Apollo Global Management Inc

Previous wording

The following discussion should be read in conjunction with Apollo Global Management, Inc.’s condensed consolidated financial statements and the related notes within this quarterly report. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those included in the section entitled “Item 1A. Risk Factors” in the 2023 Annual Report and “Item 1A. Risk Factors” in this quarterly report. The highlights listed below have had significant effects on many items within our condensed consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.

Current wording

The following discussion should be read in conjunction with Apollo Global Management, Inc.’s condensed consolidated financial statements and the related notes within this quarterly report. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those included in the section entitled “Item 1A. Risk Factors” in the 2024 Annual Report. The highlights listed below have had significant effects on many items within our condensed consolidated financial statements and affect the comparison of the current period’s activity with those of prior periods.

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 September 30, 2024, Apollo had a team of 5,053 employees, including 1,978 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 March 31, 2025, Apollo had a team of 5,141 employees, including 1,984 employees of Athene.

Previous wording

Our Asset Management segment focuses on two investing strategies: credit 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 September 30, 2024, we had total AUM of $733 billion.

Current wording

Our Asset Management segment focuses on credit and equity investing strategies. 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, 2025, we had total AUM of $785 billion.

Previous wording

During the third quarter ended September 30, 2024, we updated our Asset Management strategies to credit and equity, from the previously reported yield, hybrid and equity, which, we believe, better reflects our Asset Management investment strategies. The credit and equity investing strategies of our Asset Management segment reflect the range of investment capabilities across our platform, from investment grade to private equity. As an asset manager, we earn fees for providing investment management services and expertise to our client base. The amount of fees charged for managing these assets depends on the underlying investment strategy, liquidity profile, and, ultimately, our ability to generate returns for our clients. We also earn capital solutions fees as part of our growing capital solutions business and as part of monitoring and deployment activity alongside our sizeable private equity franchise. After expenses, we call the resulting earnings stream “Fee Related Earnings” or “FRE”, which represents the primary performance measure for the Asset Management segment.

Current wording

The credit and equity investing strategies of our Asset Management segment reflect the range of investment capabilities across our platform, from investment grade to private equity. As an asset manager, we earn fees for providing investment management services and expertise to our client base. The amount of fees charged for managing these assets depends on the underlying investment strategy, liquidity profile, and, ultimately, our ability to generate returns for our clients. We also earn capital solutions fees as part of our growing capital solutions business and as part of monitoring and deployment activity alongside our sizeable private equity franchise. After expenses, we call the resulting earnings stream “Fee Related Earnings” or “FRE”, which represents the primary performance measure for the Asset Management segment.

Previous wording

Credit is our largest asset management strategy with $598 billion of AUM as of September 30, 2024. Our credit strategy spans third-party strategies and Apollo’s retirement services business across four main investment pillars: direct origination, asset-backed, multi credit and opportunistic credit. Our credit strategy provides flexible, scaled and diverse capital solutions across the entire credit risk-return spectrum, with a focus 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.

Current wording

Credit is our largest asset management strategy with $641 billion of AUM as of March 31, 2025. Our credit strategy spans third-party strategies and Apollo’s retirement services business across four main investment pillars: direct origination, asset-backed, multi credit and opportunistic credit. Our credit strategy provides flexible, scaled and diverse capital solutions across the entire credit risk-return spectrum, with a focus 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.

Previous wording

Our equity strategy managed $135 billion of AUM as of September 30, 2024. Across our equity strategy, we maintain our focus on creative structuring and sourcing while working with the management teams of our Apollo-managed funds’ portfolio companies to help transform and grow their businesses. Our flexible mandate and purchase price discipline allow us to embrace complexity and seek attractive outcomes for our stakeholders. Apollo’s equity team has experience across sectors, industries, and geographies spanning its private equity, hybrid value, secondaries equity, AAA, real estate equity, impact investing platform, infrastructure and clean transition equity strategies. 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 September 30, 2024.

