What do you want to know
- Apollo now controls Athene, a major life and annuity issuer and reinsurer.
- The CEO sees Athene’s retail annuity operations doing well.
- He says the current rules now limit the ability of many other players to help stabilize financial markets.
Capital from Athene Holding helped Apollo Global Management stabilize the UK government bond market in October, company executives told equity analysts on Wednesday.
“passive investing» strategies during a period of intense market volatility.
Apollo came away with a portfolio of AAA and AA rated securities secured loan obligations with an average return above 8%, Kleinman said.
“There was nothing inherently wrong with the CLO slices we were buying,” Kleinman added. “They turned out to be the most liquid assets that entities could liquidate to cover their leverage and margin issues.”
What this means
The assets of some of the life insurers that support your clients’ life and annuity guarantees can also help in efforts to keep investment markets moving.
Kleinman said Athene has done well as a source of stable capital for Apollo, and the popularity of fixed-rate annuities has helped Athene’s retail annuity channel attract $6 billion in capital.
“The duration and rigidity of Athene’s funding is highly predictable,” he said.
Marc Rowan, CEO of Apollo, attributed the increase in fixed annuity sales to rising interest rates.
“Consumers prefer guaranteed returns of 4% and 5%, compared to guaranteed returns of 2% and 3%,” he observed.
Rowan argued Apollo was able to make significant asset purchases in the third quarter and help stabilize the UK government bond market as global regulators’ response to the 2007- 2009 hurt the supply of market stabilizing capital.
“We are acting as if low interest rates and excess liquidity are the norm,” Rowan said. “They’re not. Certainly not over my nearly 40-year career, and not over any type of long-term investment cycle. But we have a whole generation of investors and investment analysts who really grew up just seeing the market go one way, and we all know now that it goes both ways.
Apollo offers alternative assets that can help protect investors from bad markets for blue-chip stocks, high-quality bonds and other bread-and-butter asset classes, and Apollo has also tried to keep places large pools of low-yielding liquid assets, to prepare for times when other players need to sell good assets quickly to raise cash, Rowan said.
“Dry powder is now over $50 billion,” he noted. “We excel in this type of market. We lean.