Apollo Global Management Inc

Previous wording

Founded in 1990, Apollo is a high-growth, global alternative asset manager and a retirement services provider. Apollo conducts its business primarily in the United States through the following three reportable segments: Asset Management, Retirement Services and Principal Investing. These business segments are differentiated based on the investment services they provide as well as varying investing strategies. As of March 31, 2024, Apollo had a team of 4,945 employees, including 2,005 employees of Athene.

Current wording

Founded in 1990, Apollo is a high-growth, global alternative asset manager and a retirement services provider. Apollo conducts its business primarily in the United States through the following three reportable segments: Asset Management, Retirement Services and Principal Investing. These business segments are differentiated based on the investment services they provide as well as varying investing strategies. As of June 30, 2024, Apollo had a team of 5,009 employees, including 2,034 employees of Athene.

Previous wording

Our Asset Management segment focuses on three investing strategies: yield, hybrid and equity. We have a flexible mandate in many of the funds we manage which enables the funds to invest opportunistically across a company’s capital structure. We raise, invest and manage funds, accounts and other vehicles on behalf of some of the world’s most prominent pension, endowment and sovereign wealth funds and insurance companies, as well as other institutional and individual investors. As of March 31, 2024, we had total AUM of $671 billion.

Current wording

Our Asset Management segment focuses on three investing strategies: yield, hybrid and equity. We have a flexible mandate in many of the funds we manage which enables the funds to invest opportunistically across a company’s capital structure. We raise, invest and manage funds, accounts and other vehicles on behalf of some of the world’s most prominent pension, endowment and sovereign wealth funds and insurance companies, as well as other institutional and individual investors. As of June 30, 2024, we had total AUM of $696 billion.

Previous wording

Yield is our largest asset management strategy with $501 billion of AUM as of March 31, 2024. Our yield strategy focuses on generating excess returns through high-quality credit underwriting and origination. Beyond participation in the traditional issuance and secondary credit markets, through our origination platforms and corporate solutions capabilities we seek to originate attractive and safe-yielding assets for the investors in the funds we manage. Within our yield strategy, we target 4% to 10% returns for our clients. Since inception, the total return yield fund has generated a 6% gross ROE and a 5% net ROE annualized through March 31, 2024.

Current wording

Yield is our largest asset management strategy with $521 billion of AUM as of June 30, 2024. Our yield strategy focuses on generating excess returns through high-quality credit underwriting and origination. Beyond participation in the traditional issuance and secondary credit markets, through our origination platforms and corporate solutions capabilities we seek to originate attractive and safe-yielding assets for the investors in the funds we manage. Within our yield strategy, we target 4% to 10% returns for our clients. Since inception, the total return yield fund has generated a 6% gross ROE and a 5% net ROE annualized through June 30, 2024.

Previous wording

Our hybrid strategy, with $64 billion of AUM as of March 31, 2024, brings together our capabilities across debt and equity to seek to offer a differentiated risk-adjusted return with an emphasis on structured downside protected opportunities across asset classes. We target 8% to 15% returns within our hybrid strategy by pursuing investments in all market environments, deploying capital during both periods of dislocation and market strength, and focusing on different investing strategies and asset classes.

Current wording

Our hybrid strategy, with $70 billion of AUM as of June 30, 2024, brings together our capabilities across debt and equity to seek to offer a differentiated risk-adjusted return with an emphasis on structured downside protected opportunities across asset classes. We target 8% to 15% returns within our hybrid strategy by pursuing investments in all market environments, deploying capital during both periods of dislocation and market strength, and focusing on different investing strategies and asset classes.

Previous wording

The flagship hybrid credit hedge fund we manage has generated an 11% gross ROE and a 7% net ROE annualized and the hybrid value funds we manage have generated a 19% gross IRR and a 15% net IRR from inception through March 31, 2024.

Current wording

The flagship hybrid credit hedge fund we manage has generated an 11% gross ROE and a 7% net ROE annualized and the hybrid value funds we manage have generated a 20% gross IRR and a 15% net IRR from inception through June 30, 2024.

