Athene Holding Ltd.

Previous wording

We have established a significant base of earnings and, as of June 30, 2026, have an expected annual net investment spread, which measures our investment performance plus strategic capital management fees less the total cost of our insurance liabilities, of 1–2% over the estimated 6.9-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, guaranteed investment contracts and other products.

Current wording

We have established a significant base of earnings and, as of September 30, 2026, have an expected annual net investment spread, which measures our investment performance plus strategic capital management fees less the total cost of our insurance liabilities, of 1–2% over the estimated 7.1-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, guaranteed investment contracts and other products.

Previous wording

Our organic channels, including retail, flow reinsurance, institutional and other spread products, provided gross inflows of $41.8 billion and $46.8 billion for the six months ended June 30, 2026 and 2025, respectively, which were underwritten to attractive returns. Gross organic inflows decreased $5.0 billion, or 11%, from record inflows in 2025, primarily related to a decrease in funding agreement inflows. Withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities and payments related to interest, maturities and repurchases of funding agreements (collectively, gross outflows) in the aggregate were $20.9 billion and $15.6 billion for the six months ended June 30, 2026 and 2025, respectively. The increase in gross outflows was primarily driven by an increase in funding agreement maturities and interest payments on funding agreements attributable to the significant growth in the block of business over the last twelve months, as well as an increase from retail annuities, partially offset by a decrease in outflows related to policies underlying certain reinsurance blocks compared to 2025. We believe that our credit profile, current and new product offerings and product design capabilities, as well as our 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 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, institutional and other spread products, provided gross inflows of $60.6 billion and $69.4 billion for the nine months ended September 30, 2026 and 2025, respectively, which were underwritten to attractive returns. Gross organic inflows decreased $8.8 billion, or 13%, from record inflows in 2025, primarily related to a decrease in funding agreement inflows, partially offset by an increase in retail inflows. Withdrawals on our deferred annuities, death benefits, pension group annuity benefit payments, payments on payout annuities and payments related to interest, maturities and repurchases of funding agreements (collectively, gross outflows) in the aggregate were $34.2 billion and $26.3 billion for the nine months ended September 30, 2026 and 2025, respectively. Gross outflows increased $8.0 billion, or 30%, primarily driven by an increase in maturities of, and interest payments on, funding agreements, as well as an increase in retail annuity outflows related to policies having exited the surrender charge period and additional income oriented withdrawals. These impacts were partially offset by a decrease in flow reinsurance outflows primarily related to lower outflows from historical inorganic block reinsurance transactions compared to 2025. We believe that our credit profile, current and new product offerings and product design capabilities, as well as our 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 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 $19.5 billion and $16.7 billion for the six months ended June 30, 2026 and 2025, respectively. The increase in our retail channel was primarily driven by an increase in the sales of our multi-year guaranteed annuities (MYGA) and record volumes from our registered index-linked annuities (RILA) in 2026, partially offset by a decrease in sales of our fixed indexed annuities (FIA) in 2026. Overall sales were strong across our bank, broker-dealer and independent marketing organization (IMO) channels, exhibiting strong sales execution, growing product offerings and our continued distribution expansion. 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 41 IMOs, 19 banks and 169 broker-dealers, collectively representing approximately 159,000 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.

