Athene Holding Ltd

Previous wording

We have established a significant base of earnings and, as of March 31, 2024, have an expected annual net investment spread, which measures our investment performance plus strategic capital management fees less the total cost of our liabilities, of 1–2% over the estimated 8.3 year weighted-average life of our net reserve liabilities. The weighted-average life includes deferred annuities, pension group annuities, funding agreements, payout annuities, life insurance and other products.

Current wording

We have established a significant base of earnings and, as of June 30, 2024, have an expected annual net investment spread, which measures our investment performance plus strategic capital management fees less the total cost of our liabilities, of 1–2% over the estimated 8.1 year weighted-average life of our net reserve liabilities. The weighted-average life includes deferred annuities, pension group annuities, funding agreements, payout annuities, life insurance contracts and other products.

Previous wording

Our total assets have grown to $320.6 billion as of March 31, 2024. For the three months ended March 31, 2024, we generated an annualized net investment spread of 1.83%.

Current wording

Our total assets have grown to $332.6 billion as of June 30, 2024. For the six months ended June 30, 2024, we generated an annualized net investment spread of 1.74%.

Previous wording

Our organic channels, including retail, flow reinsurance and institutional products, provided gross inflows of $20.1 billion and $11.9 billion for the three months ended March 31, 2024 and 2023, respectively, which were underwritten to attractive returns. Gross organic inflows increased $8.2 billion, or 68% from the prior year, reflecting the strength of our multi-channel distribution platform and our ability to quickly pivot into optimal and profitable channels as opportunities arise. Withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities, funding agreement repurchases and maturities and block reinsurance outflows (collectively, gross outflows), in the aggregate were $8.0 billion and $6.9 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in gross outflows, which was within our range of expectations, was primarily related to an increase in funding agreement maturities in 2024 compared to 2023 as well as an increase in annuity policies which have reached the end of the surrender charge period in a higher rate environment, partially offset by a decrease in outflows related to policies underlying certain reinsurance blocks compared to 2023. We believe that our credit profile, current product offerings and product design capabilities as well as our growing reputation as both a seasoned funding agreement issuer and a reliable pension group annuity counterparty will continue to enable us to grow our existing organic channels and source additional volumes of profitably underwritten liabilities in various market environments. We intend to continue to grow organically by expanding each of our retail, flow reinsurance and institutional distribution channels. We believe that we have the right people, infrastructure, scale and capital discipline to position us for continued growth.

Current wording

Our organic channels, including retail, flow reinsurance and institutional products, provided gross inflows of $36.8 billion and $30.6 billion for the six months ended June 30, 2024 and 2023, respectively, which were underwritten to attractive returns. Gross organic inflows increased $6.1 billion, or 20% from the prior year, reflecting the strength of our multi-channel distribution platform and our ability to quickly pivot into optimal and profitable channels as opportunities arise. Withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities, funding agreement repurchases and maturities and block reinsurance outflows (collectively, gross outflows), in the aggregate were $18.2 billion and $16.0 billion for the six months ended June 30, 2024 and 2023, respectively. The increase in gross outflows, which was within our range of expectations, was primarily related to an increase in funding agreement maturities in 2024 compared to 2023 as well as an increase in annuity policies which have reached the end of the surrender charge period in a higher rate environment, partially offset by a decrease in outflows related to policies underlying certain reinsurance blocks compared to 2023. We believe that our credit profile, current product offerings and product design capabilities, as well as our growing reputation as both a seasoned funding agreement issuer and a reliable pension group annuity counterparty, will continue to enable us to grow our existing organic channels and source additional volumes of profitably underwritten liabilities in various market environments. We intend to continue to grow organically by expanding each of our retail, flow reinsurance and institutional distribution channels. We believe that we have the right people, infrastructure, scale and capital discipline to position us for continued growth.