Previous wording

Our equity strategy manages $107 billion of AUM as of March 31, 2024. Our equity strategy emphasizes flexibility, complexity, and purchase price discipline to drive opportunistic-like returns for our clients throughout market cycles. Apollo’s equity team has experience across sectors, industries, and geographies in both private equity and real estate equity. Our control equity transactions are principally buyouts, corporate carveouts and distressed investments, while the real estate funds we manage generally transact in single asset, portfolio and platform acquisitions. Within our equity strategy, we target returns above 15% in the funds we manage. We have consistently produced attractive long-term investment returns in the traditional private equity funds we manage, generating a 39% gross IRR and a 24% net IRR on a compound annual basis from inception through March 31, 2024.

Current wording

Our equity strategy manages $105 billion of AUM as of June 30, 2024. Our equity strategy emphasizes flexibility, complexity, and purchase price discipline to drive opportunistic-like returns for our clients throughout market cycles. Apollo’s equity team has experience across sectors, industries, and geographies in both private equity and real estate equity. Our control equity transactions are principally buyouts, corporate carveouts and distressed investments, while the real estate funds we manage generally transact in single asset, portfolio and platform acquisitions. Within our equity strategy, we target returns above 15% in the funds we manage. We have consistently produced attractive long-term investment returns in the traditional private equity funds we manage, generating a 39% gross IRR and a 24% net IRR on a compound annual basis from inception through June 30, 2024.

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. U.S. inflation eased but remained elevated in 2023 as the U.S. Federal Reserve continued its interest rate hiking cycle, given that the Consumer Price Index persisted above the 2% target. The U.S. Bureau of Labor Statistics reported that the annual U.S. inflation rate increased modestly to 3.5% as of March 31, 2024, compared to 3.4% as of December 31, 2023. The U.S. 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. U.S. inflation eased in 2024 but the Consumer Price Index remains above the U.S. Federal Reserve’s 2% target. The U.S. Bureau of Labor Statistics reported that the annual U.S. inflation rate decreased modestly to 3.0% as of June 30, 2024, compared to 3.5% as of March 31, 2024. The U.S. 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 U.S., the S&P 500 Index increased by 10.2% during the first quarter of 2024, following an increase of 11.2% in the fourth quarter of 2023. Global equity markets also increased during the quarter, with the MSCI All Country World ex USA Index increasing by 5.7%, following an increase of 10.6% in the fourth quarter of 2023.

Current wording

Equity market performance was strong during the second quarter of 2024. In the U.S., the S&P 500 Index increased by 3.9% during the quarter following an increase of 10.2% in the first quarter of 2024. However, global equity markets decreased during the quarter, with the MSCI All Country World ex USA Index decreasing by 0.4%, following an increase of 5.7% in the first quarter of 2024.

Previous wording

Conditions in the credit markets also have a significant impact on our business. Credit markets were positive in the first quarter of 2024, with the BofAML HY Master II Index increasing by 1.5%, while the S&P/LSTA Leveraged Loan Index increased by 2.0%.

Current wording

Conditions in the credit markets also have a significant impact on our business. Credit markets were positive in the second quarter of 2024, with the BofAML HY Master II Index increasing by 1.1%, while the S&P/LSTA Leveraged Loan Index increased by 2.1%.

Previous wording

In terms of economic conditions in the U.S., 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 U.S. economy will expand by 2.7% in 2024 and 1.9% in 2025. The U.S. Bureau of Labor Statistics reported that the U.S. unemployment rate increased to 3.8% as of March 31, 2024.

Current wording

In terms of economic conditions in the U.S., 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 U.S. economy will expand by 2.6% in 2024 and 1.9% in 2025. The U.S. Bureau of Labor Statistics reported that the U.S. unemployment rate increased to 4.1% as of June 30, 2024.

Previous wording

Foreign exchange rates can materially impact the valuations of our investments and those of the funds we manage that are denominated in currencies other than the U.S. dollar. The U.S. dollar strengthened in the first quarter of 2024 compared to the euro and the British pound. Relative to the U.S. dollar, the euro depreciated 2.3% during the first quarter of 2024, after appreciating 4.4% in the fourth quarter of 2023, while the British pound depreciated 0.8% during the first quarter of 2024, after appreciating 4.4% in the fourth quarter of 2023. Oil finished a volatile quarter up 16.1% from the fourth quarter of 2023.