Current wording

Our equity strategy managed $144 billion of AUM as of March 31, 2025. Across our equity strategy, we maintain our focus on creative structuring and sourcing while working with the management teams of the portfolio companies of the Apollo-managed funds to help transform and grow their businesses. Our flexible mandate and purchase price discipline allow us to embrace complexity and seek attractive outcomes for our stakeholders. Apollo’s equity team has experience across sectors, industries, and geographies spanning its private equity, hybrid value, secondaries equity, AAA, real estate equity, impact investing, infrastructure and clean transition equity strategies. 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, 2025.

Previous wording

Our Principal Investing segment is comprised of our realized performance fee income, realized investment income from our balance sheet investments, and certain allocable expenses related to corporate functions supporting the entire company. The Principal Investing segment also includes our growth capital and liquidity resources at AGM. Over time, we may deploy capital into strategic investments over time that will help accelerate the growth of our Asset Management segment, by broadening our investment management and/or product distribution capabilities or increasing the efficiency of our operations. We believe these investments may translate into greater compounded annual growth of Fee Related Earnings.

Current wording

Our Principal Investing segment is comprised of our realized performance fee income, realized investment income from our balance sheet investments, and certain allocable expenses related to corporate functions supporting the entire company. The Principal Investing segment also includes our growth capital and liquidity resources at AGM. Over time, we may deploy capital into strategic investments that will help accelerate the growth of our Asset Management segment, by broadening our investment management and/or product distribution capabilities or increasing the efficiency of our operations. We believe these investments may translate into greater compounded annual growth of Fee Related Earnings.

Previous wording

Adverse economic conditions may result from domestic and global economic and political developments, including plateauing or decreasing economic growth and business activity, civil unrest, geopolitical tensions or military action, such as the armed conflicts in the Middle East and between Ukraine and Russia, and corresponding sanctions imposed on Russia by the United States and other countries, and new or evolving legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply chains.

Current wording

Adverse economic conditions may result from domestic and global economic and political developments, including plateauing or decreasing economic growth and business activity, changes to U.S. and foreign tariff policies, civil unrest, geopolitical tensions or military action, such as the armed conflicts in the Middle East and between Ukraine and Russia, and corresponding sanctions imposed on Russia by the United States and other countries, and new or evolving legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply chains.

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 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 2.4% as of September 30, 2024, compared to 3.0% as of June 30, 2024. The U.S. Federal Reserve finished the quarter with a benchmark interest rate target range of 4.75% to 5.00%, marking the first significant cut in rates since the pandemic.

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 include global inflation. U.S. inflation remains elevated with the U.S. Bureau of Labor Statistics reporting the annual U.S. inflation rate at 2.4% as of March 31, 2025, compared to 2.9% as of December 31, 2024. The U.S. Federal Reserve finished the quarter with a benchmark interest rate target range of 4.25% to 4.50%, unchanged from its December 2024 meeting.

Previous wording

Equity market performance was strong during the third quarter of 2024. In the U.S., the S&P 500 Index increased by 5.5% during the quarter following an increase of 3.9% in the second quarter of 2024. Global equity markets increased during the quarter, with the MSCI All Country World ex USA Index increasing by 7.8%, following a decrease of 0.4% in the second quarter of 2024.

Current wording

Equity market performance was mixed during the first quarter of 2025. In the U.S., the S&P 500 Index decreased by 4.6% during the first quarter of 2025, following an increase of 2.1% in the fourth quarter of 2024. However, global equity markets increased during the quarter, with the MSCI All Country World ex USA Index increasing by 6.4%, following a decrease of 7.4% in the fourth quarter of 2024.

Previous wording

Conditions in the credit markets also have a significant impact on our business. Credit markets were positive in the third quarter of 2024, with the BofAML HY Master II Index increasing by 5.3%, while the S&P/LSTA Leveraged Loan Index increased by 1.9%.

