Athene Holding Ltd

Results of Operations

We completed our merger with AGM on January 1, 2022 and elected pushdown accounting in which we used AGM’s basis of accounting that reflects the fair market value of our assets and liabilities as of the date of the merger. We adopted targeted improvements to the accounting for long-duration contracts (LDTI) as of January 1, 2023 and, for all provisions of the update, applied a retrospective transition approach using a transition date of January 1, 2022, the date of our merger with AGM. All 2022 periods presented herein have been retrospectively adjusted to reflect the adoption of LDTI as of January 1, 2022.

The changes in the value of our assets and liabilities resulting from our merger with AGM as well as the impacts related to the adoption of LDTI limit the comparability of our financial results for the Predecessor and Successor periods. As a result, Predecessor results have been analyzed on a discrete period basis rather than a comparative basis.

The following summarizes the consolidated results of operations for the Predecessor and Successor periods, which relate to the period preceding and periods succeeding our merger with AGM, respectively.

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

In this section, references to 2023 refer to the year ended December 31, 2023 and references to 2022 refer to the year ended December 31, 2022.

Net Income (Loss) Available to Athene Holding Ltd. Common Stockholder

Net income (loss) available to Athene Holding Ltd. common stockholder increased by $7.5 billion, or 247%, to $4.5 billion in 2023 from $(3.1) billion in 2022. The increase in net income (loss) available to Athene Holding Ltd. common stockholder was primarily driven by a $20.6 billion increase in revenues and a $515 million decrease in income tax expense (benefit), partially offset by a $10.3 billion increase in benefits and expenses and a $3.2 billion increase in net income (loss) attributable to noncontrolling interests.

Revenues

Revenues increased by $20.6 billion to $28.2 billion in 2023 from $7.6 billion in 2022. The increase was primarily driven by an increase in investment related gains (losses), an increase in net investment income, an increase in premiums, an increase in VIE investment related gains (losses) and an increase in other revenues.

Investment related gains (losses) increased by $14.1 billion to $1.4 billion in 2023 from $(12.7) billion in 2022, primarily due to the changes in the fair value of reinsurance assets, FIA hedging derivatives, mortgage loans and trading and equity securities, as well as realized gains on AFS securities compared to realized losses in 2022, partially offset by foreign exchange losses on derivatives. The change in fair value of reinsurance assets increased $7.5 billion, the change in fair value of mortgage loans increased $3.2 billion and the change in fair value of trading and equity securities increased $653 million, primarily driven by a decrease in US Treasury rates in 2023 compared to an increase in 2022, credit spread tightening in 2023 compared to credit spread widening in 2022 and more favorable economics. The change in fair value of FIA hedging derivatives increased $4.4 billion, primarily driven by the favorable performance of the indices upon which our call options are based. The largest percentage of our call options are based on the S&P 500 index, which increased 24.2% in 2023, compared to a decrease of 19.4% in 2022. The favorable change in net realized gains and losses on AFS securities of $1.0 billion was primarily related to foreign exchange impacts. The foreign exchange gains on AFS securities and related losses on derivatives hedging foreign denominated assets were primarily driven by the strengthening of foreign currencies against the US dollar in comparison to 2022. Foreign exchange impacts were magnified in 2023 due to the growth in foreign denominated assets.

Net investment income increased by $3.6 billion to $11.1 billion in 2023 from $7.6 billion in 2022, primarily driven by higher floating rate income, higher rates on new deployment related to the higher interest rate environment and growth in our investment portfolio attributed to strong net flows during the previous twelve months. These increases were partially offset by a decrease in alternative investment income due to less favorable alternative investment performance compared to 2022 and the transfer, beginning in the second quarter of 2022, of a significant portion of our alternative investments to AAA, a consolidated VIE, as well as higher investment management fees driven by the strong growth in our investment portfolio.

Premiums increased by $1.1 billion to $12.7 billion in 2023 from $11.6 billion in 2022, primarily driven by thepremium received from the execution of a whole life block reinsurance transaction in 2023, partially offset by an $844 million decrease inpension group annuity premiums compared to 2022.

VIE investment related gains (losses) increased by $872 million to $1.2 billion in 2023 from $319 million in 2022, primarily related to unrealized gains on assets held by AAA, fewer losses on mortgage loans held in VIEs related to a decrease in US Treasury rates in 2023 compared to an increase in 2022 as well as credit spread tightening in 2023 compared to credit spread widening in 2022, and the consolidation of additional VIEs.

