December 31, 2021, we held derivatives with a notional value of
approximately $20.6 billion to hedge our exposure to these product liabilities,
of which we expect $4.1 billion to extend beyond June 30, 2023. Included within
this category are $4.4 billion of Eurodollar futures, of which we expect $0.8
billion to extend beyond June 30, 2023. Exchange traded products, such as
Eurodollar futures, will follow the CME Group Inc.'s approach regarding the
discontinuation of LIBOR. The remaining derivatives in this category are
primarily purchased to hedge the current crediting period. We will be required
to purchase new derivatives in future periods to hedge future crediting periods
associated with the related existing product liabilities, which will expose us
to potential basis mismatch to the extent that the reference rate for the
product liability is not the same as the reference rate for the derivative
instrument. These derivatives are entered into pursuant to an ISDA Master
Agreement and will transition to SOFR in accordance with the process described
below under the caption Other Derivatives.

Other Derivatives

Our other derivative contracts tied to LIBOR are generally entered into pursuant
to an ISDA Master Agreement. ISDA published the ISDA 2020 IBOR Fallbacks
Protocol (Protocol) and released Supplement 70 to the 2006 ISDA Definitions
(Supplement) on October 23, 2020. The Protocol and Supplement include
appropriate fallbacks that contemplate the permanent discontinuation of LIBOR.
In January 2021, we joined industry peers by adhering to the Protocol and terms
of the Supplement, each of which became effective on January 25, 2021. With
respect to future transactions, we anticipate adoption of the 2021 ISDA Interest
Rate Definitions. To the extent that the fallbacks incorporated into our other
derivative contracts result in the use of a replacement rate that differs from
that employed in the contract being hedged, we may experience basis mismatch.
The Protocol contains templates for possible bilateral amendments to legacy
contracts for situations in which the fallbacks contemplated by the Protocol
give rise to potential basis risk. We intend to evaluate whether and the extent
to which we are subject to such basis risk, as well as the possibility of using
the available templates to mitigate such risk.

Other Contracts and Other Sources of Exposure

The "Other Contracts" category is comprised of our LIBOR-based floating rate
funding agreements, fixed-to-float Series A preference shares, and our credit
agreement, if any amounts were to be outstanding, all of which contemplate the
permanent discontinuation of LIBOR, are tied to LIBOR in a manner that is not
expected to have a significant impact upon LIBOR's discontinuation or have
fallback provisions in place that provide for the determination of interest
after the discontinuation of LIBOR. In addition to the other contracts for which
we have quantified our exposure, we are party to contracts that are tied to
LIBOR based upon the occurrence of some remote contingency, such as the accrual
of penalty interest, or for which LIBOR is otherwise not a material term of the
contract. These contracts do not lend themselves to quantification and are lower
in priority in our LIBOR remediation efforts. Finally, LIBOR is used as a
component in our internal derivative valuation models. We are in the process of
transitioning the benchmark yield curve in such models from LIBOR to SOFR and we
expect to complete the transition prior to the discontinuation of LIBOR. Such
transition may affect the valuation of our derivative instruments.

We can provide no assurance that we will be successful at fully implementing our
plan prior to the discontinuation of LIBOR. Completion of certain components of
our plan are contingent upon market developments and are therefore not fully
within our control. To the extent management effort and attention is focused on
other matters, such as responding to the risks posed by COVID-19, the timely
completion of our plan could become more difficult. Failure to fully implement
our plan prior to the discontinuation of LIBOR may have a material adverse
effect on our business, financial position, results of operations and cash flows
and on our ability to timely report accurate financial information.

Demographics

Over the next four decades, the retirement-age population is expected to
experience unprecedented growth. Technological advances and improvements in
healthcare are projected to continue to contribute to increasing average life
expectancy, and aging individuals must be prepared to fund retirement periods
that will last longer than ever before. Further, many working households in the
United States do not have adequate retirement savings. As a tool for addressing
the unmet need for retirement planning, we believe that many Americans have
begun to look to tax-efficient savings products with low-risk or guaranteed
return features and potential equity market upside. Our tax-efficient savings
products are well positioned to meet this increasing customer demand.

Competition

We operate in highly competitive markets. We face a variety of large and small
industry participants, including diversified financial institutions, insurance
and reinsurance companies and private equity firms. These companies compete in
one form or another for the growing pool of retirement assets driven by a number
of external factors such as the continued aging of the population and the
reduction in safety nets provided by governments and private employers. In the
markets in which we operate, scale and the ability to provide value-added
services and build long-term relationships are important factors to compete
effectively. We believe that our leading presence in the retirement market,
diverse range of capabilities and broad distribution network uniquely position
us to effectively serve consumers' increasing demand for retirement solutions,
particularly in the FIA market.

According to LIMRA, total fixed annuity market sales in the United States were
$98.1 billion for the nine months ended September 30, 2021, a 9.7% increase from
the same time period in 2020, as a rise in interest rates and continued market
gains driven by the economic recovery spurred growth in the US annuity market.
In the total fixed annuity market, for the nine months ended September 30, 2021
(the most recent period for which specific market share data is available), we
were the fifth largest company based on sales of $5.6 billion, translating to a
5.7% market share. For the nine months ended September 30, 2020, our market
share was 6.0% with sales of $5.4 billion.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

According to LIMRA, total fixed annuity sales in the United States were $120.4
billion for the year ended December 31, 2020, a 13.9% decrease from the year
ended December 31, 2019. In the total fixed annuity market, for the year ended
December 31, 2020, we were the fourth largest company based on sales of $7.7
billion, translating to a 6.4% market share. For the year ended December 31,
2019, our market share was 4.8% with sales of $6.8 billion.

According to LIMRA, total FIA sales in the United States were $47.1 billion for
the nine months ended September 30, 2021, a 13.8% increase from the same time
period in 2020. In the total FIA market, for the nine months ended September 30,
2021 (the most recent period for which specific market share data is available),
we were the largest provider of FIAs based on sales of $5.3 billion, and our
market share for the same period was 11.3%. For the nine months ended September
30, 2020, our market share was 9.6% with sales of $4.0 billion.

According to LIMRA, total FIA sales in the United States were $55.5 billion for
the year ended December 31, 2020, a 24.5% decrease from the year ended December
31, 2019. In the total FIA market, for the year ended December 31, 2020, we were
the largest provider of FIAs based on sales of $5.8 billion, and our market
share for the same period was 10.5%. For the year ended December 31, 2019, we
were the second largest provider of FIAs based on sales of $6.1 billion,
translating to an 8.3% market share.

Key Operating and Non-GAAP Measures

In addition to our results presented in accordance with GAAP, we present certain
financial information that includes non-GAAP measures. 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, 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
corresponding GAAP measures. See Non-GAAP Measure Reconciliations for the
appropriate reconciliations to the corresponding GAAP measures.

Adjusted Operating Income (Loss) Available to Common Shareholders

Adjusted operating income (loss) available to common shareholders 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 (loss) available to common shareholders
equals net income (loss) available to AHL common shareholders adjusted to
eliminate the impact of the following (collectively, the non-operating
adjustments):

•Investment Gains (Losses), Net of Offsets-Consists of the realized gains and
losses on the sale of AFS securities, the change in fair value of reinsurance
assets, unrealized gains and losses, changes in the credit loss allowance, and
other investment gains and losses. Unrealized, allowances 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 change in
credit loss allowances recognized in operations net of the change in AmerUs
Closed Block fair value reserve related to the corresponding change in fair
value of investments. 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 benefit (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-Consists of impacts related to the fair value accounting for derivatives
hedging the FIA index credits and the related embedded derivative liability
fluctuations 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). On 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 term 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-Consists of
restructuring and integration expenses related to acquisitions and block
reinsurance costs as well as certain other expenses, which are not predictable
or related to our underlying profitability drivers.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

•Stock Compensation Expense-Consists of stock compensation expenses associated
with our share incentive plans, excluding our long-term incentive plan, which
are not related to our underlying profitability drivers and fluctuate from time
to time due to the structure of our plans.

•Income Tax (Expense) Benefit - Non-operating-Consists of the income tax effect
of non-operating adjustments and is computed by applying the appropriate
jurisdiction's tax rate to the non-operating adjustments that are subject to
income tax.

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

Adjusted Operating ROE

Adjusted operating ROE is a non-GAAP measure used to evaluate our financial
performance excluding the impacts of AOCI and the cumulative change in fair
value of funds withheld and modco reinsurance assets, net of DAC, DSI, rider
reserve and tax offsets. Adjusted AHL common shareholders' equity is calculated
as the ending AHL shareholders' equity excluding AOCI, the cumulative change in
fair value of funds withheld and modco reinsurance assets and preferred stock.
Adjusted operating ROE is calculated as the adjusted operating income (loss)
available to common shareholders, divided by average adjusted AHL common
shareholders' equity. 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. Except with respect to reinvestment
activity relating to acquired blocks of businesses, we typically buy and hold
AFS investments to maturity throughout the duration of market fluctuations,
therefore, the period-over-period impacts in unrealized gains and losses are not
necessarily indicative of current operating fundamentals or future performance.
Accordingly, we believe using measures which exclude AOCI and the cumulative
change in fair value of funds withheld and modco reinsurance assets are useful
in analyzing trends in our operating results. To enhance the ability to analyze
these measures across periods, interim periods are annualized. Adjusted
operating ROE should not be used as a substitute for ROE. However, we believe
the adjustments to net income (loss) available to AHL common shareholders and
AHL common shareholders' equity are significant to gaining an understanding of
our overall financial performance.

Adjusted Operating Earnings (Loss) Per Common Share, Weighted Average Common
Shares Outstanding - Adjusted Operating and Adjusted Book Value Per Common Share

Adjusted operating earnings (loss) per common share, weighted average common
shares outstanding - adjusted operating and adjusted book value per common 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 these measures
represent an economic view of our share counts and provide a simplified and
consistent view of our outstanding shares. Adjusted operating earnings (loss)
per common share is calculated as the adjusted operating income (loss) available
to common shareholders, over the weighted average common shares outstanding -
adjusted operating. Adjusted book value per common share is calculated as the
adjusted AHL common shareholders' equity divided by the adjusted operating
common shares outstanding. Effective February 28, 2020, all Class B common
shares were converted into Class A common shares and all Class M common shares
were converted into warrants and Class A common shares. Our Class B common
shares were economically equivalent to Class A common shares and were
convertible to Class A common shares on a one-for-one basis at any time. Our
Class M common shares were in the legal form of shares but economically
functioned as options as they were convertible into Class A common shares after
vesting and payment of the conversion price. In calculating Class A diluted
earnings (loss) 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 were
not dilutive, after considering the dilutive effects of the more dilutive
securities in the sequence, they were excluded. Weighted average common 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 (loss) per common share, weighted average common
shares outstanding - adjusted operating and adjusted book value per common share
should not be used as a substitute for basic earnings (loss) per share - Class A
common shares, basic weighted average common shares outstanding - Class A or
book value per common 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.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Adjusted Debt to Capital Ratio

Adjusted debt to capital ratio is a non-GAAP measure used to evaluate our
capital structure excluding the impacts of AOCI and the cumulative change in
fair value of funds withheld and modco reinsurance assets, net of DAC, DSI,
rider reserve and tax offsets. Adjusted debt to capital ratio is calculated as
total debt divided by adjusted AHL 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 capitalization, debt utilization and debt
capacity.

Retirement Services Net Investment Spread, Investment Margin on Deferred
Annuities and Operating Expenses

Net investment spread is a key measure of the profitability of our Retirement
Services segment. Net investment spread measures our investment performance less
the total cost of our liabilities. Net investment earned rate is a key measure
of our investment performance, while cost of funds is a key measure of the cost
of our policyholder benefits and liabilities. Investment margin on our deferred
annuities measures our investment performance less the cost of crediting for our
deferred annuities, which make up a significant portion of our net reserve
liabilities.

Net investment earned rate is a non-GAAP measure we use to evaluate the
performance of our net invested assets that does not correspond to GAAP net
investment income. Net investment earned rate is computed as the income from our
net invested assets divided by the average net invested assets, excluding the
impacts of our investment in Apollo, for the relevant period. To enhance the
ability to analyze these measures across periods, interim periods are
annualized. The adjustments to net investment income to arrive at our net
investment earned rate add (a) alternative investment gains and losses, (b)
gains and losses related to trading securities for CLOs, (c) net VIE impacts
(revenues, expenses and noncontrolling interest), (d) forward points gains and
losses on foreign exchange derivative hedges and (e) the change in fair value of
reinsurance assets, and removes the proportionate share of the ACRA net
investment income associated with the ACRA noncontrolling interest as well as
the gain or loss on our investment in Apollo. We include the income and assets
supporting our change in fair value of reinsurance assets 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 change in fair value of reinsurance
assets. 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 funds includes liability costs related to cost of crediting on both
deferred annuities and institutional products as well as other liability costs,
but does not include the proportionate share of the ACRA cost of funds
associated with the noncontrolling interest. Cost of funds is computed as the
total liability costs divided by the average net invested assets, excluding our
investment in Apollo, for the relevant period. To enhance the ability to analyze
these measures across periods, interim periods are annualized.

Cost of crediting includes the costs for both deferred annuities and
institutional products. Cost of crediting on deferred annuities 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. Cost of
crediting on institutional products is comprised of (i) pension group annuity
costs, including interest credited, benefit payments and other reserve changes,
net of premiums received when issued, and (ii) funding agreement costs,
including the interest payments and other reserve changes. Cost of crediting is
computed as the cost of crediting for deferred annuities and institutional
products divided by the average net invested assets, excluding the investment in
Apollo, for the relevant periods. Cost of crediting on deferred annuities is
computed as the net interest credited on fixed strategies and option costs on
indexed annuity strategies divided by the average net account value of our
deferred annuities. Cost of crediting on institutional products is computed as
the pension group annuity and funding agreement costs divided by the average net
institutional reserve liabilities. Our average net invested assets, excluding
our investment in Apollo, net account values and net institutional reserve
liabilities are averaged over the number of quarters in the relevant period to
obtain our associated cost of crediting for such period. To enhance the ability
to analyze these measures across periods, interim periods are annualized.

Other liability costs include DAC, DSI and VOBA amortization, change in rider
reserves, the cost of liabilities on products other than deferred annuities and
institutional products, excise taxes, premiums, product charges and other
revenues. We believe a measure like other liability costs is useful in analyzing
the trends of our core business operations and profitability. While we believe
other liability costs is a meaningful financial metric and enhances our
understanding of the underlying profitability drivers of our business, it should
not be used as a substitute for total benefits and expenses presented under
GAAP.

Net investment earned rate, cost of funds, net investment spread and investment
margin on deferred annuities are non-GAAP measures we use to evaluate the
profitability of our business. We believe these metrics are useful in analyzing
the trends of our business operations, profitability and pricing discipline.
While we believe each of these metrics 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,
interest sensitive contract benefits or total benefits and expenses presented
under GAAP.

Operating expenses excludes integration, restructuring and other non-operating
expenses, stock compensation expense, interest expense and policy acquisition
expenses. We believe a measure like operating expenses is useful in analyzing
the trends of our core business operations and profitability. While we believe
operating expenses is a meaningful financial metric and enhances our
understanding of the underlying profitability drivers of our business, it should
not be used as a substitute for policy and other operating expenses presented
under GAAP.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Net Invested Assets

In managing our business, we analyze net invested assets, which does not
correspond to total investments, including investments in related parties, as
disclosed in our consolidated financial statements and notes thereto. Net
invested assets represents the investments that directly back our net reserve
liabilities as well as surplus assets. Net invested assets, excluding our
investment in Apollo, is used in the computation of net investment earned rate,
which allows us to analyze the profitability of our investment portfolio. Net
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) VIE assets, liabilities and
noncontrolling interest adjustments, (f) net investment payables and
receivables, (g) policy loans ceded (which offset the direct policy loans in
total investments) and (h) an allowance for credit losses. Net 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 net 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. Net invested assets includes our proportionate share
of ACRA investments, based on our economic ownership, but does not include the
proportionate share of investments associated with the noncontrolling interest.
Net invested assets also includes our investment in Apollo. Our net invested
assets, excluding our investment in Apollo, are averaged over the number of
quarters in the relevant period to compute our net investment earned rate for
such period. While we believe net invested assets is a meaningful financial
metric and enhances our understanding of the underlying drivers of our
investment portfolio, it should not be used as a substitute for total
investments, including related parties, presented under GAAP.

Net Reserve Liabilities

In managing our business, we also analyze net reserve liabilities, which does
not correspond to total liabilities as disclosed in our consolidated financial
statements and notes thereto. Net reserve liabilities represent our policyholder
liability obligations net of reinsurance and is used to analyze the costs of our
liabilities. Net reserve liabilities include (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. Net reserve liabilities include our proportionate
share of ACRA reserve liabilities, based on our economic ownership, but does not
include the proportionate share of reserve liabilities associated with the
noncontrolling interest. Net 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. While we
believe net reserve liabilities is a meaningful financial metric and enhances
our understanding of the underlying profitability drivers of our business, it
should not be used as a substitute for total liabilities presented under GAAP.

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
inflows generated during a specific period of time. Our sales statistics include
inflows 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). While we believe sales is a meaningful metric
and enhances our understanding of our business performance, it should not be
used as a substitute for premiums presented under GAAP.

Net Organic Growth Rate

Net organic growth rate is calculated as the net organic flows divided by
average net invested assets. Net organic flows are comprised of net organic
inflows less net outflows. Organic inflows are the deposits generated from our
organic channels, which include retail, flow reinsurance and institutional. Net
outflows are total liability outflows, including full and partial withdrawals on
our deferred annuities, death benefits, pension group annuity benefit payments,
payments on payout annuities and maturities of our funding agreements, net of
outflows attributable to the ACRA noncontrolling interest. To enhance the
ability to analyze these measures across periods, interim periods are
annualized. We believe net organic growth rate provides a meaningful financial
metric that enables investors to assess our growth from the channels that
provide recurring inflows. Management uses net organic growth rate to monitor
our business performance and the underlying profitability drivers of our
business.


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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Consolidated Results of Operations

The following summarizes the consolidated results of operations:

                                                                       Years ended December 31,
(In millions, except per share data and percentages)           2021                 2020              2019
Revenues                                                 $    26,320             $ 14,764          $ 16,258
Benefits and expenses                                         22,134               12,558            13,956
Income before income taxes                                     4,186                2,206             2,302
Income tax expense                                               386                  285               117
Net income                                                     3,800                1,921             2,185

Less: Net income (loss) attributable to noncontrolling
interests

                                                        (59)                 380                13
Net income attributable to Athene Holding Ltd.                 3,859                1,541             2,172
Less: Preferred stock dividends                                  141                   95                36

Net income available to AHL common shareholders $ 3,718

$ 1,446 $ 2,136

Earnings per common share - basic Class A                $     19.40             $   8.51          $  11.44
Earnings per common share - diluted Class A1             $     18.71             $   8.34          $  11.41
ROE                                                             19.3     %           10.0  %           19.7  %

1 Diluted earnings per common share on a GAAP basis for Class A common shares, including diluted Class A
weighted average common shares outstanding, includes the dilutive impacts, if any, for all stock-based awards,
and for the years ended December 31, 2020 and 2019, the dilutive impacts, if any, of Class B and Class M
common shares.

Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

In this section, references to 2021 refer to the year ended December 31, 2021
and references to 2020 refer to the year ended December 31, 2020.

Net Income Available to AHL Common Shareholders

Net income available to AHL common shareholders increased by $2.3 billion, or
157%, to $3.7 billion in 2021 from $1.4 billion in 2020. ROE increased to 19.3%
in 2021 from 10.0% in 2020. The increase in net income available to AHL common
shareholders was driven by an $11.6 billion increase in revenues and a $439
million decrease in noncontrolling interests, partially offset by an increase of
$9.6 billion in benefits and expenses and a $101 million increase in income tax
expense.

Revenues

Revenues increased by $11.6 billion to $26.3 billion in 2021 from $14.8 billion
in 2020. The increase was driven by an increase in premiums, an increase in net
investment income and an increase in investment related gains and losses.

Premiums increased by $8.3 billion to $14.3 billion in 2021 from $6.0 billion in
2020, driven by higher pension group annuity premiums compared to the prior
year.