Current wording

Within our retail channel, we had fixed annuity sales of $29.9 billion and $26.8 billion for the nine months ended September 30, 2026 and 2025, respectively. The $3.1 billion increase in our retail channel was primarily driven by an increase in the sales of our multi-year guaranteed annuities (MYGA) and record volumes from our registered index-linked annuities (RILA), partially offset by a decrease in sales of our fixed indexed annuities (FIA) in 2026. Overall sales were strong across our bank, broker-dealer and independent marketing organization (IMO) channels, exhibiting strong sales execution, growing product offerings and our continued distribution expansion. 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 41 IMOs, 19 banks and 180 broker-dealers, collectively representing approximately 163,000 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 channel to source liabilities with attractive crediting rates. We generated inflows through our flow reinsurance channel of $6.4 billion and $7.0 billion for the six months ended June 30, 2026 and 2025, respectively. The decrease in our flow reinsurance channel from record inflows in 2025 was primarily attributable to increased competitive dynamics within the Japanese market, partially offset by inflows from the establishment of a new APAC partnership in 2026. We continue to look to expand our presence in Asia with increased partnerships and growing product offerings. 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 channel to source liabilities with attractive crediting rates. We generated inflows through our flow reinsurance channel of $8.0 billion and $9.5 billion for the nine months ended September 30, 2026 and 2025, respectively. The $1.5 billion decrease in our flow reinsurance channel from record inflows in 2025 was primarily attributable to increased competitive dynamics within the Japanese market in 2026 and a strategic opportunity with a US partner at attractive returns in 2025, partially offset by strong volumes from remaining US partnerships and inflows related to the establishment of a new Asia-Pacific partnership in 2026. We continue to look to expand our presence in Asia with increased partnerships and growing product offerings. 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 $14.2 billion and $22.9 billion for the six months ended June 30, 2026 and 2025, respectively, which consisted entirely of funding agreement issuances. The decrease in our funding agreement channel from 2025 was primarily driven by a decrease in FABN issuance amid challenging market conditions, as well as a decrease in issuances of direct funding agreements and long-term repurchase agreements. Funding agreement inflows for the six months ended June 30, 2026 consisted of $3.2 billion of FABN issuances, $6.1 billion of FABR issuances and $4.9 billion of FHLB issuances. As of June 30, 2026, we had funding agreements outstanding of $33.9 billion under our FABN program, $26.0 billion under our FABR program, $6.1 billion of direct funding agreements, $27.7 billion with the FHLB and $3.2 billion of long-term repurchase agreements. We issued no pension group annuity contracts during the six months ended June 30, 2026 and 2025. The pension group annuity channel continues to be impacted by the competitive environment and litigation against certain of our pension group annuity clients. Since entering the pension group annuity market in 2017, we have closed 50 deals resulting in the issuance or reinsurance of group annuities of $53.4 billion with more than 519,000 plan participants as of June 30, 2026. 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 $20.5 billion and $32.6 billion for the nine months ended September 30, 2026 and 2025, respectively, which consisted entirely of funding agreement issuances. The $12.1 billion decrease in our funding agreement channel was primarily driven by a decrease in FABN issuance amid relatively more challenging market conditions as well as a decrease in the issuance of direct funding agreements, FABRs and long-term repurchase agreements, partially offset by strong FHLB issuance. Funding agreement inflows for the nine months ended September 30, 2026 consisted of $5.5 billion of FABN issuances, $6.8 billion of FABR issuances and $8.2 billion of FHLB issuances. As of September 30, 2026, we had funding agreements outstanding of $32.6 billion under our FABN program, $26.8 billion under our FABR program, $6.1 billion of direct funding agreements, $29.9 billion with the FHLB and $3.2 billion of long-term repurchase agreements. We issued no pension group annuity contracts during the nine months ended September 30, 2026 and 2025. The pension group annuity channel continues to be impacted by the competitive environment and litigation against certain of our pension group annuity clients. Since entering the pension group annuity market in 2017, we have closed 50 deals resulting in the issuance or reinsurance of group annuities of $53.4 billion with more than 514,000 plan participants as of September 30, 2026. We expect to grow our institutional channel by continuing to engage in pension group annuity transactions and programmatic issuances of funding agreements.

Previous wording

Within our other spread product channel, inflows include guaranteed investment and group annuity contracts issued in connection with defined contribution plans, stable value group annuity contracts and structured settlements. We generated other spread product inflows of $1.7 billion and $237 million for the six months ended June 30, 2026 and 2025, respectively. The strong performance in our other spread product channel in 2026 was driven byrecord new market activity, including stable value, guaranteed investment contracts and structured settlements as we continue to develop new products to help meet growing retirement needs.