Current wording

Foreign exchange rates can materially impact the valuations of our investments and those of the funds we manage that are denominated in currencies other than the U.S. dollar. The U.S. dollar strengthened in the second quarter of 2024 compared to the euro. Relative to the U.S. dollar, the euro depreciated 0.7% during the second quarter of 2024, after depreciating 2.3% in the first quarter of 2024, while the British pound appreciated 0.2% during the second quarter of 2024, after depreciating 0.8% in the first quarter of 2024. Oil finished the second quarter of 2024 down 2.0% from the first quarter of 2024.

Previous wording

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

Current wording

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

Previous wording

Athene addresses interest rate risk through managing the duration of the liabilities it sources with assets it acquires through asset liability management (“ALM”) modeling. As part of its investment strategy, Athene purchases floating rate investments, which are expected to perform well in a rising interest rate environment and are expected to underperform in a declining rate environment. Athene manages its interest rate risk in a declining rate environment through hedging activity or the issuance of additional floating rate liabilities in order to lower its overall net floating rate position. As of March 31, 2024, Athene’s net invested asset portfolio included $44.5 billion of floating rate investments, or 20% of its net invested assets, and its net reserve liabilities included $28.4 billion of floating rate liabilities at notional, or 13% of its net invested assets, resulting in $16.1 billion of net floating rate assets, or 7% of its net invested assets.

Current wording

Athene addresses interest rate risk through managing the duration of the liabilities it sources with assets it acquires through asset liability management (“ALM”) modeling. As part of its investment strategy, Athene purchases floating rate investments, which are expected to perform well in a rising interest rate environment and are expected to underperform in a declining rate environment. Athene manages its interest rate risk in a declining rate environment through hedging activity or the issuance of additional floating rate liabilities in order to lower its overall net floating rate position. As of June 30, 2024, Athene’s net invested asset portfolio included $45.5 billion of floating rate investments, or 20% of its net invested assets, and its net reserve liabilities included $30.3 billion of floating rate liabilities at notional, or 13% of its net invested assets, resulting in $15.2 billion of net floating rate assets, or 7% of its net invested assets.

Previous wording

As of March 31, 2024, approximately 42% of the value of the investments of the funds we manage, on a gross basis, was determined using market-based valuation methods (i.e., reliance on broker or listed exchange quotes) and the remaining 58% was determined primarily by comparable company and industry multiples or discounted cash flow models. See “Item 1A. Risk Factors—Risks Relating to Our Asset Management Business—The performance of the funds we manage, and our performance, may be adversely affected by the financial performance of portfolio companies of the funds we manage and the industries in which the funds we manage invest”in the 2023 Annual Report for discussion regarding certain industry-specific risks that could affect the fair value of certain of the portfolio company investments of the funds we manage.

Current wording

As of June 30, 2024, approximately 41% of the value of the investments of the funds we manage, on a gross basis, was determined using market-based valuation methods (i.e., reliance on broker or listed exchange quotes) and the remaining 59% was determined primarily by comparable company and industry multiples or discounted cash flow models. See “Item 1A. Risk Factors—Risks Relating to Our Asset Management Business—The performance of the funds we manage, and our performance, may be adversely affected by the financial performance of portfolio companies of the funds we manage and the industries in which the funds we manage invest”in the 2023 Annual Report for discussion regarding certain industry-specific risks that could affect the fair value of certain of the portfolio company investments of the funds we manage.

Previous wording

The balance of our other expenses includes interest, placement fees, and general, administrative and other operating expenses. Interest expense consists primarily of interest related to the 2024 Senior Notes, the 2026 Senior Notes, the 2029 Senior Notes, the 2030 Senior Notes, the 2033 Senior Notes, the 2048 Senior Notes, the 2050 Subordinated Notes and the 2053 Subordinated Notes as discussed in note 11 to our condensed consolidated financial statements. Placement fees are incurred in connection with our capital raising activities. In cases where the limited partners of the funds are determined to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract, and amortized over the life of the customer contract. General, administrative and other expenses includes occupancy expense, depreciation and amortization, professional fees and costs related to travel, information technology and administration. Occupancy expense represents charges related to office leases and associated expenses, such as utilities and maintenance fees. Depreciation and amortization of fixed assets is normally calculated using the straight-line method over their estimated useful lives, ranging from two to sixteen years, taking into consideration any residual value. Leasehold improvements are amortized over the shorter of the useful life of the asset or the expected term of the lease. Intangible assets are amortized based on the future cash flows over the expected useful lives of the assets.