Previous wording

Within our retail channel, we had fixed annuity sales of $9.7 billion and $8.6 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in our retail channel was driven by record sales of our fixed indexed annuity (FIA) products, partially offset by a decrease in multi-year guaranteed annuity (MYGA) sales. Overall sales were strong across our bank, independent marketing organization (IMO) and broker-dealer channels, exhibiting strong sales execution, the current rate environment and our continued expansion into large financial institutions. We have maintained our disciplined approach to pricing and our targeted underwritten returns. We aim to continue to grow our retail channel by deepening our relationships with our approximately 42 IMOs and with our growing network of 18 banks and 149 broker-dealers, collectively representing approximately 127,000 independent agents. Our strong financial position and diverse, capital-efficient products allow us to be dependable partners with IMOs, banks and broker-dealers as well as consistently write new business. We expect our retail channel to continue to benefit from our credit profile, product launches and continuous product enhancements. We believe this can support growth in sales at our targeted returns through increased volumes via existing IMO relationships and allow us to continue to expand our bank and broker-dealer channels. Additionally, we continue to focus on hiring and training a specialized sales force and creating products to capture new potential distribution opportunities.

Current wording

Within our retail channel, we had fixed annuity sales of $18.6 billion and $15.4 billion for the six months ended June 30, 2024 and 2023, respectively. The increase in our retail channel was driven by record sales of our fixed indexed annuity (FIA) products as well as robust multi-year guaranteed annuity (MYGA) sales compared to 2023. Overall sales were strong across our bank, independent marketing organization (IMO) and broker-dealer channels, exhibiting strong sales execution, the current rate environment and our continued expansion into large financial institutions. We have maintained our disciplined approach to pricing and our targeted underwritten returns. We aim to continue to grow our retail channel by deepening our relationships with our approximately 38 IMOs and with our growing network of 19 banks and 148 broker-dealers, collectively representing approximately 134,000 independent agents. Our strong financial position and diverse, capital-efficient products allow us to be dependable partners with IMOs, banks and broker-dealers as well as to consistently write new business. We expect our retail channel to continue to benefit from our credit profile, product launches and continuous product enhancements as we look to capture new potential distribution opportunities. We believe this can support sales growth at our targeted returns from increased volumes via existing IMO relationships and allow continued expansion of our bank and broker-dealer channels.

Previous wording

Within our flow reinsurance channel, we target reinsurance business consistent with our preferred liability characteristics, which provides us another opportunistic channel to source liabilities with attractive crediting rates. We generated inflows through our flow reinsurance channel of $2.4 billion and $1.8 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in our flow reinsurance channel from 2023 was primarily driven by strong volumes related to new partners added in both the US and Japan in the second quarter of 2023. We expect that our credit profile and our reputation as a solutions provider will help us continue to source additional reinsurance partners, which will further diversify our flow reinsurance channel.

Current wording

Within our flow reinsurance channel, we target reinsurance business consistent with our preferred liability characteristics, which provides us another opportunistic channel to source liabilities with attractive crediting rates. We generated inflows through our flow reinsurance channel of $3.6 billion and $4.6 billion for the six months ended June 30, 2024 and 2023, respectively. The decrease in our flow reinsurance channel from 2023 was primarily driven by increased competitiveness in the Japanese market and client repositioning in the US. We expect that our credit profile and our reputation as a solutions provider will help us continue to source additional reinsurance partners, which will further diversify our flow reinsurance channel.

Previous wording

Within our institutional channel, we generated inflows of $8.0 billion and $1.6 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in our institutional channel was driven by higher funding agreement inflows, partially offset by lower pension group annuity inflows. We issued funding agreements in the aggregate principal amount of $8.0 billion and $1.5 billion for the three months ended March 31, 2024 and 2023, respectively. The increase in our funding agreement channel from the prior year was driven by record quarterly inflows related to a resurgence in public FABN issuance amid more favorable market conditions as well as an increase in secured and other funding agreement issuances. Funding agreement inflows for the three months ended March 31, 2024 consisted of $5.0 billion of FABN issuances, $1.9 billion of secured and other funding agreement issuances, $1.1 billion of FHLB issuances and no long-term repurchase agreement issuances. As of March 31, 2024, we had funding agreements outstanding of $23.2 billion under our FABN program, $8.5 billion of secured and other funding agreements,$7.6 billion with the FHLB and $2.7 billion of long-term repurchase agreements. We issued group annuity contracts in the aggregate principal amount of $0 million and $56 million during the three months ended March 31, 2024 and 2023, respectively. Since entering the pension group annuity market in 2017, we have closed 47 deals resulting in the issuance or reinsurance of group annuities of $51.8 billion with more than 555,000 plan participants as of March 31, 2024. We expect to grow our institutional channel by continuing to engage in pension group annuity transactions and programmatic issuances of funding agreements.