Net investment income increased by $2.3 billion to $7.2 billion in 2021 from
$4.9 billion in 2020, primarily driven by growth in our investment portfolio
attributed to strong net inflows during the previous twelve months as well as
the Jackson reinsurance transaction, favorable alternative investment
performance, the favorable change in the fair value of our investment in Apollo
of $639 million mainly attributable to the increase in valuation price compared
to prior year and the early redemptions of two loans. These were partially
offset by lower new money rates reflecting the prolonged low interest rate
environment and lower floating rate investment income due to the low interest
rate environment.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Investment related gains and (losses) increased by $879 million to $4.2 billion
in 2021 from $3.3 billion in 2020, primarily due to the change in fair value of
FIA hedging derivatives, foreign exchange gains on derivatives, an increase in
the fair value of equity securities and an increase in realized gains on AFS
securities, partially offset by the change in fair value of reinsurance assets
and a decrease in the change in fair value of trading securities. The change in
fair value of FIA hedging derivatives increased $1.6 billion driven by more
favorable performance of the indices upon which our call options are based and
an increase in derivatives hedging our FIA products resulting from strong growth
in our FIA block of business over the previous twelve months. The majority of
our call options are based on the S&P 500 index which increased 26.9% in 2021,
compared to an increase of 16.3% in 2020. The increase in foreign exchange gains
on derivatives reflects additional business denominated in foreign currencies
including recent funding agreement issuances. The increase in the fair value of
equity securities was primarily due to an increase in the market value of our
equity position in Jackson. The increase in realized gains on AFS securities was
primarily driven by an increase in sales of corporate securities. The change in
fair value of reinsurance assets decreased $2.1 billion primarily driven by the
change in the value of the underlying assets related to the increase in US
Treasury rates compared to a decrease in the prior year. The unfavorable change
in fair value of reinsurance assets was magnified by the growth in our
reinsurance asset portfolio as a result of the Jackson reinsurance transaction.
The unfavorable change in fair value of trading securities was primarily due to
a decrease in AmerUs Closed Block assets of $160 million primarily related to
the increase in US Treasury rates.

Benefits and Expenses

Benefits and expenses increased by $9.6 billion to $22.1 billion in 2021 from
$12.6 billion in 2020. The increase was driven by an increase in future policy
and other policy benefits, an increase in interest sensitive contract benefits,
an increase in DAC, DSI and VOBA amortization and an increase in policy and
other operating expenses. Our annual unlocking of assumptions resulted in an
increase in benefits and expenses of $47 million, compared to a decrease of $77
million in 2020. The 2021 unlocking was driven by a decrease of $59 million in
FIA embedded derivative liabilities and an increase of $107 million related to
DAC, DSI, VOBA and rider reserves, compared to a decrease of $110 million in FIA
embedded derivative liabilities and an increase of $34 million related to DAC,
DSI, VOBA and rider reserves in 2020.

Future policy and other policy benefits increased by $8.5 billion to $15.7
billion in 2021 from $7.2 billion in 2020, primarily attributable to higher
pension group annuity obligations, higher pension group annuity benefit payments
and an increase in the change in rider reserves, partially offset by a decrease
in the AmerUs closed block liability. The change in rider reserves of $170
million was primarily driven by the change in net FIA derivatives, unfavorable
unlocking and higher gross profits, partially offset by more favorable change in
actuarial experience and market impacts. Unlocking in 2021 was unfavorable $97
million related to changes in lapse assumptions, partially offset by favorable
income rider experience. The 2020 unlocking impacts were favorable $26 million
related to favorable income rider and mortality experience, partially offset by
changes in lapse assumptions and long-term net investment earned rate
assumptions.

Interest sensitive contract benefits increased by $551 million to $4.4 billion
in 2021 from $3.9 billion in 2020, driven by growth in the block of business,
including the Jackson reinsurance transaction, and an increase in the change in
FIA fair value embedded derivatives of $150 million. The change in the FIA fair
value embedded derivatives was primarily due to the performance of the equity
indices to which our FIA policies are linked, primarily the S&P 500 index, which
experienced an increase of 26.9% in 2021, compared to an increase of 16.3% in
2020, as well as an unfavorable change in unlocking compared to the prior year.
These were partially offset by a favorable change in discount rates used in our
embedded derivative calculations as the current year experienced an increase in
discount rates compared to a decrease in rates in 2020. The FIA fair value
embedded derivatives unlocking in 2021 was $59 million favorable primarily due
to higher lapse assumptions on recently issued business, while 2020 unlocking
was $110 million favorable primarily due to lowering future option budgets.

DAC, DSI and VOBA amortization increased by $243 million to $830 million in 2021
from $587 million in 2020, primarily due to the change in net FIA derivatives,
higher gross profits and growth in the block. These impacts were partially
offset by the unfavorable change in fair value of reinsurance assets, the
favorable change in actuarial experience and market impacts and the favorable
change in unlocking. Unlocking in 2021 was $10 million unfavorable, primarily
related to changes in lapse assumptions and income rider experience, while
unlocking in 2020 was $60 million unfavorable related to changes in the
long-term net investment earned rate assumptions and mortality experience,
partially offset by lapse assumptions.

Policy and other operating expenses increased by $246 million to $1.1 billion in
2021 from $855 million in 2020, primarily driven by significant growth in the
business, the costs associated with the previously announced merger with Apollo,
a $53 million impairment of a Corporate-Owned Life Insurance (COLI) asset and
interest expense on recent debt issuances.

Taxes

Income tax expense increased by $101 million to $386 million in 2021 from $285
million in 2020, primarily driven by higher income subject to tax due to the
favorable change in net FIA derivatives, unrealized gains on our investment in
Apollo, an increase in net investment income and the tax impact from the COLI
adjustment to deferred tax liabilities, partially offset by a $63 million
out-of-period adjustment in the third quarter of 2021 related to the correction
of previously disclosed errors in taxable income by jurisdiction, which resulted
in the misstatement of income tax expense, and an unfavorable change in the fair
value of reinsurance assets.

Our effective tax rate in 2021 was 9% and 13% in 2020. Historically, our
effective tax rates have varied period to period depending upon the relationship
of income and loss subject to tax compared to consolidated income and loss
before income taxes.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Noncontrolling Interests

Noncontrolling interests decreased by $439 million to $(59) million in 2021 from
$380 million in 2020, driven by an unfavorable change in fair value of
reinsurance assets as a result of more unrealized losses within reinsurance
investment portfolios, magnified by the Jackson reinsurance transaction.

Preferred Stock Dividends

Preferred stock dividends increased by $46 million to $141 million in 2021 from
$95 million in 2020, driven by dividends paid on recent preferred stock
issuances.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Consolidated Results of Operations in our Annual Report
on Form 10-K for the year ended December 31, 2020 as filed with the SEC on
February 19, 2021 (2020 Annual Report) for the results of operations discussion
for the year ended December 31, 2020 compared to the year ended December 31,
2019.


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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations by Segment

The following summarizes our adjusted operating income available to common
shareholders by segment:

                                                                          Years ended December 31,
(In millions, except per share data and percentages)              2021                  2020              2019
Net income available to AHL common shareholders           $      3,718               $  1,446          $  2,136
Non-operating adjustments
Realized gains on sale of AFS securities                           545                     27               125
Unrealized, allowances and other investment gains
(losses)                                                           189                   (152)               (4)
Change in fair value of reinsurance assets                        (629)                   792             1,411
Offsets to investment gains (losses)                                55                   (159)             (538)
Investment gains, net of offsets                                   160                    508               994
Change in fair values of derivatives and embedded
derivatives - FIAs, net of offsets                                 692                   (235)              (65)
Integration, restructuring and other non-operating
expenses                                                          (124)                   (10)              (70)
Stock compensation expense                                          (2)                   (11)              (12)

Income tax expense - non-operating                                 (74)                   (48)                -
Less: Total non-operating adjustments                              652                    204               847
Adjusted operating income available to common
shareholders                                              $      3,066      

$ 1,242 $ 1,289

Adjusted operating income (loss) available to common
shareholders by segment
Retirement Services                                       $      2,423               $  1,266          $  1,322
Corporate and Other                                                643                    (24)              (33)
Adjusted operating income available to common
shareholders                                              $      3,066      

$ 1,242 $ 1,289

Adjusted operating earnings per common share1             $      15.43               $   6.42          $   6.97
Adjusted operating ROE                                            23.1       %           12.1  %           14.1  %
Retirement Services adjusted operating ROE                        25.1       %           16.9  %           17.3  %

1 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 dilutive impacts, if any, for all stock-based awards, and for the years ended December 31, 2020 and
2019, the dilutive impacts, if any, of Class B and Class M common shares, 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.

Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

Adjusted Operating Income Available to Common Shareholders

Adjusted operating income available to common shareholders increased by $1.8
billion, or 147%, to $3.1 billion in 2021 from $1.2 billion in 2020. Adjusted
operating ROE was 23.1%, up from 12.1% in 2020. Adjusted operating income
available to common shareholders excluding the investment in Apollo, net of tax
increased by $1.3 billion, or 121%, to $2.4 billion in 2021 from $1.1 billion in
2020. The increase in adjusted operating income available to common shareholders
was driven by an increase in our Retirement Services segment of $1.2 billion and
an increase in our Corporate and Other segment of $667 million.

Our consolidated net investment earned rate was 4.42% in 2021, an increase from
4.01% in 2020, primarily due to the favorable performance of our alternative
investment portfolio, partially offset by lower returns in our fixed and other
investment portfolio. Alternative net investment earned rate was 21.37% in 2021,
an increase from 8.01% in 2020, primarily driven by higher returns on real
estate funds, Venerable, MidCap and an increase in the market value of our
equity position in Jackson, partially offset by less favorable AmeriHome income.
Additionally, the first half of the prior year experienced unfavorable
performance of alternative investments attributed to the economic downturn from
the spread of COVID-19. Fixed and other net investment earned rate was 3.51% in
2021, a decrease from 3.82% in 2020, primarily driven by lower new money rates
reflecting the prolonged low interest rate environment, lower floating rate
investment income and favorable prior year non-recurring adjustment on
derivative collateral, partially offset by the early redemptions of two loans in
the current year.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Non-operating Adjustments

Non-operating adjustments increased by $448 million to $652 million in 2021 from
$204 million in 2020. The increase in non-operating adjustments was primarily
driven by the change in net FIA derivatives and investment gains, partially
offset by the unfavorable change in fair value of reinsurance assets and higher
non-operating expenses. Net FIA derivatives were favorable by $927 million
primarily due to the favorable change in discount rates used in our embedded
derivative calculations and more favorable performance of the equity indices to
which our FIA policies are linked. FIA embedded derivative unlocking, net of
DAC, DSI, VOBA, rider reserve and noncontrolling interest offsets, was favorable
by $32 million in both 2021 and 2020. The current year unlocking was primarily
driven by higher lapse rates on recently issued business, while the 2020
unlocking was primarily driven by lowering future option budgets. Investment
gains were primarily driven by realized gains on the sale of AFS securities,
foreign exchange gains and a favorable change in the provision for credit
losses. The increase in realized gains on AFS securities was primarily due to an
increase in sales of corporate securities and the redeployment of the Jackson
reinsurance portfolio. The increase in foreign exchange gains reflects
additional business denominated in foreign currencies including recent funding
agreement issuances. The favorable change in the provision for credit losses of
$73 million (net of noncontrolling interests) was primarily due to the initial
establishment of the allowance in the first quarter of 2020 as well as
unfavorable prior year impacts reflecting the economic downturn from the spread
of COVID-19. The change in fair value of reinsurance assets was unfavorable by
$1.4 billion primarily driven by the increase in US Treasury rates in the
current year compared to a decrease in the prior year. The increase in
non-operating expenses was primarily due to the costs associated with the
previously announced merger with Apollo and a $53 million impairment of a COLI
asset.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations by Segment in our 2020 Annual
Report for the results of operations by segment discussion for the year ended
December 31, 2020 compared to the year ended December 31, 2019.

Retirement Services

Retirement Services is comprised of our United States and Bermuda operations
which issue and reinsure retirement savings products and institutional products.
Retirement Services has retail operations, which provide annuity retirement
solutions to our policyholders. Retirement Services also has reinsurance
operations, which reinsure FIAs, MYGAs, traditional one year guarantee fixed
deferred annuities, immediate annuities and institutional products from our
reinsurance partners. In addition, our institutional operations, including
funding agreements and pension group annuity obligations, are included in our
Retirement Services segment.

Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020

Adjusted Operating Income Available to Common Shareholders

Adjusted operating income available to common shareholders increased by $1.2
billion, or 91%, to $2.4 billion in 2021, from $1.3 billion in 2020. Adjusted
operating ROE was 25.1%, up from 16.9% in the prior period. The increase in
adjusted operating income available to common shareholders was driven by higher
net investment earnings and lower operating income taxes as a result of a
decrease in taxable earnings, partially offset by higher cost of funds and
higher operating expenses mainly attributed to significant growth in the
business. Net investment earnings increased $1.5 billion, primarily driven by
the favorable alternative investment performance, $27.2 billion of growth in our
average net invested assets from prior year attributed to the strong growth in
inflows as well as the Jackson reinsurance transaction and the early redemptions
of two loans, partially offset by lower new money rates reflecting the prolonged
low interest rate environment, lower floating rate investment income and a
favorable prior year non-recurring adjustment on derivative collateral. Cost of
funds were $418 million higher primarily related to an increase in cost of
crediting as a result of growth in the blocks of business. Other liability costs
were higher primarily driven by higher gross profits and the unfavorable change
in unlocking of $97 million, partially offset by the favorable change in rider
reserves and DAC amortization reflecting the more favorable change in actuarial
experience and market impacts. Unlocking, net of noncontrolling interest, was
unfavorable $91 million reflecting unfavorable lapse assumptions, partially
offset by income rider experience, compared to favorable unlocking of $6 million
in 2020 primarily driven by favorable income rider experience and mortality
updates, largely offset by long-term net investment earned rate and lapse
assumptions.

Net Investment Spread

                                                   Years ended December 31,
                                                 2021                2020        2019
         Net investment earned rate                     4.30  %     4.04  %     4.43  %
         Cost of funds                                  2.53  %     2.73  %     2.93  %
         Net investment spread                          1.77  %     1.31  %     1.50  %



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Net investment spread, which measures the spread on our investment performance
less the total cost of our liabilities, increased 46 basis points to 1.77% in
2021 from 1.31% in 2020. Net investment earned rate increased 26 basis points
due to a higher alternative net investment earned rate, partially offset by the
decline in the fixed and other net investment earned rate. The alternative net
investment earned rate increased to 21.30% in 2021, from 9.25% in 2020,
primarily driven by higher returns on real estate funds, higher Venerable
returns attributed to a valuation increase related to the announced reinsurance
agreement with Equitable Financial Life Insurance Company and higher MidCap
returns as a result of a valuation increase in the year relating to capital
raise price at premium compared to a decrease in valuation in the prior year,
partially offset by less favorable AmeriHome income as a result of the sale in
April of 2021 and strong earnings in the prior year. Additionally, the first
half of the prior year experienced unfavorable performance of alternative
investments attributed to the economic downturn from the spread of COVID-19. The
fixed and other net investment earned rate decreased to 3.51% in 2021, from
3.82% in 2020, primarily attributed to lower new money rates reflecting the
prolonged low interest rate environment, lower floating rate investment income
and a favorable prior year non-recurring adjustment on derivative collateral,
partially offset by the early redemptions of two loans in the current year.

Cost of funds decreased by 20 basis points to 2.53% in 2021, from 2.73% in 2020,
due to lower cost of crediting and other liability costs. Cost of crediting
decreased 10 basis points primarily driven by lower rates on recent funding
agreement issuances and pension group annuity transactions and favorable
deferred annuity rates due to favorable rate actions and lower option costs,
partially offset by an increase in the mix of the higher crediting rate
institutional block. Other liability costs decreased 10 basis points primarily
driven by the favorable change in rider reserves and DAC amortization attributed
to the favorable change in actuarial experience and market impacts, partially
offset by higher gross profits and unfavorable unlocking.

Investment Margin on Deferred Annuities

                                                         Years ended 

December 31,

                                                       2021                

2020 2019

   Net investment earned rate                                 4.30  %     

4.04 % 4.43 %

   Cost of crediting on deferred annuities                    1.85  %     

1.95 % 1.97 %

   Investment margin on deferred annuities                    2.45  %     

2.09 % 2.46 %

Investment margin on deferred annuities, which measures our investment
performance less the cost of crediting for our deferred annuities, increased by
36 basis points to 2.45% in 2021, from 2.09% in 2020, driven by an increase in
the net investment earned rate and a decrease in the cost of crediting on
deferred annuities from the prior year related to favorable rate actions and
lower option costs, as we continue to focus on pricing discipline, managing
interest rates credited to policyholders and managing the cost of options to
fund the annual index credits on our FIA products.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Retirement Services in our 2020 Annual Report for the
results of operations discussion for the Retirement Services segment for the
year ended December 31, 2020 compared to the year ended December 31, 2019.

Corporate and Other

Corporate and Other includes certain other operations related to our corporate
activities such as corporate allocated expenses, merger and acquisition costs,
debt costs, preferred stock dividends, certain integration and restructuring
costs, certain stock-based compensation and intersegment eliminations. In
addition, we also hold capital in excess of the level of capital we hold in
Retirement Services to support our operating strategy.

Adjusted Operating Income (Loss) Available to Common Shareholders

Adjusted operating income (loss) available to common shareholders increased by
$667 million to $643 million in 2021, from $(24) million in 2020. The increase
in adjusted operating income (loss) available to common shareholders was
primarily driven by a favorable change of $517 million in the fair value of our
investment in Apollo, net of tax, mainly attributable to the increase in
valuation price compared to prior year. Additionally, our alternative investment
performance was favorable due to an increase in the market value of our equity
position in Jackson as well as higher credit fund income and higher natural
resources income both related to the unfavorable economic conditions in the
prior year. These items were partially offset by higher preferred stock
dividends and interest expense due to more recent preferred share and senior
debt issuances.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Corporate and Other in our 2020 Annual Report for the
results of operations discussion for Corporate and Other for the year ended
December 31, 2020 compared to the year ended December 31, 2019.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Consolidated Investment Portfolio

We had consolidated investments, including related parties, of $212.5 billion
and $182.4 billion as of December 31, 2021 and 2020, respectively. Our
investment strategy seeks to achieve sustainable risk-adjusted returns through
the disciplined management of our investment portfolio against our long-duration
liabilities, coupled with the diversification of risk. The investment strategies
utilized by our investment manager focuses primarily on a buy and hold asset
allocation strategy that may be adjusted periodically in response to changing
market conditions and the nature of our liability profile. Substantially all of
our investment portfolio is managed by Apollo, which provides a full suite of
services, including direct investment management, asset allocation, mergers and
acquisition asset diligence, and certain operational support services, including
investment compliance, tax, legal and risk management support. Our relationship
with Apollo allows us to take advantage of our generally illiquid liability
profile by identifying investment opportunities with an emphasis on earning
incremental yield by taking liquidity and complexity risk rather than assuming
solely credit risk. Apollo's investment team and credit portfolio managers
utilize their deep experience to assist us in sourcing and underwriting complex
asset classes. Apollo has selected a diverse array of corporate bonds and more
structured, but highly rated asset classes. We also maintain holdings in
floating rate and less rate-sensitive instruments, including CLOs, non-agency
RMBS and various types of structured products. In addition to our fixed income
portfolio, we opportunistically allocate approximately 5%-6% of our portfolio to
alternative investments where we primarily focus on fixed income-like, cash
flow-based investments.

Net investment income on the condensed consolidated statements of income
included management fees under our investment management arrangements with
Apollo. For the years ended December 31, 2021, 2020 and 2019, we incurred
management fees, inclusive of base and sub-allocation fees, of $592
million, $490 million, and $426 million respectively. The total amounts we
incurred, directly and indirectly, from Apollo and its affiliates were $936
million, $716 million and $630 million, respectively, for the years ended
December 31, 2021, 2020 and 2019. Such amounts include (1) fees associated with
investment management agreements, which exclude sub-advisory fees paid to ISG
for the benefit of third-party sub-advisors but include fees charged by Apollo
to third-party cedants with respect to assets supporting obligations reinsured
to us (such fees directly reduce the settlement payments that we receive from
the third-party cedant and, as such, we, as beneficiaries of the services
performed, indirectly pay such fees), (2) fees associated with fund investments,
which include total management fees, carried interest (including unrealized but
accrued carried interest fees) and other fees on Apollo-managed funds and our
other alternative investments and (3) other fees resulting from shared services,
advisory and other agreements with Apollo or its affiliates; net of fees
incurred directly and indirectly attributable to ACRA, based upon the economic
ownership of the noncontrolling interest in ACRA.

