Bermuda-based provider of retirement and savings solutions, Athene Holding Ltd., has reported a rise in net income to $622 million for the third-quarter of 2020, driven in part by favourable changes in the fair value of reinsurance assets owing to tightening credit spreads.
Net income of $622 million represents a substantial increase from the $276 million reported for the same period in 2019.
Alongside the aforementioned favourable changes in the fair value of reinsurance assets during the quarter, the company’s net income also benefited from higher adjusted operating income of $302 million, compared with $243 million in Q3 2019, and also favourable changes in the net fair value of fixed indexed annuity derivatives. According to Athene, the latter was mostly driven by unlocking, favourable equity market performance, and a reduced discount rate as a result of fading interest rates.
The year-on-year rise in adjusted operating income was primarily driven by higher investment income from alternatives, of which over 50% are valued on a lagged basis and benefited from capital markets appreciation in Q2 2020 being reflected in Q3, says Athene.
The company notes that once notables and Apollo Operating Group (AOG) are excluded, adjusted operating income for the quarter reached $356 million, against $305 million for the same period in 2019.
Jim Belardi, Athene’s Chief Executive Officer (CEO), commented: “Amid fragile economic conditions and historically low interest rates, our third quarter results demonstrate the continued resilience of Athene’s business and our ability to drive robust, highly profitable growth in any environment.
“Following consecutive quarters of record organic growth above target returns, we are on pace to exceed $50 billion of total organic and inorganic volumes in 2020, marking our best year of growth ever. While others have been forced to pull back in the current environment, Athene continues to serve as a source of strength for policyholders and business partners. Our numerous competitive advantages, highlighted by our very strong capitalization, enable our business to continue to thrive.
“The successful execution of our strategy year-to-date has laid the foundation to significantly increase earnings and drive compelling shareholder value in 2021 and beyond.”
As evidenced by its third-quarter results, Athene remains in a strong capital position heading into the final quarter of the year, with total deployable capital of $7.6 billion, including excess equity capital of $3.2 billion, untapped capacity of $2.6 billion, and $1.8 billion of available undrawn third-party commitments to ACRA.
The firm also highlights record quarterly organic deposits for the second quarter in a row of $7.4 billion, representing year-on-year growth of 31%.