Current wording

Within our institutional channel, we generated inflows of $14.6 billion and $10.7 billion for the six months ended June 30, 2024 and 2023, respectively. The increase in our institutional channel was driven by higher funding agreement inflows, partially offset by lower pension group annuity inflows. We issued funding agreements in the aggregate principal amount of $14.0 billion and $1.6 billion for the six months ended June 30, 2024 and 2023, respectively. The increase in our funding agreement channel from the prior year was driven by strong inflows related to a resurgence in public FABN issuance in 2024 amid more favorable market conditions as well as an increase in FHLB and secured and other funding agreement issuances. Funding agreement inflows for the six months ended June 30, 2024 consisted of $6.7 billion of FABN issuances, $1.9 billion of secured and other funding agreement issuances, $5.4 billion of FHLB issuances and no long-term repurchase agreement issuances. As of June 30, 2024, we had funding agreements outstanding of $21.0 billion under our FABN program, $8.5 billion of secured and other funding agreements,$11.9 billion with the FHLB and $2.7 billion of long-term repurchase agreements. We issued group annuity contracts in the aggregate principal amount of $577 million and $9.1 billion during the six months ended June 30, 2024 and 2023, respectively. The decrease in our pension group annuity channel was primarily related to closing a $7.6 billion transaction, our largest single pension group annuity transaction to date, in the second quarter of 2023. The pension group annuity channel was also impacted by the competitive market environment, along with other factors, in 2024. Since entering the pension group annuity market in 2017, we have closed 48 deals resulting in the issuance or reinsurance of group annuities of $52.3 billion with more than 550,000 plan participants as of June 30, 2024. We expect to grow our institutional channel by continuing to engage in pension group annuity transactions and programmatic issuances of funding agreements.

Previous wording

Our inorganic channel has contributed significantly to our growth through both acquisitions and block reinsurance transactions. We completed our first block reinsurance transaction in the Japanese market in the fourth quarter of 2023. On November 6, 2023 we entered into an agreement with FWD Life Insurance Company, Ltd., a subsidiary of FWD Group Holdings Ltd. (FWD), effective October 1, 2023, pursuant to which we agreed to reinsure a small block of whole life insurance policies on a coinsurance basis. In conjunction with the transaction, we also entered into an agreement to retrocede the mortality risk related to this block of business to Swiss Reinsurance Company Ltd., a leading mortality reinsurer, on a yearly renewable term basis. We plan to continue to grow and diversify our business, both organically and inorganically, with a focus on international expansion, particularly in Asia. We believe our corporate development team, with support from Apollo, has an industry-leading ability to source, underwrite and expeditiously close transactions. With support from Apollo, we are a solutions provider with a proven track record of closing transactions, which we believe makes us the ideal partner to insurance companies seeking to restructure their business. We expect that our inorganic channel will continue to be an important source of profitable growth in the future.

Current wording

Our inorganic channel has contributed significantly to our growth through both acquisitions and block reinsurance transactions. We plan to continue to grow and diversify our business, both organically and inorganically, with a focus on international expansion, particularly in Asia. We believe our corporate development team, with support from Apollo, has an industry-leading ability to source, underwrite and expeditiously close transactions. With support from Apollo, we are a solutions provider with a proven track record of closing transactions, which we believe makes us the ideal partner to insurance companies seeking to restructure their business. We expect that our inorganic channel will continue to be an important source of profitable growth in the future.

