Athene Holding Ltd. · NYSE:ATH/PA
Athene — Investor Presentation (July 2024)
35 slides from Athene's investor presentation, Jul 3, 2024
Slide 1: Perspectives on Commercial Real Estate July 2024 Update
Perspectives on Commercial Real Estate July 2024 Update
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security of Athene Holding Ltd. (“Athene”). This presentation is not intended to constitute a solicitation of any insurance policy or contract or application therefore. Unless the context r
Slide 3: Key Takeaways
Key Takeaways Note: Metrics as of December 31, 2023. 1. Represents historical CML impairments and changes in mortgage loan specific reserves in relation to average invested assets of regulated entities in the U.S. and Bermuda. 2. AA/A+ rated companies include CRBG, LNC, MET, PFG and PRU. 3 GENERATIN
Slide 4: Industry Considerations
Industry Considerations
Slide 5: Commercial Real Estate Always Has Been an Integral Asset Class for Insurers
CML 11.5% CMBS 3.7% RE Equity 1.6% Other 0.7% RMBS 3.9% RML 1.5% Commercial Real Estate Always Has Been an Integral Asset Class for Insurers Source: SNL Financial. 1. Percentage of total general account assets for all statutory entities, as of December 31, 2023. Long Dated Low Historical Losses Down
Slide 6: Not All CRE is Created Equal – It's Better to Own Debt, Not Equity
Not All CRE is Created Equal – It’s Better to Own Debt, Not Equity 6 Debt • 1st Lien / Senior • Mezzanine Equity Higher Risk Lower Risk Capital Structure Subsector Industrial Multifamily Hotel Retail Office CRE
Slide 7: When CRE 'Cap Rates' Rise, Equity is Impaired Before Debt
When CRE ‘Cap Rates’ Rise, Equity is Impaired Before Debt Note: Capitalization rates (‘cap rates’) reflect the rate of return investors can expect to earn on CRE investments (Cap Rate = Net Operating Income / Property Value). Can also be thought of as the inverse of valuation multiples. Illustration
Slide 8: Athene Has De Minimis Exposure to CRE Equity
0.2% 0.6% 1.0% 2.3% 1.0% 0.1% PRU EQH CRBG MET Average Athene 0.1% 0.5% 0.5% 1.0% 1.2% Athene Variable Annuity Fixed Annuity AA/A+ Diversified Life Athene Has De Minimis Exposure to CRE Equity Note: CRE equity includes affiliated and unaffiliated real estate assets held by U.S.-based insurance subsi
Slide 9: Commercial Real Estate Market is Diversified by Property Type
24% 24% 20% 13% 8% 8% 3% 9 Commercial Real Estate Market is Diversified by Property Type Commercial real estate market size as of December 2023. Sources: BEA, Haver Analytics, Morgan Stanley Research. Office: $3.1T Multifamily: $3.0T Retail: $2.5T Healthcare: $1.7T Lodging: $1.0T Warehouses: $1.0T M
Slide 10: Pricing Has Largely Reset, with Values Well Below Recent Peaks
117 93 86 104 63 132 98 174 144 104 98 50 75 100 125 150 175 2019 2020 2021 2022 2023 2024 All Retail Office Multifamily Industrial Hotel 100 Pricing Has Largely Reset, with Values Well Below Recent Peaks Data as of May 1, 2024. Source: Green Street Advisors. CPPI values indexed to 100 as of January
Slide 11: Each Commercial Real Estate Subsector Has a Different Risk Profile
Each Commercial Real Estate Subsector Has a Different Risk Profile… 1. As of December 31, 2023; Morgan Stanley Research, BEA, Haver Analytics. Multifamily includes manufactured homes, Healthcare included in Industrial. 11 Demand Occupancy NOI Growth % of CRE Market1 21% 8% 27% 20% 24% HOTELINDUSTRIA
Slide 12: Varied Expectations for Net Operating Income Growth
80 100 120 140 160 2023 2024 2025 2026 2027 2028 12 Data as of December 31, 2023. Source: Green Street Advisors. Net operating income growth forecast based on Green Street’s model that incorporates key demand and supply drivers such as employment, office-use employment, real GDP, retail sales, e-com
