Risk Factors Summary
The following is only a summary of the principal risks that could materially and adversely affect our business, financial condition, results of operations and cash flows, which should be read in conjunction with the detailed description of these risks in “Item 1A. Risk Factors.” Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows include, but are not limited to, the following:
• Evolving political, market and economic conditions;
• The variability in our revenues, earnings and cash flow;
• Our ability to expand into new investment strategies, geographic markets and businesses and attract new types of investors;
• Our business initiatives to increase the number and type of products offered to individual investors;
• Our operations in highly competitive industries;
• Our dependence on management’s assumptions and estimates;
• Our dependence on certain key personnel;
• Harm caused by actual or alleged misconduct, unethical behavior and other activities by our current and former employees, directors, or others affiliated with us;
• Our reliance on technology and information systems;
• Artificial intelligence increasing competitive, operational, legal and regulatory risks;
• Investments by us and the funds we manage in illiquid assets;
• Reliance by us and the funds we manage on the financing markets;
• Our reliance on our asset management business;
• Our dependence on our retirement services business;
• Our ability to deal appropriately with conflicts of interest;
• Our ability to comply with the extensive regulation of our businesses;
• Increased regulatory focus on our businesses and legislative or regulatory changes;
• Our exposure to third-party litigation;
• The tax treatment of our structure, which is complex and subject to change;
• The impact of a number of new minimum tax regimes and their implementation; and
• We may be subject to U.S. federal income tax in amounts greater than expected.
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Terms Used in This Report
In this report, references to “Apollo,” “we,” “us,” “our,” and the “Company” refer to Apollo Global Management, Inc. (“AGM”) and its subsidiaries unless the context requires otherwise. References to “AGM common stock” or “common stock” of the Company refer to shares of common stock, par value $0.00001 per share, of AGM and “Mandatory Convertible Preferred Stock” refers to the 6.75% Series A Mandatory Convertible Preferred Stock of AGM.
The use of any defined term in this report to mean more than one entity, person, security or other item collectively is solely for convenience of reference and in no way implies that such entities, persons, securities or other items are one indistinguishable group. For example, notwithstanding the use of the defined terms “Apollo,” “we,” “us,” “our,” and the “Company” in this report to refer to AGM and its subsidiaries, each subsidiary of AGM is a standalone legal entity that is separate and distinct from AGM and any of its other subsidiaries. Any Apollo entity (including any Athene entity) referenced herein is responsible for its own financial, contractual and legal obligations.
Term or Acronym
Definition
AAA
Apollo Aligned Alternatives Aggregator, L.P.
AAA Lux
Apollo Aligned Alternatives Lux Aggregator, L.P.
AAIA
Athene Annuity and Life Company
AAM
Apollo Asset Management, Inc. (f/k/a Apollo Global Management, Inc. prior to the Mergers.)
AARe
Athene Annuity Re Ltd., a Bermuda reinsurance subsidiary
ABS
Asset-backed securities
Accord+
Apollo Accord+ Fund, L.P., together with its parallel funds and alternative investment vehicles
Accord+ II
Apollo Accord+ II Fund, L.P., together with its parallel funds and alternative investment vehicles
Accord I
Apollo Accord Master Fund, L.P., together with its feeder funds
Accord II
Apollo Accord Master Fund II, L.P., together with its feeder funds
Accord III
Apollo Accord Master Fund III, L.P., together with its feeder funds
Accord III B
Apollo Accord Master Fund III B, L.P., together with its feeder funds
Accord IV
Apollo Accord Fund IV, L.P., together with its parallel funds and alternative investment vehicles
Accord V
Apollo Accord Fund V, L.P., together with its parallel funds and alternative investment vehicles
Accord VI
Apollo Accord Fund VI, L.P., together with its parallel funds and alternative investment vehicles
Accord VII
Apollo Accord Fund VII, L.P., together with its parallel funds and alternative investment vehicles
Accord Funds
Accord I, Accord II, Accord III, Accord III B, Accord IV, Accord V and Accord VI
Accord+ Funds
Accord+ and Accord+ II
ACRA
ACRA 1 and ACRA 2
ACRA 1
Athene Co-Invest Reinsurance Affiliate Holding Ltd., together with its subsidiaries
ACRA 2
Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd., together with its subsidiaries
ADCF
Apollo Diversified Credit Fund
ADIP
ADIP I and ADIP II
ADIP I
Apollo/Athene Dedicated Investment Program (A), L.P., together with its parallel funds, a series of funds managed by Apollo including third-party capital that, through ACRA 1, invests alongside Athene in certain investments
ADIP II
Apollo/Athene Dedicated Investment Program II, L.P., a fund managed by Apollo including third-party capital that, through ACRA 2, invests alongside Athene in certain investments
Adjusted Net Income Shares Outstanding, or ANI Shares Outstanding
Consists of total shares of common stock outstanding, RSUs that participate in dividends, and shares of common stock assumed to be issuable upon the conversion of the shares of Mandatory Convertible Preferred Stock
ADREF
Apollo Diversified Real Estate Fund
ADS
Apollo Debt Solutions BDC
AFS
Available-for-sale
AIOF I
Apollo Infra Equity US Fund, L.P. and Apollo Infra Equity International Fund, L.P., including their feeder funds and alternative investment vehicles
AIOF II
Apollo Infrastructure Opportunities Fund II, L.P., together with its parallel funds and alternative investment vehicles
AIOF III
Apollo Infrastructure Opportunities Fund III, L.P., together with its parallel funds and alternative investment vehicles
ALRe
Athene Life Re Ltd., a Bermuda reinsurance subsidiary
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Alternative investments
Alternative investments, including investment funds and certain VIEs, adjusted for reinsurance impacts and to include Athene's proportionate share of ACRA alternative investments based on its economic ownership
AMH
Apollo Management Holdings, L.P., a Delaware limited partnership, that is an indirect subsidiary of AGM
ANRP I
Apollo Natural Resources Partners, L.P., together with its alternative investment vehicles
ANRP II
Apollo Natural Resources Partners II, L.P., together with its alternative investment vehicles
ANRP III
Apollo Natural Resources Partners III, L.P., together with its parallel funds and alternative investment vehicles
AOCI
Accumulated other comprehensive income (loss)
AOG Units
Units of the Apollo Operating Group
Apollo DAF
The donor-advised fund established by Apollo
Apollo funds, our funds and references to the funds we manage
The funds (including the parallel funds and alternative investment vehicles of such funds), partnerships, accounts, including strategic investment accounts or “SIAs,” alternative asset companies and other entities for which subsidiaries of Apollo provide investment management or advisory services.
Apollo Operating Group
(i) The entities through which we currently operate our asset management business and (ii) one or more entities formed for the purpose of, among other activities, holding certain of our gains or losses on our principal investments in the funds, which we refer to as our “principal investments.”
Apollo TRA
The tax receivable agreement entered into by and among APO Corp., the Former Managing Partners, the Contributing Partners, and other parties thereto
ARI
Apollo Commercial Real Estate Finance, Inc.
ARIS
Apollo Realty Income Solutions, Inc.
Assets Under Management, or AUM
The assets of the funds, partnerships and accounts to which Apollo provides investment management, advisory, or certain other investment-related services, including, without limitation, capital that such funds, partnerships and accounts have the right to call from investors pursuant to capital commitments. Our AUM equals the sum of:
1. the NAV, plus used or available leverage and/or capital commitments, or gross assets plus capital commitments, of the credit and certain equity funds, partnerships and accounts for which we provide investment management or advisory services, other than certain CLOs, CDOs, and certain perpetual capital vehicles, which have a fee-generating basis other than the mark-to-market value of the underlying assets; for certain perpetual capital vehicles in credit, gross asset value plus available financing capacity;
2. the fair value of the investments of the equity and certain credit funds, partnerships and accounts Apollo manages or advises, plus the capital that such funds, partnerships and accounts are entitled to call from investors pursuant to capital commitments, plus portfolio level financings;
3. the gross asset value associated with the reinsurance investments of the portfolio company assets Apollo manages or advises; and
4. the fair value of any other assets that Apollo manages or advises for the funds, partnerships and accounts to which Apollo provides investment management, advisory, or certain other investment-related services, plus unused credit facilities, including capital commitments to such funds, partnerships and accounts for investments that may require pre-qualification or other conditions before investment plus any other capital commitments to such funds, partnerships and accounts available for investment that are not otherwise included in the clauses above.