Previous wording

Executing our growth strategy requires that we have sufficient capital available to deploy. We believe that we have significant capital available to support our growth aspirations. As of March 31, 2024, we estimate that we had approximately $9.3 billion in capital available to deploy, consisting of approximately $3.6 billion in excess equity capital, $3.2 billion in untapped leverage capacity (assuming an adjusted leverage ratio of not more than 30%, subject to maintaining a sufficient level of capital required to maintain our desired financial strength ratings from rating agencies), and $2.5 billion in available undrawn capital at ACRA, including additional commitments to ADIP II completed subsequent to quarter-end.

Current wording

Executing our growth strategy requires that we have sufficient capital available to deploy. We believe that we have significant capital available to support our growth aspirations. As of June 30, 2024, we estimate that we had approximately $10.1 billion in capital available to deploy, consisting of approximately $3.0 billion in excess equity capital, $3.3 billion in untapped leverage capacity (assuming an adjusted leverage ratio of not more than 30%, subject to maintaining a sufficient level of capital required to maintain our desired financial strength ratings from rating agencies), and $3.8 billion in available undrawn capital at ACRA.

Previous wording

We carefully monitor economic and market conditions that could potentially give rise to global market volatility and affect our business operations, investment portfolios and derivatives, which includes global inflation. US inflation eased but remained elevated in 2023 as the US Federal Reserve continued its interest rate hiking cycle, given that the Consumer Price Index persisted above the 2% target. The US Bureau of Labor Statistics reported that the annual US inflation rate increased modestly to 3.5% as of March 31, 2024, compared to 3.4% as of December 31, 2023. The US Federal Reserve finished the quarter with a benchmark interest rate target range of 5.25% to 5.50%, unchanged from its July 2023 meeting.

Current wording

We carefully monitor economic and market conditions that could potentially give rise to global market volatility and affect our business operations, investment portfolios and derivatives, which includes global inflation. US inflation eased in 2024 but the Consumer Price Index remains above the US Federal Reserve’s 2% target. The US Bureau of Labor Statistics reported that the annual US inflation rate decreased modestly to 3.0% as of June 30, 2024, compared to 3.5% as of March 31, 2024. The US Federal Reserve finished the quarter with a benchmark interest rate target range of 5.25% to 5.50%, unchanged from its July 2023 meeting.

Previous wording

Equity market performance was strong during the first quarter of 2024, despite reduced expectations for Federal Reserve rate cuts. In the US, the S&P 500 Index increased by 10.2% in the first quarter of 2024, following an increase of 11.2% in the fourth quarter of 2023. In terms of economic conditions in the US, the Bureau of Economic Analysis reported real GDP increased at an annual rate of 1.6% in the first quarter of 2024, following an increase of 3.4% in the fourth quarter of 2023. As of April 2024, the International Monetary Fund estimated that the US economy will expand by 2.7% in 2024 and 1.9% in 2025. The US Bureau of Labor Statistics reported that the US unemployment rate increased to 3.8% as of March 31, 2024, compared to 3.7% as of December 31, 2023. Oil finished the first quarter of 2024 up 16.1% from the fourth quarter of 2023.

Current wording

Equity market performance was strong during the second quarter of 2024. In the US, the S&P 500 Index increased by 3.9% during the second quarter, following an increase of 10.2% in the first quarter of 2024. In terms of economic conditions in the US, the Bureau of Economic Analysis reported real GDP increased at an annual rate of 2.8% in the second quarter of 2024, following an increase of 1.4% in the first quarter of 2024. As of July 2024, the International Monetary Fund estimated that the US economy will expand by 2.6% in 2024 and 1.9% in 2025. The US Bureau of Labor Statistics reported that the US unemployment rate increased to 4.1% as of June 30, 2024, compared to 3.8% as of March 31, 2024. Oil finished the second quarter of 2024 down 2.0% from the first quarter of 2024.

