Athene Holding Ltd., the life, retirement, annuity insurance and reinsurance group that is majority owned by investment giant Apollo, has entered the pension risk transfer space in the second-quarter of 2017.
Athene entered into its first pension buy-out transaction during the quarter, with its Iowa life insurance subsidiary now set to provide annuity benefits to over 10,000 retirees, which represents pension obligations of around $320 million.
Athene will issue a group annuity to the pension provider involved and individual annuity certificates qualifying retirees and will now have responsibility for paying all liabilities covered by the pension risk transfer arrangement.
Jim Belardi, CEO of Athene, commented on the news; “I am pleased to announce that we successfully entered the pension risk transfer (PRT) market in the second quarter, securing our first deal in which we assumed approximately $320 million in pension liabilities.”
The pension buy-out market makes perfect sense for Athene and parent Apollo, with these transactions providing a source of long-dated liabilities and investment assets.
The majority of Athene’s investable assets are managed by Athene Asset Management, LP., a subsidiary of Apollo Global Management LLC., so the addition of assets related to pension risk transfer transactions could boost the asset portfolio considerably in years to come.
Athene also has its own reinsurance operations which could be used to simultaneously take on any longevity risk associated with pension risk transfer deals, positioning the firm well to capitalise on pension funds appetites to de-risk themselves.