Current wording

The balance of our other expenses includes interest, placement fees, and general, administrative and other operating expenses. Interest expense consists primarily of interest related to the senior and subordinated notes as discussed in note 11 to our condensed consolidated financial statements. Placement fees are incurred in connection with our capital raising activities. In cases where the limited partners of the funds are determined to be the customer in an arrangement, placement fees may be capitalized as a cost to acquire a customer contract, and amortized over the life of the customer contract. General, administrative and other expenses includes occupancy expense, depreciation and amortization, professional fees and costs related to travel, information technology and administration. Occupancy expense represents charges related to office leases and associated expenses, such as utilities and maintenance fees. Depreciation and amortization of fixed assets is normally calculated using the straight-line method over their estimated useful lives, ranging from two to sixteen years, taking into consideration any residual value. Leasehold improvements are amortized over the shorter of the useful life of the asset or the expected term of the lease. Intangible assets are amortized based on the future cash flows over the expected useful lives of the assets.

Previous wording

Below is a discussion of our condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023. For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:

Current wording

Below is a discussion of our condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023. For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:

Previous wording

The performance allocations earned from Fund X in 2024 were primarily driven by appreciation and realization of the fund’s investments in the (i) distressed investments, (ii) manufacturing and industrial, and (iii) chemicals sectors.

Current wording

The performance allocations earned from Fund X in 2024 were primarily driven by appreciation and realization of the fund’s distressed investments and investments in the (i) manufacturing and industrial and (ii) consumer and retail sectors.

Previous wording

Other income (loss) was $38 million in 2024, a decrease of $26 million from $64 million in 2023. This decrease was primarily driven by a decrease in other income (loss), net of $58 million and a decrease in net gains from investment activities of consolidated VIEs of $9 million, partially offset by an increase in net gains from investment activities of $41 million.

Current wording

Other income (loss) was $4 million in 2024, a decrease of $76 million from $80 million in 2023. This decrease was primarily driven by decreases in net gains (losses) from investment activities and other income (loss), net of $41 million and $24 million, respectively.

Previous wording

Retirement Services expenses were $3.9 billion in 2024, an increase of $1.3 billion 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.

Current wording

Retirement Services expenses were $3.6 billion in 2024, a decrease of $8.5 billion from $12.1 billion in 2023. The decrease was primarily driven by a decrease in future policy and other policy benefits and a decrease in interest sensitive contract benefits, partially offset by an increase in market risk benefits remeasurement (gains) losses.

Previous wording

The Company’s income tax provision totaled $422 million and $253 million in 2024 and 2023, respectively. The change to the provision was primarily related to the increase in pretax income subject to income tax. The provision for income taxes includes federal, state, local and foreign income taxes resulting in an effective income tax rate of 19.3% and 14.1% for 2024 and 2023, respectively. The most significant reconciling items between the U.S. federal statutory income tax rate and the effective income tax rate were due to the following: (i) foreign, state and local income taxes, including NYC UBT, (ii) income attributable to non-controlling interests and (iii) equity-based compensation net of the limiting provisions for executive compensation under IRC Section 162(m). During the fourth quarter of 2023, the Company experienced a decrease to its consolidated effective income tax rate due to the one-time deferred tax benefit resulting from the enactment of the Bermuda Corporate Income Tax (“CIT”). The Company does not expect material impacts to its consolidated effective tax rate or earnings and results of operations as a result of the utilization of the deferred tax assets, though the Company can provide no assurance that the impacts will not be material in future years (see note 10 to the condensed consolidated financial statements for further details regarding the Company’s income tax provision).