Previous wording

Foreign exchange rates can materially impact the valuations of our investments and liabilities that are denominated in currencies other than the US dollar. The US dollar strengthened in the first quarter of 2024 compared to the euro and Japanese yen. Relative to the US dollar, the euro depreciated 2.3% in the first quarter of 2024, after appreciating 4.4% in the fourth quarter of 2023. Relative to the US dollar, the Japanese yen depreciated 6.9% in the first quarter of 2024, after appreciating 6.0% in the fourth quarter of 2023. We generally undertake hedging activities to eliminate or mitigate foreign exchange currency risk.

Current wording

Foreign exchange rates can materially impact the valuations of our investments and liabilities that are denominated in currencies other than the US dollar. The US dollar strengthened in the second quarter of 2024 compared to the euro and Japanese yen. Relative to the US dollar, the euro depreciated 0.7% in the second quarter of 2024, after depreciating 2.3% in the first quarter of 2024. Relative to the US dollar, the Japanese yen depreciated 5.9% in the second quarter of 2024, after depreciating 6.9% in the first quarter of 2024. We generally undertake hedging activities to eliminate or mitigate foreign exchange currency risk.

Previous wording

Rates increased during the first quarter of 2024 with the US 10-year Treasury yield at 4.20% compared to 3.88% at the end of 2023. The US 2-year and 10-year Treasury yield curves remain inverted.

Current wording

Rates increased during the second quarter of 2024 with the US 10-year Treasury yield at 4.36% compared to 4.20% at the end of the first quarter of 2024. The US 2-year and 10-year Treasury yield curves remain inverted.

Previous wording

We address interest rate risk through managing the duration of the liabilities we source with assets we acquire through asset liability management (ALM) modeling. As part of our investment strategy, we purchase floating rate investments, which we expect would perform well in a rising interest rate environment and which we expect would underperform in a declining rate environment. We manage our interest rate risk in a declining rate environment through hedging activity or the issuance of additional floating rate liabilities in order to lower our overall net floating rate position. As of March 31, 2024, our net invested asset portfolio included $44.5 billion of floating rate investments, or 20% of our net invested assets, and our net reserve liabilities included $28.4 billion of floating rate liabilities at notional, or 13% of our net invested assets, resulting in $16.1 billion of net floating rate assets, or 7% of our net invested assets.

Current wording

We address interest rate risk through managing the duration of the liabilities we source with assets we acquire through asset liability management (ALM) modeling. As part of our investment strategy, we purchase floating rate investments, which we expect would perform well in a rising interest rate environment and which we expect would underperform in a declining rate environment. We manage our interest rate risk in a declining rate environment through hedging activity or the issuance of additional floating rate liabilities to lower our overall net floating rate position. As of June 30, 2024, our net invested asset portfolio included $45.5 billion of floating rate investments, or 20% of our net invested assets, and our net reserve liabilities included $30.3 billion of floating rate liabilities at notional, or 13% of our net invested assets, resulting in $15.2 billion of net floating rate assets, or 7% of our net invested assets.

Previous wording

If prevailing interest rates were to rise, we believe our products would be more attractive to consumers and our sales would likely increase. If prevailing interest rates were to decline, it is likely that our products would be less attractive to consumers and our sales would likely decrease. In periods of prolonged low interest rates, the net investment spread may be negatively impacted by reduced investment income to the extent that we are unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or otherwise due to market conditions. As of March 31, 2024, most of our products were deferred annuities with 16% of our FIAs at the minimum guarantees and 18% of our fixed rate annuities at the minimum crediting rates. As of March 31, 2024, minimum guarantees on all of our deferred annuities, including those with crediting rates already at their minimum guarantees, were, on average, greater than 220 basis points below the crediting rates on such deferred annuities, allowing us room to reduce rates before reaching the minimum guarantees. Our remaining liabilities are associated with immediate annuities, pension group annuity obligations, funding agreements and life contracts for which we have little to no discretionary ability to change the rates of interest payable to the respective policyholder or institution. A significant majority of our deferred annuity products have crediting rates that we may reset annually upon renewal, following the expiration of the current guaranteed period. While we have the contractual ability to lower these crediting rates to the guaranteed minimum levels, our willingness to do so may be limited by competitive pressures.