Apollo’s AUM measure includes Assets Under Management for which Apollo charges either nominal or zero fees. Apollo’s AUM measure also includes assets for which Apollo does not have investment discretion, including certain assets for which Apollo earns only investment-related service fees, rather than management or advisory fees. Apollo’s definition of AUM is not based on any definition of Assets Under Management contained in its governing documents or in any management agreements of the funds Apollo manages. Apollo considers multiple factors for determining what should be included in its definition of AUM. Such factors include but are not limited to (1) Apollo’s ability to influence the investment decisions for existing and available assets; (2) Apollo’s ability to generate income from the underlying assets in the funds it manages; and (3) the AUM measures that Apollo uses internally or believes are used by other investment managers. Given the differences in the investment strategies and structures among other alternative investment managers, Apollo’s calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may not be directly comparable to similar measures presented by other investment managers. Apollo’s calculation also differs from the manner in which its affiliates registered with the SEC report “Regulatory Assets Under Management” on Form ADV and Form PF in various ways.
Apollo uses AUM, Gross capital deployment and Dry powder as performance measurements of its investment activities, as well as to monitor fund size in relation to professional resource and infrastructure needs.
Athene
Athene Holding Ltd. (“Athene Holding” or “AHL”, together with its subsidiaries, “Athene”), a leading financial services company specializing in retirement services that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs, and to which Apollo, through its consolidated subsidiary ISG, provides asset management and advisory services.
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Athora
Athora Holding, Ltd. (“Athora Holding”, together with its subsidiaries, “Athora”), a strategic liabilities platform that acquires or reinsures blocks of insurance business in the German and broader European life insurance market (collectively, the “Athora Accounts”). Apollo, through ISGI, provides investment advisory services to Athora. Athora Non-Sub-Advised Assets includes the Athora assets which are managed by Apollo but not sub-advised by Apollo nor invested in Apollo funds or investment vehicles. Athora Sub-Advised includes assets which the Company explicitly sub-advises as well as those assets in the Athora Accounts which are invested directly in funds and investment vehicles Apollo manages.
Atlas
An equity investment of AAA and refers to certain subsidiaries of Atlas Securitized Products Holdings LP
AUM with Future Management Fee Potential
The committed uninvested capital portion of total AUM not currently earning management fees. The amount depends on the specific terms and conditions of each fund.
AUSA
Athene USA Corporation
Bermuda RBC
The risk-based capital ratio of Athene’s non-U.S. reinsurance subsidiaries calculated using Bermuda Capital and applying NAIC risk-based capital factors on an aggregate basis, excluding U.S. subsidiaries which are included within Athene’s U.S. RBC Ratio.
BMA
Bermuda Monetary Authority
Bridge
Bridge Investment Group Holdings Inc.
Bridge funds
Funds, vehicles and accounts managed by subsidiaries of Bridge
Bridge TRA
The tax receivable agreement with certain equity holders of Bridge
Capital solutions fees and other, net
Primarily includes transaction fees earned by Apollo Capital Solutions (“ACS”) related to underwriting, structuring, arrangement and placement of debt and equity securities, and syndication for funds managed by Apollo, portfolio companies of funds managed by Apollo, and third parties. Capital solutions fees and other, net also includes advisory fees for the ongoing monitoring of portfolio operations, directors' fees, as well as fees and earnings related to property management activities. These fees also include certain offsetting amounts, including reductions in management fees related to a percentage of these fees recognized (“management fee offset”), and other additional revenue sharing arrangements, including with certain subsidiaries and other affiliates.
CDO
Collateralized debt obligation
CIBC
Canadian Imperial Bank of Commerce
Class A shares
Class A common stock, $0.00001 par value per share, of AAM prior to the Mergers.
CLO
Collateralized loan obligation
CMBS
Commercial mortgage-backed securities
CML
Commercial mortgage loan
Contributing Partners
Partners and their related parties (other than Messrs. Leon Black, Joshua Harris and Marc Rowan, our co-founders) who indirectly beneficially owned AOG units.
Consolidated RBC
The consolidated risk-based capital ratio of Athene’s non-U.S. reinsurance and U.S. insurance subsidiaries calculated by aggregating U.S. RBC and Bermuda RBC, with immaterial adjustments for net assets at the holding company.
Cost of funds
Cost of funds includes liability costs related to cost of crediting on deferred annuities, including, with respect to Athene's indexed annuities, option costs, and institutional costs related to institutional products, as well as other liability costs, but does not include the proportionate share of the ACRA cost of funds associated with the non-controlling interests. Other liability costs include DAC, DSI and VOBA amortization, certain market risk benefit costs, the cost of liabilities on products other than deferred annuities and institutional products, premiums, product charges, excluding market value adjustments, and certain other revenues. Athene includes the costs related to business added through assumed reinsurance transactions but excludes the costs on business related to ceded reinsurance transactions. Cost of funds is computed as the total liability costs divided by the average net invested assets for the relevant period, presented on an annualized basis for interim periods.
Credit Strategies
Apollo Credit Strategies Master Fund Ltd., together with its feeder funds
Credit Suisse AG
DAC
Deferred acquisition costs
Deferred annuities
Fixed indexed annuities, annual reset annuities, multi-year guaranteed annuities and registered index-linked annuities
Dry Powder
The amount of capital available for investment or reinvestment subject to the provisions of the applicable limited partnership agreements or other governing agreements of the funds, partnerships and accounts we manage. Dry powder excludes uncalled commitments which can only be called for fund fees and expenses and commitments from perpetual capital vehicles.
DSI
Deferred sales inducement
EPF Funds
Apollo European Principal Finance Fund, L.P., Apollo European Principal Finance Fund II (Dollar A), L.P., EPF III, and EPF IV, together with their parallel funds and alternative investment vehicles
EPF III
Apollo European Principal Finance Fund III (Dollar A), L.P., together with its parallel funds and alternative investment vehicles
EPF IV
Apollo European Principal Finance Fund IV (Dollar A), L.P., together with its parallel funds and alternative investment vehicles
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Equity Plan
Refers collectively to the Company’s 2019 Omnibus Equity Incentive Plan and the Company’s 2019 Omnibus Equity Incentive Plan for Estate Planning Vehicles.
FABN
Funding agreement backed notes
FABR
Funding agreement backed repurchase agreement
FASB
Financial Accounting Standards Board
FCI Funds
Financial Credit Investment I, L.P., Financial Credit Investment II, L.P., together with its feeder funds, Financial Credit Investment Fund III L.P., and Financial Credit Investment IV, L.P., together with its feeder funds
Fee-Generating AUM
Fee-Generating AUM consists of assets of the funds, partnerships and accounts to which we provide investment management, advisory, or certain other investment-related services and on which we earn management fees, monitoring fees or other investment-related fees pursuant to management or other fee agreements on a basis that varies among the Apollo funds, partnerships and accounts. Management fees are normally based on “net asset value,” “gross assets,” “adjusted par asset value,” “adjusted cost of all unrealized portfolio investments,” “capital commitments,” “adjusted assets,” “stockholders’ equity,” “invested capital” or “capital contributions,” each as defined in the applicable management agreement. Monitoring fees, also referred to as advisory fees, with respect to the structured portfolio company investments of the funds, partnerships and accounts we manage or advise, are generally based on the total value of such structured portfolio company investments, which normally includes leverage, less any portion of such total value that is already considered in Fee-Generating AUM.
Fee Related Earnings, or FRE
Component of Segment Income that is used to assess the performance of the Asset Management segment. FRE is the sum of (i) management fees, (ii) capital solutions and other related fees, (iii) fee-related performance fees from indefinite term vehicles, that are measured and received on a recurring basis and not dependent on realization events of the underlying investments, excluding performance fees from Athene and performance fees from origination platforms dependent on capital appreciation, and (iv) other income, net, less (a) fee-related compensation, excluding equity-based compensation, (b) non-compensation expenses incurred in the normal course of business, (c) placement fees and (d) non-controlling interests in the management companies of certain funds the Company manages.
FIA
Fixed indexed annuity, which is an insurance contract that earns interest at a crediting rate based on a specified index on a tax-deferred basis
Fixed annuities
FIAs together with fixed rate annuities
Former Managing Partners
Messrs. Leon Black, Joshua Harris and Marc Rowan collectively and, when used in reference to holdings of interests in Apollo or AP Professional Holdings, L.P. includes certain related parties of such individuals
Freedom Parent Holdings
Freedom Parent Holdings, L.P.
GDP
Gross Domestic Product
Gross capital deployment
The gross capital that has been invested by the funds and accounts we manage during the relevant period, but excludes certain investment activities primarily related to hedging and cash management functions at the firm. Gross capital deployment is not reduced or netted down by sales or refinancings, and takes into account leverage used by the funds and accounts we manage in gaining exposure to the various investments that they have made.