Current wording

The Company’s income tax provision totaled $261 million and $201 million in 2024 and 2023, respectively. The change to the provision was primarily related to the increase in pretax income subject to income tax. The provision for income taxes includes federal, state, local and foreign income taxes resulting in an effective income tax rate of 18.2% and 21.1% for 2024 and 2023, respectively. The most significant reconciling items between the U.S. federal statutory income tax rate and the effective income tax rate were due to the following: (i) foreign, state and local income taxes, including NYC UBT, (ii) income attributable to non-controlling interests and (iii) equity-based compensation net of the limiting provisions for executive compensation under IRC Section 162(m). During the fourth quarter of 2023, the Company experienced a decrease to its consolidated effective income tax rate due to the one-time deferred tax benefit resulting from the enactment of the Bermuda Corporate Income Tax (“CIT”). The Company does not expect a material increase to its consolidated effective tax rate or earnings and results of operations as a result of the utilization of the deferred tax assets, though the Company can provide no assurance that the impacts will not be material in future years (see note 10 to the condensed consolidated financial statements for further details regarding the Company’s income tax provision).

Previous wording

Advisory and transaction fees increased by $14 million to $169 million in 2024 from $155 million in 2023. Advisory and transaction fees earned during 2024 were primarily attributable to advisory and transaction fees earned from companies in the (i) media, telecom and technology, (ii) business services, (iii) manufacturing and industrial and (iv) consumer and retail sectors.

Current wording

Advisory and transaction fees increased by $111 million to $436 million in 2024 from $325 million in 2023. Advisory and transaction fees earned during 2024 were primarily attributable to advisory and transaction fees earned from companies in the (i) media, telecom and technology, (ii) financial services, (iii) business services and (iv) manufacturing and industrial sectors.

Previous wording

Significant drivers for performance allocations in 2024 were performance allocations primarily earned from Fund IX, Fund X, Credit Strategies and Redding Ridge Holdings of $105 million, $56 million, $23 million and $23 million, respectively.

Current wording

Significant drivers for performance allocations in 2024 were performance allocations primarily earned from Fund IX, Fund X, HVF II, Credit Strategies and Redding Ridge Holdings of $158 million, $108 million, $65 million, $45 million and $35 million, respectively.

Previous wording

The performance allocations earned from Fund IX in 2024 were primarily driven by appreciation and realization of the fund’s investments in the leisure and distressed investments sectors.

Current wording

The performance allocations earned from Fund IX in 2024 were primarily driven by appreciation and realization of the fund’s investments in the leisure sector and in the fund’s distressed investments.

Previous wording

Management fees increased by $24 million to $438 million in 2024 from $414 million in 2023. The increase in management fees was primarily attributable to management fees earned from Fund X of $13 million, driven by an increase in capital commitments, partially offset by a decrease in management fees earned from Fund VIII of $5 million correlated with its decrease in invested capital. Additionally, management fees also benefited from increases in fees earned from ADS of $8 million and ISGI advised clients of $5 million.

Current wording

Management fees increased by $34 million to $900 million in 2024 from $866 million in 2023. The increase in management fees was primarily attributable to management fees earned from ADS of $20 million, driven by an increase in subscriptions, partially offset by a decrease in management fees earned from Fund VIII of $10 million correlated with its decrease in invested capital.

Previous wording

Expenses were $958 million in 2024, an increase of $60 million from $898 million in 2023 due to increases in general, administrative and other expenses and interest expense of $43 million and $20 million, respectively. General, administrative and other expenses were $240 million in 2024, an increase of $43 million from $197 million in 2023. The increase in 2024 was primarily driven by an increase in professional fees, higher travel and entertainment expenses and higher placement fees. Interest expense was $51 million in 2024, an increase of $20 million from $31 million in 2023. The increase in 2024 was primarily driven by new debt issuances during 2023.

Current wording

Expenses were $1,934 million in 2024, an increase of $263 million from $1,671 million in 2023, primarily due to increases in general, administrative and other and total compensation and benefits expenses. General, administrative and other expenses were $559 million in 2024, an increase of $136 million from $423 million in 2023. The increase in 2024 was primarily driven by an increase in professional fees, higher travel and entertainment expenses and an increase in placement fees.