Current wording

Conditions in the credit markets also have a significant impact on our business. Credit markets were positive in the first quarter of 2025, with the BofAML HY Master II Index increasing by 0.9%, while the Morningstar/LSTA Leveraged Loan Index increased by 0.4%.

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 2.8% in the third quarter of 2024, following an increase of 3.0% in the second quarter of 2024. As of October 2024, the International Monetary Fund estimated that the U.S. economy will expand by 2.8% in 2024 and 2.2% in 2025. The U.S. Bureau of Labor Statistics reported that the U.S. unemployment rate remained at 4.1% as of September 30, 2024.

Current wording

In terms of economic conditions in the U.S., the Bureau of Economic Analysis reported real GDP contracted at an annual rate of 0.3% in the first quarter of 2025, following an increase of 2.4% in the fourth quarter of 2024. As of April 2025, the International Monetary Fund estimated the U.S. economy will expand by 1.8% in 2025 and 1.7% in 2026. The U.S. Bureau of Labor Statistics reported the U.S. unemployment rate increased to 4.2% as of March 31, 2025.

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 weakened in the third quarter of 2024 compared to the euro and the British pound. Relative to the U.S. dollar, the euro appreciated 3.9% during the third quarter of 2024, after depreciating 0.7% in the second quarter of 2024, while the British pound appreciated 5.8% during the third quarter of 2024, after appreciating 0.2% in the second quarter of 2024. Oil finished the third quarter of 2024 down 16.4% from the second quarter of 2024.

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 weakened in the first quarter of 2025 compared to the euro and the British pound. Relative to the U.S. dollar, the euro appreciated 4.5% during the first quarter of 2025, after depreciating 7.0% in the fourth quarter of 2024, while the British pound appreciated 3.2% during the first quarter of 2025, after depreciating 6.4% in the fourth quarter of 2024. Oil finished the first quarter of 2025 down 0.3% from the fourth quarter of 2024.

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 to lower its overall net floating rate position. As of September 30, 2024, Athene’s net invested asset portfolio included $49.8 billion of floating rate investments, or 21% of its net invested assets, and its net reserve liabilities included $35.0 billion of floating rate liabilities at notional, or 15% of its net invested assets, resulting in $14.8 billion of net floating rate assets, or 6% 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 to lower its overall net floating rate position. As of March 31, 2025, Athene’s net invested asset portfolio included $52.9 billion of floating rate investments, or 20% of its net invested assets, and its net reserve liabilities included $35.7 billion of floating rate liabilities at notional, or 13% of its net invested assets, resulting in $17.2 billion of net floating rate assets, or 7% of its net invested assets.

Previous wording

If prevailing interest rates were to rise, we believe Athene’s products would be more attractive to consumers and its sales would likely increase. If prevailing interest rates were to decline, it is likely that Athene’s products would be less attractive to consumers and its 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 Athene is unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or otherwise due to market conditions. A significant majority of Athene’s deferred annuity products have crediting rates that it may reset annually upon renewal, following the expiration of the current guaranteed period. While Athene has the contractual ability to lower these crediting rates to the guaranteed minimum levels, its willingness to do so may be limited by competitive pressures.

Current wording

If prevailing interest rates were to rise, we believe Athene’s products would be more attractive to consumers and its sales would likely increase. If prevailing interest rates were to decline, it is likely that Athene’s products would be less attractive to consumers and its 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 Athene is unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or otherwise due to market conditions. A significant majority of Athene’s deferred annuity products have crediting rates that it may reset annually upon renewal, following the expiration of the current guaranteed period. While Athene has the contractual ability to lower these crediting rates to the guaranteed minimum levels at renewal, its willingness to do so may be limited by competitive pressures. Athene’s funding agreements and other investment-type products, the latter of which is comprised of immediate annuities without significant mortality risk (including pension group annuities without life contingencies) and assumed endowments without significant mortality risks, provide little to no discretionary ability to change the rates of interest that determine the amounts payable to the respective policyholder or institution.

