Athene Holding Ltd

Results of Operations

The following summarizes the condensed consolidated results of operations:

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

In this section, references to 2024 refer to the three months ended March 31, 2024 and references to 2023 refer to the three months ended March 31, 2023.

Net Income Available to Athene Holding Ltd. Common Stockholder

Net income available to Athene Holding Ltd. common stockholder increased by $426 million, or 59%, to $1.1 billion in 2024 from $721 million in 2023. The increase in net income available to Athene Holding Ltd. common stockholder was driven by a $1.7 billion increase in revenues and a $172 million decrease in net income attributable to noncontrolling interests, partially offset by a $1.3 billion increase in benefits and expenses and a $144 million increase in income tax expense.

Revenues

Revenues increased by $1.7 billion to $5.7 billion in 2024 from $4.1 billion in 2023. The increase was primarily driven by an increase in net investment income, an increase in investment related gains (losses) and an increase in VIE investment related gains (losses).

Net investment income increased by $885 million to $3.3 billionin 2024 from $2.4 billion in 2023, primarily driven by significant growth in our investment portfolio attributed to strong net flows during the previous twelve months, higher rates on new deployment related to the higher interest rate environment and higher floating rate income. These increases were partially offset by higher investment management fees driven by the significant growth in our investment portfolio.

Investment related gains (losses) increased by $612 million to $1.7 billion in 2024 from $1.1 billion in 2023, primarily due to the change in FIA hedging derivatives andfavorable net foreign exchange impacts, partially offset by changes in the fair value of reinsurance assets, mortgage loans and trading securities. The change in fair value of FIA hedging derivatives increased $1.3 billion, primarily driven by the favorable performance of the equity indices upon which our call options are based, with the 2024 impact amplified by the strong growth in our FIA block of business over the previous twelve months. The largest percentage of our call options are based on the S&P 500 index, which increased 10.2% in 2024, compared to an increase of 7.0% in 2023. The favorable net foreign exchange impacts were primarily related to the strengthening of the US dollar against foreign currencies in comparison to 2023 and the continued growth in foreign denominated business. The change in fair value of reinsurance assets decreased $678 million, the change in fair value of mortgage loans decreased $635 million and the change in fair value of trading securities decreased $129 million primarily driven by an increase in US Treasury rates in 2024 compared to a decrease in 2023.

VIE investment related gains (losses) increased by $133 million to $334 million in 2024 from$201 million in 2023, primarily driven by unrealized gains on assets held by AAA, partially offset by an unfavorable change in the fair value of mortgage loans held in VIEs related to an increase in US Treasury rates in 2024 compared to a decrease in 2023.

Benefits and Expenses

Benefits and expenses increased by $1.3 billion to $3.9 billion in 2024 from $2.7 billion in 2023. The increase was primarily driven by an increase in interest sensitive contract benefits and an increase in future policy and other policy benefits, partially offset by a decrease in market risk benefits remeasurement (gains) losses.

Interest sensitive contract benefits increased by $1.6 billion to $2.9 billion in 2024 from $1.3 billion in 2023, 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. The change in our fixed indexed annuity reserves includes the impact from changes in the fair value of FIA embedded derivatives. The increase in the change in fair value of FIA embedded derivatives of $704 million was primarily due to the performance of the equity indices to which our FIA policies are linked, with the 2024 impact amplified by the strong growth in our FIA block of business over the previous twelve months. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 10.2% in 2024, compared to an increase of 7.0% in 2023. The change in fair value of FIA embedded derivatives was also driven by the unfavorable impact of rates on policyholder projected benefits. These impacts were partially offset by the favorable change in discount rates used in our embedded derivative calculations as 2024 experienced an increase in discount rates compared to a decrease in 2023.

Future policy and other policy benefits increased by$77 million to $543 million in 2024 from $466 million in 2023, primarily driven by a$260 million increase in benefit payments as well as additional life reserves related to premiums, partially offset bya$56 million decrease in pension group annuity obligations compared to 2023 and a decrease in the AmerUs Closed Block fair value liability. The change in the AmerUs Closed Block fair value liability was primarily due to the increase in US Treasury rates in 2024 compared to a decrease in 2023.

Market risk benefits remeasurement (gains) losses decreased by $500 million to $(154) million in 2024 from $346 million in 2023. The gains in 2024 compared to losses in 2023 were primarily driven by a favorable change in the fair value of market risk benefits. The change in fair value of market risk benefits was$454 million favorable compared to 2023 due to an increase in the risk-free discount rate across the curve, which is used in the fair value measurement of the liability for market risk benefits, and$55 million favorable related to more favorable equity market performance compared to 2023.

