Experts Say Apollo’s Athene Acquisition Will Position It for More Deals

Athene has been a leader in both pension risk transfers and annuities.

Apollo Global Management is merging with Athene Holding in an $11 billion stock deal that expands Apollo’s current 27% stake in Athene.

Under the terms of the deal, each outstanding Class A common share of Athene will be exchanged for a fixed ratio of 1.149 shares of Apollo common stock. Apollo says the deal will greatly broaden its distribution channels.

In a statement, Apollo co-founder and incoming CEO Marc Rowan said, “This merger is all about alignment between Apollo and Athene, amongst Apollo’s stockholders and with our limited partners. For Apollo and Athene, we will have total alignment to optimize our strategy and allocate capital efficiently, which will include rapidly scaling our capability to originate attractive risk/reward assets, which are the limiter of growth for both firms—and it further aligns interests with our fund investors, giving us a bigger balance sheet to invest alongside clients in our various fund products.”

Apollo said it expects the deal will more than double its earnings in 2021.

Indeed, Mark Paracer, assistant research director at LIMRA’s Secure Retirement Institute (SRI), tells PLANSPONSOR the deal should add to the work Athene has done in the pension risk transfer (PRT) market.

“Athene is one the leading companies in pension risk transfer sales over the past few years, primarily focused on the large/jumbo end of the market,” Paracer says. “Sales for PRT have nearly doubled in past five years, from $13.6 billion in 2015 to over $25 billion in 2020. The Apollo deal should provide additional capital, allowing it to continue to pursue PRT transactions.”

The deal will also add to the work Athene has done in annuity market, says Todd Giesing, senior director, annuity research at the Secure Retirement Institute.

“In looking at Athene’s annuity business, Athene has been in growth mode while the industry experienced headwinds in 2020,” Giesing says. “Athene experienced an increase of its overall annuity business by 16%, while the industry was down 9% in 2020. This moved Athene to become a top 10 annuity carrier in 2020. It’s our opinion the deal with Apollo will provide efficiencies and a source of capital to continue to grow their individual annuity business in the U.S.”

The transaction is expected to close in January 2022.