GLWB
Guaranteed lifetime withdrawal benefit
GMDB
Guaranteed minimum death benefit
Gross IRR of accord series, ADIP funds and the European principal finance funds
The annualized return of a fund based on the actual timing of all cumulative fund cash flows before management fees, performance fees allocated to the general partner and certain other expenses. Calculations may include certain investors that do not pay fees. The terminal value is the net asset value as of the reporting date. Non-U.S. dollar denominated (“USD”) fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor.
Gross IRR of a traditional private equity or hybrid value fund
The cumulative investment-related cash flows (i) for a given investment for the fund or funds which made such investment, and (ii) for a given fund, in the relevant fund itself (and not any one investor in the fund), in each case, on the basis of the actual timing of investment inflows and outflows (for unrealized investments assuming disposition on December 31, 2025 or other date specified) aggregated on a gross basis quarterly, and the return is annualized and compounded before management fees, performance fees and certain other expenses (including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to the fund’s investors. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor.
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Gross IRR of infrastructure funds
The cumulative investment-related cash flows in the fund itself (and not any one investor in the fund), on the basis of the actual timing of cash inflows and outflows (for unrealized investments assuming disposition on December 31, 2025 or other date specified) starting on the date that each investment closes, and the return is annualized and compounded before management fees, performance fees, and certain other expenses (including interest incurred by the fund itself) and measures the returns on the fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to the fund’s investors. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, gross IRRs at the fund level will differ from those at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Gross IRR does not represent the return to any fund investor.
HoldCo
Apollo Global Management, Inc. (f/k/a Tango Holdings, Inc.)
HVF I
Apollo Hybrid Value Fund, L.P., together with its parallel funds and alternative investment vehicles
HVF II
Apollo Hybrid Value Fund II, L.P., together with its parallel funds and alternative investment vehicles
HVF III
Apollo Hybrid Value Fund III, L.P., together with its parallel funds and alternative investment vehicles
Inflows
(i) At the individual strategy level, subscriptions, commitments, and other increases in available capital, such as acquisitions or leverage, net of inter-strategy transfers, and (ii) on an aggregate basis, the sum of inflows across the credit and equity investing strategies.
IPO
Initial Public Offering
ISG
Apollo Insurance Solutions Group LP
ISGI
Refers collectively to Apollo Asset Management Europe LLP, a subsidiary of AAM (“AAME”) and Apollo Asset Management PC LLP, a wholly-owned subsidiary of AAME (“AAME PC”)
Management Fee Offset
Under the terms of the limited partnership agreements for certain funds, the management fee payable by the funds may be subject to a reduction based on a certain percentage of such advisory and transaction fees, net of applicable broken deal costs.
Market risk benefits
Guaranteed lifetime withdrawal benefits and guaranteed minimum death benefits
Mergers
Completion of the previously announced merger transactions pursuant to the Merger Agreement
Merger Agreement
The Agreement and Plan of Merger dated as of March 8, 2021 by and among AAM, AGM, AHL, Blue Merger Sub, Ltd., a Bermuda exempted company, and Green Merger Sub, Inc., a Delaware corporation.
Merger Date
January 1, 2022
MFIC
MidCap Financial Investment Corporation (f/k/a Apollo Investment Corporation or “AINV”)
MidCap FinCo
MidCap FinCo LLC, together with its subsidiaries
Modco
Modified coinsurance
NAIC
National Association of Insurance Commissioners
NAV
Net Asset Value
Net invested assets
Represent the investments that directly back Athene's net reserve liabilities as well as surplus assets. Net invested assets include Athene’s (a) total investments on the consolidated statements of financial condition, with available-for-sale securities, trading securities and mortgage loans at cost or amortized cost, excluding derivatives, (b) cash and cash equivalents and restricted cash, (c) investments in related parties, (d) accrued investment income, (e) VIE and VOE assets, liabilities and non-controlling interest adjustments, (f) net investment payables and receivables, (g) policy loans ceded (which offset the direct policy loans in total investments) and (h) an adjustment for the allowance for credit losses. Net invested assets exclude the derivative collateral offsetting the related cash positions. Athene includes the investments supporting assumed funds withheld and modco agreements and excludes the investments related to ceded reinsurance transactions in order to match the assets with the income received. Net invested assets include Athene’s economic ownership of ACRA investments but do not include the investments associated with the non-controlling interests.
Net investment earned rate
Computed as income from Athene’s net invested assets, excluding the proportionate share of the ACRA net investment income associated with the non-controlling interests, divided by the average net invested assets for the relevant period, presented on an annualized basis for interim periods.
Net investment spread
Net investment spread measures Athene’s investment performance plus its strategic capital management fees less its total cost of funds, presented on an annualized basis for interim periods.
Net IRR of accord series, ADIP funds and the European principal finance funds
The annualized return of a fund after management fees, performance fees allocated to the general partner and certain other expenses, calculated on investors that pay such fees. The terminal value is the net asset value as of the reporting date. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor.
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Net IRR of a traditional private equity or the hybrid value funds
The gross IRR applicable to a fund, including returns for related parties which may not pay fees or performance fees, net of management fees, certain expenses (including interest incurred or earned by the fund itself) and realized performance fees all offset to the extent of interest income, and measures returns at the fund level on amounts that, if distributed, would be paid to investors of the fund. The timing of cash flows applicable to investments, management fees and certain expenses, may be adjusted for the usage of a fund’s subscription facility. To the extent that a fund exceeds all requirements detailed within the applicable fund agreement, the estimated unrealized value is adjusted such that a percentage of up to 20.0% of the unrealized gain is allocated to the general partner of such fund, thereby reducing the balance attributable to fund investors. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor.
Net IRR of infrastructure funds
The cumulative cash flows in a fund (and not any one investor in the fund), on the basis of the actual timing of cash inflows received from and outflows paid to investors of the fund (assuming the ending net asset value as of the reporting date or other date specified is paid to investors), excluding certain non-fee and non-performance fee bearing parties, and the return is annualized and compounded after management fees, performance fees, and certain other expenses (including interest incurred by the fund itself) and measures the returns to investors of the fund as a whole. Non-USD fund cash flows and residual values are converted to USD using the spot rate as of the reporting date. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor.
Net reserve liabilities
Represent Athene's policyholder and institutional liability obligations net of reinsurance and used to analyze the costs of its liabilities. Net reserve liabilities include Athene’s (a) interest sensitive contract liabilities, (b) future policy benefits, (c) net market risk benefits, (d) long-term repurchase obligations, (e) dividends payable to policyholders and (f) other policy claims and benefits, offset by reinsurance recoverable, excluding policy loans ceded. Net reserve liabilities include Athene’s economic ownership of ACRA reserve liabilities but do not include the reserve liabilities associated with the non-controlling interests. Net reserve liabilities are net of the ceded liabilities to third-party reinsurers as the costs of the liabilities are passed to such reinsurers and, therefore, Athene has no net economic exposure to such liabilities, assuming its reinsurance counterparties perform under the agreements. Net reserve liabilities include the underlying liabilities assumed through modco reinsurance agreements in order to match the liabilities with the expenses incurred.
Non-Fee-Generating AUM
AUM that does not produce management fees or monitoring fees. This measure generally includes the following:
(i) fair value above invested capital for those funds that earn management fees based on invested capital;
(ii) net asset values related to general partner and co-investment interests;
(iii) unused credit facilities;
(iv) available commitments on those funds that generate management fees on invested capital;
(v) structured portfolio company investments that do not generate monitoring fees; and
(vi) the difference between gross asset and net asset value for those funds that earn management fees based on net asset value.
NYC UBT
New York City Unincorporated Business Tax
NYSE
New York Stock Exchange
Origination
Represents (i) capital that has been invested in new equity, debt or debt-like investments by Apollo's equity and credit strategies (whether purchased by funds and accounts managed by Apollo, or syndicated to third parties) where Apollo or one of Apollo's origination platforms has sourced, negotiated, or significantly affected the commercial terms of the investment; (ii) new capital pools formed by debt issuances, including CLOs; and (iii) net purchases of certain assets by the funds and accounts we manage that we consider to be private, illiquid, and hard to access assets and which the funds and accounts otherwise may not be able to meaningfully access. Origination generally excludes any issuance of debt or debt-like investments by the portfolio companies of the funds we manage.
Other operating expenses within the Principal Investing segment
Expenses incurred in the normal course of business and includes allocations of non-compensation expenses related to managing the business.
Other operating expenses within the Retirement Services segment
Expenses incurred in the normal course of business inclusive of compensation and non-compensation expenses, excluding the proportionate share of the ACRA operating expenses associated with the non-controlling interests.