Slide 13: Debt is Well Protected Even With No Net Operating Income Growth
Debt is Well Protected Even With No Net Operating Income Growth 13 0% Net Operating Income (NOI) Growth Annually for 3 Years 5% NOI Growth Annually for 3 Years 10% NOI Growth Annually for 3 Years Impairments Across Various Cap Rate Expansion Scenarios Cap Rate: 6.0% Debt (0 to 60% LTV) Equity (40% -
Slide 14: CRE Debt Benefits From Significant Protection Via Loan Structure
Credit enhancement from equity Amortization Structural protections that trap cash to support debt in periods of stress Reserves set from cash flow to cover building operating costs CRE Debt Benefits From Significant Protection Via Loan Structure… 14
Slide 15: Post Pricing Reset, New Loans Today Have Greater Downside Protection
15 …And Post Pricing Reset, New Loans Today Have Greater Downside Protection All figures as of February 2024. Sources: Apollo Analysts and Green Street. Represents the views and opinions of Apollo Analysts. Subject to change at any time without notice. Illustrative decrease in price, based on the Gr
Slide 16: Athene's CML Portfolio
Athene’s CML Portfolio
Slide 17: Athene's CRE Investments Are Virtually All Debt
8.5% 12.0% 12.5% 13.4% 11.9% 0.5% 1.2% 1.0% 0.5% 0.1% 9.0% 13.1% 13.5% 13.9% 12.0% Fixed Annuity Diversified Life AA/A+ Variable Annuity Athene CRE Debt CRE Equity 9.9% 11.2% 14.1% 14.9% 12.5% 11.9% 0.2% 2.3% 0.6% 1.0% 1.0% 0.1% 10.0% 13.5% 14.7% 15.9% 13.5% 12.0% PRU MET EQH CRBG Average Athene CRE
Slide 18: Underwritten to Conservative LTVs Relative to the Industry
69% 65% 61% 62% 64% 64% 65% 66% 66% 64% 62% 62% 63% 60% 59% 57% 56% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 …Underwritten to Conservative LTVs Relative to the Industry Source: Real Capital Analytics. Note: Athene’s current CML portfolio presented net of t
Slide 19: Athene Has a Well-Constructed CML Portfolio
Athene Has a Well-Constructed CML Portfolio Residential 35% Office 21% Industrial 11% Hotel 9% Retail 8% Healthcare/Lab 3% Other 13% Note: Athene data presented net of the noncontrolling interests in ACRA as of December 31, 2023. 1. DSCR is calculated based on interest rate cap. 2. LTV figures based
Slide 20: Portfolio Quality Improved Post Pandemic
Portfolio Quality Improved Post Pandemic Note: Athene data presented net of the noncontrolling interests in ACRA. 20 $16B or 59% of Athene’s CMLs were originated after the onset of the COVID-19 Pandemic % of Portfolio Designated CM 1 & 2 Office Sector as % of Portfolio Residential Sector as % of Por
Slide 21: Newer Vintage Loans with Several Years to Maturity
Athene Origination Volume ($bn) Athene’s CML Portfolio Consists of Newer Vintage Loans with Several Years to Maturity Note: Origination Volumes includes loans currently held within Athene’s investment portfolio as of December 31, 2023. Athene data presented net of the noncontrolling interests in ACR
Slide 22: Athene's CMLs Have Been Very Resilient
Athene’s CMLs Have Been Very Resilient 1. AA/A+ rated companies include MET, PRU, CRBG and EQH. Represents U.S. statutory impairments adjusted to include changes in mortgage loan specific reserves per SNL Financial. 2. Athene’s statutory fixed income impairments adjusted to include changes in mortga
Slide 23: Athene's CML Portfolio Performs Well in Stress Testing
4Q’23 Portfolio Allocation BASELINE RECESSION SCENARIO DEEP RECESSION SCENARIO STAGFLATION SCENARIO Losses Impact ($B) Losses % of Net Invested Assets Losses Impact ($B) Losses % of Net Invested Assets Losses Impact ($B) Losses % of Net Invested Assets Corporate & Gov’t 42% ($0.3) (0.4%) ($0.7) (0.7
Slide 24: Like Corporate Bonds, Commercial Mortgage Loans Have a Ratings Framework