Our net invested assets, which are those that directly back our net reserve
liabilities as well as surplus assets, were $175.3 billion and $150.2 billion as
of December 31, 2021 and 2020, respectively. Apollo's knowledge of our funding
structure and regulatory requirements allows it to design customized strategies
and investments for our portfolio. Apollo manages our asset portfolio within the
limits and constraints set forth in our Investment and Credit Risk Policy. Under
this policy, we set limits on investments in our portfolio by asset class, such
as corporate bonds, emerging markets securities, municipal bonds, non-agency
RMBS, CMBS, CLOs, commercial mortgage whole loans and mezzanine loans and
investment funds. We also set credit risk limits for exposure to a single issuer
that vary based on the issuer's ratings. In addition, our investment portfolio
is constrained by its scenario-based capital ratio limit and its stressed
liquidity limit.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following table presents the carrying values of our total investments and
investments in related parties:

                                                        December 31, 2021                          December 31, 2020
                                                 Carrying          Percent 

of Total Carrying Percent of Total
(In millions, except percentages)

                  Value                                      Value
AFS securities, at fair value                  $  100,159                   47.1  %       $   82,853                   45.4  %
Trading securities, at fair value                   2,056                    1.0  %            2,093                    1.2  %
Equity securities                                   1,170                    0.6  %              532                    0.3  %
Mortgage loans, net of allowances                  22,557                   10.6  %           15,264                    8.4  %
Investment funds                                    1,407                    0.7  %              803                    0.4  %
Policy loans                                          312                    0.1  %              369                    0.2  %
Funds withheld at interest                         43,907                   20.7  %           48,612                   26.7  %
Derivative assets                                   4,387                    2.1  %            3,523                    1.9  %
Short-term investments, at fair value                 139                    0.1  %              222                    0.1  %
Other investments, net of allowances                1,473                    0.7  %              572                    0.3  %
Total investments                                 177,567                   83.7  %          154,843                   84.9  %
Investments in related parties
AFS securities, at fair value                      10,402                    4.9  %            6,520                    3.6  %
Trading securities, at fair value                   1,781                    0.8  %            1,529                    0.8  %
Equity securities, at fair value                      284                    0.1  %               72                      -  %
Mortgage loans, net of allowances                   1,591                    0.7  %              674                    0.4  %
Investment funds                                    8,459                    4.0  %            5,284                    2.9  %
Funds withheld at interest                         12,207                    5.7  %           13,030                    7.1  %

Other investments, net of allowances                  222                    0.1  %              469                    0.3  %
Total related party investments                    34,946                   16.3  %           27,578                   15.1  %
Total investments including related party      $  212,513                  100.0  %       $  182,421                  100.0  %



The increase in our total investments, including related party, as of
December 31, 2021 of $30.1 billion compared to December 31, 2020 was primarily
driven by growth from gross organic inflows of $37.0 billion in excess of gross
liability outflows of $17.5 billion, reinvestment of earnings, an increase in
the market valuations of several investment funds, the deployment of proceeds
from the issuances of $2.5 billion of uncommitted short-term repurchase
obligations and $1.0 billion of debt,and an increase in derivative assets. These
increases were partially offset by unrealized losses on AFS securities in the
year ended December 31, 2021 of $2.9 billion attributed to an increase in US
Treasury rates.

Our investment portfolio consists largely of high quality fixed maturity
securities, loans and short-term investments, as well as additional
opportunistic holdings in investment funds and other instruments, including
equity holdings. Fixed maturity securities and loans include publicly issued
corporate bonds, government and other sovereign bonds, privately placed
corporate bonds and loans, mortgage loans, CMBS, RMBS, CLOs and ABS.

While the substantial majority of our investment portfolio has been allocated to
corporate bonds and structured credit products, a key component of our
investment strategy is the opportunistic acquisition of investment funds with
attractive risk and return profiles. Our investment fund portfolio consists of
funds that employ various strategies including real estate and other real asset
funds, credit funds and private equity funds. We have a strong preference for
assets that have some or all of the following characteristics, among others:
(1) investments that constitute a direct investment or an investment in a fund
with a high degree of co-investment; (2) investments with credit- or debt-like
characteristics (for example, a stipulated maturity and par value), or
alternatively, investments with reduced volatility when compared to pure equity;
or (3) investments that we believe have less downside risk.

We hold derivatives for economic hedging purposes to reduce our exposure to the
cash flow variability of assets and liabilities, equity market risk, interest
rate risk, credit risk and foreign exchange risk. Our primary use of derivative
instruments relates to providing the income needed to fund the annual indexed
credits on our FIA products. We primarily use fixed indexed options to
economically hedge FIA products that guarantee the return of principal to the
policyholder and credit interest based on a percentage of the gain in a specific
market index.

With respect to derivative positions, we transact with highly rated
counterparties, and expect the counterparties to fulfill their obligations under
the contracts. We generally use industry standard agreements and annexes with
bilateral collateral provisions to further reduce counterparty credit exposure.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Related Party Investments

We hold investments in related party assets primarily comprised of AFS
securities, trading securities, investment funds and funds withheld at interest
reinsurance receivables which are primarily a result of investments over which
Apollo can exercise influence. As of December 31, 2021 and 2020, these
investments totaled $34.9 billion, or 14.8%, and $27.6 billion, or 13.5%, of our
total assets, respectively. Related party AFS and trading securities primarily
consist of structured securities for which Apollo is the manager of the
underlying securitization vehicle and securities issued by Apollo direct
origination platforms including Wheels/Donlen, PK AirFinance, MidCap and, until
its sale in April 2021, AmeriHome. In each case, the underlying collateral,
borrower or other credit party is generally unaffiliated with us. Related party
investment funds include strategic investments in direct origination platforms
and insurance companies, investments in Apollo managed funds and our investment
in Apollo. The funds withheld at interest related party amounts are primarily
comprised of the Venerable reinsurance portfolios, which are considered related
party even though a significant majority of the underlying assets within the
investment portfolios do not have a related party affiliation.

As of December 31, 2021, the majority of the related party investments, or 9.2%
of our total assets, were related to the Venerable reinsurance portfolio and
securities for which Apollo is the manager of the securitization vehicle, but
the underlying collateral, borrower or other credit party is unaffiliated with
us. Approximately 5.6% of total assets were comprised of strategic investments
in affiliated companies or Apollo funds. The related party net invested assets,
which look through to the underlying assets of the funds withheld and modco
reinsurance portfolios' investments, were $29.4 billion, or 16.8% of our total
net invested assets as of December 31, 2021. Approximately 7.8% of net invested
assets were comprised of securitizations where Apollo was the manager of the
securitization vehicle but the underlying collateral, borrower or other credit
party is unaffiliated with us, while 9.0% was comprised of strategic investments
in affiliated companies or Apollo funds.

AFS Securities

We invest in AFS securities and attempt to source investments that match our
future cash flow needs. However, we may sell any of our investments in advance
of maturity to timely satisfy our liabilities as they become due or in order to
respond to a change in the credit profile or other characteristics of the
particular investment.

AFS securities are carried at fair value, less allowances for expected credit
losses, on our consolidated balance sheets. Changes in fair value of our AFS
securities, net of related DAC, DSI and VOBA amortization and the change in
rider reserves, are charged or credited to other comprehensive income, net of
tax. All changes in the allowance for expected credit losses, whether due to
passage of time, change in expected cash flows or change in fair value are
recorded through credit loss expense within investment related gains (losses) on
the consolidated statements of income.

The distribution of our AFS securities, including related parties, by type is as
follows:

                                                                                                  December 31, 2021
                                                                    Allowance for                                      Unrealized                               Percent of
(In millions, except percentages)           Amortized Cost          Credit Losses           Unrealized Gains             Losses             Fair Value             Total
AFS securities
US government and agencies                $           231          $           -          $               2          $        (10)         $      223                 0.2  %
US state, municipal and political
subdivisions                                        1,081                      -                        134                    (2)              1,213                 1.1  %
Foreign governments                                 1,110                      -                         35                   (17)              1,128                 1.0  %
Corporate                                          62,817                      -                      4,060                  (651)             66,226                59.9  %
CLO                                                13,793                      -                         44                  (185)             13,652                12.4  %
ABS                                                 8,890                    (17)                       151                   (35)              8,989                 8.1  %
CMBS                                                2,764                     (3)                        56                   (59)              2,758                 2.5  %
RMBS                                                5,772                   (103)                       326                   (25)              5,970                 5.4  %
Total AFS securities                               96,458                   (123)                     4,808                  (984)            100,159                90.6  %
AFS securities - related party
Corporate                                             842                      -                         19                    (2)                859                 0.8  %
CLO                                                 2,573                      -                          5                   (29)              2,549                 2.3  %
ABS                                                 6,986                      -                         61                   (53)              6,994                 6.3  %
Total AFS securities - related party               10,401                      -                         85                   (84)             10,402                 9.4  %
Total AFS securities including related
party                                     $       106,859          $        (123)         $           4,893          $     (1,068)         $  110,561               100.0  %


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                                                                                               December 31, 2020
                                          Amortized          Allowance for                                      Unrealized                                Percent of
(In millions, except percentages)            Cost            Credit Losses           Unrealized Gains             Losses              Fair Value             Total
AFS securities
US government and agencies               $     349          $           -          $               3          $         (1)         $       351                 0.4  %
US state, municipal and political
subdivisions                                   864                      -                        169                     -                1,033                 1.2  %
Foreign governments                            330                      -                         38                     -                  368                 0.4  %
Corporate                                   51,934                     (6)                     6,368                  (116)              58,180                65.1  %
CLO                                          9,631                     (1)                       145                  (206)               9,569                10.7  %
ABS                                          4,259                     (6)                       140                  (123)               4,270                 4.8  %
CMBS                                         2,165                    (10)                        85                   (71)               2,169                 2.4  %
RMBS                                         6,568                    (80)                       447                   (22)               6,913                 7.7  %
Total AFS securities                        76,100                   (103)                     7,395                  (539)              82,853                92.7  %
AFS securities - related party
Corporate                                      213                      -                          2                     -                  215                 0.2  %
CLO                                          1,511                     (1)                        23                   (13)               1,520                 1.7  %
ABS                                          4,720                      -                         95                   (30)               4,785                 5.4  %

Total AFS securities - related party         6,444                     (1)                       120                   (43)               6,520                 7.3  %
Total AFS securities including related
party                                    $  82,544          $        (104)         $           7,515          $       (582)         $    89,373               100.0  %



We maintain a diversified AFS portfolio of corporate fixed maturity securities
across industries and issuers, and a diversified portfolio of structured
securities. The composition of our AFS securities, including related parties, is
as follows:

                                                               December 31, 2021                       December 31, 2020
                                                         Fair Value        

Percent of Fair Value Percent of
(In millions, except percentages)

    Total                                  Total
Corporate
Industrial other1                                      $    23,882                21.6  %       $  20,637                23.1  %
Financial                                                   21,537                19.5  %          17,759                19.9  %
Utilities                                                   14,290                12.9  %          13,471                15.1  %
Communication                                                3,492                 3.2  %           3,155                 3.5  %
Transportation                                               3,884                 3.5  %           3,373                 3.8  %
Total corporate                                             67,085                60.7  %          58,395                65.4  %
Other government-related securities
US state, municipal and political subdivisions               1,213                 1.1  %           1,033                 1.2  %
Foreign governments                                          1,128                 1.0  %             368                 0.4  %
US government and agencies                                     223                 0.2  %             351                 0.4  %
Total non-structured securities                             69,649                63.0  %          60,147                67.4  %
Structured securities
CLO                                                         16,201                14.7  %          11,089                12.4  %
ABS                                                         15,983                14.4  %           9,055                10.1  %
CMBS                                                         2,758                 2.5  %           2,169                 2.4  %
RMBS
Agency                                                          23                   -  %              29                   -  %
Non-agency                                                   5,947                 5.4  %           6,884                 7.7  %
Total structured securities                                 40,912                37.0  %          29,226                32.6  %
Total AFS securities including related party           $   110,561               100.0  %       $  89,373               100.0  %

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

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The fair value of our AFS securities, including related parties, was $110.6
billion and $89.4 billion as of December 31, 2021 and 2020, respectively. The
increase was mainly driven by strong growth from organic inflows in excess of
liability outflows, reinvestment of earnings and the deployment of proceeds from
the issuance of debt. These increases were partially offset by unrealized losses
on AFS securities in the year ended December 31, 2021 of $2.9 billion attributed
to an increase in US Treasury rates.


The Securities Valuation Office (SVO) of the NAIC is responsible for the credit
quality assessment and valuation of securities owned by state regulated
insurance companies. Insurance companies report ownership of securities to the
SVO when such securities are eligible for filing on the relevant schedule of the
NAIC Financial Statement. The SVO conducts credit analysis on these securities
for the purpose of assigning an NAIC designation and/or unit price. Generally,
the process for assigning an NAIC designation varies based upon whether a
security is considered "filing exempt" (General Designation Process). Subject to
certain exceptions, a security is typically considered "filing exempt" if it has
been rated by a Nationally Recognized Statistical Rating Organization (NRSRO).
For securities that are not "filing exempt," insurance companies assign
temporary designations based upon a subjective evaluation of credit quality. The
insurance company generally must then submit the securities to the SVO within
120 days of acquisition to receive an NAIC designation. For securities
considered "filing exempt," the SVO utilizes the NRSRO rating and assigns an
NAIC designation based upon the following system:

                    NAIC designation1       NRSRO equivalent rating
                          1 A-G                     AAA/AA/A
                          2 A-C                       BBB
                          3 A-C                        BB
                          4 A-C                        B
                          5 A-C                       CCC
                            6                     CC and lower


1 As of December 31, 2020, the NAIC introduced 20 NAIC designation modifiers to
be applied to each NAIC designation to determine a security's NAIC designation
category (NAIC 1.A through 1.G, NAIC 2.A through 2.C, NAIC 3.A through 3.C, NAIC
4.A through 4.C, NAIC 5.A through 5.C and NAIC 6). The NAIC has approved new
unique risk-based capital charges for each of the 20 designated categories for
reporting effective December 31, 2021.

An important exception to the General Designation Process occurs in the case of
certain loan-backed and structured securities (LBaSS). The NRSRO ratings
methodology is focused on the likelihood of recovery of all contractual
payments, including principal at par, regardless of an investor's carrying
value. In effect, the NRSRO rating assumes that the holder is the original
purchaser at par. In contrast, the SVO's LBaSS methodology is focused on
determining the risk associated with the recovery of the amortized cost of each
security. Because the NAIC's methodology explicitly considers amortized cost and
the likelihood of recovery of such amount, we view the NAIC's methodology as the
most appropriate means of evaluating the credit quality of our fixed maturity
portfolio since a large portion of our holdings were purchased and are carried
at significant discounts to par.

The SVO has developed a designation process and provides instruction on modeled
LBaSS. For modeled LBaSS, the process is specific to the non-agency RMBS and
CMBS asset classes. In order to establish ratings at the individual security
level, the SVO obtains loan-level analysis of each RMBS and CMBS using a
selected vendor's proprietary financial model. The SVO ensures that the vendor
has extensive internal quality-control processes in place and the SVO conducts
its own quality-control checks of the selected vendor's valuation process. The
SVO has retained the services of Blackrock, Inc. (Blackrock) to model non-agency
RMBS and CMBS owned by US insurers for all years presented herein. Blackrock
provides five prices (breakpoints), based on each US insurer's statutory book
value price, to utilize in determining the NAIC designation for each modeled
LBaSS.

The NAIC designation determines the associated level of risk-based capital that
an insurer is required to hold for all securities owned by the insurer. In
general, under the modeled LBaSS process, the larger the discount to par value
at the time of determination, the higher the NAIC designation the LBaSS will
have.
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A summary of our AFS securities, including related parties, by NAIC designation
is as follows:

                                                           December 31, 2021                                              December 31, 2020
                                        Amortized Cost          Fair Value           Percent of          Amortized           Fair Value           Percent of
(In millions, except percentages)                                                      Total                Cost                                    Total
NAIC designation
1 A-G                                 $        49,639          $   51,514                 46.6  %       $  38,171          $    41,532                 46.5  %
2 A-C                                          51,587              53,398                 48.3  %          38,231               41,704                 46.7  %
Total investment grade                        101,226             104,912                 94.9  %          76,402               83,236                 93.2  %
3 A-C                                           4,199               4,247                  3.8  %           4,777                4,853                  5.4  %
4 A-C                                           1,113               1,100                  1.0  %           1,191                1,145                  1.3  %
5 A-C                                              94                  88                  0.1  %             149                  114                  0.1  %
6                                                 227                 214                  0.2  %              25                   25                    -  %
Total below investment grade                    5,633               5,649                  5.1  %           6,142                6,137                  6.8  %
Total AFS securities including
related party                         $       106,859          $  110,561                100.0  %       $  82,544          $    89,373                100.0  %



A significant majority of our AFS portfolio, 94.9% and 93.2% as of December 31,
2021 and 2020, respectively, was invested in assets considered investment grade
with a NAIC designation of 1 or 2.

A summary of our AFS securities, including related parties, by NRSRO ratings is
set forth below:

                                                              December 31, 2021                          December 31, 2020
                                                      Fair Value             Percent of           Fair Value          Percent of
(In millions, except percentages)                                               Total                                    Total
NRSRO rating agency designation
AAA/AA/A                                           $       44,501                  40.2  %       $  33,553                  37.5  %
BBB                                                        47,636                  43.1  %          34,404                  38.5  %
Non-rated1                                                 10,754                   9.7  %          12,732                  14.3  %
Total investment grade                                    102,891                  93.0  %          80,689                  90.3  %
BB                                                          3,713                   3.4  %           4,020                   4.5  %
B                                                             946                   0.9  %           1,030                   1.2  %
CCC                                                         1,356                   1.2  %           1,557                   1.7  %
CC and lower                                                  755                   0.7  %             973                   1.1  %
Non-rated1                                                    900                   0.8  %           1,104                   1.2  %
Total below investment grade                                7,670                   7.0  %           8,684                   9.7  %

Total AFS securities including related party $ 110,561

       100.0  %       $  89,373                 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. With respect to modeled LBaSS, the NAIC designation methodology differs in significant respects from
the NRSRO rating methodology.

Consistent with the NAIC Process and Procedures Manual, an NRSRO rating was
assigned based on the following criteria: (a) the equivalent S&P rating when the
security is rated by one NRSRO; (b) the equivalent S&P rating of the lowest
NRSRO when the security is rated by two NRSROs; and (c) the equivalent S&P
rating of the second lowest NRSRO when the security is rated by three or more
NRSROs. If the lowest two NRSRO ratings are equal, then such rating will be the
assigned rating. NRSRO ratings available for the periods presented were S&P,
Fitch, Moody's Investor Service, DBRS, and Kroll Bond Rating Agency, Inc.

The portion of our AFS portfolio that was considered below investment grade
based on NRSRO ratings was 7.0% and 9.7% as of December 31, 2021 and 2020,
respectively. The primary driver of the difference in the percentage of
securities considered below investment grade by NRSRO as compared to the
securities considered below investment grade by the NAIC is the difference in
methodologies between the NRSRO and NAIC for RMBS due to investments acquired
and/or carried at a discount to par value, as discussed above.

As of December 31, 2021 and 2020, non-rated securities were comprised 73% and
54%, respectively, of corporate private placement securities for which we have
not sought individual ratings from an NRSRO, and 17% and 18%, respectively, of
RMBS, many of which were acquired at a significant discount to par. We rely on
internal analysis and designations assigned by the NAIC to evaluate the credit
risk of our portfolio. As of each of December 31, 2021 and 2020, 92% of the
non-rated securities were designated NAIC 1 or 2.

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Asset-backed Securities - We invest in ABS which are securitized by pools of
assets such as consumer loans, automobile loans, student loans, insurance-linked
securities, operating cash flows of corporations and cash flows from various
types of business equipment. Our ABS holdings were $16.0 billion and $9.1
billion as of December 31, 2021 and 2020, respectively.