Payout annuities
Annuities with a current cash payment component, which consist primarily of single premium immediate annuities, supplemental contracts and structured settlements.
PCD
Purchased Credit Deteriorated Investments
Performance allocations, Performance fees, Performance revenues, Incentive fees and Incentive income
The interests granted to Apollo by a fund managed by Apollo that entitle Apollo to receive allocations, distributions or fees which are based on the performance of such fund or its underlying investments.
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Performance Fee-Eligible AUM
AUM that may eventually produce performance fees. All funds for which we are entitled to receive a performance fee allocation or incentive fee are included in Performance Fee-Eligible AUM, which consists of the following:
(i) “Performance Fee-Generating AUM”, which refers to invested capital of the funds, partnerships and accounts we manage, advise, or to which we provide certain other investment-related services, that is currently above its hurdle rate or preferred return, and profit of such funds, partnerships and accounts is being allocated to, or earned by, the general partner in accordance with the applicable limited partnership agreements or other governing agreements;
(ii) “AUM Not Currently Generating Performance Fees”, which refers to invested capital of the funds, partnerships and accounts we manage, advise, or to which we provide certain other investment-related services, that is currently below its hurdle rate or preferred return; and
(iii) “Uninvested Performance Fee-Eligible AUM”, which refers to capital of the funds, partnerships and accounts we manage, advise, or to which we provide certain other investment-related services, that is available for investment or reinvestment subject to the provisions of applicable limited partnership agreements or other governing agreements, which capital is not currently part of the NAV or fair value of investments that may eventually produce performance fees allocable to, or earned by, the general partner.
Perpetual capital
Assets under management of certain vehicles with an indefinite duration, which assets may only be withdrawn under certain conditions or subject to certain limitations, including satisfying required hold periods or percentage limits on the amounts that may be redeemed over a particular period. The investment management, advisory or other service agreements with our perpetual capital vehicles may be terminated under certain circumstances.
Principal Investing Income, or PII
Component of Segment Income that is used to assess the performance of the Principal Investing segment. For the Principal Investing segment, PII is the sum of (i) realized performance fees, including certain realizations received in the form of equity, (ii) realized investment income, less (x) realized principal investing compensation expense, excluding expense related to equity-based compensation, and (y) certain corporate compensation and non-compensation expenses.
Principal investing compensation
Realized performance compensation, distributions related to investment income and dividends, and includes allocations of certain compensation expenses related to managing the business.
Policy loan
A loan to a policyholder under the terms of, and which is secured by, a policyholder’s policy.
Realized Value
All cash investment proceeds received by the relevant Apollo fund, including interest and dividends, but does not give effect to management fees, expenses, incentive compensation or performance fees to be paid by such Apollo fund.
Redding Ridge
Redding Ridge Asset Management, LLC and its subsidiaries, which is a standalone, self-managed asset management business established in connection with risk retention rules that manages CLOs and retains the required risk retention interests.
Redding Ridge Holdings
Redding Ridge Holdings LP
Remaining Cost
Total Invested Capital, reduced for any return of capital proceeds received to date.
RMBS
Residential mortgage-backed securities
RML
Residential mortgage loan
RSUs
Restricted share units
SIA
Strategic investment account
SPACs
Special purpose acquisition companies
Spread Related Earnings, or SRE
Component of Segment Income that is used to assess the performance of the Retirement Services segment, excluding certain market volatility, which consists of investment gains (losses), net of offsets and non-operating change in insurance liabilities and related derivatives, and certain expenses related to integration, restructuring, and equity-based compensation, as well as other items. For the Retirement Services segment, SRE equals the sum of (i) the net investment earnings on Athene’s net invested assets and (ii) management fees received on business managed for others, less (x) cost of funds, (y) operating expenses excluding equity-based compensation and (z) financing costs, including interest expense and preferred dividends, if any, paid to Athene preferred stockholders.
Surplus assets
Assets in excess of Athene’s policyholder and institutional obligations, determined in accordance with the applicable domiciliary jurisdiction’s statutory accounting principles.
S3 Equity and Hybrid Solutions
Apollo S3 Equity and Hybrid Solutions Fund, L.P.
Total Invested Capital
The aggregate cash invested by the relevant Apollo fund and includes capitalized costs relating to investment activities, if any, but does not give effect to cash pending investment or available for reserves and excludes amounts, if any, invested on a financed basis with leverage facilities
Total Value
The sum of the total Realized Value and Unrealized Value of investments
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Traditional private equity funds
Apollo Investment Fund I, L.P. (“Fund I”), AIF II, L.P. (“Fund II”), a mirrored investment account established to mirror Fund I and Fund II for investments in debt securities (“MIA”), Apollo Investment Fund III, L.P. (together with its parallel funds, “Fund III”), Apollo Investment Fund IV, L.P. (together with its parallel fund, “Fund IV”), Apollo Investment Fund V, L.P. (together with its parallel funds and alternative investment vehicles, “Fund V”), Apollo Investment Fund VI, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VI”), Apollo Investment Fund VII, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VII”), Apollo Investment Fund VIII, L.P. (together with its parallel funds and alternative investment vehicles, “Fund VIII”), Apollo Investment Fund IX, L.P. (together with its parallel funds and alternative investment vehicles, “Fund IX”) and Apollo Investment Fund X, L.P. (together with its parallel funds and alternative investment vehicles, “Fund X”).
U.S. GAAP
Generally accepted accounting principles in the United States of America
U.S. RBC
The CAL RBC ratio for AAIA, Athene's U.S. insurance company
U.S. Treasury
United States Department of the Treasury
Unlocking
Assumption unlocking is the annual process of revising current assumptions that impact the projection of benefits to align with recent experience. This may result in an immediate impact that may be favorable, resulting in a reduction in reserves or an increase in VOBA, or unfavorable, resulting in an increase in reserves or a decrease in VOBA.
Unrealized Value
The fair value consistent with valuations determined in accordance with GAAP, for investments not yet realized and may include payments in kind, accrued interest and dividends receivable, if any, and before the effect of certain taxes. In addition, amounts include committed and funded amounts for certain investments.
Venerable
Venerable Holdings, Inc., together with its subsidiaries
VIAC
Venerable Insurance and Annuity Company
VIE
Variable interest entity
Vintage Year
The year in which a fund’s final capital raise occurred, or, for certain funds, the year of a fund’s effective date or the year in which a fund’s investment period commences pursuant to its governing agreements.
VOBA
Value of business acquired
VOE
Voting interest entity
WACC
Weighted average cost of capital
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PART I
ITEM 1. BUSINESS
Index to Business
Overview
Our Businesses
Asset Management
Retirement Services
Principal Investing
Competition
Human Capital
Regulatory and Compliance Matters
Available Information
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Overview
Founded in 1990, Apollo is a high-growth, global alternative asset manager and a retirement services provider. Apollo conducts its business primarily in the U.S. through the following three reportable segments: Asset Management, Retirement Services and Principal Investing. These business segments are differentiated based on the investment services they provide as well as varying investing strategies.
Our Businesses
Asset Management
Our Asset Management segment focuses on credit and equity investing strategies. These strategies reflect the range of investment capabilities across our platform based on relative risk and return. As an asset manager, we earn fees for providing investment management services and expertise to our client base. The amount of fees charged for managing these assets depends on the underlying investment strategy, liquidity profile, and, ultimately, our ability to generate returns for our clients. We also earn capital solutions fees as part of our growing capital solutions business and as part of monitoring and deployment activity alongside our sizable private equity franchise. After expenses, we call the resulting earning stream “Fee Related Earnings” or “FRE”, which represents the primary performance measure for the Asset Management segment. As of December 31, 2025, we had total AUM of $938.4 billion.
Our Asset Management segment had a team of approximately 4,130 employees, including 600 employees of Bridge as of December 31, 2025, with offices throughout the world. This team possesses a broad range of transaction, financial, managerial and investment skills. We operate our asset management business in a highly integrated manner, which we believe distinguishes us from other alternative asset managers. Our investment teams frequently collaborate across disciplines and we believe that this collaboration enables our clients to more successfully invest across a company’s capital structure. Our objective is to achieve superior long-term risk-adjusted returns for our clients. The majority of the investment funds we manage are designed to invest capital over a period of several years from inception, thereby allowing us to seek to generate attractive long-term returns throughout economic cycles. We have a contrarian, value-oriented investment approach, emphasizing downside protection, and the preservation of capital. We believe our contrarian investment approach is reflected in a number of ways, including:
• our willingness to pursue investments in industries that our competitors typically avoid;
• the often complex structures employed in some of the investments of our funds;
• our experience investing during periods of uncertainty or distress in the economy or financial markets; and
• our willingness to undertake transactions that have substantial business, regulatory or legal complexity.