Previous wording

Total compensation and benefits were $667 million in 2024, a decrease of $3 million from $670 million in 2023 primarily due to a decrease in profit sharing expense of $69 million, resulting from the corresponding lower investment income in 2024, partially offset by an increase in equity-based compensation of $52 million. In any period, the blended profit sharing percentage is impacted by the respective profit sharing ratios of the funds generating performance allocations in the period. Equity-based compensation expense, in any given period, is generally comprised of: (i) performance grants which are tied to the Company’s receipt of performance fees, within prescribed periods and are typically recognized on an accelerated recognition method over the requisite service period to the extent the performance revenue metrics are met or deemed probable, and (ii) the impact of the 2021 one-time grants awarded to the Co-Presidents, all of which vest on a cliff basis subject to continued employment over five years, and a portion of which also vest on the Company’s achievement of FRE and SRE per share metrics.

Current wording

Total compensation and benefits were $1,271 million in 2024, an increase of $85 million from $1,186 million in 2023, primarily due to an increase in equity-based compensation of $68 million. Equity-based compensation expense, in any given period, is generally comprised of: (i) performance grants which are tied to the Company’s receipt of performance fees, within prescribed periods and are typically recognized on an accelerated recognition method over the requisite service period to the extent the performance revenue metrics are met or deemed probable, and (ii) the impact of the 2021 one-time grants awarded to the Co-Presidents, all of which vest on a cliff basis subject to continued employment over five years, and a portion of which also vest on the Company’s achievement of FRE and SRE per share metrics. Additionally, there was an increase in salary, bonus and benefits stemming from growth in revenues and increased headcount in 2024.

Previous wording

Other income of $64 million in 2023 was primarily attributable to net gains from consolidated VIEs and interest income earned on the Company’s money market funds and U.S. treasury securities, as a result of the rising interest rate environment. Other income of $38 million in 2024 was primarily attributable to appreciation from the Company’s balance sheet investments, derivatives gains and interest income earned on the Company’s money market funds and U.S. treasury securities, partially offset by an increase in earnout expense associated with a previous acquisition.

Current wording

Other income in 2023 was primarily attributable to interest income earned on the Company’s money market funds and U.S. Treasury securities, as a result of the rising interest rate environment, as well as interest income and net gains earned through the Company’s consolidated SPACs. Other income of $42 million in 2024 was primarily attributable to appreciation from the Company’s balance sheet investments, derivatives gains, and interest income earned on the Company’s money market funds and U.S. Treasury securities, partially offset by an increase in earnout expense associated with a previous acquisition.

Previous wording

Retirement Services revenues were $6.0 billion in 2024, an increase of $1.7 billion from $4.3 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 revenues of consolidated VIEs.

Current wording

Retirement Services revenues were $11.0 billion in 2024, a decrease of $6.2 billion from $17.2 billion in 2023. The decrease was primarily driven by a decrease in premiums, partially offset by an increase in net investment income, an increase in revenues of consolidated VIEs and an increase in investment related gains (losses).

Previous wording

Net investment income was $3.6 billion in 2024, an increase of $1.0 billion from $2.6 billion in 2023, primarily driven by significant growth in Athene’s 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.

Current wording

Net investment income was $7.4 billion in 2024, an increase of $1.8 billion from $5.6 billion in 2023, primarily driven by significant growth in Athene’s 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.

Previous wording

Revenues of consolidated VIEs were $411 million in 2024, an increase of $130 million from $281 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 U.S. Treasury rates in 2024 compared to a decrease in 2023.

Current wording

Revenues of consolidated VIEs were $777 million in 2024, an increase of $149 million from $628 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 a larger increase in U.S. Treasury rates in 2024 compared to 2023 and an unfavorable change in fair value of certain investment funds held within Athene’s consolidated VIEs.

Previous wording

Investment related gains (losses) were $1.7 billion in 2024, an increase of $612 million 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 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 Athene’s call options are based, with the 2024 impact amplified by the strong growth in Athene’s FIA block of business over the previous twelve months. The largest percentage of Athene’s 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 U.S. 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 U.S. Treasury rates in 2024 compared to a decrease in 2023.