A summary of our ABS portfolio, including related parties, by NAIC designations
and NRSRO quality ratings is as follows:

                                                         December 31, 2021                        December 31, 2020
                                                  Fair Value          Percent of           Fair Value          Percent of
(In millions, except percentages)                                        Total                                    Total
NAIC designation
1 A-G                                            $   8,089                  50.6  %       $   4,056                  44.8  %
2 A-C                                                7,047                  44.1  %           4,018                  44.4  %
Total investment grade                              15,136                  94.7  %           8,074                  89.2  %
3 A-C                                                  643                   4.0  %             700                   7.7  %
4 A-C                                                  200                   1.3  %             265                   2.9  %
5 A-C                                                    4                     -  %              16                   0.2  %
6                                                        -                     -  %               -                     -  %
Total below investment grade                           847                   5.3  %             981                  10.8  %
Total AFS ABS including related party            $  15,983                 100.0  %       $   9,055                 100.0  %

NRSRO rating agency designation
AAA/AA/A                                         $   7,892                  49.4  %       $   3,311                  36.6  %
BBB                                                  6,975                  43.5  %           1,580                  17.4  %
Non-rated                                              232                   1.5  %           3,106                  34.3  %
Total investment grade                              15,099                  94.4  %           7,997                  88.3  %
BB                                                     680                   4.3  %             451                   5.0  %
B                                                      200                   1.3  %             154                   1.7  %
CCC                                                      4                     -  %               7                   0.1  %
CC and lower                                             -                     -  %               -                     -  %
Non-rated                                                -                     -  %             446                   4.9  %
Total below investment grade                           884                   5.6  %           1,058                  11.7  %
Total AFS ABS including related party            $  15,983                 100.0  %       $   9,055                 100.0  %



As of December 31, 2021 and 2020, a substantial majority of our AFS ABS
portfolio, 94.7% and 89.2%, respectively, was invested in assets considered to
be investment grade based upon application of the NAIC's methodology while 94.4%
and 88.3%, respectively, of securities were considered investment grade based on
NRSRO ratings. The increase in our ABS portfolio was primarily driven by the
deployment of strong inflows into ABS securities primarily related to the assets
from the SoftBank and Wheels fleet lease transactions.

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Collateralized Loan Obligations - We also invest in CLOs which pay principal and
interest from cash flows received from underlying corporate loans. These
holdings were $16.2 billion and $11.1 billion as of December 31, 2021 and 2020,
respectively.

A summary of our AFS CLO portfolio, including related parties, by NAIC
designations and NRSRO quality ratings is as follows:

                                                         December 31, 2021                        December 31, 2020
                                                  Fair Value          Percent of           Fair Value          Percent of
(In millions, except percentages)                                        Total                                    Total
NAIC designation
1 A-G                                            $   9,957                  61.5  %       $   6,786                  61.2  %
2 A-C                                                6,096                  37.6  %           3,934                  35.5  %
Total investment grade                              16,053                  99.1  %          10,720                  96.7  %
3 A-C                                                  124                   0.8  %             356                   3.2  %
4 A-C                                                   24                   0.1  %               9                   0.1  %
5 A-C                                                    -                     -  %               4                     -  %
6                                                        -                     -  %               -                     -  %
Total below investment grade                           148                   0.9  %             369                   3.3  %
Total AFS CLO including related party            $  16,201                 100.0  %       $  11,089                 100.0  %

NRSRO rating agency designation
AAA/AA/A                                         $   9,943                  61.4  %       $   6,781                  61.2  %
BBB                                                  6,101                  37.6  %           3,930                  35.4  %
Non-rated                                                -                     -  %               9                   0.1  %
Total investment grade                              16,044                  99.0  %          10,720                  96.7  %
BB                                                     130                   0.8  %             356                   3.2  %
B                                                       27                   0.2  %               9                   0.1  %
CCC                                                      -                     -  %               4                     -  %
CC and lower                                             -                     -  %               -                     -  %
Non-rated                                                -                     -  %               -                     -  %
Total below investment grade                           157                   1.0  %             369                   3.3  %
Total AFS CLO including related party            $  16,201                 100.0  %       $  11,089                 100.0  %

As of December 31, 2021 and 2020, a substantial majority of our AFS CLO
portfolio, 99.1% and 96.7%, respectively, was invested in assets considered to
be investment grade based upon application of the NAIC's methodology. The
increase in our CLO portfolio was mainly driven by the deployment of strong
organic inflows in the current year.

Commercial Mortgage-backed Securities - A portion of our AFS portfolio is
invested in CMBS. CMBS are constructed from pools of commercial mortgages. These
holdings were $2.8 billion and $2.2 billion as of December 31, 2021 and 2020,
respectively. As of December 31, 2021 and 2020, our CMBS portfolio included $2.0
billion (74% of the total) and $1.6 billion (72% of the total), respectively, of
securities that are considered investment grade based on NAIC designations,
while $2.1 billion (75% of the total) and $1.6 billion (75% of the total),
respectively, of securities were considered investment grade based on NRSRO
ratings.

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Residential Mortgage-backed Securities - A portion of our AFS portfolio is
invested in RMBS, which are securities constructed from pools of residential
mortgages. These holdings were $6.0 billion and $6.9 billion as of December 31,
2021 and 2020, respectively.

A summary of our AFS RMBS portfolio by NAIC designations and NRSRO quality
ratings is as follows:

                                                        December 31, 2021                       December 31, 2020
                                                 Fair Value         Percent of           Fair Value          Percent of
(In millions, except percentages)                                      Total                                    Total
NAIC designation
1 A-G                                            $ 5,097                  85.4  %       $   6,196                  89.6  %
2 A-C                                                331                   5.5  %             232                   3.4  %
Total investment grade                             5,428                  90.9  %           6,428                  93.0  %
3 A-C                                                327                   5.5  %             323                   4.7  %
4 A-C                                                172                   2.9  %             120                   1.7  %
5 A-C                                                 29                   0.5  %              37                   0.5  %
6                                                     14                   0.2  %               5                   0.1  %
Total below investment grade                         542                   9.1  %             485                   7.0  %
Total AFS RMBS                                   $ 5,970                 100.0  %       $   6,913                 100.0  %

NRSRO rating agency designation
AAA/AA/A                                         $ 1,110                  18.6  %       $     872                  12.6  %
BBB                                                  522                   8.7  %             635                   9.2  %
Non-rated1                                         1,648                  27.6  %           2,187                  31.6  %
Total investment grade                             3,280                  54.9  %           3,694                  53.4  %
BB                                                   184                   3.1  %             233                   3.4  %
B                                                    193                   3.2  %             261                   3.8  %
CCC                                                1,281                  21.5  %           1,509                  21.8  %
CC and lower                                         733                  12.3  %             971                  14.1  %
Non-rated1                                           299                   5.0  %             245                   3.5  %
Total below investment grade                       2,690                  45.1  %           3,219                  46.6  %
Total AFS RMBS                                   $ 5,970                 100.0  %       $   6,913                 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 designations. The NAIC designation methodology differs in significant respects from the NRSRO
rating methodology.

A significant majority of our RMBS portfolio, 90.9% and 93.0% as of December 31,
2021 and 2020, respectively, was invested in assets considered to be investment
grade based upon an application of the NAIC designations. The NAIC's methodology
with respect to RMBS gives explicit effect to the amortized cost at which an
insurance company carries each such investment. Because we invested in RMBS
after the stresses related to US housing had caused significant downward
pressure on prices of RMBS, we carry most of our investments in RMBS at
significant discounts to par value, which results in an investment grade NAIC
designation. In contrast, our understanding is that in setting ratings, NRSROs
focus on the likelihood of recovering all contractual payments, including
principal at par value. As a result of a fundamental difference in approach, as
of December 31, 2021 and 2020, NRSRO characterized 54.9% and 53.4%,
respectively, of our RMBS portfolio as investment grade.

Unrealized Losses

Our investments in AFS securities, including related parties, are reported at
fair value with changes in fair value recorded in other comprehensive income.
Certain of our AFS securities, including related parties, have experienced
declines in fair value that we consider temporary in nature. These investments
are held to support our product liabilities, and we currently have the intent
and ability to hold these securities until recovery of the amortized cost basis
prior to sale or maturity. As of December 31, 2021, our AFS securities,
including related party, had a fair value of $110.6 billion, which was 3.5%
above amortized cost of $106.9 billion. As of December 31, 2020, our AFS
securities, including related party, had a fair value of $89.4 billion, which
was 8.3% above amortized cost of $82.5 billion.
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The following tables reflect the unrealized losses on the AFS portfolio,
including related parties, for which an allowance for credit losses has not been
recorded, by NAIC designations:

                                                                                            December 31, 2021
                                Amortized Cost of        Gross Unrealized        Fair Value of AFS          Fair Value to          Fair Value of         Gross Unrealized
(In millions, except           AFS Securities with            Losses              Securities with          Amortized Cost            Total AFS           Losses to Total
percentages)                     Unrealized Loss                                  Unrealized Loss               Ratio               Securities            AFS Fair Value
NAIC designation
1 A-G                          $         19,369          $        (338)         $         19,031                    98.3  %       $     51,514                     (0.7) %
2 A-C                                    20,849                   (475)                   20,374                    97.7  %             53,398                     (0.9) %
Total investment grade                   40,218                   (813)                   39,405                    98.0  %            104,912                     (0.8) %
3 A-C                                     1,494                    (82)                    1,412                    94.5  %              4,247                     (1.9) %
4 A-C                                       410                    (26)                      384                    93.7  %              1,100                     (2.4) %
5 A-C                                        41                     (6)                       35                    85.4  %                 88                     (6.8) %
6                                            61                    (14)                       47                    77.0  %                214                     (6.5) %
Total below investment grade              2,006                   (128)                    1,878                    93.6  %              5,649                     (2.3) %
Total                          $         42,224          $        (941)         $         41,283                    97.8  %       $    110,561                     (0.9) %



                                                                                             December 31, 2020
                                Amortized Cost of        Gross Unrealized        Fair Value of AFS          Fair Value to           Fair Value of          Gross Unrealized
(In millions, except           AFS Securities with            Losses              Securities with          Amortized Cost             Total AFS            Losses to Total
percentages)                     Unrealized Loss                                  Unrealized Loss               Ratio                Securities             AFS Fair Value
NAIC designation
1 A-G                          $          5,010          $        (129)         $          4,881                    97.4  %       $       41,532                     (0.3) %
2 A-C                                     4,732                   (168)                    4,564                    96.4  %               41,704                     (0.4) %
Total investment grade                    9,742                   (297)                    9,445                    97.0  %               83,236                     (0.4) %
3 A-C                                     1,646                   (119)                    1,527                    92.8  %                4,853                     (2.5) %
4 A-C                                       563                    (61)                      502                    89.2  %                1,145                     (5.3) %
5 A-C                                        54                    (11)                       43                    79.6  %                  114                     (9.6) %
6                                             1                      -                         1                   100.0  %                   25                        -  %
Total below investment grade              2,264                   (191)                    2,073                    91.6  %                6,137                     (3.1) %
Total                          $         12,006          $        (488)         $         11,518                    95.9  %       $       89,373                     (0.5) %

The gross unrealized losses on AFS securities, including related parties, were
$941 million and $488 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, we held $7.4 billion and $6.9 billion,
respectively, in energy sector fixed maturity securities, or 7% and 8%,
respectively, of the total fixed maturity securities, including related parties.
The gross unrealized capital losses on these securities were $35 million and $28
million, or 4% and 6% of the total unrealized losses, respectively.

Provision for Credit Losses

For our credit loss accounting policies and the assumptions used in the
allowances, see Note 1 - Business, Basis of Presentation and Significant
Accounting Policies and Note 2 - Investments to the consolidated financial
statements.

As of December 31, 2021 and December 31, 2020, we held an allowance for credit
losses on AFS securities of $123 million and $104 million, respectively. During
the year ended December 31, 2021, we recorded a change in provision for credit
losses on AFS securities of $19 million, of which $9 million had an income
statement impact and $10 million related to PCD securities. During the year
ended December 31, 2020, we recorded a change in provision for credit losses on
AFS securities of $87 million, of which $32 million had an income statement
impact. These changes were primarily driven by the establishment of the
allowance for credit losses in the first quarter of 2020 as well as an increase
in RMBS and corporate allowances in the prior year as a result of the spread of
COVID-19. The intent-to-sell impairments for the year ended December 31, 2021
and 2020 were $4 million and $17 million, respectively.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

International Exposure

A portion of our AFS securities are invested in securities with international
exposure. As of December 31, 2021 and 2020, 35% and 34%, respectively, of the
carrying value of our AFS securities, including related parties, was comprised
of securities of issuers based outside of the United States and debt securities
of foreign governments. These securities are either denominated in US dollars or
do not expose us to significant foreign currency risk as a result of foreign
currency swap arrangements.

The following table presents our international exposure in our AFS portfolio,
including related parties, by country or region:

                                                       December 31, 2021                                            December 31, 2020
                                      Amortized           Fair Value           Percent of          Amortized           Fair Value           Percent of
(In millions, except percentages)        Cost                                    Total                Cost                                    Total
Country of risk
Ireland                              $   5,172          $     5,052                 13.0  %       $   2,407          $     2,597                  8.6  %
Italy                                       30                   31                  0.1  %               6                    8                    -  %
Spain                                      216                  213                  0.5  %              51                   59                  0.2  %

Total Ireland, Italy, Greece, Spain
and Portugal1                            5,418                5,296                 13.6  %           2,464                2,664                  8.8  %
Other Europe                             8,618                8,974                 23.1  %           7,991                8,925                 29.6  %
Total Europe                            14,036               14,270                 36.7  %          10,455               11,589                 38.4  %
Non-US North America                    17,218               17,387                 44.8  %          13,188               13,335                 44.3  %
Australia & New Zealand                  2,441                2,557                  6.6  %           1,925                2,143                  7.1  %
Central & South America                  1,347                1,346                  3.5  %             620                  666                  2.2  %
Africa & Middle East                     1,966                2,019                  5.2  %           1,599                1,680                  5.6  %
Asia/Pacific                             1,256                1,262                  3.2  %             661                  712                  2.4  %
Supranational                                -                    -                    -  %               1                    1                    -  %
Total                                $  38,264          $    38,841                100.0  %       $  28,449          $    30,126                100.0  %

1 As of each of the respective periods, we had no holdings in Greece or Portugal.

Approximately 96.7% and 94.8% of these securities are investment grade by NAIC
designation as of December 31, 2021 and 2020, respectively. As of December 31,
2021, 10% of our AFS securities, including related parties, were invested in
CLOs of Cayman Islands issuers (included in Non-US North America) for which
underlying investments are largely loans to US issuers and 25% were invested in
securities of other non-US issuers.

Portugal, Ireland, Italy, Greece and Spain continue to represent credit risk as
economic conditions in these countries continue to be volatile, especially
within the financial and banking sectors. We had $5.3 billion and $2.7 billion
of exposure in these countries as of December 31, 2021 and 2020, respectively. A
significant majority of these assets relate to Ireland and are primarily made up
of Euro denominated CLOs, for which the SPV is domiciled in Ireland, but the
underlying leveraged loans involve borrowers from the broader European region.

As of December 31, 2021, we held United Kingdom and Channel Islands AFS
securities of $4.1 billion, or 3.7% of our AFS securities, including related
parties. As of December 31, 2021, these securities were in a net unrealized gain
position of $146 million. Our investment managers analyze each holding for
credit risk by economic and other factors of each country and industry.

Trading Securities

Trading securities, including related parties, were $3.8 billion and $3.6
billion as of December 31, 2021 and 2020, respectively. Trading securities are
primarily comprised of AmerUs Closed Block securities for which we have elected
the fair value option valuation, CLO and ABS equity tranche securities, MidCap
profit participating notes, structured securities with embedded derivatives and
investments which support various reinsurance arrangements.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Mortgage Loans

The following is a summary of our mortgage loan portfolio by collateral type:

                                                           December 31, 2021                          December 31, 2020
                                                  Net Carrying          

Percent of Net Carrying Percent of
(In millions, except percentages)

                     Value                 Total                Value                Total
Property type
Office building                                  $      4,870                  20.1  %       $    3,589                  22.5  %
Retail                                                  2,022                   8.4  %            2,083                  13.1  %
Apartment                                               4,626                  19.2  %            2,441                  15.3  %
Hotels                                                  1,727                   7.2  %            1,294                   8.1  %
Industrial                                              2,336                   9.7  %            1,362                   8.5  %
Other commercial1                                       1,316                   5.4  %              679                   4.3  %
Total net commercial mortgage loans                    16,897                  70.0  %           11,448                  71.8  %
Residential loans                                       7,251                  30.0  %            4,490                  28.2  %
Total mortgage loans, net of allowances          $     24,148                 100.0  %       $   15,938                 100.0  %

1 Other commercial loans include investments in nursing homes, other healthcare institutions, parking garages, storage
facilities and other commercial properties.

We invest a portion of our investment portfolio in mortgage loans, which are
generally comprised of high quality commercial first lien and mezzanine real
estate loans. Our mortgage loan holdings were $24.1 billion and $15.9 billion as
of December 31, 2021 and 2020, respectively. This included $1.9 billion of
mezzanine mortgage loans as of December 31, 2021 and 2020 respectively. We have
acquired mortgage loans through acquisitions and reinsurance arrangements, as
well as through an active program to invest in new mortgage loans. We invest in
CMLs on income producing properties including hotels, apartments, retail and
office buildings, and other commercial and industrial properties. Our RML
portfolio primarily consists of first lien RMLs collateralized by properties
located in the US. Loan-to-value ratios at the time of loan approval are
generally 75% or less.

Our mortgage loans are primarily stated at unpaid principal balance, adjusted
for any unamortized premium or discount, and net of credit loss allowances.
Interest income is accrued on the principal amount of the loan based on the
loan's contractual interest rate. Amortization of premiums and discounts is
recorded using the effective interest method. Interest income, amortization of
premiums and discounts, and prepayment fees are reported in net investment
income.

It is our policy to cease to accrue interest on loans that are over 90 days
delinquent. For loans less than 90 days delinquent, interest is accrued unless
it is determined that the accrued interest is not collectible. If a loan becomes
over 90 days delinquent, it is our general policy to initiate foreclosure
proceedings unless a workout arrangement to bring the loan current is in place.
As of December 31, 2021 and 2020, we had $990 million and $128 million,
respectively, of mortgage loans that were 90 days past due, of which $54 million
and $38 million, respectively, were in the process of foreclosure. As of
December 31, 2021 and 2020, $856 million and $0 million of mortgage loans that
were 90 days past due were related to Government National Mortgage Association
(GNMA) early buyouts that are fully or partially guaranteed and are accruing
interest. We will continue to evaluate these policies with regard to the
economic downturn brought about by the spread of COVID-19. Our ability to
initiate foreclosure proceedings may be limited by legislation passed and
executive orders issued in response to the spread of COVID-19.

See Note 2 - Investments to the consolidated financial statements for
information regarding credit loss allowance for collection loss, loan-to-value,
and debt service coverage.

As of December 31, 2021, we had a mortgage loan valuation allowance of $237
million comprised of $167 million of CML and $70 million of RML allowances. As
of December 31, 2020, we had a mortgage loan valuation allowance of $246 million
comprised of $167 million of CML and $79 million of RML allowances. During the
year ended December 31, 2021, we recorded a change in provision for credit
losses on CMLs of $0 million and RMLs of $(14) million in the consolidated
statements of income. During the year ended December 31, 2020, we recorded a
change in provision for credit losses on CMLs of $(10) million and RMLs of $29
million in the consolidated statements of income.

