AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of a of the members of Athene Group (Athene). Athene, which is focused on the fixed indexed and fixed annuity market segments, is the consolidation of the organizations U.S. operating companies, along with its affiliated reinsurance companies domiciled in Bermuda. Additionally, AM Best has affirmed the Long-Term ICR of bbb, the existing Long-Term Issue Credit Ratings (Long-Term IRs) and the indicative Long-Term IRs of Athene Holding Ltd. (NYSE:ATH) (Bermuda). Athene Holding operates as the holding company for the U.S. and Bermuda operations. The outlook of the FSR remains stable, while the outlook of the Long-Term ICRs remain positive.
The ratings reflect Athenes balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The positive outlook of the Long-Term ICR reflects continued enhancements to Athenes business profile through additional distribution channels in its retail markets, and expansion of its pension risk transfer business in the United States and United Kingdom in recent years. Furthermore, the establishment of the Athene Co-Invest Reinsurance Affiliates (ACRA) provides on-demand access to third-party capital to support new business growth and is expected to be accretive to earnings through management fees.
AM Best views Athenes risk-adjusted capitalization as very strong and supported by favorable financial flexibility. The company has demonstrated its ability to access capital markets and maintains additional access to capital and liquidity through a revolving credit facility and Federal Home Loan Bank borrowing capacity, as well as uncalled capital commitments from ACRA investors. Financial leverage metrics have increased with recent senior unsecured notes and preferred equity issuances in recent periods, but remain within guidelines for the current ratings. However, AM Best notes that Athene holds elevated allocations to more complex and less-liquid investments, which could be impacted materially under the current stressed market conditions.
The expansion of Athenes business profile has led to consistently strong growth in sales across the companys retail fixed indexed annuities and pension risk transfer markets. AM Best notes the transactional nature of the companys block reinsurance business creates notable volatility in annual deposits; however, the execution of several flow reinsurance transactions in recent years is expected to support incremental growth going forward. The company also has sustained favorable earning spreads and operating profitability, despite the challenges related to the persistent low interest rate environment and high competitive pressures.
The FSR of A (Excellent) has been affirmed with a stable outlook, and the Long-Term ICRs of a have been affirmed with positive outlooks for the following members of Athene Group:
- Athene Annuity & Life Assurance Company
- Athene Annuity & Life Assurance Company of New York
- Athene Annuity and Life Company
- Athene Life Insurance Company of New York
- Athene Life Re Ltd.
- Athene Life Re International Ltd.
- Athene Co-Invest Reinsurance Affiliate International Ltd.
- Athene Co-Invest Reinsurance Affiliate 1A Ltd.
- Athene Co-Invest Reinsurance Affiliate 1B Ltd.
The following Long-Term IRs have been affirmed with positive outlooks:
Athene Holding Ltd. –bbb on $1.0 billion 4.125% senior unsecured notes, due 2028 –bbb on $500 million 6.150% senior unsecured notes due 2030 –bb+ on $750 million, 6.35%, perpetual, non-cumulative preferred stock, Series A –bb+ on $300 million, 5.625%, perpetual, non-cumulative preferred stock, Series B
The following indicative Long-Term IRs have been affirmed with positive outlooks:
Athene Holding Ltd. — bbb on senior unsecured debt — bbb- on subordinated debt — bb+ on junior subordinated debt — bb+ on preferred stock
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