Like Corporate Bonds, Commercial Mortgage Loans Have a Ratings Framework 24 • ‘CM’ designations (1-7) are used by insurance companies to calculate risk-based capital (RBC) charges • Unlike corporate bond designations, which are based on NRSRO ratings, CM designations are formulaic and driven by LTV
Slide 25: Highly Rated CML Portfolio; 'CM3' Designations Driven by Idiosyncratic Factors
Highly Rated CML Portfolio; ‘CM3’ Designations Driven by Idiosyncratic Factors Note: Athene data presented net of the noncontrolling interests in ACRA as of December 31, 2023. 1. Weighted average LTV figures based on original appraised values at close or most recent appraisal. 25 • Athene’s CML port
Slide 26: Athene is Well Positioned to Invest in the Higher Rate Environment
1.3% 3.0% 4.6%+1.7% +0.7% +1.7% 3.0% 3.7% 6.3% 2021 2022 2023 Avg UST by WAL Implied Athene Spread Athene is Well Positioned to Invest in the Higher Rate Environment Note: Includes transactions closed to date and in closing. Coupons of fixed-rate deals in closing shown at locked rates (as applicable
Slide 27: Athene's CML Office Investments
Athene’s CML Office Investments
Slide 28: Athene's CML Office Investments are 100% Debt
Class A CBD 76% Class B CBD 11% Suburban 10% Medical Office 3% Owner Occupied <1% Athene’s CML Office Investments are 100% Debt Note: Athene data presented net of the noncontrolling interests in ACRA as of December 31, 2023. 1. DSCR is calculated based on interest rate cap. 2. LTV figures based on o
Slide 29: Athene's Office CML Composition
Los Angeles 21% SF & Silicon Valley 18% Manhattan 17% South Excl. FL 14% Northeast Excl. Manhattan 13% UK/Europe 10% West Excl. LA, SF & SV 5% Midwest 2% 59% LTV Mortgage Fixed 51% Mortgage Floating 25% Mezzanine Fixed 17% Mezzanine Floating 7% Athene’s Office CML Composition Note: Athene data prese
Slide 30: Below Average Concentration of Investments in the Office Sector
4.4% 3.7% 3.3% 2.7% 2.5% 1.9% Peer Average 3.1% MET PFG CRBG LNC ATH PRU 38% 25% 22% 21% 20% 16% Peer Average 25.3% MET CRBG PFG ATH LNC PRU Athene Has Below Average Concentration of Investments in the Office Sector Note: All metrics as of December 31, 2023. 1. Represents Office CMLs as a percentage
Slide 31: Office Loan Volumes and Future Borrower Maturities
$272 $1,076 $1,096 $915 $1,193 $820 $0 2017 2018 2019 2020 2021 2022 2023 Office Loan Volumes and Future Borrower Maturities Note: Charts reflect Athene’s current office portfolio net of the noncontrolling interests in ACRA as of December 31, 2023. 1. Includes loans originated in 2017 and earlier. 2
Slide 32: Athene's CML Multifamily Investments
Athene’s CML Multifamily Investments
Slide 33: Multifamily Investments are Well Diversified with Small Loan Size
Athene’s CML Multifamily Investments are Well Diversified with Small Loan Size Note: Data presented net of the noncontrolling interests in ACRA as of December 31, 2023. 1. Mezzanine positions account for ~0.1% of Athene’s Multifamily portfolio. 2. DSCR is calculated based on interest rate cap. 3. LT
Slide 34: Athene's Multifamily CML Composition
Mortgage Fixed 72% Mortgage Floating 28% Mezzanine Fixed <1% Mezzanine Floating <1% Athene’s Multifamily CML Composition Note: Data presented net of the noncontrolling interests in ACRA as of December 31, 2023. 1. Mezzanine positions account for ~0.1% of Athene’s Multifamily portfolio. 34 ~100% of M
Slide 35: Non-GAAP Definitions & Reconciliations
Non-GAAP Definitions & Reconciliations 35 Non-GAAP Definitions In addition to our results presented in accordance with US GAAP, we present certain financial information that includes non-GAAP measures. Management believes the use of these non-GAAP measures, together with the relevant US GAAP measure