Investment Funds

Our investment funds investment strategy primarily focuses on funds with core
holdings of credit assets, real assets, real estate, preferred equity and income
producing assets. Our investment funds generally meet the definition of a VIE,
and in certain cases these investment funds are consolidated in our financial
statements because we meet the criteria of the primary beneficiary.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following table illustrates our investment funds, including related party:

                                                          December 31, 2021                       December 31, 2020
                                                   Carrying           Percent of            Carrying           Percent of
(In millions, except percentages)                    Value               Total               Value                Total
Investment funds
Real estate                                       $    856                   8.7  %             348                   5.7  %
Credit funds                                            86                   0.9  %             107                   1.8  %
Private equity                                         343                   3.5  %             267                   4.4  %
Real assets                                            122                   1.2  %              81                   1.3  %

Total investment funds                               1,407                  14.3  %             803                  13.2  %
Investment funds - related parties
Differentiated investments
Athora                                                 743                   7.5  %             709                  11.6  %
Wheels/Donlen                                          700                   7.1  %               -                     -  %
Catalina                                               441                   4.5  %             334                   5.5  %
Venerable                                              219                   2.2  %             123                   2.0  %
A-A Mortgage1                                           26                   0.3  %             444                   7.3  %
Other                                                  433                   4.4  %             279                   4.6  %
Total differentiated investments                     2,562                  26.0  %           1,889                  31.0  %
Real estate                                          1,507                  15.3  %             828                  13.5  %
Credit funds                                         1,198                  12.1  %             375                   6.2  %
Private equity                                         751                   7.6  %             473                   7.8  %
Natural resources                                      172                   1.7  %             113                   1.9  %
Real assets                                            157                   1.6  %             172                   2.8  %
Public equities2                                         -                     -  %             110                   1.8  %
Investment in Apollo                                 2,112                  21.4  %           1,324                  21.8  %
Total investment funds - related parties             8,459                  85.7  %           5,284                  86.8  %
Total investment funds, including related parties $  9,866                 100.0  %       $   6,087                 100.0  %

1 In April of 2021, we sold our investment in AmeriHome which is held by A-A Mortgage. Following the sale of AmeriHome, A-A
Mortgage distributed the majority of the proceeds, with the remaining residual investment expected to be distributed within
the next year. 2 In December of 2021, we sold all remaining shares of our public equity investment in OneMain Holdings, Inc.
(ticker:OMF).

Overall, the total investment funds, including related party, were $9.9 billion
and $6.1 billion as of December 31, 2021 and 2020, respectively. See Note 2 -
Investments to the consolidated financial statements for further discussion
regarding how we account for our investment funds. Our investment fund portfolio
is subject to a number of market related risks including interest rate risk and
equity market risk. Interest rate risk represents the potential for changes in
the investment fund's net asset values resulting from changes in the general
level of interest rates. Equity market risk represents potential for changes
in the investment fund's net asset values resulting from changes in equity
markets or from other external factors which influence equity markets. These
risks expose us to potential volatility in our earnings period-over-period. We
actively monitor our exposure to these risks. The increase in investment funds,
including related party, was primarily driven by the deployment into real
assets, real estate and credit funds, an increase in the valuations of our
investments in Apollo and Venerable and an investment in Wheels/Donlen,
partially offset by the sale of AmeriHome and OneMain.

Funds Withheld at Interest

Funds withheld at interest represents a receivable for amounts contractually
withheld by ceding companies in accordance with modco and funds withheld
reinsurance agreements in which we act as the reinsurer. Generally, assets equal
to statutory reserves are withheld and legally owned by the ceding company. We
hold funds withheld at interest receivables, including those held with VIAC,
Lincoln and Jackson. As of December 31, 2021, the majority of the ceding
companies holding the assets pursuant to such reinsurance agreements had a
financial strength rating of A or better (based on an A.M. Best scale).

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The funds withheld at interest is comprised of the host contract and an embedded
derivative. We are subject to the investment performance on the withheld assets
with the total return directly impacting the host contract and the embedded
derivative. Interest accrues at a risk-free rate on the host receivable and is
recorded as net investment income in the consolidated statements of income. The
embedded derivative in our reinsurance agreements is similar to a total return
swap on the income generated by the underlying assets held by the ceding
companies. The change in the embedded derivative is recorded in investment
related gains (losses). Although we do not legally own the underlying
investments in the funds withheld at interest, in each instance the ceding
company has hired Apollo to manage the withheld assets in accordance with our
investment guidelines.

The following summarizes the underlying investment composition of the funds
withheld at interest, including related parties:

                                                         December 31, 2021                        December 31, 2020
                                                   Carrying           Percent of            Carrying           Percent of
(In millions, except percentages)                   Value                Total               Value                Total
Fixed maturity securities
US government and agencies                       $      50                   0.1  %       $       -                     -  %
US state, municipal and political subdivisions         338                   0.6  %             513                   0.8  %
Foreign governments                                    553                   1.0  %             301                   0.5  %
Corporate                                           26,143                  46.5  %          34,057                  55.2  %
CLO                                                  5,322                   9.5  %           5,912                   9.6  %
ABS                                                  7,951                  14.2  %           5,212                   8.5  %
CMBS                                                 1,661                   3.0  %           2,374                   3.8  %
RMBS                                                 1,586                   2.8  %           2,270                   3.7  %
Equity securities                                      243                   0.4  %             119                   0.2  %
Mortgage loans                                       9,437                  16.8  %           8,201                  13.3  %
Investment funds                                     1,807                   3.2  %           1,155                   1.9  %
Derivative assets                                      208                   0.4  %             200                   0.3  %
Short-term investments                                  54                   0.1  %             608                   1.0  %
Other investments                                        -                     -  %              15                     -  %
Cash and cash equivalents                            1,049                   1.9  %             906                   1.5  %
Other assets and liabilities                          (288)                 (0.5) %            (201)                 (0.3) %
Total funds withheld at interest including
related party                                    $  56,114                 100.0  %       $  61,642                 100.0  %



As of December 31, 2021 and 2020, we held $56.1 billion and $61.6 billion,
respectively, of funds withheld at interest receivables, including related
party. Approximately 93.5% and 94.1% of the fixed maturity securities within the
funds withheld at interest are investment grade by NAIC designation as of
December 31, 2021 and 2020, respectively. The decrease in funds withheld at
interest, including related party, was primarily driven by run-off of the
underlying blocks of business and unrealized losses in the year ended December
31, 2021 attributed to an increase in US Treasury rates.

Derivative Instruments

We hold derivative instruments for economic hedging purposes to reduce our
exposure to cash flow variability of assets and liabilities, equity market risk,
interest rate risk, credit risk and foreign exchange risk. The types of
derivatives we may use include interest rate swaps, foreign currency swaps and
forward contracts, total return swaps, credit default swaps, variance swaps,
futures and equity options.

A discussion regarding our derivative instruments and how such instruments are
used to manage risk is included in Note 3 - Derivative Instruments to the
consolidated financial statements.

As part of our risk management strategies, management continually evaluates our
derivative instrument holdings and the effectiveness of such holdings in
addressing risks identified in our operations.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Net Invested Assets

The following summarizes our net invested assets:

                                                           December 31, 2021                           December 31, 2020
                                                  Net Invested           Percent of           Net Invested           Percent of
(In millions, except percentages)                 Asset Value1              Total             Asset Value1              Total
Corporate                                        $     75,163                  42.9  %       $     71,040                  47.3  %
CLO                                                    17,892                  10.2  %             14,609                   9.7  %
Credit                                                 93,055                  53.1  %             85,649                  57.0  %
RMBS                                                    6,969                   4.0  %              8,337                   5.6  %
CML                                                    21,438                  12.2  %             16,778                  11.2  %
RML                                                     7,116                   4.1  %              4,774                   3.2  %
CMBS                                                    3,440                   2.0  %              3,227                   2.1  %

Real estate                                            38,963                  22.3  %             33,116                  22.1  %
ABS                                                    20,376                  11.6  %             13,137                   8.7  %
Alternative investments                                 9,873                   5.6  %              6,793                   4.5  %
State, municipal, political subdivisions and
foreign government                                      2,505                   1.4  %              2,136                   1.4  %

Equity securities                                         754                   0.4  %                478                   0.3  %
Short-term investments                                    111                   0.1  %                479                   0.3  %
US government and agencies                                212                   0.1  %                206                   0.2  %
Other investments                                      33,831                  19.2  %             23,229                  15.4  %
Cash and equivalents                                    6,086                   3.5  %              5,417                   3.6  %
Policy loans and other                                  1,296                   0.7  %              1,455                   1.0  %
Net invested assets excluding investment in
Apollo                                                173,231                  98.8  %            148,866                  99.1  %
Investment in Apollo                                    2,112                   1.2  %              1,324                   0.9  %
Net invested assets                              $    175,343                 100.0  %       $    150,190                 100.0  %

1 See Key Operating and Non-GAAP Measures for the definition of net invested assets.

Our net invested assets were $175.3 billion and $150.2 billion as of
December 31, 2021 and 2020, respectively. As of December 31, 2021, our net
invested assets were mainly comprised of 42.9% of corporate securities, 27.8% of
structured securities, 16.3% of mortgage loans and 5.6% of alternative
investments. Corporate securities included $23.0 billion of private placements,
which represented 13.1% of our net invested assets. The increase in net invested
assets as of December 31, 2021 from 2020 was primarily driven by growth from net
organic inflows over liability outflows, reinvestment of earnings, an increase
in valuation of several alternative investments and the deployment of proceeds
from the issuances of short-term repurchase obligations and debt.

In managing our business, we utilize net invested assets as presented in the
above table. Net invested assets do not correspond to total investments,
including related parties, on our consolidated balance sheets, as discussed
previously in Key Operating and Non-GAAP Measures. Net invested assets represent
the investments that directly back our net reserve liabilities and surplus
assets. We believe this view of our portfolio provides a view of the assets for
which we have economic exposure. We adjust the presentation for funds withheld
and modco transactions to include or exclude the underlying investments based
upon the contractual transfer of economic exposure to such underlying
investments. We also adjust for VIEs to show the net investment in the funds,
which are included in the alternative investments line above as well as adjust
for the allowance for credit losses. Net invested assets includes our
proportionate share of ACRA investments, based on our economic ownership, but
excludes the proportionate share of investments associated with the
noncontrolling interest.

Net invested assets is utilized by management to evaluate our investment
portfolio. Net invested assets, excluding our strategic investment in Apollo, is
used in the computation of net investment earned rate, which allows us to
analyze the profitability of our investment portfolio. Net invested assets is
also used in our risk management processes for asset purchases, product design
and underwriting, stress scenarios, liquidity, and ALM.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Net Alternative Investments

The following summarizes our net alternative investments:

                                                          December 31, 2021                        December 31, 2020
                                                      Net
                                                   Invested           Percent of           Net Invested          Percent of
(In millions, except percentages)                 Asset Value            Total             Asset Value              Total
Retirement Services
Differentiated investments
MidCap                                            $    666                   6.7  %       $       611                   9.0  %
Wheels/Donlen                                          590                   6.0  %                 -                     -  %
Catalina                                               442                   4.6  %               334                   4.9  %
Venerable                                              219                   2.2  %               123                   1.8  %
A-A Mortgage1                                           32                   0.3  %               546                   8.0  %
Other                                                1,090                  11.0  %               339                   5.0  %
Total differentiated investments                     3,039                  30.8  %             1,953                  28.7  %
Real estate                                          2,673                  27.1  %             1,537                  22.6  %
Credit                                               1,163                  11.8  %               941                  13.9  %
Private equity                                       1,298                  13.1  %               831                  12.2  %
Real assets                                            330                   3.3  %               296                   4.4  %
Natural resources                                      115                   1.2  %                60                   0.9  %
Other                                                   23                   0.2  %                 -                     -  %
Total Retirement Services alternative investments    8,641                  87.5  %             5,618                  82.7  %
Corporate and Other
Athora                                                 743                   7.5  %               661                   9.7  %
Credit                                                 118                   1.2  %                93                   1.4  %
Natural resources                                      238                   2.5  %               238                   3.5  %
Equities2                                              133                   1.3  %               183                   2.7  %

Total Corporate and Other alternative investments    1,232                  12.5  %             1,175                  17.3  %
Net alternative investments                       $  9,873                 100.0  %       $     6,793                 100.0  %

1 In April of 2021, we sold our investment in AmeriHome which is held by A-A Mortgage. Following the sale of AmeriHome, A-A
Mortgage distributed the majority of the proceeds, with the remaining residual investment expected to be distributed within a
year after the sale.
2 As of December 31, 2021, equities included our public equity position in Jackson (ticker: JXN). In December of 2021, we sold
all remaining shares of our public equity investment in OneMain.

Net alternative investments were $9.9 billion and $6.8 billion as of
December 31, 2021 and 2020, respectively, representing 5.6% and 4.5% of our net
invested assets portfolio as of December 31, 2021 and 2020, respectively. The
increase in net alternative investments was primarily driven by deployment into
real estate, credit and private equity funds; investments in Wheels/Donlen, FWD
Group Holdings and Challenger; and an increase in the valuation of Venerable
less the sale of a portion of our investment, partially offset by the sales of
AmeriHome and OneMain.

Net alternative investments do not correspond to the total investment funds,
including related parties, on our consolidated balance sheets. As discussed
above in the net invested assets section, we adjust the GAAP presentation for
funds withheld, modco and VIEs. The investment in Apollo is excluded from our
alternative investments, while we include CLO and ABS equity tranche securities
in alternative investments due to their underlying characteristics and
equity-like features.

Through our relationship with Apollo, we have indirectly invested in companies
that meet the key characteristics we look for in net alternative investments.
Our two largest alternative investments are Athora and MidCap. MidCap is an
asset originator which, from time to time, provides us with access to assets for
our investment portfolio, while Athora is a strategic investment. We previously
held a stake in AmeriHome, which was also an asset originator that provided
access to assets for our investment portfolio.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Athora

Athora is a specialized insurance and reinsurance group fully focused on the
European market. Athora's principal operational subsidiaries are Athora
Netherlands N.V. in the Netherlands, Athora Belgium SA in Belgium, Athora
Lebensversicherung AG in Germany, Athora Ireland plc in Ireland, and Athora Life
Re Ltd in Bermuda. Athora deploys capital and resources to further its mission
to build a stand-alone independent and integrated insurance and reinsurance
business. Athora's growth is achieved primarily through acquisitions, portfolio
transfers and reinsurance. Athora is building a European insurance brand and has
successfully acquired, integrated, and transformed four insurance companies:
Delta Lloyd Deutschland AG (2015), Aegon Ireland plc (2018), Generali Belgium SA
(2019) and VIVAT NV (2020).

Our alternative investment in Athora had a carrying value of $743 million and
$661 million as of December 31, 2021 and 2020, respectively. Our investment in
Athora represents our proportionate share of its net asset value, which largely
reflects any contributions to and distributions from Athora and changes in its
fair value. Athora returned a net investment earned rate of 10.52%, 15.94% and
7.51% for the years ended December 31, 2021, 2020 and 2019, respectively.
Alternative investment income from Athora was $76 million, $66 million and $10
million for the years ended December 31, 2021, 2020 and 2019, respectively. The
increase in alternative investment income for the year ended December 31, 2021
compared to 2020 was primarily due to an upsize in the investment in the fourth
quarter of 2020.

MidCap

MidCap is a commercial finance company that provides various financial products
to middle-market businesses in multiple industries, primarily located in the US.
MidCap primarily originates and invests in commercial and industrial loans,
including senior secured corporate loans, working capital loans collateralized
mainly by accounts receivable and inventory, senior secured loans collateralized
by portfolios of commercial and consumer loans and related products and secured
loans to highly capitalized pharmaceutical and medical device companies, and
commercial real estate loans, including multifamily independent-living
properties, assisted living, skilled nursing and medical office properties,
warehouse, office building, hotel and other commercial use properties and
multifamily properties. MidCap originates and acquires loans using borrowings
under financing arrangements that it has in place with numerous financial
institutions. MidCap's earnings are primarily driven by the difference between
the interest earned on its loan portfolio and the interest accrued under its
outstanding borrowings. As a result, MidCap is primarily exposed to the credit
risk of its loan counterparties and prepayment risk. Additionally, financial
results are influenced by related levels of middle-market business investment
and interest rates.

Our alternative investment in MidCap had a carrying value of $666 million and
$611 million as of December 31, 2021 and 2020, respectively. As of December 31,
2021 and 2020, this alternative investment was comprised of our equity
investment in MidCap of $659 million and $534 million, respectively, and
redeemable preferred stock of $7 million and $77 million, respectively. The
MidCap equity investment returned a net investment earned rate of 16.34%, 1.90%
and 11.56% for the years ended December 31, 2021, 2020 and 2019, respectively.
Alternative investment income from equity investment in MidCap was $102 million,
$13 million and $65 million for the years ended December 31, 2021, 2020 and
2019, respectively. The increase in alternative investment income for the year
ended December 31, 2021 compared to 2020 was mainly driven by an increase in
valuation associated with a capital raise priced at a slight premium and the
decrease in valuation in the prior year reflecting an increase in loan loss
assumptions and lower origination volumes due to the interest rate environment.
The redeemable preferred stock returned a net investment earned rate of 25.86%,
39.09% and 0.00% for the years ended December 31, 2021, 2020 and 2019,
respectively. Alternative investment income from the redeemable preferred stock
was $9 million, $18 million and $0 million for the years ended December 31,
2021, 2020 and 2019, respectively. The decrease in alternative investment income
from the redeemable preferred stock for the year ended December 31, 2021
compared to 2020 was primarily driven by a decrease in net asset value due to
the partial early redemption of the preferred stock in the second quarter of
2021.

AmeriHome

Our equity investment in AmeriHome was held indirectly through A-A Mortgage, of
which AmeriHome was the fund's only investment. AmeriHome is a mortgage
origination platform and an aggregator of mortgage servicing rights. AmeriHome
acquires mortgage loans from retail originators and re-sells the loans to the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Government National Mortgage Association and other investors.
AmeriHome retains the mortgage servicing rights on the loans that it sells and
employs a subservicer to perform servicing operations, including payment
collection. AmeriHome's earnings are primarily driven by two sources: gains or
losses on the sale of mortgage loans and the difference between the fee that it
charges for mortgage servicing and the fee charged by the subservicer. As a
result, AmeriHome's financial results are influenced by interest rates and
related housing demand. AmeriHome is primarily exposed to credit risk related to
the accuracy of the representations and warranties in the loans that AmeriHome
acquires and prepayment risk, which prematurely terminates fees related to
mortgage servicing.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

On February 16, 2021, Apollo, Athene and AmeriHome announced the sale of
AmeriHome to a subsidiary of Western Alliance Bancorporation and the transaction
closed on April 7, 2021. Our alternative investment in A-A Mortgage had a
carrying value of $32 million and $546 million as of December 31, 2021 and 2020,
respectively. Our investment in A-A Mortgage represents our proportionate share
of its net asset value, which largely reflects any contributions to and
distributions from A-A Mortgage and, prior to the sale, the fair value of
AmeriHome. Following the sale of AmeriHome, A-A Mortgage distributed the
majority of the proceeds, with the remaining residual investment expected to be
distributed within a year after the sale. A-A Mortgage returned a net investment
earned rate of 62.90%, 44.30% and 14.00% for the years ended December 31, 2021,
2020 and 2019, respectively. Alternative investment income from A-A Mortgage was
$188 million, $297 million and $81 million for the years ended December 31,
2021, 2020 and 2019, respectively. The decrease in alternative investment income
for the year ended December 31, 2021 compared to 2020 was primarily due to the
sale of AmeriHome in April as well as strong investment performance in the prior
year, partially offset by an increase in valuation resulting from the April sale
reflecting a premium of the platform sale, net of carry and transaction
expenses.

Public Equities

We hold a public equity position in Jackson, previously held as a private equity
investment, after Jackson's former parent company, Prudential plc, completed a
dividend demerger transaction in September 2021 which resulted in Jackson
becoming a publicly traded company. Although the net invested asset value of
this equity position is not significant, it has the ability to create volatility
in our statements of income. As of December 31, 2021, we held approximately 3.4
million shares of Jackson, reflective of the sale of approximately 0.4 million
shares in December, with a market value of $133 million, net of the ACRA
noncontrolling interest. Alternative investment income (loss) from Jackson was
$75 million, $(84) million and $0 million for the years ended December 31, 2021,
2020 and 2019, respectively. The increase in alternative investment income was
driven by the increase in Jackson's share price after the completion of the
dividend demerger transaction and a write-down of the investment in the prior
year.

Prior to the sale of our remaining shares in OneMain in December, we indirectly
held a public equity position in OneMain through our equity investment in an
alternative investment. Although the net invested asset value of this security
was not significant, such securities have resulted in volatility in our
statements of income. As of December 31, 2021 and 2020, we indirectly held
approximately 0.0 million and 2.8 million shares of OneMain with a market value
of $0 million and $110 million, respectively. Alternative investment income from
OneMain was $33 million, $33 million and $64 million for the years ended
December 31, 2021, 2020 and 2019, respectively.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Non-GAAP Measure Reconciliations

The reconciliations to the nearest GAAP measure for adjusted operating income
available to common shareholders is included in the Consolidated Results of
Operations section.