Other revenues increased by $619 million to $591 million in 2023 from $(28) million in 2022, primarily driven by the $555 million gain on the settlement of the VIAC recapture agreement.

Benefits and Expenses

Benefits and expenses increased by $10.3 billion to $23.6 billion in 2023 from $13.3 billion in 2022. The increase was driven by an increase in interest sensitive contract benefits, an increase in market risk benefits remeasurement (gains) losses, an increase in future policy and other policy benefits, an increase in policy and other operating expenses and an increase in DAC, DSI and VOBA amortization. Our annual unlocking of assumptions resulted in a decrease in benefits and expenses of $22 million compared to a decrease of $94 million in 2022. The 2023 unlocking was driven by a decrease of $94 million in interest sensitive contract benefits and a decrease of $45 million in future policy and other policy benefits, partially offset by an increase of $81 million in market risk benefits and an increase of $36 million related to DAC, DSI and VOBA, compared to a decrease of $49 million in interest sensitive contract benefits, a decrease of $43 million in market risk benefits and a decrease of $2 million related to DAC, DSI and VOBA in 2022.

Interest sensitive contract benefits increased by $5.7 billion to $6.2 billion in 2023 from $538 million in 2022, primarily driven by an increase in the change in our fixed indexed annuity reserves, an increase in rates on deferred annuity and funding agreement issuances, as well as on existing floating rate funding agreements, driven by higher US Treasury rates, and significant growth in our deferred annuity and funding agreement blocks of business, partially offset by a favorable change in unlocking. The change in our fixed indexed annuity reserves includes the impact from changes in the fair value of FIA embedded derivatives. Theincrease in the change in fair value of FIA embedded derivatives of $4.2 billion was primarily due to the performance of the equity indices towhich our FIA policies are linked. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 24.2% in 2023, compared to a decrease of 19.4% in 2022. The change in the fair value of FIA embedded derivatives was also driven by the unfavorable change in discount rates used in our embedded derivative calculations as 2023 experienced a decrease in discount rates compared to an increase in 2022. These impacts were partially offset by the favorable impact of rates on policyholder projected benefits. The fair value of FIA embedded derivatives unlocking in 2023 was $20 million favorable primarily due to changes to projected interest crediting, partially offset by an increase in lapse and risk margin assumptions, while 2022 unlocking was $47 million favorable primarily due to changes to projected interest crediting, partially offset by the impact of higher rates on future account values. The negative VOBA unlocking related to our interest sensitive contract liabilities in 2023 was $74 million favorable mainly due to an increase in lapse assumptions, while 2022 unlocking was $2 million favorable.

Market risk benefits remeasurement (gains) losses increased by $2.1 billion to $404 million in 2023 from $(1.7) billion in 2022. The losses in 2023 compared to gains in 2022 were primarily driven by an unfavorable change in the fair value of market risk benefits as well as an unfavorable change in unlocking. The change in fair value of market risk benefits was $2.1 billion unfavorable compared to 2022 due to a decrease in the risk-free discount rate across the curve, which is used in the fair value measurement of the liability for market risk benefits. This was partially offset by a favorable change in fair value of $295 million relatedto favorable equity market performance compared to 2022. The market risk benefits unlocking in 2023 was $81 million unfavorable primarily due to an increase in the income rider utilization assumption increasing projected claims, partially offset by favorable changes in lapse and income rider restart assumptions, while 2022 unlocking was $43 million favorable primarily due to lower projected claims related to the impact of higher rates.

Future policy and other policy benefits increased by $2.0 billion to $14.4 billion in 2023 from $12.5 billion in 2022, primarily driven by the $2.2 billion increase in reserves related to the execution of a whole life block reinsurance transaction in 2023, a $931 million increase in benefit payments and an increase in the AmerUs Closed Block fair value liability, partially offset by an$844 million decrease in pension group annuity obligations and favorable unlocking. The change in the AmerUs Closed Block fair value liability was primarily due toa decrease in US Treasury rates in 2023 compared to an increase in 2022 as well as credit spread tightening in 2023 compared to credit spread widening in 2022. Unlocking in 2023 was $45 million favorable consisting of $297 million of favorable future policy benefit reserve unlocking, partially offset by $252 million of unfavorable negative VOBA and deferred profit liability unlocking. The net favorable unlocking primarily related to higher interest rates and favorable mortality experience lowering future benefit payments.

Policy and other operating expenses increased by $353 million to $1.8 billion in 2023 from $1.5 billion in 2022, primarily driven by an increase in interest expense on short-term and floating rate long-term repurchase agreements and the issuance of debt in the fourth quarter of 2022, as well as an increase in general operating expenses related to growth in the business.