Current wording

If prevailing interest rates were to rise, we believe our products would be more attractive to consumers and our sales would likely increase. If prevailing interest rates were to decline, it is likely that our products would be less attractive to consumers and our sales would likely decrease. In periods of prolonged low interest rates, the net investment spread may be negatively impacted by reduced investment income to the extent that we are unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or otherwise due to market conditions. See Note 7 – Long-duration Contracts to the condensed consolidated financial statements for policyholder account balances by range of guaranteed minimum crediting rates and the related distance to those respective guaranteed minimums. The policyholder account balances represent deferred annuities, funding agreements and other investment-type products. A significant majority of our deferred annuity products have crediting rates that we may reset annually upon renewal, following the expiration of the current guaranteed period. While we have the contractual ability to lower these crediting rates to the guaranteed minimum levels, our willingness to do so may be limited by competitive pressures. Our funding agreements and other investment-type products, as well as our remaining liabilities associated with immediate annuities, pension group annuity obligations and life contracts, provide us little to no discretionary ability to change the rates of interest payable to the respective policyholder or institution.

Previous wording

According to the Life Insurance and Market Research Association (LIMRA), total annuity market sales in the US were $385.4 billion for the year ended December 31, 2023, a 23.2% increase from the same time period in 2022, as higher interest rates spurred continued growth in the US annuity market. In the total annuity market, for the year ended December 31, 2023 (the most recent period for which specific market share data is available), we were the largest provider of annuities based on sales of $35.5 billion, translating to a 9.2% market share. For the year ended December 31, 2022, we were the second largest provider of annuities based on sales of $20.7 billion, translating to a 6.6% market share.

Current wording

According to the Life Insurance and Market Research Association (LIMRA), total annuity market sales in the US were $106.7 billion for the three months ended March 31, 2024, a 13.4% increase from the same time period in 2023, as higher interest rates resulted in continued growth in the US annuity market. In the total annuity market, for the three months ended March 31, 2024 (the most recent period for which specific market share data is available), we were the largest provider of annuities based on sales of $9.7 billion, translating to a 9.1% market share. For the three months ended March 31, 2023, we were the largest provider of annuities based on sales of $8.6 billion, translating to a 9.2% market share.

Previous wording

According to LIMRA, total fixed annuity market sales in the US were $286.6 billion for the year ended December 31, 2023, a 36.5% increase from the same time period in 2022. In the total fixed annuity market, for the year ended December 31, 2023 (the most recent period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $34.7 billion, translating to a 12.1% market share. For the year ended December 31, 2022, we were the largest provider of fixed annuities based on sales of $19.8 billion, translating to a 9.4% market share.

Current wording

According to LIMRA, total fixed annuity market sales in the US were $78.5 billion for the three months ended March 31, 2024, a 10.8% increase from the same time period in 2023. In the total fixed annuity market, for the three months ended March 31, 2024 (the most recent period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $9.4 billion, translating to a 12.0% market share. For the three months ended March 31, 2023, we were the largest provider of fixed annuities based on sales of $8.4 billion, translating to an 11.9% market share.

Previous wording

According to LIMRA, total fixed indexed annuity market sales in the US were $95.9 billion for the year ended December 31, 2023, a 20.2% increase from the same time period in 2022. For the year ended December 31, 2023 (the most recent period for which specific market share data is available), we were the second largest provider of FIAs based on sales of $10.8 billion, translating to an 11.2% market share. For the year ended December 31, 2022, we were the largest provider of FIAs based on sales of $10.1 billion, translating to a 12.6% market share.

Current wording

According to LIMRA, total fixed indexed annuity market sales in the US were $28.6 billion for the three months ended March 31, 2024, a 23.8% increase from the same time period in 2023. For the three months ended March 31, 2024 (the most recent period for which specific market share data is available), we were the largest provider of FIAs based on sales of $4.2 billion, translating to a 14.5% market share. For the three months ended March 31, 2023, we were the largest provider of FIAs based on sales of $2.5 billion, translating to a 10.8% market share.