Income Tax Expense

Income tax expense increased by $144 million to$307 million in 2024 from $163 million in 2023, primarily driven by the increase in net investment income, a favorable change in the fair value of market risk benefits and a favorable change in net FIA embedded derivatives, partially offset by the unfavorable change in fair value of reinsurance assets and mortgage loans and additional policyholder and other reserve liability costs. Our effective tax rate in thefirst quarter of 2024 was 17% compared to 12% in 2023. The income tax expense was calculated by applying the 21% US statutory rate to the income of our US and foreign subsidiaries, net of noncontrolling interests.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests decreased by $172 million to $283 million in 2024 from $455 million in 2023, primarily due to the unfavorable change in fair value of reinsurance assets related to an increase in US Treasury rates in 2024 compared to a decrease in 2023, partially offset by income attributable to the ACRA 2 noncontrolling interest, which was established in the third quarter of 2023, and a higher allocation of income to the AAA noncontrolling interest due to the continued increase in the noncontrolling interest ownership of AAA.

Summary of Non-GAAP Earnings

The following summarizes our spread related earnings:

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

In this section, references to 2024 refer to the three months ended March 31, 2024 and references to 2023 refer to the three months ended March 31, 2023.

Spread Related Earnings

SRE increased by $129 million, or 19%, to $816 million in 2024 from $687 million in 2023. The increase in SRE was primarily driven by higher net investment earnings and lower interest and other financing costs, partially offset by higher cost of funds.

Net investment earnings increased $578 million, primarily driven by $20.8 billion of growth in our average net invested assets, higher rates on new deployment related to the higher interest rate environment, higher floating rate income and favorable alternative investment performance. The favorable alternative investment performance compared to 2023 was primarily driven by favorable performance from Challenger Life Company Limited (Challenger) related to a share price increase in 2024 compared to a decrease in 2023, higher returns on our investment in Wheels related to strong performance and accelerated integration post-merger and more favorable performance from our investment in Redding Ridge attributed to continued strong growth. These impacts were partially offset by less favorable returns on our investment in Athora attributable to higher debt costs and operating expenses compared to 2023.

Cost of funds increased $488 million, primarily driven by higher rates on deferred annuity and funding agreement issuances, an increase in rates on existing floating rate funding agreements, significant growth in our retail, funding agreement and pension group annuity channels and an increase in the institutional block of business at higher crediting rates.

Interest and other financing costs decreased $18 million primarily related to lower interest expense resulting from a significant decrease in short-term repurchase agreements outstanding in 2024 compared to 2023, partially offset by interest expense related to our debt issuances in the fourth quarter of 2023 and the first quarter of 2024.

Net Investment Spread

Net investment spread of 1.83% in 2024, in line with 2023, primarily driven by a higher net investment earned rate, offset by higher cost of funds.

Net investment earned rate increased 64 basis points to 4.89% in 2024 from 4.25% in 2023, primarily due to higher returns in our fixed income portfolio and favorable performance in our alternative investment portfolio. Fixed income and other net investment earned rate was 4.66% in 2024, an increase from 4.13% in 2023, primarily driven byhigher rates on new deployment related to the higher interest rate environment and higher floating rate income. Alternative net investment earned rate was 9.10% in 2024, an increase from 6.12% in 2023, primarily driven byfavorable performance from Challenger related to a share price increase in 2024 compared to a decrease in 2023, higher returns on our investment in Wheels related to strong performance and accelerated integration post-merger and more favorable performance from our investment in Redding Ridge attributed to continued strong growth. These impacts were partially offset by less favorable returns on our investment in Athora attributable to higher debt costs and operating expenses compared to 2023.

Cost of funds increased 65 basis points to 3.10% in 2024 from 2.45% in 2023, primarily driven by higher rates on deferred annuity and funding agreement issuances, an increase in rates on existing floating rate funding agreements and an increase in the institutional block of business at higher crediting rates.

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

The adjustments tonet income 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 related to these adjustments. The increase in adjustments tonet income available to Athene Holding Ltd. common stockholder in 2024 compared to 2023 was primarily driven by the increase in non-operating change in insurance liabilities and related derivatives, partially offset by the decrease in investment gains (losses), net of offsets.

Non-operating change in insurance liabilities and related derivatives increased $808 million due to the increase in the change in fair value of market risk benefits and the increase in net FIA derivatives. The $472 million favorable change in fair value of market risk benefits was primarily driven by an increase 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 equity market performance compared to 2023. The $341 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, with the 2024 impact amplified by the strong growth in our FIA block of business over the previous twelve months. The largest percentage of our FIA policies are linked to the S&P 500 index, which increased 10.2% in 2024, compared to an increase of 7.0% in 2023. The change in net FIA derivatives was also driven by the favorable change in discount rates used in our embedded derivative calculations as 2024 experienced an increase in discount rates compared to a decrease in 2023, partially offset bythe unfavorable impact of rates on policyholder projected benefits.

Investment gains (losses), net of offsets, decreased $419 million, primarily due to the changes in fair value of mortgage loans and reinsurance assets, partially offset by favorable net foreign exchange impacts primarily related to the strengthening of the US dollar against foreign currencies in comparison to 2023 and the continued growth in foreign denominated business. The unfavorable changes in fair value of mortgage loans of $475 million and reinsurance assets of $392 million were primarily driven by an increase in US Treasury rates in 2024 compared to a decrease in 2023.