DAC, DSI and VOBA amortization increased by $244 million to $688 million in 2023 from $444 million in 2022, primarily due to significant growth in our deferred annuity block of business as well as an unfavorable change in unlocking. Unlocking in 2023 was $36 million unfavorable mainly related to an increase in lapse assumptions and changes to projected interest crediting, while unlocking in 2022 was $2 million favorable.

Income Tax Expense (Benefit)

Income tax expense (benefit) decreased by $515 million to $(1.2) billion in 2023 from $(646) million in 2022, primarily driven by a one-time tax benefit of $1.8 billion resulting from the establishment of deferred tax assets related to the Bermuda CIT, an unfavorable change in fair value of market risk benefits and additional policyholder and other reserve liability costs, partially offset bythe favorable changes in fair value of reinsurance assets and mortgage loans, an increase in net investment income and the gain on the settlement of the VIAC recapture agreement.

Our effective tax rate benefit in 2023 was 25% compared to a benefit of 11% in 2022. The income tax benefit was calculated by applying the 21% US statutory rate to the income of our US and foreign subsidiaries, net of the noncontrolling interests. Our earnings are generally subject to tax, in whole or in part, at a 21% effective tax rate (ETR), with a commensurate cash tax cost. We do not expect the Bermuda CIT to increase the ETR on the earnings of the Company’s subsidiaries excluding ACRA, and do not expect to pay increased cash taxes. With respect to the ACRA subsidiaries tax resident status in Bermuda, while it is possible we could experience an increase in the tax rate on their earnings due to the Bermuda CIT, we do not expect the cash tax cost to increase to the same extent. This cash tax savings is expected to arise because we recorded deferred tax assets, which are expected to be available to mitigate the cash tax impact of the Bermuda CIT on these subsidiaries during the period such deferred tax assets reverse. Although we experienced a decrease to our consolidated ETR for the year ended December 31, 2023 when we recorded estimates of the deferred tax assets, and could experience a material impact to our consolidated ETR as these estimates are revised, we do not expect material impacts to our consolidated ETR or earnings and results of operations as a result of utilization of the deferred tax assets, though we can provide no assurance that the impacts will not be material in future years.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests increased by $3.2 billion to $1.1 billion in 2023 from $(2.1) billion in 2022, primarily due to the favorable change in fair value of reinsurance assets related to the decrease in US Treasury rates in 2023 compared to an increase in 2022 and credit spread tightening in 2023 compared to credit spread widening in 2022, as well as a higher allocation of income to the AAA noncontrolling interest due to the continued increase in the noncontrolling interest ownership of AAA.

Year Ended December 31, 2021

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

Net Income Available to Athene Holding Ltd. Common Stockholder

Net income available to Athene Holding Ltd. common stockholder was $3.7 billion in 2021. Net income available to Athene Holding Ltd. common stockholder was primarily driven by $26.3 billion of revenues, partially offset by $22.1 billion of benefits and expenses and $386 million of income tax expense.

Revenues

Revenues were $26.3 billion in 2021, primarily driven by premiums, net investment income, investment related gains and losses and product charges.

Premiums were $14.3 billion in 2021, primarily driven by $13.8 billion ofpension group annuity premiums as well as premiums from payout annuities.

Net investment income was $7.1 billion in 2021, primarily driven by earnings on our fixed income portfolio, strong alternative investment performance, a favorable change of $864 million in the fair value of our investment in Apollo and robust growth in our investment portfolio. These impacts were partially offset by investment management fees.

Investment related gains (losses) were $4.2 billion in 2021, primarily due to the changes in the fair value of FIA hedging derivatives, reinsurance assets and equity securities, as well as realized gains on AFS securities and foreign exchange gains on derivatives. The change in fair value of FIA hedging derivatives of $2.5 billion was due to the favorable performance of the indices upon which our call options are based. The largest percentage of our call options are based on the S&P 500 index, which increased 26.9% in 2021. The change in fair value of reinsurance assets of $572 million was primarily related to the allocation of income from the underlying investments, partially offset by unrealized losses on the investments attributed to an increase in US Treasury rates in 2021. The change in the fair value of equity securities was primarily due to the favorable equity market performancein 2021. Realized gains on AFS securities were primarily driven the sale of corporate securities related to the redeployment of assets from the block reinsurance transaction with Jackson National Life Insurance Company, a wholly owned subsidiary of Jackson Financial, Inc. (together with its subsidiaries, Jackson) in 2020. Foreign exchange gains on derivatives reflects the strengthening of the US dollar against foreign currenciesin 2021 as well asadditional business denominated in foreign currencies.