Previous wording

As of September 30, 2024, approximately 39% 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 61% 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 March 31, 2025, 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 2024 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

Other income (losses), net includes gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities, remeasurement of the tax receivable agreement liability and other miscellaneous non-operating income and expenses.

Current wording

Other income (losses), net includes interest income, gains (losses) arising from the remeasurement of foreign currency denominated assets and liabilities, remeasurement of the tax receivable agreement liability and other miscellaneous non-operating income and expenses.

Previous wording

Investment related gains (losses) primarily consist of (i) realized gains and losses on sales of investments, (ii) unrealized gains or losses relating to identified risks within AFS securities in fair value hedging relationships, (iii) gains and losses on trading securities, (iv) gains and losses on equity securities, (v) changes in the fair value of the embedded derivatives and derivatives not designated as a hedge, (vi) changes in the fair value of mortgage loan assets and (vii) changes in the provision for credit losses.

Current wording

Investment related gains (losses) primarily consist of (i) realized gains and losses on sales of investments, (ii) unrealized gains or losses relating to identified risks within AFS securities in fair value hedging relationships, (iii) gains and losses on trading securities, (iv) gains and losses on equity securities, (v) changes in the fair value of the embedded derivatives and derivatives not designated as a hedge, (vi) changes in the fair value of mortgage loan assets, (vii) foreign exchange gains and losses and (viii) changes in the provision for credit losses.

Previous wording

Universal life-type policies and investment contracts include traditional deferred annuities, indexed annuities consisting of fixed indexed and index-linked variable annuities in the accumulation phase, funding agreements, immediate annuities without significant mortality risk (which include pension group annuities without life contingencies), universal life insurance, and other investment contracts inclusive of assumed endowments without significant mortality risk. Liabilities for traditional deferred annuities, indexed annuities, funding agreements and universal life insurance are carried at the account balances without reduction for potential surrender or withdrawal charges, except for a block of universal life business ceded to Global Atlantic which is carried at fair value. Fixed indexed annuity, index-linked variable annuity and indexed universal life insurance contracts contain an embedded derivative. Benefit reserves for these contracts are reported as the sum of the fair value of the embedded derivative and the host (or guaranteed) component of the contracts. Liabilities for immediate annuities without significant mortality risk are calculated as the present value of future liability cash flows and policy maintenance expenses discounted at contractual interest rates. Certain contracts are offered with additional contract features that meet the definition of a market risk benefit. See “—Market risk benefits remeasurement (gains) losses” below for further information.

Current wording

Universal life-type policies and investment contracts include traditional deferred annuities; indexed annuities consisting of fixed indexed, index-linked variable annuities in the accumulation phase, and assumed indexed universal life without significant mortality risk; funding agreements; immediate annuities without significant mortality risk (which include pension group annuities without life contingencies); universal life insurance; and other investment contracts inclusive of assumed endowments without significant mortality risk. Liabilities for traditional deferred annuities, indexed annuities, funding agreements and universal life insurance are carried at the account balances without reduction for potential surrender or withdrawal charges, except for a block of universal life business ceded to Global Atlantic Financial Group Limited (together with its subsidiaries, “Global Atlantic”), which is carried at fair value. Fixed indexed annuity, index-linked variable annuity and indexed universal life insurance contracts contain an embedded derivative. Benefit reserves for these contracts are reported as the sum of the fair value of the embedded derivative and the host (or guaranteed) component of the contracts. The fair value of the embedded derivatives represents the present value of cash flows attributable to the indexed strategies. The host contract is established at contract inception as the initial account value less the initial fair value of the embedded derivative and accreted over the policy’s life. Liabilities for immediate annuities without significant mortality risk are calculated as the present value of future liability cash flows and policy maintenance expenses discounted at contractual interest rates. Certain contracts are offered with additional contract features that meet the definition of a market risk benefit. See “—Market risk benefits remeasurement (gains) losses” below for further information.

Previous wording

Athene issues contracts classified as long-duration, which include term and whole life, accident and health, disability, and deferred and immediate annuities with life contingencies (which include pension group annuities with life contingencies).