Previous wording

According to LIMRA, total registered indexed linked annuity (RILA) market sales in the US were $47.4 billion for the year ended December 31, 2023, a 15.6% increase from the same time period in 2022. For the year ended December 31, 2023 (the most recent period for which specific market share data is available), we were the eleventh largest provider of RILAs based on sales of $851 million, translating to a 1.8% market share. For the year ended December 31, 2022, we were the eleventh largest provider of RILAs based on sales of $903 million, translating to a 2.2% market share. We believe RILAs represent a significant growth opportunity for Athene.

Current wording

According to LIMRA, total registered indexed linked annuity (RILA) market sales in the US were $14.5 billion for the three months ended March 31, 2024, a 39.6% increase from the same time period in 2023. For the three months ended March 31, 2024 (the most recent period for which specific market share data is available), we were the tenth largest provider of RILAs based on sales of $291 million, translating to a 2.0% market share. For the three months ended March 31, 2023, we were the tenth largest provider of RILAs based on sales of $217 million, translating to a 2.1% market share. We believe RILAs represent a significant growth opportunity for Athene.

Previous wording

Spread related earnings is a pre-tax non-GAAP measure used to evaluate our financial performance including the impact of any reinsurance transactions and excluding market volatility and expenses related to integration, restructuring, stock compensation and other expenses. Our spread related earnings equals net income (loss) available to AHL common stockholder adjusted to eliminate the impact of the following:

Current wording

Spread related earnings is a pre-tax non-GAAP measure used to evaluate our financial performance including the impact of any reinsurance transactions and excluding market volatility and expenses related to integration, restructuring, stock compensation and other expenses. Our spread related earnings equals net income available to AHL common stockholder adjusted to eliminate the impact of the following:

Previous wording

We consider these adjustments to be meaningful adjustments to net income (loss) available to AHL common stockholder for the reasons discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is useful in analyzing our business performance and the trends in our results of operations. Together with net income (loss) available to AHL common stockholder, we believe spread related earnings provides a meaningful financial metric that helps investors understand our underlying results and profitability. Spread related earnings should not be used as a substitute for net income (loss) available to AHL common stockholder.

Current wording

We consider these adjustments to be meaningful adjustments to net income available to AHL common stockholder for the reasons discussed in greater detail above. Accordingly, we believe using a measure which excludes the impact of these items is useful in analyzing our business performance and the trends in our results of operations. Together with net income available to AHL common stockholder, we believe spread related earnings provides a meaningful financial metric that helps investors understand our underlying results and profitability. Spread related earnings should not be used as a substitute for net income available to AHL common stockholder.

Previous wording

Adjusted senior debt-to-capital ratio is a non-GAAP measure used to evaluate our capital structure excluding the impacts of AOCI and the cumulative changes in fair value of funds withheld and modco reinsurance assets as well as mortgage loan assets, net of tax. Adjusted senior debt-to-capital ratio is calculated as senior debt at notional value divided by adjusted capitalization. Adjusted capitalization includes our adjusted AHL common stockholder’s equity, preferred stock and the notional value of our total debt. Adjusted AHL common stockholder’s equity is calculated as the ending AHL stockholders’ equity excluding AOCI, the cumulative changes in fair value of funds withheld and modco reinsurance assets and mortgage loan assets as well as preferred stock. These adjustments fluctuate period to period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities, reinsurance assets and mortgage loans. Except with respect to reinvestment activity relating to acquired blocks of businesses, we typically buy and hold investments to maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance. Adjusted senior debt-to-capital ratio should not be used as a substitute for the debt-to-capital ratio. However, we believe the adjustments to stockholders’ equity and debt are significant to gaining an understanding of our capitalization, debt utilization and debt capacity.