Product charges were $621 million in 2021, primarily related to rider and surrender charges on our deferred annuity products.

Benefits and Expenses

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

Future policy and other policy benefits were $15.7 billion in 2021, primarily attributable to $13.8 billion of pension group annuity obligations, as well as benefit payments and reserve changes related to pension group annuities and other payout annuities, and an increase in rider reserves, partially offset by a decrease in the AmerUs Closed Block fair value liability. The increase in rider reserves in 2021 was mainly due to growth in our deferred annuity block of business, elevated gross profits, net FIA derivative impacts and unfavorable unlocking, partially offset by favorable 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 decrease in the AmerUs Closed Block fair value liability in 2021 was primarily driven by the increase in US Treasury rates during the year.

Interest sensitive contract benefits were $4.4 billion in 2021, primarily driven by the change in our fixed indexed annuity reserves, interest credited on deferred annuities and funding agreements and growth in our deferred annuity and funding agreement blocks of business. The change in our fixed indexed annuity reserves includes the impact from the change in fair value of FIA embedded derivatives. The change in fair value of FIA embedded derivatives of $1.5 billion was due to the performance of the equity indices to which our FIA policies are linked. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 26.9% in 2021. This was partially offset by the favorable impact from the discount rates used in our embedded derivative calculations related to the increase in rates in 2021 as well as favorable unlocking. The fair value of FIA embedded derivatives unlocking in 2021 was $59 million favorable primarily due to higher lapse assumptions on recently issued business.

Policy and other operating expenses were $1.1 billion in 2021, primarily related to employee compensation and other operating expenses, interest expense on debt, thecosts associated with the merger with Apollo, non-deferrable commission expense anda $53 million impairment of a Corporate-Owned Life Insurance (COLI) asset.

DAC, DSI and VOBA amortization was $830 million in 2021, primarily due to growth in our deferred annuity block of business, elevated gross profits, net FIA derivative impacts and unfavorable unlocking, partially offset by favorable actuarial experience and market impacts. Unlocking in 2021 was $10 million unfavorable, primarily related to changes in lapse assumptions and income rider experience.

Income Tax Expense (Benefit)

Income tax expense was $386 million in 2021, primarily driven by the favorable change in net FIA derivatives, the unrealized gain on our investment in Apollo, 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. Our effective tax rate in 2021 was 9%. Our effective tax rate was dependent upon the relationship of income or loss subject to tax compared to consolidated income or loss before income taxes.

Summary of Non-GAAP Earnings

The following summarizes ourspread related earnings:

Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

In this section, references to 2023 refer to the year ended December 31, 2023 and references to 2022 refer to the year ended December 31, 2022.

Spread Related Earnings

SRE increased by $641 million, or 26%, to $3.1 billion in 2023 from $2.5 billion in 2022. The increase in SRE was primarily driven by higher net investment earnings, partially offset by higher cost of funds and interest and other financing costs.

Net investment earnings increased $2.7 billion, primarily driven by higher floating rate income, higher rates on new deployment and $19.7 billion of growth in our average net invested assets, partially offset by less favorable alternative investment performance. The less favorable alternative investment performance compared to 2022 was primarily driven by lower income from real estate funds related to home price appreciation in 2022, less favorable performance from our investment in Challenger Life Company Limited (Challenger) related to a share price decrease in 2023 compared to an increase in 2022, lower returns on our investments in Athora and Venerable Holdings, Inc. (together with its subsidiaries, Venerable) attributable to valuation increases in 2022 and less favorable performance on our investment in Aqua Finance related to macroeconomic headwinds for consumer loan origination. These impacts were partially offset by favorable performance from our investment in Wheels, Inc. (Wheels) related to an elevated growth trajectory driven by strong performance and accelerated integration post-merger, as well as favorable performance from our investment in Redding Ridge attributed to an increase in average NAV and unfavorable economics in 2022.

Cost of funds increased $1.9 billion, primarily driven by higher rates on deferred annuity, funding agreement and pension group annuity issuances, as well as an increase in rates on existing floating rate funding agreements, significant growth in each of our business channels and an unfavorable change in unlocking, partially offset by the $114 million operating gain on the settlement of the VIAC recapture agreement. Unlocking, net of the noncontrolling interests, was unfavorable $24 million primarily related to an increase in the income rider utilization assumption increasing projected claims. This impact was partially offset by favorable changes in lapse and income rider restart assumptions as well as higher interest rates and favorable mortality experience lowering future benefit payments. Unlocking, net of the noncontrolling interests, in 2022 was favorable $3 million primarily related to the impact of higher rates on future account values, partially offset by changes to projected interest crediting.