The reconciliation of basic earnings per Class A common share to adjusted
operating earnings per common share is as follows:

Years ended December 31,

                                                                    2021                2020              2019
Basic earnings per share - Class A common shares              $    19.40             $   8.51          $  11.44
Non-operating adjustments
Realized gains on sale of AFS securities                            2.74                 0.14              0.68
Unrealized, allowances and other investment gains
(losses)                                                            0.95                (0.79)            (0.02)
Change in fair value of reinsurance assets                         (3.16)                4.09              7.64
Offsets to investment gains (losses)                                0.28                (0.82)            (2.91)
Investment gains, net of offsets                                    0.81                 2.62              5.39
Change in fair values of derivatives and embedded
derivatives - FIAs, net of offsets                                  3.48                (1.22)            (0.36)

Integration, restructuring and other non-operating
expenses

                                                           (0.63)               (0.05)            (0.37)
Stock compensation expense                                         (0.01)               (0.06)            (0.07)
Income tax expense - non-operating                                 (0.37)               (0.25)                -
Less: Total non-operating adjustments                               3.28                 1.04              4.59

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

                                               0.69                 1.05             (0.12)
Adjusted operating earnings per common share                  $    15.43    

$ 6.42 $ 6.97

The reconciliation of basic weighted average common shares outstanding - Class A
to weighted average common shares outstanding - adjusted operating, which is
included in adjusted operating earnings per common share, is as follows:
                                                                           Years ended December 31,
(In millions)                                                2021                     2020                   2019

Basic weighted average common shares outstanding -
Class A

                                                       191.6                   184.9                   153.9

Conversion of Class B common shares to Class A common
shares

                                                            -                     4.2                    25.4

Conversion of Class M common shares to Class A common
shares

                                                            -                     0.7                     5.1
Effect of other stock compensation plans                        7.1                     3.7                     0.4
Weighted average common shares outstanding - adjusted
operating                                                     198.7                   193.5                   184.8

The reconciliation of total AHL shareholders' equity to total adjusted AHL
common shareholders' equity, which is included in adjusted book value per common
share, adjusted debt to capital ratio and adjusted operating ROE, is as follows:

                                                                         December 31,
(In millions)                                              2021              2020              2019
Total AHL shareholders' equity                          $ 20,130          $ 18,657          $ 13,391
Less: Preferred stock                                      2,312             2,312             1,172
Total AHL common shareholders' equity                     17,818            16,345            12,219
Less: AOCI                                                 2,430             3,971             2,281

Less: Accumulated change in fair value of reinsurance
assets

                                                       585             1,142               493

Total adjusted AHL common shareholders' equity $ 14,803 $ 11,232 $ 9,445

Segment adjusted AHL common shareholders' equity
Retirement Services                                     $ 11,453          $  7,732          $  7,443
Corporate and Other                                        3,350             3,500             2,002

Total adjusted AHL common shareholders' equity $ 14,803 $ 11,232 $ 9,445

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The reconciliation of average AHL shareholders' equity to average adjusted AHL
common shareholders' equity, which is included in adjusted operating ROE is as
follows:

                                                                   Years ended December 31,
(In millions)                                              2021              2020              2019
Average AHL shareholders' equity                        $ 19,295          $ 14,528          $ 10,834
Less: Average preferred stock                              2,312             1,633               586
Less: Average AOCI                                         2,954             2,030               905
Less: Average accumulated change in fair value of
reinsurance assets                                           776               575               209

Average adjusted AHL common shareholders' equity $ 13,253 $ 10,290 $ 9,134

Segment average adjusted AHL common shareholders'
equity
Retirement Services                                     $  9,663          $  7,491          $  7,625
Corporate and Other                                        3,590             2,799             1,509

Average adjusted AHL common shareholders' equity $ 13,253 $ 10,290 $ 9,134

The reconciliation of Class A common shares outstanding to adjusted operating
common shares outstanding, which is included in adjusted book value per common
share, is as follows:
                                                       December 31,
(In millions)                                     2021               2020
Class A common shares outstanding               191.9               191.2

Effect of other stock compensation plans          8.6                 6.0
Adjusted operating common shares outstanding    200.5               197.2



The reconciliation of book value per common share to adjusted book value per
common share is as follows:
                                                                           December 31,
                                                                     2021                2020
Book value per common share                                      $    92.83          $    85.51
AOCI                                                                 (12.66)             (20.77)
Accumulated change in fair value of reinsurance assets                (3.05)              (5.98)

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

                                                                (3.28)              (1.81)
Adjusted book value per common share                             $    73.84 

$ 56.95

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The reconciliation of debt to capital ratio to adjusted debt to capital ratio is
as follows:

                                                                       December 31,
 (In millions, except percentages)                                 2021     

2020

 Total debt                                                     $  2,964    

$ 1,976

 Total AHL shareholders' equity                                   20,130         18,657
 Total capitalization                                             23,094         20,633
 Less: AOCI                                                        2,430          3,971

Less: Accumulated change in fair value of reinsurance assets 585

1,142

 Total adjusted capitalization                                  $ 20,079       $ 15,520

 Debt to capital ratio                                              12.8  %         9.6  %
 AOCI                                                                1.6  %         2.4  %
 Accumulated change in fair value of reinsurance assets              0.4  % 

0.7 %

 Adjusted debt to capital ratio                                     14.8  % 

12.7 %

The reconciliation of net investment income to net investment earnings and
earned rate is as follows:

Years ended December 31,

                                                         2021                                   2020                                   2019
(In millions, except percentages)             Dollar              Rate               Dollar              Rate               Dollar              Rate
GAAP net investment income                 $   7,177                4.49  %       $   4,885                3.68  %       $   4,596                3.97  %
Change in fair value of reinsurance assets     1,451                0.90  %           1,408                1.06  %             680                0.59  %

Alternative gains (losses)                       144                0.09  %            (102)              (0.08) %               1                   -  %
ACRA noncontrolling interest                    (943)              (0.59) %            (559)              (0.42) %             (61)              (0.05) %
Apollo investment (gain)                        (864)              (0.54) %            (225)              (0.17) %               -                   -  %
Held for trading amortization and other          114                0.07  %             (79)              (0.06) %             (37)              (0.03) %
Total adjustments to arrive at net
investment earnings/earned rate                  (98)              (0.07) %             443                0.33  %             583                0.51  %
Total net investment earnings/earned rate  $   7,079                4.42  %       $   5,328                4.01  %       $   5,179                4.48  %

Retirement Services                        $   6,791                4.30  %       $   5,287                4.04  %       $   5,062                4.43  %
Corporate and Other                              288               14.73  %              41                2.17  %             117                8.33  %
Total net investment earnings/earned rate  $   7,079                4.42  %       $   5,328                4.01  %       $   5,179                4.48  %

Retirement Services average net invested
assets                                     $ 158,064                              $ 130,887                              $ 114,310
Corporate and Other average net invested
assets ex. Apollo investment                   1,955                                  1,863                                  1,409
Consolidated average net invested assets
ex. Apollo investment                      $ 160,019                              $ 132,750                              $ 115,719



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The reconciliation of interest sensitive contract benefits to Retirement
Services' cost of crediting, and the respective rates, is as follows:

Years ended December 31,

                                                         2021                                   2020                                   2019
(In millions, except percentages)             Dollar              Rate               Dollar              Rate               Dollar              Rate
GAAP interest sensitive contract benefits  $   4,442                2.81  %       $   3,891                2.97  %       $   4,557                3.99  %
Interest credited other than deferred
annuities and institutional products             405                0.26  %             312                0.24  %             232                0.20  %
FIA option costs                               1,125                0.71  %           1,101                0.84  %           1,109                0.97  %
Product charges (strategy fees)                 (165)              (0.10) %            (136)              (0.10) %            (119)              (0.10) %
Reinsurance embedded derivative impacts           49                0.03  %              57                0.04  %              57                0.05  %
Change in fair value of embedded
derivatives - FIAs                            (2,500)              (1.58) %          (2,404)              (1.84) %          (3,644)              (3.19) %
Negative VOBA amortization                        18                0.01  %              21                0.02  %              36                0.03  %
ACRA noncontrolling interest                    (637)              (0.40) %            (433)              (0.33) %             (42)              (0.03) %
Other changes in interest sensitive
contract liabilities                              31                0.01  %               8                0.01  %              (7)              (0.01) %
Total adjustments to arrive at cost of
crediting                                     (1,674)              (1.06) %          (1,474)              (1.12) %          (2,378)              (2.08) %
Retirement Services cost of crediting      $   2,768                1.75  %       $   2,417                1.85  %       $   2,179                1.91  %

Retirement Services cost of crediting on
deferred annuities                         $   1,939                1.85  %       $   1,884                1.95  %       $   1,774                1.97  %
Retirement Services cost of crediting on
institutional products                           829                2.52  %             533                3.05  %             405                3.47  %
Retirement Services cost of crediting      $   2,768                1.75  %       $   2,417                1.85  %       $   2,179                1.91  %

Retirement Services average net invested
assets                                     $ 158,064                              $ 130,887                              $ 114,310
Average account value on deferred
annuities                                    104,874                                 96,848                                 89,878
Average net institutional reserve
liabilities                                   32,911                                 17,505                                 11,632



The reconciliation of GAAP benefits and expenses to other liability costs is as
follows:

                                                                    Years ended December 31,
(In millions)                                               2021              2020              2019
GAAP benefits and expenses                               $ 22,134          $ 12,558          $ 13,956
Premiums                                                  (14,262)           (5,963)           (6,382)
Product charges                                              (621)             (571)             (524)
Other revenues                                                (72)              (36)              (37)
Cost of crediting                                          (1,594)           (1,259)           (1,013)

Change in fair value of embedded derivatives - FIA, net
of offsets

                                                 (2,989)           (2,261)           (3,577)

DAC, DSI and VOBA amortization related to investment
gains and losses

                                              115               (95)             (477)

Rider reserves related to investment gains and losses (4)

     (10)              (58)

Policy and other operating expenses, excluding policy
acquisition expenses

                                         (772)             (533)             (488)
AmerUs closed block fair value liability                       57              (104)             (152)

ACRA noncontrolling interest                                 (759)             (527)              (74)
Other changes in benefits and expenses                         (8)              (41)               (2)

Total adjustments to arrive at other liability costs (20,909) (11,400) (12,784)
Other liability costs

                                    $  1,225          $  1,158          $  1,172

Retirement Services                                      $  1,225          $  1,158          $  1,172
Corporate and Other                                             -                 -                 -
Consolidated other liability costs                       $  1,225          $  1,158          $  1,172



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The reconciliation of policy and other operating expenses to operating expenses
is as follows:

                                                                      Years ended December 31,
(In millions)                                                 2021               2020              2019
GAAP policy and other operating expenses                 $     1,101          $    855          $    744
Interest expense                                                (139)             (114)              (67)
Policy acquisition expenses, net of deferrals                   (329)             (322)             (256)

Integration, restructuring and other non-operating
expenses

                                                        (134)              (10)              (70)
Stock compensation expenses                                       (2)              (11)              (12)
ACRA noncontrolling interest                                     (93)              (58)               (5)
Other changes in policy and other operating expenses              (9)               (2)                -
Total adjustments to arrive at operating expenses               (706)             (517)             (410)
Operating expenses                                       $       395        

$ 338 $ 334

Retirement Services                                      $       316          $    275          $    266
Corporate and Other                                               79                63                68
Consolidated operating expenses                          $       395        

$ 338 $ 334

The reconciliation of total investments, including related parties, to net
invested assets is as follows:

                                                                      December 31,
(In millions)                                                     2021      

2020

Total investments, including related parties                   $ 212,513      $ 182,421
Derivative assets                                                 (4,387)   

(3,523)

Cash and cash equivalents (including restricted cash)             10,429    

8,442

Accrued investment income                                            968    

905

Payables for collateral on derivatives                            (3,934)   

(3,203)

Reinsurance funds withheld and modified coinsurance               (1,035)   

(2,459)

VIE and VOE assets, liabilities and noncontrolling interest (539)

       (136)
Unrealized (gains) losses                                         (4,057)        (7,275)
Ceded policy loans                                                  (169)          (204)
Net investment receivables (payables)                                 75    

99

Allowance for credit losses                                          361    

357

Total adjustments to arrive at gross invested assets              (2,288)        (6,997)
Gross invested assets                                            210,225        175,424
ACRA noncontrolling interest                                     (34,882)       (25,234)
Net invested assets                                            $ 175,343      $ 150,190

The reconciliation of total investment funds, including related parties, to net
alternative investments within net invested assets is as follows:

December 31,

    (In millions)                                                 2021     

2020

    Investment funds, including related parties                 $ 9,866    

$ 6,087

    Equity securities                                               156    

165

    CLO and ABS equities included in trading securities           2,134    

971

    Investment in Apollo                                         (2,112)   

(1,324)

    Investment funds within funds withheld at interest            1,807    

1,155

Royalties and other assets included in other investments (722)

66

    Unrealized (gains) losses and other adjustments                  14    

(44)

    ACRA noncontrolling interest                                 (1,270)   

(283)

    Total adjustments to arrive at alternative investments            7    

706

    Net alternative investments                                 $ 9,873    

 $ 6,793



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The reconciliation of total liabilities to net reserve liabilities is as
follows:

                                                                    December 31,
   (In millions)                                                2021           2020
   Total liabilities                                         $ 212,968      $ 182,631

   Long-term debt                                               (2,964)        (1,976)

   Derivative liabilities                                         (472)     

(298)

   Payables for collateral on derivatives                       (6,446)        (3,203)
   Funds withheld liability                                       (439)          (452)
   Other liabilities                                            (2,997)        (2,040)

   Reinsurance ceded receivables                                (4,594)     

(4,848)

   Policy loans ceded                                             (169)     

(204)

   ACRA noncontrolling interest                                (32,933)     

(24,618)

   Other                                                            (3)     

(3)

Total adjustments to arrive at net reserve liabilities (51,017)

  (37,642)
   Net reserve liabilities                                   $ 161,951      $ 144,989

Liquidity and Capital Resources

There are two forms of liquidity relevant to our business, funding liquidity and
balance sheet liquidity. Funding liquidity relates to the ability to fund
operations. Balance sheet liquidity relates to our ability to liquidate or
rebalance our balance sheet without incurring significant costs from fees,
bid-offer spreads, or market impact. We manage our liquidity position by
matching projected cash demands with adequate sources of cash and other liquid
assets. Our principal sources of liquidity, in the ordinary course of business,
are operating cash flows and holdings of cash, cash equivalents and other
readily marketable assets.

Our investment portfolio is structured to ensure a strong liquidity position
over time in order to permit timely payment of policy and contract benefits
without requiring asset sales at inopportune times or at depressed prices. In
general, liquid assets include cash and cash equivalents, highly rated corporate
bonds, unaffiliated preferred stock and unaffiliated public common stock, all of
which generally have liquid markets with a large number of buyers. The carrying
value of these assets, excluding assets within modified coinsurance and funds
withheld portfolios, as of December 31, 2021 was $92.5 billion. Assets included
in modified coinsurance and funds withheld portfolios are available to fund the
benefits for the associated obligations but are restricted from other uses. The
carrying value of the underlying assets in these modified coinsurance and funds
withheld portfolios that we consider liquid as of December 31, 2021 was $31.1
billion. Although our investment portfolio does contain assets that are
generally considered illiquid for liquidity monitoring purposes (primarily
mortgage loans, policy loans, real estate, investment funds, and affiliated
common stock), there is some ability to raise cash from these assets if needed.
In periods of economic downturn, such as the one brought about by the spread of
COVID-19, we may maintain higher cash balances than required to manage our
liquidity risk and to take advantage of market dislocations as they arise. We
have access to additional liquidity through our $1.25 billion credit agreement,
which was undrawn as of December 31, 2021 and had a remaining term of more than
two years, subject to up to two one-year extensions. We also have access to more
than $2.0 billion of committed repurchase facilities. Our registration statement
on Form S-3 ASR (Shelf Registration Statement) provides us access to the capital
markets, subject to market conditions and other factors. We are also party to
repurchase agreements with several different financial institutions, pursuant to
which we may obtain short-term liquidity, to the extent available. In addition,
through our membership in the FHLB, we are eligible to borrow under variable
rate short-term federal funds arrangements to provide additional liquidity.

We proactively manage our liquidity position to meet cash needs while minimizing
adverse impacts on investment returns. We analyze our cash-flow liquidity over
the upcoming 12 months by modeling potential demands on liquidity under a
variety of scenarios, taking into account the provisions of our policies and
contracts in force, our cash flow position, and the volume of cash and readily
marketable securities in our portfolio.

Liquidity risk is monitored, managed and mitigated through a number of stress
tests and analyses to assess our ability to meet our cash flow requirements, as
well as the ability of our reinsurance and insurance subsidiaries to meet their
collateral obligations, under various stress scenarios. We further seek to
mitigate liquidity risk by maintaining access to alternative, external sources
of liquidity as described below.

Our liquidity risk management framework is codified in the company's Liquidity
Risk Policy that is reviewed and approved by our board of directors.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Insurance Subsidiaries' Liquidity

Operations

The primary cash flow sources for our insurance subsidiaries include retirement
services product inflows (premiums), investment income, principal repayments on
our investments, net transfers from separate accounts and financial product
inflows. Uses of cash include investment purchases, payments to policyholders
for surrenders, withdrawals and payout benefits, interest and principal payments
on funding agreements, payments to satisfy pension group annuity obligations,
policy acquisition costs and general operating costs.

Our policyholder obligations are generally long-term in nature. However, one
liquidity risk is an extraordinary level of early policyholder withdrawals. We
include provisions within our annuity policies, such as surrender charges and
MVAs, which are intended to protect us from early withdrawals. As of
December 31, 2021 and 2020, approximately 74% and 75%, respectively, of our
deferred annuity liabilities were subject to penalty upon surrender. In
addition, as of December 31, 2021 and 2020, approximately 54% and 56%,
respectively, of policies contained MVAs that may also have the effect of
limiting early withdrawals if interest rates increase, but may encourage early
withdrawals by effectively subsidizing a portion of surrender charges when
interest rates decrease. Our funding agreements, group annuities and payout
annuities are generally non-surrenderable.

Membership in Federal Home Loan Bank

Through our membership in the FHLB, we are eligible to borrow under variable
rate short-term federal funds arrangements to provide additional liquidity. The
borrowings must be secured by eligible collateral such as mortgage loans,
eligible CMBS or RMBS, government or agency securities and guaranteed loans. As
of each of December 31, 2021 and 2020, we had $0 million of outstanding
borrowings under these arrangements.

We have issued funding agreements to the FHLB. These funding agreements were
issued in an investment spread strategy, consistent with other investment spread
operations. As of December 31, 2021 and 2020, we had funding agreements
outstanding with the FHLB in the aggregate principal amount of $2.8 billion and
$2.0 billion, respectively.

The maximum FHLB indebtedness by a member is determined by the amount of
collateral pledged and cannot exceed a specified percentage of the member's
total statutory assets dependent on the internal credit rating assigned to the
member by the FHLB. As of December 31, 2021, the total maximum borrowings under
the FHLB facilities were limited to $40.2 billion. However, our ability to
borrow under the facilities is constrained by the availability of assets that
qualify as eligible collateral under the facilities and certain other
limitations. Considering these limitations, we estimate that as of December 31,
2021 we had the ability to draw up to a total of approximately $3.7 billion,
inclusive of borrowings then outstanding. This estimate is based on our internal
analysis and assumptions and may not accurately measure collateral which is
ultimately acceptable to the FHLB.

Securities Repurchase Agreements

We engage in repurchase transactions whereby we sell fixed income securities to
third parties, primarily major brokerage firms or commercial banks, with a
concurrent agreement to repurchase such securities at a determined future date.
We require that, at all times during the term of the repurchase agreements, we
maintain sufficient cash or other liquid assets sufficient to allow us to fund
substantially all of the repurchase price. Proceeds received from the sale of
securities pursuant to these arrangements are generally invested in short-term
investments, with the offsetting obligation to repurchase the security included
within payables for collateral on derivatives and securities to repurchase on
the consolidated balance sheets. As per the terms of the repurchase agreements,
we monitor the market value of the securities sold and may be required to
deliver additional collateral (which may be in the form of cash or additional
securities) to the extent that the value of the securities sold decreases prior
to the repurchase date.

