AM Best Upgrades Issuer Credit Ratings of Athene Holding Ltd. and Its Subsidiaries

Rhea-AI Summary

AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) of Athene Holding Ltd. (NYSE: ATH) from 'bbb' to 'bbb+'. The Long-Term Financial Strength Rating (FSR) remains at A (Excellent), with stable outlooks for both ratings. Athene's strong balance sheet, operating performance, and appropriate risk management led to this upgrade. Its risk-adjusted capitalization is deemed strongest, despite increased financial leverage from recent issuances. The company is also expanding its business profile through new distribution channels and strategic partnerships, enhancing earnings prospects.

Positive

• Upgrade of Long-Term ICR to 'bbb+' from 'bbb'.
• Affirmation of FSR at A (Excellent).
• Very strong balance sheet strength.
• Strong operating performance with favorable earning spreads.
• Expansion in retail markets and pension risk transfer business.

Negative

• Increased financial leverage from recent senior unsecured notes and preferred equity issuances.
• Elevated allocations to complex and less-liquid investments, exposed to adverse market conditions.

AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb”, the existing Long-Term Issue Credit Ratings (Long-Term IRs) and the indicative Long-Term IRs of Athene Holding Ltd. (Athene) (NYSE:ATH) (Bermuda). Concurrently, AM Best has upgraded the Long-Term ICRs to “a+” from “a” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of its insurance subsidiaries. The outlook of the Long-Term ICRs has been revised to stable from positive, while the outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Athene’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.

AM Best views Athene’s consolidated risk-adjusted capitalization as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), and supported by favorable financial flexibility. Athene 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 Athene Co-Invest Reinsurance Affiliates (ACRA) investors. Financial leverage metrics have increased with recent senior unsecured notes and preferred equity issuances, but still 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 adverse market conditions.

Athene has a trend of strong earnings driven by sustained favorable earning spreads and operating profitability, despite the challenges related to the persistent low interest rate environment and high competitive pressures.

Athene’s favorable business profile reflects continued enhancements through additional distribution channels in its retail markets, and expansion of its pension risk transfer business in the United States and United Kingdom, and of its flow reinsurance channel in Japan in recent years. Furthermore, ACRA and the recent fixed annuity reinsurance agreement with Jackson National Life Insurance Company are projected to be accretive to earnings.

The Long-Term ICRs have been upgraded to “a+” from “a” and the FSR of A (Excellent) has been affirmed with stable outlooks for the following members of Athene:

• 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 upgraded with stable outlooks:

Athene Holding Ltd. —
-- to “bbb+” from “bbb” on $1.0 billion 4.125% senior unsecured notes, due 2028
-- to “bbb+” from “bbb” on $500 million 6.150% senior unsecured notes, due 2030
-- to “bbb+” from “bbb” on $500 million 3.50% senior unsecured notes, due 2031
-- to “bbb-” from “bb+” on $750 million, 6.35%, perpetual, non-cumulative preferred stock, Series A
-- to “bbb-” from “bb+” on $300 million, 5.625%, perpetual, non-cumulative preferred stock, Series B
-- to “bbb-” from “bb+” on $600 million, 6.375%, perpetual, non-cumulative preferred stock, Series C
-- to “bbb-” from “bb+” on $575 million, 4.875%, perpetual, non-cumulative preferred stock, Series D

The following indicative Long-Term IRs have been upgraded with stable outlooks:

Athene Holding Ltd. —
-- to “bbb+” from “bbb” on senior unsecured debt
-- to “bbb” from “bbb-” on subordinated debt
-- to “bbb-” from “bb+” on junior subordinated debt
-- to “bbb-” from “bb+” on preferred stock

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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FAQ

What is the recent rating upgrade for Athene Holding Ltd (ATH)?

AM Best upgraded Athene's Long-Term ICR from 'bbb' to 'bbb+' and affirmed its FSR at A (Excellent) with stable outlooks.

How does AM Best view Athene's financial strength?

AM Best assesses Athene's balance sheet strength as very strong, reflecting its strong operating performance and risk management.

What are Athene's recent performance metrics?

Athene has shown strong earnings driven by favorable earning spreads, despite challenges in the low-interest rate environment.

What business expansions has Athene undertaken recently?

Athene has enhanced its business profile through new distribution channels and expansion in its pension risk transfer business in the US, UK, and Japan.

How does increased financial leverage affect Athene's ratings?

While financial leverage metrics have increased, they remain within guidelines for the current ratings, as per AM Best.