Current wording

Within our other spread product channel, inflows include guaranteed investment and group annuity contracts issued in connection with defined contribution plans, stable value group annuity contracts and structured settlements. We generated other spread product inflows of $2.2 billion and $541 million for the nine months ended September 30, 2026 and 2025, respectively. The $1.7 billion increase in our other spread product channel was driven by record new market activity, primarily related to structured settlements and stable value products, as we continue to develop new products to help meet growing retirement needs.

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 June 30, 2026, we estimate that we had approximately $6.1 billion in capital available to deploy, consisting of approximately $1.4 billion in excess equity capital, $2.2 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.

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 September 30, 2026, we estimate that we had approximately $5.4 billion in capital available to deploy, consisting of approximately $1.8 billion in excess equity capital, $1.2 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 $2.4 billion in available undrawn capital at ACRA.

Previous wording

Adverse economic conditions may result from domestic and global economic and political developments, including slower economic growth and business activity, changes in US and foreign tariff policies, civil unrest, geopolitical tensions or military action, such as the armed conflicts in the Middle East, including with Iran, and between Ukraine and Russia, and related sanctions. Additional risks include new or evolving legal and regulatory requirements affecting business investment, hiring, migration, labor supply and global supply chains, as well as disruptions to energy markets and critical shipping routes.

Current wording

Adverse economic conditions may result from domestic and global economic and political developments, including slower economic growth, changes in US and foreign tariff policies, civil unrest, geopolitical tensions or military action, including the armed conflicts in the Middle East and between Ukraine and Russia, and related sanctions. Additional risks include changes in legal and regulatory requirements affecting investment, hiring, migration, labor supply and global supply chains, as well as disruptions to energy markets and critical shipping routes.

Previous wording

Uncertainty surrounding US trade policy, the conflict with Iran and persistent inflation remain downside risks. However, US economic activity remains resilient, supported by consumer spending, investment in artificial intelligence infrastructure, increased domestic manufacturing and fiscal stimulus. These drivers continue to support solid growth and a modest risk of recession. Tariffs remain inflationary and may weigh on growth and corporate earnings, with the ultimate impact dependent on their scope, duration and the outcome of trade negotiations.

Current wording

US economic activity remains resilient, supported by investment in artificial intelligence and data centers, increased spending across semiconductors, pharmaceuticals and defense, and fiscal stimulus. These drivers continue to support solid growth, but also contribute to persistent inflation and a higher interest rate environment. Uncertainty surrounding US trade policy, the conflict with Iran, and inflation remain downside risks to the economy.

Previous wording

We carefully monitor economic and market conditions, including global inflation, that could potentially give rise to global market volatility and affect our business operations, investment portfolios and derivatives. US inflation remains elevated, with the US Bureau of Labor Statistics reporting the annual US inflation rate increased to 3.5% as of June 30, 2026, compared to 3.3% as of March 31, 2026. The US Federal Reserve has a current benchmark interest rate target range of 3.50% to 3.75%, unchanged from its December 2025 meeting.

Current wording

We carefully monitor economic and market conditions, including global inflation, that could potentially give rise to global market volatility and affect our business operations, investment portfolios and derivatives. Inflation remains elevated, limiting the scope of monetary easing and contributing to upward pressure on yields, increasing the likelihood that interest rates will remain elevated. The US Bureau of Labor Statistics reported the annual US inflation rate increased to 3.7% as of September 30, 2026, compared to 3.5% as of June 30, 2026. Due to persistent inflationary pressure, the US Federal Reserve raised its benchmark interest rate target range by 25 basis points to 3.75% to 4.00% at its September meeting.

Previous wording

Equity market performance was strong during the second quarter of 2026. In the US, the S&P 500 Index increased by 14.9% during the second quarter, following a decrease of 4.6% during the first quarter of 2026. In terms of economic conditions in the US, the Bureau of Economic Analysis reported real GDP increased at an annual rate of 1.5% in the second quarter of 2026, following an increase of 2.1% in the first quarter of 2026. As of July 2026, the International Monetary Fund estimated the US economy will expand by 2.3% in 2026 and 2.2% in 2027. The US Bureau of Labor Statistics reported the US unemployment rate decreased to 4.2% as of June 30, 2026, compared to 4.3% as of March 31, 2026. Oil prices ended the second quarter of 2026 down 31.4% from the first quarter of 2026, primarily related to the temporary easing of tensions in the ongoing conflict in the Middle East.

