AM Best Upgrades Athene Group’s Ratings To A+

June 25, 2024 | 0 Comments

AM Best has upgraded the Financial Strength Rating to A+ [Superior] from A [Excellent] and the Long-Term Issuer Credit Rating to “aa-” [Superior] from “a+” [Excellent] of the members of Athene Group.

The ratings agency said, “Athene is the consolidation of the organization’s U.S. operating companies, along with its affiliated reinsurance companies domiciled in Bermuda. In addition, AM Best has upgraded the Long-Term ICR to “a-” [Excellent] from “bbb+” [Good] of Athene Holding Ltd. [Delaware]. Athene Holding Ltd. operates as the holding company for the U.S. and Bermuda operations.

“Concurrently, AM Best has upgraded the Long-Term Issue Credit Ratings [Long-Term IRs] and the indicative Long-Term IRs of Athene Holding Ltd. [Delaware]. The outlook of these Credit Ratings [ratings] has been revised to stable from positive.

“The 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.

“The rating upgrades reflect a continuing trend of Athene’s improving balance sheet strength. AM Best views Athene’s consolidated risk-adjusted capitalization as strongest, as measured by Best’s Capital Adequacy Ratio [BCAR], supported by favorable financial flexibility, including significant excess liquidity.

“Athene has demonstrated its ability to access capital markets and maintains additional access to capital and liquidity through a liquidity facility, revolving credit facility, Federal Home Loan Bank borrowing capacity and a shelf registration statement, as well as uncalled capital commitments from Athene Co-Invest Reinsurance Affiliates [ACRA] investors, which has been beneficial to Athene’s financial position. The 2022 merger with Apollo Global Management, Inc. is expected to have a longer-term positive impact on Athene’s financial flexibility.

“Financial leverage metrics support Athene’s current ratings. AM Best notes that Athene holds elevated allocations to less-liquid investments, which could be impacted materially under adverse market conditions, though default in its investment portfolio has been low to date.

“Athene has a track record of consistently positive earnings driven by favorable earning spreads and operating profitability, despite the challenges related to competitive pressures.

“Athene’s favorable business profile reflects continued enhancements through additional distribution channels in its retail markets, as well as expansion of its pension risk transfer [PRT] business in the United States, its increased issuances of funding agreements and wider use of its flow reinsurance channel in Japan in recent years. During this time, Athene has demonstrated restraint and pricing discipline. Furthermore, the ACRA structures, and the recent PRT deals are expected to be accretive to earnings and available capital.”

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