Current wording

Athene issues or reinsures contracts classified as long-duration, which include term and whole life, accident and health, disability, and deferred and immediate annuities with life contingencies (which include pension group annuities with life contingencies).

Previous wording

Changes in the value of the liability for nonparticipating long-duration contracts due to changes in the discount rate are recognized as a component of OCI on the condensed consolidated statements of comprehensive income (loss). Changes in the liability for the remeasurement gains or losses and all other changes in the liability are recorded in future policy and other policy benefits on the condensed consolidated statements of operations.

Current wording

Changes in the value of the liability for nonparticipating long-duration contracts due to changes in the discount rate are recognized as a component of OCI on the condensed consolidated statements of comprehensive income (loss). Changes in the liability for remeasurement gains or losses and all other changes in the liability are recorded in future policy and other policy benefits on the condensed consolidated statements of operations.

Previous wording

Future policy benefits include liabilities for no-lapse guarantees on universal life insurance and fixed indexed universal life insurance. Each reporting period, expected excess benefits and assessments are updated with actual excess benefits and assessments and the liability balance is adjusted due to the OCI effects of unrealized investment gains and losses on AFS securities.

Current wording

Future policy benefits include liabilities for no-lapse guarantees on universal life insurance and fixed indexed universal life insurance. Each reporting period, expected excess benefits and assessments are updated with actual excess benefits and assessments. Athene also periodically revises the key assumptions used in the calculation of the liabilities that result in revisions to the expected excess benefits and assessments. The effects of changes in assumptions are recorded as unlocking in the period in which the changes are made. Changes in the liabilities associated with no-lapse guarantees are recorded in future policy and other policy benefits on the condensed consolidated statements of operations.

Previous wording

Adjusted Net Income (“ANI”) represents Segment Income less HoldCo interest and other financing costs and estimated income taxes. For purposes of calculating the Adjusted Net Income tax rate, Segment Income is reduced by HoldCo interest and financing costs. Income taxes on FRE and PII represents the total current corporate, local, and non-U.S. taxes as well as the current payable under Apollo’s tax receivable agreement. Income taxes on FRE and PII excludes the impacts of deferred taxes and the remeasurement of the tax receivable agreement, which arise from changes in estimated future tax rates. Certain assumptions and methodologies that impact the implied FRE and PII income tax provision are similar to those used under U.S. GAAP. Specifically, certain deductions considered in the income tax provision under U.S. GAAP relating to transaction related charges, equity-based compensation, and tax deductible interest expense are taken into account for the implied tax provision. Income Taxes on SRE represent the total current and deferred tax expense or benefit on income before taxes adjusted to eliminate the impact of the tax expense or benefit associated with the non-operating adjustments. Management believes the methodologies used to compute income taxes on FRE, SRE, and PII are meaningful to each segment and increases comparability of income taxes between periods.

Current wording

Adjusted Net Income (“ANI”) represents Segment Income less HoldCo interest and other financing costs and estimated income taxes. For purposes of calculating the Adjusted Net Income tax rate, Segment Income is reduced by HoldCo interest and financing costs. Income taxes on FRE and PII represents the total current corporate, local, and non-U.S. taxes as well as the current payable under Apollo’s tax receivable agreement. Income taxes on FRE and PII excludes the impacts of deferred taxes and the remeasurement of the tax receivable agreement, which arise from changes in estimated future tax rates. Certain assumptions and methodologies that impact the implied FRE and PII income tax provision are similar to those used under U.S. GAAP. Specifically, certain deductions considered in the income tax provision under U.S. GAAP relating to transaction-related costs, equity-based compensation, charitable contributions and tax deductible interest expense are taken into account for the implied tax provision. Income Taxes on SRE represent the total current and deferred tax expense or benefit on income before taxes adjusted to eliminate the impact of the tax expense or benefit associated with the non-operating adjustments. Management believes the methodologies used to compute income taxes on FRE, SRE, and PII are meaningful to each segment and increases comparability of income taxes between periods.