Current wording

Equity market performance moderated during the third quarter of 2026. In the US, the S&P 500 Index increased by 2.0%, following an increase of 14.9% during the second quarter of 2026. In terms of economic conditions in the US, the Bureau of Economic Analysis reported real GDP increased at an annual rate of 3.4% in the third quarter of 2026, following an increase of 2.2% in the second quarter of 2026. As of October 2026, the International Monetary Fund estimated the US economy will expand by 2.3% in each of 2026 and 2027. The US Bureau of Labor Statistics reported the US unemployment rate remained at 4.2% as of September 30, 2026. Oil prices ended the third quarter of 2026 up 30.1% from the second quarter of 2026, primarily reflecting renewed tensions in the Middle East. Further escalation could create additional inflationary pressure through higher energy prices.

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. Strong foreign demand for US assets remains an important support for the US dollar. The US dollar strengthened in the second quarter of 2026 compared to the euro and Japanese yen. Relative to the US dollar, the euro depreciated 1.1% in the second quarter of 2026, after depreciating 1.6% in the first quarter of 2026. Relative to the US dollar, the Japanese yen depreciated 2.4% in the second quarter of 2026, after depreciating 1.3% in the first quarter of 2026. 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 compared to the euro, but weakened against the Japanese yen in the third quarter of 2026. Relative to the US dollar, the euro depreciated 0.8% in the third quarter of 2026, after depreciating 1.1% in the second quarter of 2026. Relative to the US dollar, the Japanese yen appreciated 3.3% in the third quarter of 2026, after depreciating 2.4% in the second quarter of 2026. We generally undertake hedging activities to eliminate or mitigate foreign currency risk.

Previous wording

Medium and long-term rates increased during the second quarter of 2026, with the US 10-year Treasury yield at 4.44% as of June 30, 2026 compared to 4.30% as of March 31, 2026. Short-term rates increased during the second quarter of 2026 with the 3-month secured overnight financing rate at 3.73% as of June 30, 2026, compared to 3.68% as of March 31, 2026.

Current wording

Medium and long-term rates increased significantly during the third quarter of 2026, with the US 10-year Treasury yield at 5.29% as of September 30, 2026 compared to 4.44% as of June 30, 2026. Short-term rates also increased during the third quarter of 2026, with the 3-month secured overnight financing rate at 4.08% as of September 30, 2026, compared to 3.73% as of June 30, 2026.

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 to lower our overall net floating rate position. As of June 30, 2026, our net invested asset portfolio included $71.2 billion of floating rate assets, or 23% of our net invested assets, and our net reserve liabilities included $68.9 billion of floating rate liabilities at notional, or 22% of our net invested assets, resulting in $2.3 billion of net floating rate assets, or 1% of our net invested assets. Our floating rate asset position includes floating rate investments and cash and cash equivalents on a net invested asset basis, adjusted for net investment payables/receivables and cash posted as collateral for derivative transactions.

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 September 30, 2026, our net invested asset portfolio included $66.9 billion of floating rate assets, or 21% of our net invested assets, and our net reserve liabilities included $64.1 billion of floating rate liabilities at notional, or 20% of our net invested assets, resulting in $2.8 billion of net floating rate assets, or 1% of our net invested assets. Our floating rate asset position includes floating rate investments and cash and cash equivalents on a net invested asset basis, adjusted for net investment payables/receivables and cash posted as collateral for derivative transactions.

Previous wording

According to the Life Insurance and Market Research Association (LIMRA), total annuity market sales in the US were $107.4 billion for the three months ended March 31, 2026, a 0.8% increase from the same time period in 2025. In the total annuity market, for the three months ended March 31, 2026 (the most recent period for which specific market share data is available), we were the largest provider of annuities based on sales of $7.5 billion, translating to a 7.0% market share. For the three months ended March 31, 2025, we were the largest provider of annuities based on sales of $9.5 billion, translating to an 8.9% market share.