Interest and other financing costs increased $157 million related to interest expense resulting from higher rates on more short-term repurchase agreements in 2023 as well as interest expense and preferred stock dividends related to our debt and preferred stock issuances in the fourth quarter of 2022.

Net investment spread increased 22 basis points to 1.93% in 2023 from 1.71% in 2022, driven by a higher net investment earned rate, partially offset by higher cost of funds.

Net investment earned rate was 4.61% in 2023, an increase from 3.66% in 2022, primarily due to higher returns in our fixed income portfolio, partially offset by less favorable performance in our alternative investment portfolio. Fixed income and other net investment earned rate was 4.45% in 2023, an increase from 3.22% in 2022, primarily driven by higher floating rate income andhigher new deployment rates. Alternative net investment earned rate was 7.22% in 2023, a decrease from 10.42% in 2022, primarily driven bylower income from real estate funds related to home price appreciation in 2022, less favorable performance from our investment in Challenger related to a share price decrease in 2023 compared to an increase in 2022, lower returns on our investments in Athora and Venerable attributable to valuation increases in 2022 and less favorable performance on our investment in Aqua Finance related to macroeconomic headwinds for consumer loan origination. These impacts were partially offset by favorable performance from our investment in Wheels related to an elevated growth trajectory driven by strong performance and accelerated integration post-merger, as well as favorable performance from our investment in Redding Ridge attributed to an increase in average NAV and unfavorable economics in 2022.

Cost of funds increased by 73 basis points to 2.71% in 2023, from 1.98% in 2022, primarily driven by higher rates on deferred annuity, funding agreement and pension group annuity issuances, as well as an increase in rates on existing floating rate funding agreements, and an unfavorable change in unlocking, partially offset by the $114 million operating gain on the settlement of the VIAC recapture agreement.

Adjustments to Net Income (Loss) Available to Athene Holding Ltd. Common Stockholder

The adjustments tonet income (loss) available to Athene Holding Ltd. common stockholder are comprised of investment gains (losses), net of offsets; non-operating change in insurance liabilities and related derivatives; inte gration, restructuring and other non-operating expenses; stock compensation expense and the non-operating income tax expense (benefit) on these adjustments. The increase in adjustments to net income (loss) available to Athene Holding Ltd. common stockholder in 2023 compared to 2022 was primarily driven by the increase in investment gains (losses), net of offsets, and an increase in the non-operating income tax benefit, partially offset by the decrease in non-operating change in insurance liabilities and related derivatives. Our annual unlocking of assumptions, net of the noncontrolling interests, resulted inan increase in our adjustments to net income (loss) available to Athene Holding Ltd. common stockholder of $71 million compared to an increase of $90 million in 2022. The 2023 unlocking was driven by an increase of $71 million in FIA embedded derivative liabilities, compared to an increase of $47 million in FIA embedded derivative liabilities and an increase of $43 million in the fair value of market risk benefits in 2022.

Investment gains (losses), net of offsets, increased $7.6 billion, primarily due to the changes in fair value of reinsurance assets and mortgage loans as well as the $441 million non-operating gain on the settlement of the VIAC recapture agreement. The favorable changes in fair value of reinsurance assets of $4.7 billion and mortgage loans of $2.8 billion were primarily due to a decrease in US Treasury rates in 2023 compared to an increase in 2022 as well as credit spread tightening in 2023 compared to credit spread widening in 2022.

Non-operating change in insurance liabilities and related derivatives decreased $1.3 billion due to the decrease in the change in fair value of market risk benefits, partially offset by the favorable net change in FIA derivatives. The $2.0 billion unfavorable change in fair value of market risk benefits was primarily driven by a decrease in the risk-free discount rate across the curve, which is used in the fair value measurement of the liability for market risk benefits, as well as favorable unlocking in 2022, partially offset by favorable equity market performance. The market risk benefits unlocking, net of the noncontrolling interests, in 2022 was $43 million favorable primarily due to lower projected claims related to the impact of higher rates. The $605 million favorable change in net FIA derivatives was primarily due to the favorable performance of the equity indices to which our FIA policies are linked. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 24.2% in 2023, compared to a decrease of 19.4% in 2022. The change in net FIA derivatives was also driven by the favorable impact of rates on policyholder projected benefits and a favorable change in unlocking, partially offset by the unfavorable change in discount rates used in our embedded derivative calculations as 2023 experienced a decrease in discount rates compared to an increase in 2022. The fair value of FIA embedded derivative unlocking, net of the noncontrolling interests, in 2023 was $71 million favorable primarily due to changes to projected interest crediting, partially offset by an increase in lapse and risk margin assumptions, while 2022 unlocking was $47 million favorable primarily due to changes to projected interest crediting, partially offset by the impact of higher rates on future account values.