We have applied this investment philosophy to identify what we believe are attractive investment opportunities, deploy capital across the balance sheet of industry leading, or “franchise,” businesses and create value throughout economic cycles.
Credit
Credit is our largest asset management strategy with $749.2 billion of AUM as of December 31, 2025. Our credit strategy spans third-party strategies and Apollo’s retirement services business across four main investment pillars: direct origination, asset-backed finance, opportunistic credit and multi-credit. Our credit strategy focuses on generating excess returns through high-quality credit underwriting and origination. Beyond participation in the traditional issuance and secondary credit markets, through our origination platforms and corporate solutions capabilities we seek to originate attractive and safe-yielding assets for the investors in the funds we manage. The investment portfolios of the credit-oriented funds Apollo manages include several asset classes as described below as of December 31, 2025:
• Direct Origination ($302.1 billion of AUM), includes large corporate direct origination, middle-market direct lending, and investment grade and performing credit mandates across managed accounts and CLOs. Apollo’s direct origination platform is built to offer companies a variety of financing solutions across investment grade and below investment grade, and public and private markets. The strategy is focused on first lien senior secured investments and is diversified across fixed and floating rate issuance, issuer type and sector;
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• Asset-Backed Finance ($282.7 billion of AUM), includes instruments that are supported first by the contractual cash flows of a pool of assets, and second by the liquidation value of those assets. Asset-backed finance encompasses diverse credit types, such as mortgages, consumer credit, receivables, aircraft lending, and inventory finance, in both whole loan and bond format across the capital structure;
• Opportunistic Credit ($50.0 billion of AUM), seeks to optimize both near- and longer-term relative value across market cycles by capitalizing on investment opportunities across the credit spectrum, spanning private and public markets as well as corporate and asset-backed credit. Using a flexible approach, the objective of the opportunistic credit strategy is to identify market inefficiencies and unique opportunities to generate excess returns; and
• Multi-Credit ($40.9 billion of AUM), targets investment grade and high yield performing credit, including income-oriented, senior loan and bond corporate credit, as well as asset-backed finance investments. The multi-credit strategy allocates capital across both public and private markets, seeking to generate enhanced yield and attractive risk-adjusted returns while prioritizing downside protection.
Equity
Our equity strategy represents $189.2 billion of AUM as of December 31, 2025. Across our equity strategy, we focus on creative structuring and sourcing while working with the management teams of the portfolio companies of Apollo managed funds to help transform and grow their businesses. Our flexible mandate and purchase price discipline allow us to embrace complexity and seek attractive outcomes for our stakeholders. Our equity team has experience across sectors, industries, and geographies spanning its private equity, hybrid value, secondaries equity, AAA, real estate equity, infrastructure and clean transition equity strategies. We have consistently produced attractive long-term investment returns in the traditional private equity funds we manage, generating a 39% gross IRR and a 24% net IRR on a compound annual basis from inception through December 31, 2025. Our equity strategy focuses on several investing strategies as described below as of December 31, 2025:
• Corporate Private Equity ($78.8 billion of AUM) , which refers to our investment strategy focused on creating investment opportunities with attractive risk-adjusted returns across industries and geographies and throughout market cycles, utilizing our value-oriented investment approach. Through this strategy, we seek to build portfolios of investments that are created at meaningful discounts to comparable market multiples, thereby resulting in what we believe are portfolios focused on capital preservation. The transactions in this strategy include opportunistic buyouts, corporate carveouts and deleveraging investments. Corporate Private Equity also includes our secondaries equity strategy (“Secondaries”), which offers a comprehensive set of secondary and liquidity solutions;
• Hybrid Value ($17.7 billion of AUM), which refers to our strategy that focuses on investments that share features with both private credit and traditional private equity investments. Hybrid Value offers creative, partnership-driven solutions to counterparties seeking to fund growth initiatives, acquisitions, liquidity events for shareholders and balance sheet deleveraging. By employing a comprehensive and flexible investment approach, the hybrid value strategy aims to generate equity-like returns with credit-like downside protection across market cycles;
• AAA ($25.6 billion of AUM), which offers investors access to Apollo’s flagship private market strategy in a perpetual capital, semi-liquid structure. The strategy seeks to deliver consistent, equity-like returns with lower risk and more downside protection than both public equity and traditional private equity buyout strategies. AAA’s portfolio encompasses several investment strategies, such as core private equity, structured equity, traditional private equity, private credit, secondaries, and real assets;
• Real Estate Equity ($47.9 billion of AUM), which refers to our real estate income strategies encompassing core plus and net lease investments in the non-traded REIT and public and private real estate funds we manage, as well as our value add and opportunistic investments strategies that target investments in real estate assets, portfolios and platforms in regionally focused private funds in both the U.S. and Asia. In September 2025, we completed the acquisition of Bridge, a real estate fund manager with a core focus on residential and industrial properties in the U.S., further expanding our real estate equity product offerings. Our real estate strategy is supported by our vertically integrated approach to asset management, which provides a full suite of services spanning investment management and transaction advisory services, as well as property management, leasing, development and construction management functions and is led by specialized and experienced real estate professionals who bring deep sector knowledge across economic cycles; and
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• Infrastructure and Clean Transition Equity ($21.6 billion of AUM), which refers to the investment strategy of certain funds managed by Apollo that focus on investing in a broad range of infrastructure assets, including digital infrastructure, energy transition, transportation/logistics and sustainable living, as well as our clean transition equity strategy, our dedicated energy transition and decarbonization-focused private equity strategy. This investing strategy also includes the legacy natural resources-focused private equity funds we manage.
Perpetual Capital
Included within our investing strategies above is $535.6 billion of perpetual capital, out of the $938.4 billion of AUM as of December 31, 2025. Perpetual capital includes, without limitation, certain assets in our credit strategy, including assets relating to publicly traded and non-traded vehicles, certain origination platform assets and assets managed for certain of our retirement services clients. Perpetual capital assets may be withdrawn under certain circumstances and utilize a range of investment strategies, including those described previously.
Athene
Apollo’s asset management business, through its consolidated subsidiary, ISG, provides a full suite of services for Athene’s investment portfolio, including direct investment management, asset allocation, mergers and acquisitions asset diligence, and certain operational support services, including investment compliance, tax, legal and risk management support. See “Item 1. Business—Our Businesses—Retirement Services” for further details regarding Athene’s retirement services business. As of December 31, 2025, Apollo managed or advised $392.2 billion of AUM, of which $386.5 billion was Fee-Generating AUM, in accounts owned by or related to Athene (“Athene Accounts”).
Athora
Apollo’s asset management business, through its consolidated subsidiary, ISGI, provides investment advisory services to certain portfolio companies of Apollo funds and Athora, a strategic liabilities platform that acquires or reinsures blocks of insurance business in the German and broader European life insurance market (collectively, the “Athora Accounts”). As of December 31, 2025, Apollo, through its subsidiaries, managed or advised $57.2 billion of AUM and $55.2 billion of Fee-Generating AUM in Athora Accounts. See note 18 to our consolidated financial statements for details regarding the fee arrangements between the Company and Athora.
Athora Non-Sub-Advised Assets
This category includes the Athora assets that Apollo manages but are not sub-advised by Apollo nor invested in Apollo funds or investment vehicles. We refer to these assets collectively as “Athora Non-Sub-Advised Assets.” Our AUM within the Athora Non-Sub-Advised category totaled $34.7 billion as of December 31, 2025, of which $32.3 billion was Fee-Generating AUM.
Origination
Apollo’s integrated approach to origination is designed to provide scaled, long-term capital across market cycles. Our origination capabilities span asset classes, geographies, and multiple levels of the capital structure enabling us to structure solutions to our clients, including the funds we manage, Athene and third parties.
We originate assets through multiple channels including core credit, origination platforms, high grade capital solutions, and hybrid and equity strategies. For the year ended December 31, 2025, origination volumes were $309 billion, of which core credit and origination platforms represented approximately 45% and 40%, respectively, of total origination volumes.
Core credit origination at Apollo primarily consists of directly originated, predominantly investment-grade assets, including corporate lending and asset-backed finance. We also generate assets through a diversified ecosystem of 16 origination platforms across corporate credit, asset-backed finance, real estate, infrastructure and other private market asset classes. Our origination activities are primarily focused on investment-grade and high-quality credit exposures, with transactions evaluated and structured using Apollo’s disciplined underwriting and risk management frameworks.