Previous wording

Fee Related Earnings, or “FRE”, is a component of Segment Income that is used as a supplemental performance measure to assess the performance of the Asset Management segment.

Current wording

Fee Related Earnings, or “FRE”, is a component of Segment Income that is used to assess the performance of the Asset Management segment.

Previous wording

Spread Related Earnings, or “SRE”, is a component of Segment Income that is used as a supplemental performance measure to assess the performance of the Retirement Services segment, excluding certain market volatility, which consists of investment gains (losses), net of offsets and non-operating change in insurance liabilities and related derivatives, and certain expenses related to integration, restructuring, equity-based compensation, and other expenses.

Current wording

Spread Related Earnings, or “SRE”, is a component of Segment Income that is used to assess the performance of the Retirement Services segment, excluding certain market volatility, which consists of investment gains (losses), net of offsets and non-operating change in insurance liabilities and related derivatives, and certain expenses related to integration, restructuring, equity-based compensation, and other expenses.

Previous wording

Principal Investing Income, or “PII”, is a component of Segment Income that is used as a supplemental performance measure to assess the performance of the Principal Investing segment.

Current wording

Principal Investing Income, or “PII”, is a component of Segment Income that is used to assess the performance of the Principal Investing segment.

Previous wording

In managing its business, Athene analyzes net invested assets, which does not correspond to total Athene investments, including investments in related parties, as disclosed in the condensed consolidated statements of financial condition and notes thereto. Net invested assets represent the investments that directly back Athene’s net reserve liabilities as well as surplus assets. Net invested assets is used in the computation of net investment earned rate, which is used to analyze the profitability of Athene’s investment portfolio. Net invested assets include (a) total investments on the condensed consolidated statements of financial condition with AFS securities, trading securities and mortgage loans at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) VIE assets, liabilities and non-controlling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash positions. Athene includes the underlying investments supporting its assumed funds withheld and modco agreements and excludes the underlying investments related to ceded reinsurance transactions in its net invested assets calculation in order to match the assets with the income received. Athene believes the adjustments for reinsurance provide a view of the assets for which it has economic exposure. Net invested assets include Athene’s proportionate share of ACRA investments, based on its economic ownership, but do not include the proportionate share of investments associated with the non-controlling interests. Net invested assets are averaged over the number of quarters in the relevant period to compute a net investment earned rate for such period. While Athene believes net invested assets is a meaningful financial metric and enhances the understanding of the underlying drivers of its investment portfolio, it should not be used as a substitute for Athene’s total investments, including related parties, presented under U.S. GAAP.

Current wording

In managing its business, Athene analyzes net invested assets, which does not correspond to total Athene investments, including investments in related parties, as disclosed in the condensed consolidated statements of financial condition and notes thereto. Net invested assets represent the investments that directly back Athene’s net reserve liabilities as well as surplus assets. Net invested assets is used in the computation of net investment earned rate, which is used to analyze the profitability of Athene’s investment portfolio. Net invested assets include (a) total investments on the condensed consolidated statements of financial condition with AFS securities, trading securities and mortgage loans at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and non-controlling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash positions. Athene includes the underlying investments supporting its assumed funds withheld and modco agreements and excludes the underlying investments related to ceded reinsurance transactions in its net invested assets calculation in order to match the assets with the income received. Athene believes the adjustments for reinsurance provide a view of the assets for which it has economic exposure. Net invested assets include Athene’s proportionate share of ACRA investments, based on its economic ownership, but do not include the proportionate share of investments associated with the non-controlling interests. Net invested assets are averaged over the number of quarters in the relevant period to compute a net investment earned rate for such period. While Athene believes net invested assets is a meaningful financial metric and enhances the understanding of the underlying drivers of its investment portfolio, it should not be used as a substitute for Athene’s total investments, including related parties, presented under U.S. GAAP.