As of December 31, 2021 and 2020, the payables for repurchase agreements were
$3.1 billion and $598 million, respectively, while the fair value of securities
and collateral held by counterparties backing the repurchase agreements was $3.2
billion and $644 million, respectively. As of December 31, 2021, payables for
repurchase agreements were comprised of $2.5 billion of short-term and $598
million of long-term repurchase agreements. As of December 31, 2020, payables
for repurchase agreements were comprised of $0 million of short-term and $598
million of long-term repurchase agreements.

On May 1, 2020, we signed a $1.0 billion committed repurchase facility with BNP
Paribas. The facility has an initial commitment period of 12 months and
automatically renews for successive 12-month periods until terminated by either
party. During the commitment period, we may sell and BNP Paribas is required to
purchase eligible investment grade corporate bonds pursuant to repurchase
transactions at pre-agreed discounts in exchange for a commitment fee. As of
December 31, 2021, we had no outstanding payables under this facility.

On July 26, 2021, we entered into a $1.0 billion committed repurchase facility
with Societe Generale. The facility has a commitment term of 5 years, however,
either party may terminate the facility upon 24-months' notice, in which case
the facility will end upon the earlier of (1) such designated termination date,
or (2) July 26, 2026. During the commitment period, we may sell and Societe
Generale is required to purchase eligible investment grade corporate bonds
pursuant to repurchase transactions at pre-agreed rates in exchange for an
ongoing commitment fee for the facility. As of December 31, 2021, we had no
outstanding payables under this facility.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Cash Flows

Our cash flows were as follows:

                                                                      Years ended December 31,
(In millions)                                               2021                 2020                2019
Net income                                             $    3,800            $    1,921          $    2,185
Payment at inception or recapture of reinsurance
agreements, net                                                 -                  (723)                  -
Non-cash revenues and expenses                              6,492                 2,956                 471
Net cash provided by operating activities                  10,292                 4,154               2,656
Sales, maturities and repayments of investments            42,063                18,712              17,776
Purchases of investments                                  (70,220)              (33,230)            (27,687)
Other investing activities                                    225                  (299)                (45)
Net cash used in investing activities                     (27,932)              (14,817)             (9,956)
Issuance of common stock                                       11                   351                   -
Net proceeds and repayments of debt                           997                   917                 475

Inflows on investment-type policies and contracts 21,447

      18,836              11,569

Withdrawals on investment-type policies and contracts (7,042)

      (7,067)             (6,548)

Net capital contributions and distributions to/from
noncontrolling interests

                                      758                   194                 575

Net change in cash collateral posted for derivative
transactions and securities to repurchase

                   3,243                   546               2,286
Issuance of preferred stock, net of expenses                    -                 1,140               1,172
Preferred stock dividends                                    (141)                  (95)                (36)
Repurchase of common stock                                     (8)                 (428)               (832)
Other financing activities                                    364                    95                (124)
Net cash provided by financing activities                  19,629                14,489               8,537
Effect of exchange rate changes on cash and cash
equivalents                                                    (2)                  (26)                  -

Net increase (decrease) in cash and cash equivalents1 $ 1,987

$ 3,800 $ 1,237

1 Includes cash and cash equivalents and restricted cash.

Cash flows from operating activities

The primary cash inflows from operating activities include net investment
income, annuity considerations and insurance premiums. The primary cash outflows
from operating activities are comprised of benefit payments and operating
expenses. Our operating activities generated cash flows totaling $10.3 billion,
$4.2 billion and $2.7 billion for the years ended December 31, 2021, 2020 and
2019, respectively. The increase in cash provided by operating activities was
primarily driven by higher cash received from pension group annuity transactions
and the prior year restructuring of a coinsurance agreement to a funds withheld
agreement with an existing reinsurance partner.

Cash flows from investing activities

The primary cash inflows from investing activities are the sales, maturities and
repayments of investments. The primary cash outflows from investing activities
are the purchases and acquisitions of new investments. Our investing activities
used cash flows totaling $27.9 billion, $14.8 billion and $10.0 billion for the
years ended December 31, 2021, 2020 and 2019, respectively. The increase in cash
used in investing activities was primarily attributed to an increase in
purchases of investments due to the deployment of significant cash inflows from
organic growth over the previous twelve months, the redeployment of the Jackson
reinsurance investment portfolio and the redeployment of debt issuances.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Cash flows from financing activities

The primary cash inflows from financing activities are inflows on our
investment-type policies, changes of cash collateral posted for derivative
transactions, capital contributions, proceeds from the issuance of stock and
proceeds from borrowing activities. The primary cash outflows from financing
activities are withdrawals on our investment-type policies, changes of cash
collateral posted for derivative transactions, repayments of outstanding
borrowings, repurchases of common stock and payment of preferred stock
dividends. Our financing activities provided cash flows totaling $19.6 billion,
$14.5 billion and $8.5 billion for the years ended December 31, 2021, 2020 and
2019, respectively. The increase in cash provided by financing activities was
primarily attributed to higher organic inflows from retail and funding
agreements net of withdrawals. Additionally, other drivers of the increase
include additional collateral received on derivative assets, net capital
contributions from noncontrolling interests and a decrease in repurchases of
common stock, partially offset by the issuance of preferred stock in the prior
year and the issuance of common stock in connection with the strategic
transaction with Apollo in the prior year.

Material Cash Obligations

The following table summarizes estimated future cash obligations as of
December 31, 2021:
                                                                       Payments Due by Period
                                                                                                                     2027 and
(In millions)                            Total               2022            2023-2024          2025-2026           thereafter
Interest sensitive contract
liabilities                          $   156,325          $ 16,903          $  34,596          $  30,729          $    74,097
Future policy benefits                    42,488             1,955              3,000              2,915               34,618
Other policy claims and benefits             138               138                  -                  -                    -
Dividends payable to policyholders           101                 5                  9                  9                   78

Long-term debt1                            4,802               125                253                253                4,171
Securities to repurchase2                  3,157             2,526                 26                605                    -
Total                                $   207,011          $ 21,652          $  37,884          $  34,511          $   112,964

1 The obligations for long-term debt payments include contractual maturities of principal and estimated future interest payments
based on the terms of the debt agreements, as described in Note 9 - Debt to the consolidated financial statements.
2 The obligations for securities to repurchase payments include contractual maturities of principal and estimated future
interest payments based on the terms of the agreements.



Holding Company Liquidity

Dividends Declared

Our board of directors declared common stock cash dividends of $750 million on
December 31, 2021, payable to holders of AHL's Class A shares with a record date
and payment date following the completion of our merger with AGM, as discussed
further in Note 1 - Business, Basis of Presentation and Significant Accounting
Policies. The dividend was paid on January 4, 2022.

Dividends from Subsidiaries

AHL is a holding company whose primary liquidity needs include the cash-flow
requirements relating to its corporate activities, including its day-to-day
operations, debt servicing, preferred stock dividend payments and strategic
transactions, such as acquisitions. The primary source of AHL's cash flow is
dividends from its subsidiaries, which are expected to be adequate to fund cash
flow requirements based on current estimates of future obligations.

The ability of AHL's insurance subsidiaries to pay dividends is limited by
applicable laws and regulations of the jurisdictions where the subsidiaries are
domiciled, as well as agreements entered into with regulators. These laws and
regulations require, among other things, the insurance subsidiaries to maintain
minimum solvency requirements and limit the amount of dividends these
subsidiaries can pay.

Subject to these limitations and prior notification to the appropriate
regulatory agency, the US insurance subsidiaries are permitted to pay ordinary
dividends based on calculations specified under insurance laws of the relevant
state of domicile. Any distributions above the amount permitted by statute in
any twelve month period are considered to be extraordinary dividends, and
require the approval of the appropriate regulator prior to payment. AHL does not
currently plan on having the US subsidiaries pay any dividends to their parents.

Dividends from ALRe are projected to be the primary source of AHL's liquidity.
Under the Bermuda Insurance Act, ALRe is prohibited from paying a dividend in an
amount exceeding 25% of the prior year's statutory capital and surplus, unless
at least two members of ALRe's board of directors and its principal
representative in Bermuda sign and submit to the BMA an affidavit attesting that
a dividend in excess of this amount would not cause ALRe to fail to meet its
relevant margins. In certain instances, ALRe would also be required to provide
prior notice to the BMA in advance of the payment of dividends. In the event
that such an affidavit is submitted to the BMA in accordance with the Bermuda
Insurance Act, and further subject to ALRe meeting its relevant margins, ALRe is
permitted to distribute up to the sum of 100% of statutory surplus and an amount
less than 15% of its total statutory capital. Distributions in excess of this
amount require the approval of the BMA. As of December 31, 2021 and 2020, ALRe
was permitted to dividend or distribute up to $7.1 billion and $10.0 billion,
respectively.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The maximum distribution permitted by law or contract is not necessarily
indicative of our actual ability to pay such distributions, which may be further
restricted by business and other considerations, such as the impact of such
distributions on surplus, which could affect our ratings or competitive position
and the amount of premiums that can be written. Specifically, the level of
capital needed to maintain desired financial strength ratings from rating
agencies, including S&P, A.M. Best and Fitch, is of particular concern when
determining the amount of capital available for distributions. AHL believes its
insurance subsidiaries have sufficient statutory capital and surplus, combined
with additional capital available to be provided by AHL, to meet their financial
strength ratings objectives. Finally state insurance laws and regulations
require that the statutory surplus of our insurance subsidiaries following any
dividend or distribution must be reasonable in relation to their outstanding
liabilities and adequate for the insurance subsidiaries' financial needs.

Other Sources of Funding

We may seek to secure additional funding at the holding company level by means
other than dividends from subsidiaries, such as by drawing on our undrawn $1.25
billion credit agreement or by pursuing future issuances of debt or equity
securities to third-party investors. See Note 9 - Debt to the consolidated
financial statements for more information regarding our credit agreement.
However, such additional funding may not be available on terms favorable to us
or at all, depending on our financial condition, results of operations or
prevailing market conditions. Certain other sources of liquidity potentially
available at the holding company level are discussed below. Certain covenants in
our credit agreement prohibit us from maintaining debt in excess of specified
thresholds. Specifically, our credit agreement prohibits us from permitting the
Consolidated Debt to Capitalization Ratio (as such term is defined in the credit
agreement) to exceed 35% as of the end of any quarter.

Shelf Registration - Under our Shelf Registration Statement, subject to market
conditions, we have the ability to issue, in indeterminate amounts, debt
securities, preference shares, depositary shares, Class A common shares,
warrants and units.

Debt - The following summarizes our outstanding long-term senior notes (in
millions, except percentages):
Issuance                          Issue Date                    Maturity Date                  Interest Rate                 Principal Balance
2028 Senior
Unsecured Notes                January 12, 2018                      2028                          4.125%                          $1,000
2030 Senior
Unsecured Notes                  April 3, 2020                       2030                          6.150%                           $500
2031 Senior
Unsecured Notes                 October 8, 2020                      2031                          3.500%                           $500
2051 Senior
Unsecured Notes                  May 25, 2021                        2051                          3.950%                           $500
2052 Senior
Unsecured Notes                December 13, 2021                     2052                          3.450%                           $500

See Note 9 - Debt to the consolidated financial statements for further
information on debt.

Preferred Stock - The following summarizes our perpetual non-cumulative
preferred stock issuances (in millions, except share, per share data and
percentages):
Issuance

                    Fixed/Floating                Rate                 Issue Date                Shares Issued            Par Value Per Share   

Liquidation Value Per Share Aggregate Net Proceeds
Series A

                Fixed-to-Floating Rate           6.350%               June 10, 2019                  34,500                      $1.00                           $25,000                             $839
Series B                      Fixed-Rate                 5.625%            September 19, 2019                13,800                      $1.00                           $25,000                             $333
Series C                   Fixed-Rate Reset              6.375%               June 11, 2020                  24,000                      $1.00                           $25,000                             $583
Series D                      Fixed-Rate                 4.875%             December 18, 2020                23,000                      $1.00                           $25,000                             $557

See Note 10 - Equity to the consolidated financial statements for further
information on preferred stock.

Intercompany Note - AHL has an unsecured revolving note payable with ALRe, which
permits AHL to borrow up to $2 billion with a fixed interest rate of 2.29% and a
maturity date of December 15, 2028. As of December 31, 2021 and 2020, the
revolving note payable had an outstanding balance of $158 million and $0
million, respectively.

Use of Captives

While our business strategy does not involve the use of captives, we ceded
certain liabilities to a captive reinsurer that we acquired in connection with
the Aviva USA acquisition. The captive reinsurer was formed in 2011 and is
domiciled in the state of Vermont. The statutory reserves of the affiliated
captive reinsurer are supported by a combination of funds withheld receivable
assets and letters of credit issued by an unaffiliated financial institution.
The reinsurance activities within the captive reinsurer are eliminated in
consolidation. As discussed in Note 13 - Statutory Requirements to the
consolidated financial statements, a permitted practice of the state of Vermont
allows the captive to include issued and outstanding letters of credit in the
amount of $117 million and $134 million as of December 31, 2021 and 2020,
respectively, as admitted assets in its statutory financial statements. The NAIC
and certain state insurance departments have scrutinized insurance companies'
use of affiliated captive reinsurers. Regulatory changes regarding the use of
captives could affect our financial position and results of operations.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Capital Resources

We believe that we have a strong capital position and that we are well
positioned to meet policyholder and other obligations. We measure capital
sufficiency using an internal capital model which reflects management's view on
the various risks inherent to our business, the amount of capital required to
support our core operating strategies and the amount of capital necessary to
maintain our current ratings in a recessionary environment. The amount of
capital required to support our core operating strategies is determined based
upon internal modeling and analysis of economic risk, as well as inputs from
rating agency capital models and consideration of both NAIC RBC and Bermuda
capital requirements. Capital in excess of this required amount is considered
excess equity capital, which is available to deploy.

As of December 31, 2021 and 2020, our US insurance companies' TAC, as defined by
the NAIC, was $3.0 billion and $2.7 billion, respectively, and our US RBC ratio
was 377% and 425%, respectively. The decrease was primarily driven by strong
growth in our organic channels, a recent NAIC update to C-1 factors, higher
unfunded commitments and the impairment of a COLI asset, partially offset by
higher total adjusted capital largely from capital contributions. Each US
domestic insurance subsidiary's state of domicile imposes minimum RBC
requirements that were developed by the NAIC. The formulas for determining the
amount of RBC specify various weighting factors that are applied to financial
balances or various levels of activity based on the perceived degree of risk.
Regulatory compliance is determined by a ratio of TAC to its authorized control
level RBC (ACL). Our TAC was significantly in excess of all regulatory standards
as of December 31, 2021 and 2020, respectively.

Bermuda statutory capital and surplus for our Bermuda insurance companies in
aggregate was $14.6 billion and $13.5 billion as of December 31, 2021 and 2020,
respectively. Our Bermuda insurance companies adhere to BMA regulatory capital
requirements to maintain statutory capital and surplus to meet the MMS and
maintain minimum EBS capital and surplus to meet the ECR. Under the EBS
framework, assets are recorded at market value and insurance reserves are
determined by reference to nine prescribed scenarios, with the scenario
resulting in the highest reserve balance being ultimately required to be
selected. The Bermuda group's EBS capital and surplus was $19.7 billion and
$17.2 billion, resulting in a BSCR ratio of 232% and 254% as of December 31,
2021 and 2020, respectively. The decrease was primarily driven by strong growth
in our organic channels and the declared dividend. The Bermuda group's BSCR
ratio includes the capital and surplus of ALRe, AARe, ALReI and all of their
subsidiaries, and including AUSA and its subsidiaries. An insurer must have a
BSCR ratio of 100% or greater to be considered solvent by the BMA. As of
December 31, 2021 and 2020, our Bermuda insurance companies held the appropriate
capital to adhere to these regulatory standards. As of December 31, 2021 and
2020, our Bermuda RBC was 410% and 460%, respectively. The decrease was
primarily driven by strong growth in our organic channels, a recent NAIC update
to C-1 factors and the declared dividend. The Bermuda RBC ratio is calculated by
applying the NAIC RBC factors to the statutory financial statements of our
non-US reinsurance subsidiaries on an aggregate basis with certain adjustments
made by management as described in the glossary. We exclude our interests in the
AOG units and other subsidiary holding companies from our capital base for
purposes of calculating Bermuda RBC, but do reflect such interests within our
capital analysis, net of risk charges.

Repurchase of Securities

Share Repurchase Program

In December of 2018, our board of directors established a share repurchase
program with an initial authorization for the repurchase of up to $250 million
of our Class A common shares. In 2019, our board of directors approved four
additional authorizations under our share repurchase program for the purchase of
up to an additional $1.3 billion of our Class A common shares, in the aggregate,
for a total authorization of $1.6 billion. We have repurchased, in the
aggregate, 35.6 million Class A common shares for $1.3 billion since inception
of our share repurchase program. On February 8, 2022, our board of directors
terminated our prior repurchase authorization and as a result we have $0 million
of repurchase authorization remaining.

Repurchase of Other Securities

We may from time to time seek to retire or purchase our other outstanding debt
or equity securities through cash purchases and/or exchanges for other
securities, purchases in the open market, privately negotiated transactions or
otherwise. Any such repurchases will be dependent upon several factors,
including our liquidity requirements, contractual restrictions, general market
conditions and applicable regulatory, legal and accounting factors. Whether or
not we repurchase any of our other securities and the size and timing of any
such repurchases will be determined at our discretion.


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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Critical Accounting Estimates and Judgments

The preparation of consolidated financial statements in conformity with GAAP
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of any contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Amounts based on such
estimates involve numerous assumptions subject to varying and potentially
significant degrees of judgment and uncertainty, particularly related to the
future performance of the underlying business, and will likely change in the
future as additional information becomes available. Critical estimates and
assumptions are evaluated on an ongoing basis based on historical developments,
market conditions, industry trends and other information that is reasonable
under the circumstances. There can be no assurance that actual results will
conform to estimates and assumptions and that reported results of operations
will not be materially affected by the need to make future accounting
adjustments to reflect periodic changes in these estimates and assumptions.
Critical accounting estimates are impacted significantly by our methods,
judgments and assumptions used in the preparation of the consolidated financial
statements and should be read in conjunction with our significant accounting
policies described in Note 1 - Business, Basis of Presentation and Significant
Accounting Policies to the consolidated financial statements. The following
summary of our critical accounting estimates is intended to enhance one's
ability to assess our financial condition and results of operations and the
potential volatility due to changes in estimates.

Investments

We are responsible for the fair value measurement of certain investments
presented in our consolidated financial statements. We perform regular analysis
and review of our valuation techniques, assumptions and inputs used in
determining fair value to evaluate if the valuation approaches are appropriate
and consistently applied, and the various assumptions are reasonable. We also
perform quantitative and qualitative analysis and review of the information and
prices received from commercial pricing services and broker-dealers, to verify
it represents a reasonable estimate of the fair value of each investment. In
addition, we use both internally-developed and commercially-available cash flow
models to analyze the reasonableness of fair values using credit spreads and
other market assumptions, where appropriate. For investment funds, we typically
recognize our investment, including those for which we have elected the fair
value option, based on net asset value information provided by the general
partner or related asset manager. For a discussion of our investment funds for
which we have elected the fair value option, see Note 5 - Fair Value to the
consolidated financial statements.

Valuation of Fixed Maturity and Equity Securities

The following table presents the fair value of fixed maturity and equity
securities, including those with related parties and those held by consolidated
VIEs, by pricing source and fair value hierarchy:

                                                                            December 31, 2021
(In millions, except for percentages)                 Total             Level 1           Level 2            Level 3
Fixed maturity securities
AFS securities
Priced via commercial pricing services             $  39,857          $      -          $  39,848          $      9
Priced via independent broker-dealer quotations       59,538               214             57,899             1,425
Priced via affiliated broker-dealer quotations        11,166                 -                266            10,900
Priced via other methods                                   -                 -                  -                 -
Trading securities
Priced via commercial pricing services                   126                 -                126                 -
Priced via independent broker-dealer quotations        1,919                 3              1,852                64
Priced via affiliated broker-dealer quotations         1,792                 -                 16             1,776
Priced via other methods                                   -                 -                  -                 -

Total fixed maturity securities including related
party                                                114,398               217            100,007            14,174
Equity securities
Priced via commercial pricing services                   171                 -                  -               171
Priced via independent broker-dealer quotations          892                86                290               516
Priced via affiliated broker-dealer quotations           391                 -                365                26
Priced via other methods                                   -                 -                  -                 -

Total equity securities including related party        1,454                86                655               713
Total fixed maturity and equity securities
including related party                            $ 115,852          $    303          $ 100,662          $ 14,887
Percent of total                                       100.0  %            0.3  %            86.9  %           12.8  %



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

We measure the fair value of our securities based on assumptions used by market
participants in pricing the assets, which may include inherent risk,
restrictions on the sale or use of an asset, or nonperformance risk. The
estimate of fair value is the price that would be received to sell a security in
an orderly transaction between market participants in the principal market, or
the most advantageous market in the absence of a principal market, for that
security. Market participants are assumed to be independent, knowledgeable, able
and willing to transact an exchange while not under duress. The valuation of
securities involves judgment, is subject to considerable variability and is
revised as additional information becomes available. As such, changes in, or
deviations from, the assumptions used in such valuations can significantly
affect our consolidated financial statements.

