S&P Global Ratings shas raised its financial strength and issuer credit ratings on retirement services company Athene to ‘A+’ from ‘A’. The outlook is stable.
S&P has also raised its rating on the holding company to ‘A-‘ from ‘BBB+’. The outlook on the holding company ratings is positive.
Athene’s continued growth over the last 12 months during the height of the COVID-19 pandemic and the related economic crisis is noted by S&P as a contributing factor to its decision to upgrade.
While the pandemic is certainly not over, its believed there is less uncertainty than last year, especially in the US given the ongoing vaccine rollout and recent economic growth.
Athene’s increased financial strength and issuer credit ratings reflects the group’s capital strength and balance-sheet growth.
While the increased scale does not in and of itself affect our ratings, the combination of the company’s profitable growth, strong earnings vis-à-vis peers, and capital position supports its credit quality.
Furthermore, Athene has expanded its liability profile and market share over the past few years. It was the top seller of fixed index annuities in 2020, and it expanded its funding-agreement-backed notes program, pension risk transfers, flow reinsurance, and block acquisitions.
S&P says these expansions reflect the strength of Athene’s business model and competitive advantage in its various spread-lending businesses.
The upcoming merger with Apollo will create a group that will be roughly split equally between asset management and insurance, on an earnings basis.
Successful execution of Athene’s strategy is seen as requiring capital to be maintained and boosted. Although the merger will better align the two companies, S&P sees no material difference in the way Athene will be managed after the merger, which further strengthens its view that ratings are not limited by the upcoming transaction.
The stable outlook on Athene’s operating companies reflects an expectation that the company will retain its competitive position in its core markets, maintain capital adequacy at ‘AA’ level, and keep growing profitably in its retail and reinsurance/acquisition businesses.
The positive outlook on Athene’s holding company matches the positive outlook on Apollo itself.