Current wording

Adjusted senior debt-to-capital ratio is a non-GAAP measure used to evaluate our capital structure excluding the impacts of AOCI and the cumulative changes in fair value of funds withheld and modco reinsurance assets as well as mortgage loan assets, net of tax. Adjusted senior debt-to-capital ratio is calculated as senior debt at notional value divided by adjusted capitalization. Adjusted capitalization includes our adjusted AHL common stockholder’s equity, preferred stock and the notional value of our total debt. Adjusted AHL common stockholder’s equity is calculated as the ending AHL stockholders’ equity excluding AOCI, the cumulative changes in fair value of funds withheld and modco reinsurance assets and mortgage loan assets as well as preferred stock. These adjustments fluctuate period to period in a manner inconsistent with our underlying profitability drivers as the majority of such fluctuation is related to the market volatility of the unrealized gains and losses associated with our AFS securities, reinsurance assets and mortgage loans. Except with respect to reinvestment activity relating to acquired blocks of businesses, we typically buy and hold investments to maturity throughout the duration of market fluctuations, therefore, the period-over-period impacts in unrealized gains and losses are not necessarily indicative of current operating fundamentals or future performance.

Previous wording

In managing our business, we also analyze net reserve liabilities, which does not correspond to total liabilities as disclosed in our condensed consolidated financial statements and notes thereto. Net reserve liabilities represent our policyholder liability obligations net of reinsurance and are used to analyze the costs of our liabilities. Net reserve liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include our proportionate share of ACRA reserve liabilities, based on our economic ownership, but do not include the proportionate share of reserve liabilities associated with the noncontrolling interests. Net reserve liabilities are net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore, we have no net economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. The majority of our ceded reinsurance is a result of strategic reinsurance transactions as well as reinsuring large blocks of life insurance business following acquisitions. For such transactions, US GAAP requires the ceded liabilities and related reinsurance recoverables to continue to be recorded in our consolidated financial statements despite the transfer of economic risk to the counterparty in connection with the reinsurance transaction. We include the underlying liabilities assumed through modco reinsurance agreements in our net reserve liabilities calculation in order to match the liabilities with the expenses incurred. While we believe net reserve liabilities is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total liabilities presented under US GAAP.

Current wording

In managing our business, we also analyze net reserve liabilities, which does not correspond to total liabilities as disclosed in our condensed consolidated financial statements and notes thereto. Net reserve liabilities represent our policyholder liability obligations net of reinsurance and are used to analyze the costs of our liabilities. Net reserve liabilities include (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include our proportionate share of ACRA reserve liabilities, based on our economic ownership, but do not include the proportionate share of reserve liabilities associated with the noncontrolling interests. Net reserve liabilities are net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore, we have no net economic exposure to such liabilities, assuming our reinsurance counterparties perform under our agreements. For such transactions, US GAAP requires the ceded liabilities and related reinsurance recoverables to continue to be recorded in our consolidated financial statements despite the transfer of economic risk to the counterparty in connection with the reinsurance transaction. We include the underlying liabilities assumed through modco reinsurance agreements in our net reserve liabilities calculation in order to match the liabilities with the expenses incurred. While we believe net reserve liabilities is a meaningful financial metric and enhances our understanding of the underlying profitability drivers of our business, it should not be used as a substitute for total liabilities presented under US GAAP.

Previous wording

Sales statistics do not correspond to revenues under US GAAP but are used as relevant measures to understand our business performance as it relates to inflows generated during a specific period of time. Our sales statistics include inflows for fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers). We believe sales is a meaningful metric that enhances our understanding of our business performance and is not the same as premiums presented in our condensed consolidated statements of income (loss).

Current wording

Sales statistics do not correspond to revenues under US GAAP but are used as relevant measures to understand our business performance as it relates to inflows generated during a specific period of time. Our sales statistics include inflows for fixed rate annuities and FIAs and align with the LIMRA definition of all money paid into an individual annuity, including money paid into new contracts with initial purchase occurring in the specified period and existing contracts with initial purchase occurring prior to the specified period (excluding internal transfers). We believe sales is a meaningful metric that enhances our understanding of our business performance and is not the same as premiums presented in our condensed consolidated statements of income.