Current wording

According to the Life Insurance Marketing and Research Association (LIMRA), total annuity market sales in the US were $228.7 billion for the six months ended June 30, 2026, a 1.3% increase from the same time period in 2025. In the total annuity market, for the six months ended June 30, 2026 (the most recent period for which specific market share data is available), we were the largest provider of annuities based on sales of $20.2 billion, translating to an 8.8% market share. For the six months ended June 30, 2025, we were the second largest provider of annuities based on sales of $16.8 billion, translating to a 7.4% market share.

Previous wording

According to LIMRA, total fixed annuity market sales in the US were $69.1 billion for the three months ended March 31, 2026, a 6.9% decrease from the same time period in 2025. In the total fixed annuity market, for the three months ended March 31, 2026 (the most recent period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $7.0 billion, translating to a 10.1% market share. For the three months ended March 31, 2025, we were the largest provider of fixed annuities based on sales of $9.2 billion, translating to a 12.4% market share.

Current wording

According to LIMRA, total fixed annuity market sales in the US were $149.4 billion for the six months ended June 30, 2026, a 6.0% decrease from the same time period in 2025. In the total fixed annuity market, for the six months ended June 30, 2026 (the most recent period for which specific market share data is available), we were the largest provider of fixed annuities based on sales of $18.6 billion, translating to a 12.5% market share. For the six months ended June 30, 2025, we were the largest provider of fixed annuities based on sales of $16.2 billion, translating to a 10.2% market share.

Previous wording

According to LIMRA, FIA market sales in the US were $26.8 billion for the three months ended March 31, 2026, a 3.6% decrease from the same time period in 2025. For the three months ended March 31, 2026 (the most recent period for which specific market share data is available), we were the largest provider of FIAs based on sales of $2.6 billion, translating to a 9.6% market share. For the three months ended March 31, 2025, we were the largest provider of FIAs based on sales of $3.4 billion, translating to a 12.1% market share.

Current wording

According to LIMRA, FIA market sales in the US were $57.4 billion for the six months ended June 30, 2026, a 5.3% decrease from the same time period in 2025. For the six months ended June 30, 2026 (the most recent period for which specific market share data is available), we were the largest provider of FIAs based on sales of $6.4 billion, translating to an 11.1% market share. For the six months ended June 30, 2025, we were the largest provider of FIAs based on sales of $7.3 billion, translating to a 12.1% market share.

Previous wording

According to LIMRA, RILA market sales in the US were $21.1 billion for the three months ended March 31, 2026, a 20.3% increase from the same time period in 2025. For the three months ended March 31, 2026 (the most recent period for which specific market share data is available), we were the eleventh largest provider of RILAs based on sales of $541 million, translating to a 2.6% market share. For the three months ended March 31, 2025, we were the eleventh largest provider of RILAs based on sales of $353 million, translating to a 2.0% market share. We believe RILAs represent a significant growth opportunity for Athene.

Current wording

According to LIMRA, RILA market sales in the US were $44.4 billion for the six months ended June 30, 2026, a 21.0% increase from the same time period in 2025. For the six months ended June 30, 2026 (the most recent period for which specific market share data is available), we were the tenth largest provider of RILAs based on sales of $1.5 billion, translating to a 3.4% market share. For the six months ended June 30, 2025, we were the fifteenth largest provider of RILAs based on sales of $620 million, translating to a 1.7% market share. We believe RILAs represent a significant growth opportunity for Athene.

Previous wording

•Integration, Restructuring and Other Non-operating Items—Consists ofrestructuring and integration expenses related to acquisitions and block reinsurance costs, as well as certain other items, which are not predictable or related to our underlying profitability drivers.

Current wording

•Integration, Restructuring and Other Non-operating Items—Consists ofrestructuring and integration expenses related to acquisitions and block reinsurance transactions, as well as certain other items, which are not predictable or related to our underlying profitability drivers.