Financial markets are susceptible to severe events evidenced by rapid
depreciation in security values accompanied by a reduction in asset liquidity.
Our ability to sell securities, or the price ultimately realized upon the sale
of securities, depends upon the demand and liquidity in the market and increases
the use of judgment in determining the estimated fair value of certain
securities. Accordingly, estimates of fair value are not necessarily indicative
of the amounts that could be realized in a current or future market exchange.

For fixed maturity securities, we obtain the fair values, when available, based
on quoted prices in active markets that are regularly and readily obtainable.
Generally, these are liquid securities and the valuation does not require
significant management judgment. When quoted prices in active markets are not
available, fair value is based on market standard valuation techniques, giving
priority to observable inputs. We obtain the fair value for most marketable
bonds without an active market from several commercial pricing services. The
pricing services incorporate a variety of market observable information in their
valuation techniques, including benchmark yields, broker-dealer quotes, credit
quality, issuer spreads, bids, offers, and other reference data. For certain
fixed maturity securities without an active market, an internally-developed
discounted cash flow or other approach is utilized to calculate the fair value.
A discount rate is used, which adjusts a market comparable base rate for
securities with similar characteristics for credit spread, market illiquidity or
other adjustments. The fair value of privately placed fixed maturity securities
are based on the credit quality and duration of comparable marketable
securities, which may be securities of another issuer with similar
characteristics. In some instances, we use a matrix-based pricing model, which
considers the current level of risk-free interest rates, corporate spreads,
credit quality of the issuer, and cash flow characteristics of the security. We
also consider additional factors, such as net worth of the borrower, value of
collateral, capital structure of the borrower, presence of guarantees, and our
evaluation of the borrower's ability to compete in its relevant market.

For equity securities, we obtain the fair value, when available, based on quoted
market prices. Other equity securities, typically private equities or equity
securities not traded on an exchange, are valued based on other sources, such as
commercial pricing services or brokers.

Future Policy Benefits

The future policy benefit liabilities associated with long duration contracts
include term and whole-life products, accident and health, disability, and
deferred and immediate annuities with life contingencies. Liabilities for
non-participating long duration contracts are established using accepted
actuarial valuation methods which require us to make certain assumptions
regarding expenses, investment yields, mortality, morbidity, and persistency,
with a provision for adverse deviation, at the date of issue or acquisition. As
of December 31, 2021, the reserve investment yield assumptions for
non-participating contracts range from 2.3% to 5.4% and are specific to our
expected earned rate on the asset portfolio supporting the reserves. We base
other key assumptions, such as mortality and morbidity, on industry standard
data adjusted to align with actual company experience, if necessary. Premium
deficiency tests are performed periodically using current assumptions, without
provisions for adverse deviation, in order to test the appropriateness of the
established reserves. If the reserves using current assumptions are greater than
the existing reserves, the excess is recorded and the initial assumptions are
revised.

Liabilities for Guaranteed Living Withdrawal Benefits and Guaranteed Minimum
Death Benefits

We issue and reinsure deferred annuity contracts which contain GLWB and GMDB
riders. We establish future policy benefits for GLWB and GMDB by estimating the
expected value of withdrawal and death benefits in excess of the projected
account balance. We recognize the excess proportionally over the accumulation
period based on total actual and expected assessments. The methods we use to
estimate the liabilities have assumptions about policyholder behavior, which
includes lapses, withdrawals and utilization of the benefit riders; mortality;
and market conditions affecting the account balance.

Projected policyholder lapse and withdrawal behavior assumptions are set in one
of two ways. For certain blocks of business, this behavior is a function of our
predictive analytics model which considers various observable inputs. For the
remaining blocks of business, these assumptions are set at the product level by
grouping individual policies sharing similar features and guarantees and
reviewed periodically against experience. Base lapse rates consider the level of
surrender charges and are dynamically adjusted based on the level of current
interest rates relative to the guaranteed rates and the amount by which any
rider guarantees are in a net positive position. Rider utilization assumptions
consider the number and timing of policyholders electing the riders. We track
and update this assumption as experience emerges. Mortality assumptions are set
at the product level and generally based on standard industry tables, adjusted
for historical experience and a provision for mortality improvement. Projected
guaranteed benefit amounts in excess of the underlying account balances are
considered over a range of scenarios in order to capture our exposure to the
guaranteed withdrawal and death benefits.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The assessments used to accrue liabilities are based on interest margins, rider
charges, surrender charges and realized gains (losses). As such, future reserve
changes are sensitive to changes in investment results and the impacts of shadow
adjustments, which represent the impact of assuming unrealized gains (losses)
are realized in future periods. As of December 31, 2021, the GLWB and GMDB
liability balance, including the impacts of shadow adjustments, totaled $5.3
billion. The increase (decrease) to the GLWB and GMDB liability balance,
including the impacts of shadow adjustments from hypothetical changes in
projected assessments, changes in the discount rate and annual equity growth is
summarized as follows:

(In millions)                       December 31, 2021
+10% assessments                   $             (156)
-10% assessments                                  171
+100 bps discount rate                            147
-100 bps discount rate                           (161)
1% higher annual equity growth                    (40)
1% lower annual equity growth                      38

Derivatives

Valuation of Embedded Derivatives on FIAs

We issue and reinsure products, primarily FIA products, or purchase investments
that contain embedded derivatives. If we determine the embedded derivative has
economic characteristics not clearly and closely related to the economic
characteristics of the host contract, and a separate instrument with the same
terms would qualify as a derivative instrument, the embedded derivative is
bifurcated from the host contract and accounted for separately, unless the fair
value option is elected on the host contract. Under the fair value option,
bifurcation of the embedded derivative is not necessary as the entire contract
is carried at fair value with all related gains and losses recognized in
investment related gains (losses) on the consolidated statements of income.
Embedded derivatives are carried on the consolidated balance sheets at fair
value in the same line item as the host contract.

FIA and indexed universal life insurance contracts allow the policyholder to
elect a fixed interest rate return or an equity market component for which
interest credited is based on the performance of certain stock market indices.
The equity market option is an embedded derivative, similar to a call option.
The benefit reserve is equal to the sum of the fair value of the embedded
derivative and the host (or guaranteed) component of the contracts. The fair
value of the embedded derivatives is computed as the present value of benefits
attributable to the excess of the projected policy contract values over the
projected minimum guaranteed contract values. The projections of policy contract
values are based on assumptions for future policy growth, which include
assumptions for expected index credits on the next policy anniversary date,
future equity option costs, volatility, interest rates, and policyholder
behavior. The projections of minimum guaranteed contract values include the same
assumptions for policyholder behavior as were used to project policy contract
values. The embedded derivative cash flows are discounted using a rate that
reflects our own credit rating. The host contract is established at contract
inception as the initial account value less the initial fair value of the
embedded derivative and accreted over the policy's life. The host contract
accretion rate is updated each quarter so that the present value of actual and
expected guaranteed cash flows is equal to the initial host value. Changes in
the fair value of embedded derivatives associated with FIAs and indexed
universal life insurance contracts are reflected in interest sensitive contract
benefits on the consolidated statements of income.

In general, the change in the fair value of the embedded derivatives will not
directly correspond to the change in fair value of the hedging derivative
assets. The derivatives are intended to hedge the index credits expected to be
granted at the end of the current term. The options valued in the embedded
derivatives represent the rights of the policyholder to receive index credits
over the entire period the FIAs are expected to be in force, which are typically
much longer than the current term of the options. From an economic basis we
believe it is suitable to hedge with options that align with index terms of our
FIA products 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 differences in the recognition of income and expense for
accounting purposes.

A significant assumption in determining policy liabilities for FIAs is the
vector of rates used to discount the excess projected contract values. The
change in risk free rates is expected to drive most of the movement in the
discount rates between periods. Changes to credit spreads for a given credit
rating as well as any change to our credit rating requiring a revised level of
nonperformance risk would also be factors in the changes to the discount rate.
If the discount rates used to discount the excess projected contract values were
to fluctuate, there would be a resulting change in reserves for FIAs recorded
through the consolidated statements of income.

As of December 31, 2021, we had embedded derivative liabilities classified as
Level 3 in the fair value hierarchy of $14.9 billion. The increase (decrease) to
the embedded derivatives on FIA products from hypothetical changes in discount
rates is summarized as follows:

                   (In millions)               December 31, 2021
                   +100 bps discount rate     $           (1,112)
                   -100 bps discount rate                  1,208


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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

However, these estimated effects do not take into account potential changes in
other variables, such as equity price levels and market volatility, which can
also contribute significantly to changes in carrying values. Therefore, the
quantitative impact presented in the table above does not necessarily correspond
to the ultimate impact on the consolidated financial statements. In determining
the ranges, we have considered current market conditions, as well as the market
level of discount rates that can reasonably be anticipated over the near-term.
For additional information regarding sensitivities to interest rate risk and
public equity risk, see Item 7A. Quantitative and Qualitative Disclosures About
Market Risks.

Deferred Acquisition Costs, Deferred Sales Inducements, and Value of Business
Acquired

Costs related directly to the successful acquisition of new or renewal insurance
or investment contracts are deferred to the extent they are recoverable from
future premiums or gross profits. These costs consist of commissions and policy
issuance costs, as well as sales inducements credited to policyholder account
balances. We perform periodic tests, including at issuance, to determine if the
deferred costs are recoverable. If it is determined that the deferred costs are
not recoverable, we record a cumulative charge to the current period.

Deferred costs related to universal life-type policies and investment contracts
with significant revenue streams from sources other than investment of the
policyholder funds are amortized over the lives of the policies, based upon the
proportion of the present value of actual and expected deferred costs to the
present value of actual and expected gross profits to be earned over the life of
the policies. Gross profits include investment spread margins, surrender charge
income, policy administration, changes in the GLWB and GMDB reserves, and
realized gains (losses) on investments. Current period gross profits for FIAs
also include the change in fair value of both freestanding and embedded
derivatives.

Our estimates of expected gross profits and margins are based on assumptions
using accepted actuarial methods related to policyholder behavior, including
lapses and the utilization of benefit riders, mortality, yields on investments
supporting the liabilities, future interest credited amounts (including indexed
related credited amounts on fixed indexed annuity products), and other policy
changes as applicable, and the level of expenses necessary to maintain the
policies over their expected lives. Each reporting period, we update estimated
gross profits with actual gross profits as part of the amortization process. We
also periodically revise the key assumptions used in the amortization
calculation which results in revisions to the estimated future gross profits.
The effects of changes in assumptions are recorded as unlocking in the period in
which the changes are made.

We establish VOBA for blocks of insurance contracts acquired through the
acquisition of insurance entities. The fair value of the liabilities purchased
is determined using market participant assumptions at the time of acquisition
and represents the amount an acquirer would expect to be compensated to assume
the contracts. We record the fair value of the liabilities assumed in two
components: reserves and VOBA. Reserves are established using our best estimate
assumptions, as previously discussed in future policy benefits. VOBA is the
difference between the fair value of the liabilities and the reserves. VOBA can
be either positive or negative. Any negative VOBA is recorded to the same
financial statement line on the consolidated balance sheets as the associated
reserves. Positive VOBA is recorded in DAC, DSI and VOBA on the consolidated
balance sheets.

VOBA associated with immediate annuity contracts classified as long-duration
contracts is amortized at a constant rate in relation to net policyholder
liabilities. For universal life-type policies and investment contracts with
significant revenue streams from sources other than investment of policyholder
funds, VOBA is amortized in relation to the present value of estimated gross
profits using methods consistent with those used to amortize DAC and DSI.
Negative VOBA is amortized at a constant rate in relation to applicable net
policyholder liabilities.

Estimated future gross profits vary based on a number of factors but are
typically most sensitive to changes in investment spread margins, which are the
most significant component of gross profits. If estimated gross profits for all
future years on business in force were to change, including the impacts of
shadow adjustments, there would be a resulting increase or decrease to the
balances of DAC, DSI and VOBA recorded as an increase or decrease to
amortization of DAC, DSI, and VOBA on the consolidated statements of income or
AOCI.

Actual gross profits will depend on actual margins, including the changes in the
value of embedded derivatives. The most sensitive assumption in determining the
value of the embedded derivative is the vector of rates used to discount the
excess projected contract values. If the discount rates used to discount the
excess projected contract values were to change, there would be a resulting
increase or decrease to the balances of DAC, DSI and VOBA recorded as an
increase or decrease in amortization of DAC, DSI, and VOBA on the consolidated
statements of income.

As of December 31, 2021, DAC, DSI and VOBA totaled $5.4 billion. The increases
(decreases) to DAC, DSI and VOBA from hypothetical changes in estimated future
gross profits and the embedded derivative discount rate are summarized as
follows:

                                                              December 31, 2021
             (In millions)                            DAC       DSI       VOBA      Total
             +10% estimated future gross profits    $ 163      $ 44      $ 48      $ 255
             -10% estimated future gross profits     (184)      (49)      (52)      (285)
             +100 bps discount rate                  (178)      (68)      (35)      (281)
             -100 bps discount rate                   196        75        36        307



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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Consolidation

We consolidate all entities in which we hold a controlling financial interest as
of the financial statement date whether through a majority voting interest or
otherwise, including those investment funds that meet the definition of a VIE in
which we are determined to be the primary beneficiary. If we are not the primary
beneficiary, the general partner or another limited partner may consolidate the
investment fund, and we record the investment as an equity method investment.
See Note 4 - Variable Interest Entities to the consolidated financial
statements.

The determination as to whether an entity qualifies as a VIE depends on the
underlying facts and circumstances surrounding each entity. Our assessment of
whether an entity is a VIE may require significant judgment. Those judgments may
include, but are not limited to: (1) determining whether the total equity
investment at risk is sufficient to permit the entity to finance its activities
without additional subordinated financial support; (2) evaluating whether the
holders of the equity investment at risk, as a group, lack any characteristics
of a controlling financial interest, such as the obligation to absorb losses,
right to receive expected residual returns or the ability to make decisions that
have a significant effect on the success of the entity; and (3) determining
whether the equity investors' voting rights are not proportional to their
economic rights, and whether substantially all of the activities of the entity
either involve or are conducted on behalf of an investor with disproportionately
fewer voting rights.

Judgments are also made in determining whether we, as a variable interest
holder, are required to consolidate the VIE as its primary beneficiary.
Determining whether we are the primary beneficiary may require significant
judgment. Generally, the primary beneficiary is the party that has both the
power to direct the activities that most significantly impact the VIE's economic
performance and the right to receive benefits or obligation to absorb losses
that could be potentially significant to the VIE. This analysis considers
related party and de-facto agent relationships, as well as indirect interests we
may hold in the entity being evaluated. For example, we may not be deemed to
control the VIE; however, to the extent the controlling party is a related party
or a de-facto agent, we perform an additional assessment to determine if
substantially all of the activities of the VIE are conducted on our behalf and
we are therefore the primary beneficiary. This assessment is primarily
qualitative and focused on the relationship between us and the VIE being
evaluated, but also includes an analysis of the VIE's economic impacts we
receive. Additionally, in situations where the related parties share power or
are under common control, we evaluate the nature of the relationship and
activities of the parties involved to determine which party within the
related-party group is most closely associated with the VIE and therefore
required to consolidate.

Additionally, determining whether a VIE meets the criteria of an investment
company is qualitative in nature and may involve significant judgment. The
significance of this distinction relates to whether the investment fund retains
the specialized accounting afforded investment companies.

To be deemed an investment company an entity must, at a minimum, meet the
following fundamental criteria: (1) obtain funds from one or more investors and
provide the investor(s) with defined investment management services, (2) commit
to its investor(s) that its business purpose and only substantive activities are
investing funds solely for returns from capital appreciation, investment income,
or both, and (3) it or its affiliates do not obtain or have the objective of
obtaining returns or benefits from an investee or its affiliates that are not
normally attributable to ownership interests or that are other than capital
appreciation or investment income.

If the three fundamental characteristics are met, we evaluate whether the entity
possesses some or all of the following typical characteristics that are
generally associated with an investment company: (1) has more than one
investment, (2) has more than one investor, (3) has investors that are not
related parties of the parent entity (if there is a parent) and the investment
manager, (4) has ownership interests in the form of equity or partnership
interests, and (5) manages substantially all of its investments on a fair value
basis. Lacking one or more of these characteristics does not preclude an entity
from being considered an investment company. All relevant facts and
circumstances are taken into consideration in making a final determination.

Income Taxes

In determining our income taxes, management is required to interpret complex
income tax laws and regulations. We are subject to examinations by federal,
state, local and foreign income tax authorities that may give rise to different
interpretations of these complex laws and regulations. Due to the nature of the
examination process, it generally takes years before these examinations are
completed and these matters are resolved. We recognize the tax benefit from an
uncertain tax position only if it is more-likely-than-not that the tax position
will be sustained on examination by the relevant taxing authorities based on the
technical merits of our position. For those tax positions that meet the
more-likely-than-not recognition threshold, we recognize the largest amount of
tax benefit that is more than 50 percent likely to be realized upon ultimate
settlement with the related tax authority. The aggregate amount of any
additional income tax liabilities that may result from these examinations, if
any, is not expected to have a material impact on our consolidated financial
results. For more information regarding income taxes, see Note 12 - Income Taxes
to the consolidated financial statements.

Accounting for income taxes involves numerous estimates and assumptions
regarding various events and transactions based on management's judgment and
interpretation of the laws and regulations enacted as of the reporting date.
Deferred tax assets and liabilities resulting from temporary differences between
the financial reporting and tax basis of assets and liabilities are measured at
the balance sheet date using enacted tax rates expected to apply to taxable
income in the years the temporary differences are expected to reverse. We
routinely evaluate the likelihood of realizing the benefit of our deferred tax
assets and may record a valuation allowance if, based on all available evidence,
we determine that it is more-likely-than-not some portion of the tax benefit
will not be realized. We have deferred tax assets primarily related to reserve
valuation differences, net operating losses, DAC and employee benefit plans.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

On a quarterly basis, we test the value of deferred tax assets for impairment at
the taxpaying-component level within each tax jurisdiction. Significant judgment
and estimates are required in determining whether valuation allowances should be
established as well as the amount of such allowances. When making such
determination, consideration is given to, among other things, the following:

•whether sufficient taxable income exists within the allowed carryback or
carryforward periods;
•whether future reversals of existing taxable temporary differences will occur,
including any tax planning strategies that could be used;
•nature or character (e.g., ordinary vs. capital) of the deferred tax assets and
liabilities; and
•whether future taxable income exclusive of reversing temporary differences and
carryforwards exists.

We may be required to change the provision for income taxes in certain
circumstances. Examples of such circumstances include when the ultimate
deductibility of certain items is challenged by taxing authorities, when it
becomes clear that certain items will not be challenged, when forecasted results
used in determining valuation allowances on deferred tax assets significantly
change, or when receipt of new information indicates the need for adjustment in
valuation allowances. Additionally, future events such as changes in tax
legislation could have an impact on the provision for income tax and the
effective tax rate. Any such changes could significantly affect the amounts
reported in our consolidated financial statements in the period to which these
changes apply.

We expect that earnings from AHL's US subsidiaries will not be subject to US
dividend withholding tax under the UK Treaty. Any dividends remitted from ALRe
are not subject to withholding tax.

Impact of Recent Accounting Pronouncements

For a discussion of new accounting pronouncements affecting us, see Note 1 -
Business, Basis of Presentation and Significant Accounting Policies to the
consolidated financial statements.

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