Previous wording

Below is a discussion of our condensed consolidated statements of operations for the three and nine months ended September 30, 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 months ended March 31, 2025 and 2024. For additional analysis of the factors that affected our results at the segment level, see “—Segment Analysis” below:

Previous wording

Advisory and transaction fees increased by $135 million to $617 million in 2024 from $482 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 and (iii) business services sectors.

Current wording

Advisory and transaction fees, net increased by $26 million to $195 million in 2025 from $169 million in 2024. Advisory and transaction fees earned during 2025 were primarily attributable to advisory and transaction fees earned from companies in the (i) manufacturing and industrial and (ii) financial services sectors.

Previous wording

Investment income moderated in 2024, increasing $28 million to $910 million compared to $882 million in 2023. The increase in investment income in 2024 was driven by an increase in performance allocations of $84 million, partially offset by a decrease in principal investment income of $56 million.

Current wording

Investment income decreased $99 million in 2025 to $303 million compared to $402 million in 2024. The decrease in investment income of $99 million in 2025 was primarily driven by decreases in performance allocations of $98 million.

Previous wording

Significant drivers for performance allocations in 2024 were performance allocations primarily earned from Fund IX, HVF II, Credit Strategies, Redding Ridge Holdings, Fund X and Freedom Parent Holdings of $74 million, $49 million, $47 million, $31 million, $28 million and $21 million, respectively, partially offset by performance allocation losses from Fund VIII of $103 million.

Current wording

Significant drivers for performance allocations in 2025 were performance allocations primarily earned from Fund X, HVF II, Fund IX, Redding Ridge Holdings and Credit Strategies of $83 million, $34 million, $31 million, $22 million and $21 million, respectively, partially offset by performance allocation losses from Financial Credit Investment II, L.P. (“FCI II”) of $17 million.

Previous wording

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

Current wording

The performance allocations earned from Fund X in 2025 were primarily driven by the appreciation and realization of the fund’s investments in the (i) consumer and retail, (ii) chemicals and (iii) manufacturing and industrial sectors.

Previous wording

The performance allocations earned from HVF II in 2024 were primarily driven by appreciation of the fund’s investments in private portfolio companies in the (i) consumer and retail, (ii) consumer services and (iii) manufacturing and industrial sectors. Moreover, the fund achieved its annualized hurdle rate in 2024.

Current wording

The performance allocations earned from HVF II in 2025 were primarily driven by the appreciation and realization of the fund’s investments in private portfolio companies in the (i) consumer and retail, (ii) consumer services and (iii) media, telecom and technology sectors.

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 (i) manufacturing and industrial and (ii) consumer services sectors, and the fund’s distressed investments.

Current wording

The performance allocations earned from Fund IX in 2025 were primarily driven by the appreciation and realization of the fund’s investments in the (i) manufacturing and industrial and (ii) leisure sectors, and the fund’s distressed investments.

Previous wording

The performance allocations earned from Redding Ridge Holdings in 2024 were primarily driven by existing and new CLO issuances, CLO contract acquisitions, new consulting contracts and the accumulation of warehouse assets.

Current wording

The performance allocations earned from Redding Ridge Holdings in 2025 were primarily driven by existing and new CLO issuances, resets, accumulation of warehouse assets, new consulting contracts and the net income generated by the vehicle’s strategic investments.

Previous wording

Total compensation and benefits were $1,876 million in 2024, an increase of $133 million from $1,743 million in 2023, primarily due to increases in salary, bonus and benefits and equity-based compensation of $85 million and $63 million, respectively. The increase in salary, bonus and benefits of $85 million was primarily driven by the growth in revenues and increased headcount in 2024. 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 $745 million in 2025, an increase of $78 million from $667 million in 2024, primarily due to increases in profit sharing expense and salary, bonus and benefits of $59 million and $57 million, respectively, partially offset by a decrease in equity-based compensation of $38 million. The increase in salary, bonus and benefits of $57 million was primarily driven by increased headcount in 2025, whereas the decrease in equity-based compensation of $38 million was primarily due to a decrease in amortization of certain RSUs. 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 then Co-Presidents of AAM, 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. 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.