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Origination supports our asset management and retirement services businesses primarily by facilitating capital deployment and portfolio construction. In our asset management business, origination enhances our ability to source assets in line with targeted returns. In our retirement services business, origination supports the creation of assets aligned with the long-duration liabilities. These integrated capabilities allow Apollo to provide flexible, bespoke capital solutions to support evolving financing needs across a range of capital formation clients.
Capital Solutions
Our capital solutions business focuses on (i) sourcing investment opportunities for asset management clients and their respective portfolio investments, (ii) maintaining relationships with the capital markets community in an effort to help clients and their respective portfolio investments to raise debt and equity capital, provide secondary market support and optimize capital structures through creative financing solutions, and (iii) structuring capital solutions in an effort to enhance our ability to syndicate, place, trade or otherwise transfer loans, securities and other financial instruments arising from financings in an effort to drive positive outcomes for our asset management clients and their respective portfolio investments. Our capital solutions business also provides a variety of services with respect to both security and non-security financial instruments, including loans, such as originating, arranging, structuring, syndicating and trading loans and private debt, as well as providing corporate finance advisory services and other similar services.
Capital Formation
Capital formation serves as the foundation to our asset management and retirement services businesses and origination activities. Within our asset management business, over the last 35 years, our capital formation has historically been focused on serving institutional investors through their respective alternatives portfolio allocation. Over time, our capabilities have expanded to address new sources of demand through discrete pools of capital, each encapsulating specific investment objectives, liquidity and other considerations. Capital formation aligns origination and structuring capabilities to support credit and equity investment opportunities for a diverse range of buyers.
We view the capital formation opportunity across the following discrete buyer pools:
• Institutional investors (alternative allocation)
In addition, we are increasingly focused on expanding to:
• Institutional investors (fixed income and equity replacement)
• Individuals
• Insurance (Athene and third-party clients)
• Traditional asset managers
• Defined contribution / 401(k)
Across these pools of capital, we raise, allocate and manage capital across a range of structures, including closed-end funds, open-ended and evergreen vehicles, perpetual capital vehicles, publicly listed entities, insurance and retirement solutions and separately managed accounts. Capital deployment requirements may vary by vehicle structure. For closed-end funds we manage, investors generally provide capital through capital calls once investment opportunities are identified. Open-ended and evergreen vehicles we manage typically accept subscriptions and process redemptions in accordance with their respective governing documents. Perpetual capital vehicles, which represent nearly 60% of total AUM and over 70% of total fee-generating AUM, are highly scalable with the ability to deploy capital on an ongoing basis.
We source capital from a diverse base that includes public and private pension funds, sovereign wealth funds, endowments and foundations, insurance companies, private wealth platforms, family offices, high net worth individuals, other institutional investors, as well as public market investors through certain perpetual capital vehicles. A significant portion of capital raised across our closed-ended strategies has historically come from existing investors.
We maintain a centralized and rigorous investment governance framework that applies across our capital base. This framework includes processes for sourcing and evaluating investment opportunities, conducting due diligence, structuring and negotiating transactions, monitoring portfolio positions and managing investment exits. We have established allocation policies and governance mechanisms designed to allocate investment opportunities among funds, vehicles and managed accounts in a
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manner consistent with applicable governing documents and investment objectives. Investment committees for the relevant funds, vehicles or accounts we manage review and approve investment decisions.
Our investment professionals are responsible for the end-to-end investment process and, where applicable, may commit capital alongside investors. We seek to align our economic interests with those of investors through investment terms, co-investment and governance arrangements. The design and management of each pool of capital reflects its investor base, regulatory constraints, liquidity profile and the investment strategy.
Within our retirement services business, capital formation is driven by the origination of long-duration, regulated capital aligned with liability profiles, liquidity characteristics and regulatory capital requirements. Athene generates recurring premium inflows through the issuance of retirement and savings products designed to reflect their long-term nature, regulatory requirements and targeted risk and return objectives. These activities are supported by Apollo’s origination, structuring and investment capabilities.
To support growth, flexibility and capital deployment at scale, Athene supplements its capital with dedicated, long-duration third-party capital through ACRA. Capital deployment across Athene’s balance sheet and third-party capital vehicles is subject to Athene’s internal capital models, regulatory requirements and transaction approval processes, and is governed under a centralized framework intended to align policyholder interests and third-party investor capital with Athene and Apollo’s investment discipline.
General Partner and Professionals Investments and Co-Investments
General Partner Investments
Certain management companies, general partners and co-invest vehicles are committed to contribute to the funds we manage and their affiliates. As a limited partner, general partner and manager of the Apollo funds, Apollo had unfunded capital commitments as of December 31, 2025 of $553 million.
Professionals Investments
To further align our interests with those of investors in the funds we manage, certain of our professionals have invested their own capital in the funds. Our professionals will either re-invest their performance fees to fund these investments or use cash on hand or funds borrowed from third parties. We generally have not historically charged management fees or performance fees on capital invested by our professionals directly in the funds.
Co-Investments
Investors in many of the funds we manage, as well as certain other investors, may have the opportunity to make co-investments with the funds. Co-investments are investments in portfolio companies or other fund assets generally on the same terms and conditions as those to which the applicable fund is subject.
Retirement Services
Our retirement services business is conducted by Athene, a leading financial services company that specializes in issuing, reinsuring and acquiring retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. Athene is led by a highly skilled management team with extensive industry experience and has its corporate headquarters located in West Des Moines, Iowa. Our asset management business provides a full suite of services for Athene’s investment portfolio, including direct investment management, asset allocation, mergers and acquisitions asset diligence, and certain operational support services including investment compliance, tax, legal and risk management support. As of December 31, 2025, approximately 2,010 employees supported our Retirement Services segment.
Our retirement services business focuses on generating spread income by combining the two core competencies of (1) sourcing long-term, persistent liabilities and (2) using the global scale and reach of our asset management business to actively source or originate assets with Athene’s preferred risk and return characteristics. Athene’s investment philosophy is to invest a portion of its assets in securities that earn an incremental yield by taking measured liquidity and complexity risk and capitalize on its long-dated, persistent liability profile to prudently achieve higher net investment earned rates, rather than assuming incremental credit risk. A cornerstone of Athene’s investment philosophy is that given the operating leverage inherent in its business,
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modest investment outperformance can translate to outsized return performance. Because Athene maintains discipline in underwriting attractively priced liabilities, it has the ability to invest in a broad range of high-quality assets to generate attractive earnings.
Our asset management expertise supports the sourcing and underwriting of assets for Athene’s portfolio. Athene is invested in a diverse array of primarily high-grade fixed income assets including corporate bonds, structured securities, and commercial and residential real estate loans, among others. Athene establishes risk thresholds which in turn define risk tolerance across a wide range of factors, including credit risk, liquidity risk, concentration risk and caps on specific asset classes. In addition to other efforts, Athene manages the risk of rising interest rates by strategically allocating a meaningful portion of its investment portfolio into floating rate securities. Athene manages its interest rate risk in a declining rate environment through hedging activity or the issuance of additional floating rate liabilities to lower its overall net floating rate position. Athene also maintains holdings in less interest rate-sensitive investments, including CLOs, non-agency RMBS and various types of structured products, consistent with its strategy of pursuing incremental yield by assuming liquidity and complexity risk, rather than assuming incremental credit risk.
Rather than increase its allocation to higher risk securities to increase yield, Athene pursues the direct origination of high-quality, predominantly senior secured assets, which it believes possess greater alpha-generating qualities than securities that would otherwise be readily available in public markets. These direct origination strategies include investments sourced by (1) affiliated platforms that originate loans to third parties and in which Athene gains exposure directly to the loan or indirectly through its ownership of the origination platform and/or securitizations of assets originated by the origination platform, and (2) our asset management team’s extensive network of direct relationships with predominantly investment-grade counterparties.
Athene uses, and may continue to use, derivatives, including swaps, options, futures and forward contracts, and reinsurance contracts, to hedge risks such as current or future changes in the fair value of assets and liabilities, current or future changes in cash flows and changes in interest rates, equity markets, currency fluctuations and longevity.
Products
Athene principally offers two product lines: annuities and funding agreements.
Annuities
Athene’s primary product line is annuities, which include fixed rate, indexed, payout and group annuities issued in connection with pension group annuity transactions and defined contribution plans.