Current wording

Investment related gains (losses) were $1.5 billion in 2024, an increase of $112 million from $1.4 billion in 2023, primarily due to the change in fair value of FIA hedging derivatives, favorable net foreign exchange impacts and a favorable change in the provision for credit losses, partially offset by an unfavorable change in the fair value of reinsurance assets and mortgage loans. The change in fair value of FIA hedging derivatives increased $392 million, primarily driven by the favorable performance of the equity indices upon which Athene’s call options are based, with the 2024 impact amplified by the strong growth in Athene’s FIA block of business over the previous twelve months. The largest percentage of Athene’s call options are based on the S&P 500 index, which increased 14.5% in 2024, compared to an increase of 15.9% in 2023. The favorable net foreign exchange impacts were primarily related to the strengthening of the U.S. dollar against foreign currencies in comparison to 2023 and the continued growth in foreign denominated business. The favorable change in the provision for credit losses of $77 million was primarily driven by intent-to-sell impairments in 2023 related to the timing of the recapture of certain business by VIAC and impacts from the Silicon Valley Bank failure, partially offset by an increase in the allowance for credit losses in 2024 primarily related to CMBS and corporate securities. The change in fair value of reinsurance assets decreased $528 million and the change in fair value of mortgage loans decreased $167 million, primarily driven by a larger increase in U.S. Treasury rates in 2024 compared to 2023.

Previous wording

Market risk benefits remeasurement (gains) losses were $(154) million in 2024, a decrease of $500 million from $346 million in 2023. The gains in 2024 compared to the 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.

Current wording

Market risk benefits remeasurement (gains) losses were $(170) million in 2024, a decrease of $445 million from $275 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 $457 million favorable compared to 2023 due to a larger 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.

Previous wording

Interest sensitive contract benefits were $2.9 billionin 2024, an increase of $1.6 billion from $1.3 billion in 2023, primarily driven by an increase in the change in Athene’s 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 U.S. Treasury rates, and significant growth in Athene’s deferred annuity and funding agreement blocks of business. The change in Athene’s 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 Athene’s FIA policies are linked, with the 2024 impact amplified by the strong growth in Athene’s FIA block of business over the previous twelve months. The largest percentage of Athene’s 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 the 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 Athene’s embedded derivative calculations as 2024 experienced an increase in discount rates compared to a decrease in 2023.

Current wording

Interest sensitive contract benefits were $4.7 billionin 2024, an increase of $1.4 billion from $3.3 billion in 2023, primarily driven by an increase in rates on deferred annuity and funding agreement issuances, as well as increased costs on floating rate funding agreements, driven by higher U.S. Treasury rates, and significant growth in Athene’s deferred annuity and funding agreement blocks of business, partially offset by a decrease in the change in Athene’s fixed indexed annuity reserves. The change in Athene’s fixed indexed annuity reserves includes the impact from changes in the fair value of FIA embedded derivatives. The decrease in the change in fair value of FIA embedded derivatives of $533 million was primarily due to the performance of the equity indices to which Athene’s FIA policies are linked. The largest percentage of Athene’s FIA policies are linked to the S&P 500 index, which increased 14.5% in 2024, compared to an increase of 15.9% in 2023. The change in fair value of FIA embedded derivatives was also driven by the favorable change in discount rates used in Athene’s embedded derivative calculations as 2024 experienced an increase in discount rates compared to a decrease in 2023.

Previous wording

The increase in management fees was primarily attributable to management fees earned from Athene and Fund X of $49 million and $13 million, respectively, primarily driven by increases in fee-generating AUM and capital commitments, respectively, partially offset by a decrease in management fees earned from Fund VIII of $5 million correlated with its decrease in invested capital. Management fees in 2024 benefited from robust growth from retirement services clients, strong levels of third-party asset management fundraising, and solid levels of capital deployment in yield and hybrid strategies.

Current wording

The increase in management fees was primarily attributable to management fees earned from Athene and ADS of $55 million and $11 million, respectively, driven by increases in fee-generating AUM and subscriptions in 2024, respectively, partially offset by a decrease in management fees earned from Fund X of $10 million primarily related to the catch-up management fees earned in 2023. Management fees in 2024 benefited from robust growth in the yield strategy reflecting increasing contributions from third-party clients and Athene, as well as solid levels of capital deployment.

Previous wording

The growth in revenues was offset, in part, by increases in other operating expenses and fee-related compensation expense associated with increased headcount to support the Company’s growth. The increase in other operating expenses in 2024 was primarily driven by higher travel and entertainment expenses and an increase in placement fees. Our emphasis on disciplined expense management amid decelerating hiring activity and investment spend helped to drive more than 150 basis points of FRE margin expansion in 2024.