Previous wording

General, administrative and other expenses were $326 million in 2024, an increase of $106 million from $220 million in 2023. The increase in 2024 was primarily driven by $72 million related to equity interests issued by a subsidiary as part of a restructuring of such entity. Additionally, increases in professional fees, higher travel and entertainment expenses, placement fees, and higher depreciation and amortization also contributed to the higher general, administrative and other expenses in 2024.

Current wording

General, administrative and other expenses were $308 million in 2025, an increase of $68 million from $240 million in 2024. The increase in 2025 was primarily driven by increases in professional fees, depreciation and amortization and higher placement fees.

Previous wording

Other income (loss) was $171 million in 2024, a decrease of $12 million from $183 million in 2023. This decrease was driven by decreases in other income (loss), net and net gains (losses) from investment activities of consolidated variable interest entities of $34 million and $25 million, respectively, partially offset by an increase in net gains (losses) from investment activities of $47 million.

Current wording

Other income (loss) was a loss of $25 million in 2025, a decrease of $63 million from income of $38 million in 2024. This decrease was primarily driven by decreases in other income (loss), net and net gains (losses) from investment activities of $192 million and $57 million, respectively, offset by an increase in net gains (losses) from investment activities of consolidated variable interest entities of $186 million.

Previous wording

Retirement Services revenues were $17.8 billion in 2024, a decrease of $1.0 billion from $18.8 billion in 2023. The decrease was primarily driven by a decrease in premiums and a decrease in other revenues, partially offset by an increase in investment related gains (losses), an increase in net investment income and an increase in revenues of consolidated VIEs.

Current wording

Retirement Services revenues were $4.5 billion in 2025, a decrease of $1.5 billion from $6.0 billion in 2024. The decrease was primarily driven by a decrease in investment related gains (losses), partially offset by an increase in net investment income and an increase in revenues of consolidated VIEs.

Previous wording

Investment related gains (losses) were $1.5 billion in 2024, an increase of $4.2 billion from $(2.6) billion in 2023, primarily due to the favorable change in fair value of mortgage loans, FIA hedging derivatives, reinsurance assets and trading securities, partially offset by unfavorable net foreign exchange impacts. The change in fair value of mortgage loans increased $1.7 billion, the change in fair value of reinsurance assets increased$1.5 billion and the change in fair value of trading securities increased $144 million, primarily driven by a decrease in U.S. Treasury rates in 2024 compared to an increase in 2023. The change in fair value of FIA hedging derivatives increased$1.6 billion, primarily driven by favorable performance of the equity indices upon which Athene’s call options are based. The largest percentage of Athene’s call options are based on the S&P 500 index, which increased 5.5% in 2024, compared to a decrease of 3.6% in 2023. The unfavorable net foreign exchange impacts were primarily related to the weakening of the U.S. dollar against foreign currencies in 2024 compared to 2023.

Current wording

Investment related gains (losses) were losses of $828 million in 2025, a decrease of $2.5 billion from gains of $1.7 billion in 2024, primarily due to the unfavorable change in fair value of FIA hedging derivatives, unfavorable net foreign exchange impactsand an increase in realized losses on AFS securities, partially offset by thefavorable change in fair value of mortgage loans and reinsurance assets. The change in fair value of FIA hedging derivatives decreased $2.7 billion, primarily driven by the unfavorable performance of the equity indices upon which Athene’s call options are based. The largest percentage of Athene’s call options are based on the S&P 500 Index, which decreased 4.6% in 2025, compared to an increase of 10.2% in 2024. The unfavorable net foreign exchange impacts were primarily related to the weakening of the U.S. dollar against foreign currencies in 2025 compared to 2024. The change in fair value of mortgage loans increased $952 million and the change in fair value of reinsurance assets increased $233 million, primarily driven by a decrease in U.S. Treasury rates in 2025 compared to an increase in 2024.