Fixed Rate Annuities. Fixed rate annuities include annual reset annuities and multi-year guarantee annuities (“MYGA”). Fixed rate annuities earn interest at a set rate (or declared crediting rate), rather than at a rate that may vary based on an index. Fixed rate annual reset annuities have a crediting rate that is typically guaranteed for one year. After such period, Athene has the ability to change the crediting rate at its discretion, generally once annually, to any rate at or above a guaranteed minimum rate. MYGAs are similar to annual reset annuities except that the initial crediting rate is guaranteed for a specified number of years, rather than just one year, before it may be changed at Athene’s discretion. After the initial crediting period, MYGAs can generally be reset annually.
Fixed Indexed Annuities. FIAs are the largest percentage of Athene’s net reserve liabilities. FIAs are a type of insurance contract in which the policyholder makes one or more premium deposits that earn interest, on a tax deferred basis, at a crediting rate based on a specified market index, subject to a contractually specified cap, spread or participation rate. FIAs allow policyholders the possibility of earning interest without significant risk to principal, unless the contract is surrendered during a surrender charge period. A market index tracks the performance of a specific group of stocks or other assets representing a particular segment of the market, or in some cases, an entire market. Athene generally buys options on the indices to which the FIAs are tied to hedge the associated market risk. The cost of the option is priced into the overall economics of the product as an option budget.
Registered Index-Linked Annuities (“RILAs”). RILAs are similar to FIAs in offering the policyholder the opportunity for tax-deferred growth based in part on the performance of a market index. Compared to an FIA, RILAs have the potential for higher returns but also have the potential for risk of loss to principal and related earnings. RILAs provide the ability for the policyholder to participate in the positive performance of certain market indices during a term, limited by a contractually specified cap or adjusted for a contractually specified participation rate. Negative performance of the market indices during a
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term can result in negative policyholder returns, with contractually specified downside protection typically provided in the form of either a “buffer” or a “floor” to limit the policyholder’s exposure to market loss. A “buffer” is protection from negative exposure up to a certain percentage, such as 10 or 20 percent. A “floor” is protection from negative exposure less than a stated percentage (i.e., the policyholder risks exposure of loss up to the “floor,” but is protected against any loss in excess of this amount).
Payout Annuities. Payout annuities primarily consist of single premium immediate annuities (“SPIA”), supplemental contracts and structured settlements. Payout annuities provide a series of periodic payments for a fixed period of time or for the life of the policyholder, based upon the policyholder’s election at the time of issuance. The amounts, frequency and length of time of the payments are fixed at the outset of the annuity contract. SPIAs are often purchased by persons at or near retirement age who desire a steady stream of payments over a future period of years. Supplemental contracts are typically created upon the conversion of a death claim or the annuitization of a deferred annuity. Structured settlements generally relate to legal settlements.
Athene generates income on fixed rate, indexed and payout annuity products by earning an investment spread, based on the difference between (1) income earned on the investments supporting the liabilities and (2) the cost of funds, including fixed interest credited to customers, option costs on indexed products, the cost of providing guarantees (net of rider fees) and policy issuance, maintenance and distribution costs.
Private Placement Variable Annuities (“PPVA”). PPVAs are not registered with the SEC and currently are only offered by private placement to purchasers meeting the requirements as a qualified purchaser and/or an accredited investor under applicable federal securities laws. Variable annuities allow policyholders to participate directly in the investment experience of the underlying investment vehicles offered through the product. In a variable annuity, the policyholder assumes the full investment risk of the investment options chosen. The product allows the policyholder to allocate their money to a variety of variable separate account divisions that invest in a suite of underlying investment options and the potential to accumulate cash value on a tax-deferred basis. Athene’s PPVA products provide access to a suite of Apollo managed funds and other product offerings with no surrender charges and no GLWB or GMDB features. Athene generates income on its PPVA products by collecting a fee that is a function of the policyholder’s account value.
Income Riders to Fixed Annuity Products. The income riders on Athene’s deferred annuities can be broadly categorized as either guaranteed or participating. Guaranteed income riders provide policyholders with a guaranteed lifetime withdrawal benefit, which permits policyholders to elect to receive guaranteed payments for life from their contract without having to annuitize their policies. Participating income riders tend to have lower levels of guaranteed income than guaranteed income riders but provide policyholders the opportunity to receive greater levels of income if the policies’ indexed crediting strategies perform well. As of December 31, 2025, approximately 24% of Athene’s deferred annuity account value contained rider benefits.
Withdrawal Options for Deferred Annuities . After the first year following the issuance of a deferred annuity, the policyholder is typically permitted to make withdrawals up to 5% or 10% (depending on the contract) of the prior year’s value without a surrender charge or market value adjustment (“MVA”), subject to certain limitations. Withdrawals in excess of the allowable amounts are assessed a surrender charge and MVA if such withdrawals are made during the surrender charge period of the policy, which generally ranges from 3 to 20 years. The surrender charge for most Athene products at contract inception is generally between 7% and 15% of the contract value and typically decreases by approximately half a percentage point to one percentage point per year during the surrender charge period. The weighted average base surrender charge (excluding the impact of MVAs) was 6% for Athene’s deferred annuities as of December 31, 2025.
At maturity, the policyholder may elect to receive proceeds in the form of a single payment or an annuity. If the annuity option is selected, the policyholder will receive a series of payments over the policyholder’s lifetime or over a fixed number of years, depending upon the terms of the contract. Some contracts permit annuitization prior to maturity.
Group Annuities . Group annuities issued in connection with pension group annuity transactions usually involve a single premium group annuity contract issued to discharge certain pension plan liabilities. The group annuities that Athene issues are nonparticipating contracts. The assets supporting the guaranteed benefits for each contract may be held in a separate account. Group annuity benefits may be purchased for current, retired and/or terminated employees and their beneficiaries covered under terminating or continuing pension plans. Both immediate and deferred annuity certificates may be issued pursuant to a single group annuity contract. Immediate annuity certificates cover those retirees and beneficiaries currently receiving payments, whereas deferred annuity certificates cover those participants who have not yet begun receiving benefit payments. Immediate
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annuity certificates have no cash surrender rights, whereas deferred annuity certificates may include an election to receive a lump sum payment, exercisable by the participant upon either the participant achieving a specified age or the occurrence of a specified event, such as termination of the participant’s employment.
Athene earns income on group annuities based upon the spread between the return on the assets received in connection with the pension group annuity transaction and the cost of the pension obligations assumed. Group annuities expose Athene to longevity risk, which would be realized if plan participants live longer than assumed in underwriting the transaction, resulting in aggregate payments that exceed Athene’s expectations. However, Athene’s conservative underwriting process makes use of a wealth of reliable pre- and post-selection participant data, including mortality experience data, particularly for mid- to large-sized transactions, to mitigate this risk.
To better position Athene to expand distribution of annuities to defined contribution plans, it acquired Advantage Retirement Solutions, which was rebranded to Vitera, and made enhancements to its annuity offering with Vitera in 2025. Group fixed indexed annuities are issued as part of Vitera’s guaranteed lifetime income solution for defined contribution plans. This involves the use of a target date fund, which can serve as a defined contribution plan’s qualified default investment alternative. The target date fund provides guaranteed lifetime income by purchasing group fixed indexed annuities with guaranteed lifetime withdrawal benefits that Athene issues to the target date fund. The fixed indexed annuities are an asset class within the target date fund’s asset allocation. The allocation to fixed indexed annuities begins, on average, at age 47 for each vintage of the target date fund and gradually increases with incremental purchases of group fixed indexed annuities to provide a pre-defined level of guaranteed income starting at age 65.
Athene generates income on group fixed indexed annuity products distributed to defined contribution target date funds in a similar manner to its fixed indexed annuities sold through the retail distribution channel. Specifically, Athene earns an investment spread, based on the difference between (1) income earned on the investments supporting the liabilities and (2) the cost of funds, including option costs, the cost of providing guarantees and institutional policy issuance, maintenance and distribution costs.
Funding Agreements
Funding agreements include those issued to institutions via direct issuances, those issued to the Federal Home Loan Bank (“FHLB”) and those issued to special-purpose unaffiliated trusts in connection with Athene’s FABN and FABR programs. Funding agreements are issued opportunistically to institutional investors at attractive risk-adjusted funding costs. They are designed to provide an agreement holder with a guaranteed return of principal and periodic interest payments, while offering competitive yields and predictable returns. The interest rate can be fixed or floating. Athene also includes repurchase agreements with a term that exceeds one year at the time of execution within the funding agreement product category.
Life and Other
Life and other products include life insurance policies assumed through reinsurance transactions, guaranteed investment contracts issued in connection with defined contribution plans, other retail products, including legacy run-off or ceded business, and statutory closed blocks.
Guaranteed investment contracts are designed similar to funding agreements, where the contract holder is guaranteed a return of principal plus interest.