Current wording

The growth in revenues was offset, in part, by increases in non-compensation expenses and higher fee-related compensation expense stemming from strong growth in fee related revenues and increased headcount in 2024. The increase in non-compensation expenses in 2024 was primarily driven by fund merger-related costs of $15 million, as well as an increase in professional fees and higher travel and entertainment expenses.

Previous wording

FRE was $462 million in 2024, an increase of $65 million compared to $397 million in 2023. This increase was primarily attributable to increases in management fees and fee-related performance fees.

Current wording

FRE was $978 million in 2024, an increase of $139 million compared to $839 million in 2023. This increase was primarily attributable to growth in fee related revenues, including management fees, capital solutions fees and other, net and fee-related performance fees.

Previous wording

The increase in fee-related performance fees in 2024 was primarily attributable to fees earned from ADS and MidCap Financial of $10 million and $7 million, respectively.

Current wording

The increase in fee-related performance fees in 2024 was primarily attributable to fees earned from ADS and MidCap Financial of $10 million and $7 million, respectively, reflecting the growing contribution from Apollo’s diversified suite of wealth-focused products.

Previous wording

The growth of capital solutions fees moderated in 2024 and such fees were primarily attributable to fees earned from companies in the (i) financial services, (ii) manufacturing and industrial, (iii) media, telecom and technology and (iv) business services sectors.

Current wording

Capital solutions fees in 2024 reflect growth across the broader debt origination ecosystem and such fees were primarily attributable to fees earned from companies in the (i) media, telecom and technology, (ii) financial services, (iii) business services and (iv) manufacturing and industrial sectors.

Previous wording

Apollo, through its consolidated subsidiary, ISG, provides asset management services to Athene with respect to assets in the accounts owned by or related to Athene (“Athene Accounts”), including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions asset diligence, hedging and other asset management services and receives management fees for providing these services. The Company, through ISG, also provides sub-allocation services with respect to a portion of the assets in the Athene Accounts. Apollo, through its asset management business, managed or advised $293.1 billion, $278.3 billion and $247.8 billion of AUM on behalf of Athene as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

Current wording

Apollo, through its consolidated subsidiary, ISG, provides asset management services to Athene with respect to assets in the accounts owned by or related to Athene (“Athene Accounts”), including asset allocation services, direct asset management services, asset and liability matching management, mergers and acquisitions asset diligence, hedging and other asset management services and receives management fees for providing these services. The Company, through ISG, also provides sub-allocation services with respect to a portion of the assets in the Athene Accounts. Apollo, through its asset management business, managed or advised $304.4 billion, $278.3 billion and $257.9 billion of AUM on behalf of Athene as of June 30, 2024, December 31, 2023 and June 30, 2023, respectively.

Previous wording

Apollo, through ISGI, provides investment advisory services with respect to certain assets in certain portfolio companies of Apollo funds and sub-advises the Athora Accounts and broadly refers to “Athora Sub-Advised” assets as those assets in the Athora Accounts which the Company explicitly sub-advises as well as those assets in the Athora Accounts which are invested directly in funds and investment vehicles Apollo manages. The Company refers to the portion of the Athora AUM that is not Athora Sub-Advised AUM as “Athora Non-Sub Advised” AUM. See note 15 to the condensed consolidated financial statements for more details regarding the fee arrangements with respect to the assets in the Athora Accounts. Apollo managed or advised $51.6 billion, $49.9 billion and $51.1 billion of AUM on behalf of Athora as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

Current wording

Apollo, through ISGI, provides investment advisory services with respect to certain assets in certain portfolio companies of Apollo funds and sub-advises the Athora Accounts and broadly refers to “Athora Sub-Advised” assets as those assets in the Athora Accounts which the Company explicitly sub-advises as well as those assets in the Athora Accounts which are invested directly in funds and investment vehicles Apollo manages. The Company refers to the portion of the Athora AUM that is not Athora Sub-Advised AUM as “Athora Non-Sub Advised” AUM. See note 15 to the condensed consolidated financial statements for more details regarding the fee arrangements with respect to the assets in the Athora Accounts. Apollo managed or advised $50.3 billion, $49.9 billion and $50.6 billion of AUM on behalf of Athora as of June 30, 2024, December 31, 2023 and June 30, 2023, respectively.