Non-operating income tax benefit increased $530 million, primarily due to aone-time tax benefit of $1.8 billion resulting from the establishment of deferred tax assets related to the Bermuda CIT and the unfavorable change in fair value of market risk benefits, partially offset by the significant unrealized losses on investments in 2022.

Year Ended December 31, 2021

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

Spread Related Earnings

SRE was $2.5 billion in 2021. SRE was primarily driven by net investment earnings, partially offset by cost of funds, other operating expenses and interest and other financing costs.

Net investment earnings were $7.1 billion primarily due to earnings on our fixed income portfolio, strong alternative investment performance and robust growth in our investment portfolio, partially offset by investment management fees.

Cost of funds was $4.0 billion primarily driven by interest credited and option costs on annuity products, pension group annuity and payout annuity obligations, interest on funding agreement issuances, income rider reserve, DAC, DSI and VOBA amortization attributed to strong growth and elevated gross profits in 2021 and unfavorable unlocking. Unlocking, net of the noncontrolling interest, was unfavorable $91 million reflecting unfavorable lapse assumptions, partially offset by income rider experience.

Other operating expenses primarily relate to employee compensation and general operating costs of the business. Interest and other financing costs consist primarily of preferred stock dividends and interest expense on our senior debt issuances.

Net investment spread was 1.94% in 2021, primarily driven by our net investment earned rate, partially offset by our cost of funds.

Net investment earned rate was 4.42% in 2021, due to the performance of our fixed income and alternative investment portfolios. Fixed income and other net investment earned rate was 3.51% in 2021, reflective of income on our fixed income portfolio in a low interest rate environment. Alternative net investment earned rate was 21.37% in 2021, primarily driven by strong returns from several investments including Venerable attributed to a valuation increase related to the announced reinsurance agreement with Equitable Financial Life Insurance Company, AmeriHome Mortgage Company, LLC (AmeriHome) related to a valuation increase resulting from the eventual sale of our investment in April of 2021, private equity and real estate funds, MidCap Financial due to a valuation increase in 2021 relating to a capital raise priced at a premium and an increase in the market value of our equity position in Jackson.

Cost of funds was 2.50% in 2021, primarily driven by interest credited and option costs on annuity products, pension group annuity and payout annuity obligations, interest on funding agreement issuances, income rider reserve, DAC, DSI and VOBA amortization attributed to strong growth and elevated gross profits in 2021 and unfavorable unlocking.

Adjustments to Net Income Available to Athene Holding Ltd. Common Stockholder

The adjustments to net income available to Athene Holding Ltd. common stockholder were primarily driven by investment gains (losses), net of offsets and the non-operating change in insurance liabilities and related derivatives, net of offsets, partially offset by integration, restructuring and other non-operating expenses.

Investment gains (losses), net of offsets were $1.0 billion primarily driven by thefavorable change of $864 million in the fair value of our investment in Apollo, realized gains on the sale of corporate securities related to the redeployment of assets from the block reinsurance transaction with Jackson in 2020 and foreign exchange gains, partially offset by the change in fair value of reinsurance assets. The change in fair value of reinsurance assets was unfavorable $629 million primarily related to the increase in US Treasury rates in 2021.

Non-operating change in insurance liabilities and related derivatives, net of offsets was $692 million due to the change in net FIA derivatives. The favorable change in net FIA derivatives was primarily driven by the favorable performance of the equity indices to which our FIA policies are linked. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 26.9% in 2021. The favorable change in net FIA derivatives was also driven by the increase in discount rates used in our embedded derivative calculations in 2021 and favorable unlocking. The fair value of FIA embedded derivative unlocking, net of DAC, DSI, VOBA, rider reserve and noncontrolling interest offsets, was favorable $32 million in 2021 primarily driven by higher lapse rates on recently issued business.

Integration, restructuring and other non-operating expenses were primarily driven by the costs associated with the merger with Apollo and a $53 million impairment of a COLI asset.