Previous wording

Cost of funds includes liability costs related to cost of crediting on deferred annuities and institutional products, as well as other liability costs, but does not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interests. Cost of crediting on deferred annuities is the interest credited to the policyholders on our fixed strategies, as well as the option costs on the indexed annuity strategies. With respect to indexed annuities, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. Cost of crediting on institutional products represents (1) pension group annuity costs, including interest credited, benefit payments and other reserve changes, net of premiums received when issued, (2) funding agreement costs, including interest expense and other reserve changes and (3) guaranteed investment contract costs, including interest expense. Additionally, cost of crediting includes forward points gains and losses on foreign exchange derivative hedges. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than deferred annuities and institutional products, premiums, product charges, excluding market value adjustments, and certain other revenues. We include the costs related to business added through assumed reinsurance transactions and exclude the costs on business related to ceded reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. We believe a measure like cost of funds is useful in analyzing the trends of our core business operations, profitability and pricing discipline. While we believe cost of funds 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 benefits and expenses presented under US GAAP.

Current wording

Cost of funds includes liability costs related to cost of crediting on deferred annuities and institutional products, as well as other liability costs, but does not include the proportionate share of the ACRA cost of funds associated with the noncontrolling interests. Cost of crediting on deferred annuities is the interest credited to the policyholders on our fixed strategies, as well as the option costs on the indexed annuity strategies. With respect to indexed annuities, the cost of providing index credits includes the expenses incurred to fund the annual index credits, and where applicable, minimum guaranteed interest credited. Cost of crediting on institutional products represents (1) pension group annuity costs, including interest credited, benefit payments and other reserve changes, net of premiums received when issued, (2) funding agreement costs, including interest expense and other reserve changes and (3) guaranteed investment contract costs, including interest expense. Additionally, cost of crediting includes forward points gains and losses on foreign exchange derivative hedges. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than deferred annuities and institutional products, premiums and certain product charges and other revenues. We include the costs related to business added through assumed reinsurance transactions and exclude the costs on business related to ceded reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets for the relevant period. To enhance the ability to analyze these measures across periods, interim periods are annualized. We believe a measure like cost of funds is useful in analyzing the trends of our core business operations, profitability and pricing discipline. While we believe cost of funds 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 benefits and expenses presented under US GAAP.

Previous wording

Adjusted leverage 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 leverage ratio is calculated as total debt at notional value adjusted to exclude 50 percent of the notional value of subordinated debt as an equity credit plus 50 percent of the notional value of our preferred stock divided by adjusted capitalization. Adjusted capitalization includes our adjusted Athene Holding Ltd. common stockholder’s equity and the notional value of our total debt and preferred stock. Adjusted Athene Holding Ltd. common stockholder’s equity is calculated as the ending Athene Holding Ltd. 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 business, 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 leverage ratio should not be used as a substitute for the leverage ratio. However, we believe the adjustments to stockholders’ equity and debt are significant to gaining an understanding of our capitalization, debt and preferred stock utilization and overall leverage capacity, because they provide insight into how rating agencies measure our capitalization, which is a consideration in how we manage our leverage capacity.

Current wording

Adjusted leverage 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 leverage ratio is calculated as total debt at notional value adjusted to exclude 50 percent of the notional value of subordinated debt as an equity credit plus 50 percent of the notional value of our preferred stock divided by adjusted capitalization. Adjusted capitalization includes our adjusted Athene Holding Ltd. common stockholder’s equity and the notional value of our total debt and preferred stock. Adjusted Athene Holding Ltd. common stockholder’s equity is calculated as the ending Athene Holding Ltd. 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-over-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 business, 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 leverage ratio should not be used as a substitute for the leverage ratio. However, we believe the adjustments to stockholders’ equity and debt are significant to gaining an understanding of our capitalization, debt and preferred stock utilization and overall leverage capacity, because they provide insight into how rating agencies measure our capitalization, which is a consideration in how we manage our leverage capacity.