Distribution Channels
Athene has developed four dedicated distribution channels to address the retirement services market: retail, flow reinsurance, institutional, and acquisitions and block reinsurance, which support opportunistic origination across different market environments. Additionally, Athene believes these distribution channels enable it to achieve stable asset growth while maintaining attractive returns.
Retail
Athene has built a scalable platform that allows it to originate and rapidly grow its business in deferred annuity products. Athene has developed a suite of retirement savings products, distributed through its network of 41 independent marketing organizations (“IMOs”), 18 banks and 163 broker-dealers, collectively representing approximately 152,000 independent agents
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in all 50 states. Additionally, Athene distributes structured settlements through its network of specialized structured settlement annuity brokers. Athene is focused in every aspect of its retail channel on providing high quality products and service to its policyholders and maintaining appropriate financial protection over the life of their policies.
Flow Reinsurance
Flow reinsurance provides another channel for Athene to source liabilities with attractive crediting rates and offers insurance companies the opportunity to improve their product offerings and enhance their financial results. As in the retail channel, Athene does not pursue flow volume growth at the expense of profitability and will respond rapidly to adjust pricing for changes in asset yields.
Reinsurance is an arrangement under which an insurance company, the reinsurer, agrees to indemnify another insurance company, the ceding company or cedant, for all or a portion of certain insurance risks underwritten by the ceding company. Reinsurance is designed to (1) reduce the net amount at risk on individual risks, thereby enabling the ceding company to increase the volume of business it can underwrite, as well as increase the maximum risk it can underwrite on a single risk, (2) stabilize operating results by reducing volatility in the ceding company’s loss experience, (3) assist the ceding company in meeting applicable regulatory requirements and (4) enhance the ceding company’s financial strength and surplus position.
Within its flow reinsurance channel, Athene conducts third-party flow reinsurance transactions through its insurance subsidiaries. Flow reinsurance also includes recurring premium from block reinsurance transactions. As a reinsurer, Athene partners with insurance companies to develop solutions to their capital requirements, enhance their presence in the retirement market and improve their financial results. Athene targets reinsuring spread-based liabilities which can include FIAs, MYGAs, traditional one-year guarantee fixed deferred annuities, immediate annuities, whole life insurance, universal life insurance, indexed universal life insurance and institutional products.
Institutional
Athene’s institutional channel includes funding agreements, guaranteed investment contracts, pension group annuity transactions and group fixed indexed annuities issued in connection with defined contribution plans.
Funding Agreements . Funding agreements are comprised of funding agreements issued under Athene’s FABN program, secured and other funding agreements, which include Athene’s FABR program and direct funding agreements, funding agreements issued to the FHLB and long-term repurchase agreements. Athene’s FABN program allows its special-purpose, unaffiliated statutory trust to offer its senior secured medium-term notes. The notes are underwritten and marketed by major investment banks’ broker-dealer operations and are sold to institutional investors. The net proceeds from each sale are used to purchase one or more funding agreements from Athene subsidiaries with matching interest and maturity payment terms. Athene also established a secured FABR program in which a special-purpose, unaffiliated entity enters into a repurchase agreement with a bank and the proceeds of the repurchase agreement are used by the special-purpose entity to purchase funding agreements from Athene subsidiaries. In addition to the funding agreements issued to special-purpose unaffiliated trusts or other unaffiliated entities, Athene engages in direct issuances with various institutions. Athene is also a member of the Federal Home Loan Bank of Des Moines and, through membership, has issued funding agreements to the FHLB in exchange for cash advances. Athene is required to provide collateral in excess of the funding agreement amounts outstanding, considering any discounts to the securities posted and prepayment penalties. Long-term repurchase agreements with a term that exceeds one year at the time of execution are also included within the funding agreement product category.
Guaranteed Investment Contracts. Guaranteed investment contracts are marketed to stable value fund managers to support stable value investment options within defined contribution plans.
Pension Group Annuities. Athene partners with institutions seeking to transfer and thereby reduce their obligation to pay future pension benefits to retirees and deferred participants through pension group annuities. Athene works with advisors, brokers and consultants to source pension group annuity transactions and design solutions that meet the needs of prospective pension group annuity counterparties and their participants, with a focus on medium- and large-sized deals involving retirees and/or deferred participants that are structured as either a buyout or a buy-in transaction.
Group Fixed Indexed Annuities. Group fixed indexed annuities are issued as part of Vitera’s guaranteed lifetime income solution through a target date fund within defined contribution plans. The defined contribution market involves several stakeholders, including asset managers and plan record-keepers. Vitera partners with select asset managers and plan record-
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keepers to market the guaranteed lifetime income target date fund to institutions that sponsor defined contribution plans to have these institutions add the guaranteed lifetime income target fund to their fund offering with a particular focus in having the target date fund deemed as the qualified default investment alternative. Vitera also has direct outreach efforts to larger institutions to market the product.
Acquisitions and Block Reinsurance
Acquisitions . Acquisitions are a complementary source of growth for our retirement services business. Athene has a proven ability to acquire businesses in complex transactions at favorable terms, manage the liabilities acquired and reinvest the associated assets.
Block Reinsurance . Through block reinsurance transactions, Athene partners with life and annuity companies to decrease their exposure to one or more products or to divest of lower-margin or non-core segments of their businesses. Unlike acquisitions in which Athene acquires the assets or stock of a target company, block reinsurance allows Athene to contractually assume assets and liabilities associated with a certain book of business. In doing so, Athene contractually assumes responsibility for only that portion of the business that it deems desirable, without assuming additional liabilities.
As Athene continues to expand into new markets and geographies, it has been disciplined in only retaining liabilities that are core to its strategy and competitive advantages. This can be accomplished through structural solutions, including mortality and longevity reinsurance.
Capital
Athene believes it has a strong capital position and is well positioned to meet policyholder and other obligations. Athene measures capital sufficiency using various internal capital metrics which reflect management’s view on the various risks inherent to its business, the amount of capital required to support its core operating strategies and the amount of capital necessary to maintain its current ratings in a recessionary environment. The amount of capital required to support Athene’s core operating strategies is determined based upon internal modeling and analysis of economic risk, as well as inputs from rating agency capital models and consideration of both NAIC risk-based capital (“RBC”) and Bermuda capital requirements. Capital in excess of this required amount is considered excess equity capital, which is available to deploy.
Deployable Capital
Athene’s deployable capital is comprised of capital from three sources: excess equity capital, untapped leverage capacity and available undrawn capital commitments from ACRA. As of December 31, 2025, Athene estimates that it had approximately $8.6 billion in capital available to deploy, consisting of approximately $3.2 billion in excess equity capital, $2.6 billion in untapped leverage capacity (assuming an adjusted leverage ratio of not more than 30%, subject to maintaining a sufficient level of capital required to maintain Athene’s desired financial strength ratings from rating agencies), and $2.8 billion in available undrawn capital at ACRA.
ACRA
To support growth strategies and capital deployment opportunities, Athene established ACRA 1 as a long-duration, on-demand capital vehicle. Athene directly owns 37% of the economic interests in ACRA 1 and all of ACRA 1’s voting interests, with ADIP I owning the remaining 63% of the economic interests. During the commitment period, ACRA 1 participated in certain transactions by drawing a portion of the required capital for such transactions from third-party investors equal to ADIP I’s proportionate economic interests in ACRA 1. The commitment period for ACRA 1 expired in August 2023.
To further support its growth and capital deployment opportunities following the deployment of capital by ACRA 1, Athene funded ACRA 2 in December 2022 as another long-duration, on-demand capital vehicle. Athene directly owns 37% of the economic interests in ACRA 2 and all of ACRA 2’s voting interests, with ADIP II owning the remaining 63% of the economic interests. ACRA 2 participates in certain transactions by drawing a portion of the required capital for such transactions from third-party investors equal to ADIP II’s proportionate economic interests in ACRA 2.
These strategic capital solutions are designed to provide Athene the flexibility to simultaneously deploy capital across multiple accretive avenues and sustain a profitable growth strategy at scale in a capital efficient manner, while maintaining a strong financial position.
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Uses of Capital
Athene’s capital deployment includes the payment for a business opportunity, such as the payment of a ceding commission to enter into a block reinsurance transaction, and the retention of capital based on Athene’s internal capital model. Currently, Athene deploys capital in four primary ways: (1) supporting organic growth, (2) supporting inorganic growth, (3) making dividend payments to AGM, and (4) retaining capital to support financial strength ratings upgrades. Athene generally seeks mid-teen or higher returns on its capital deployment.
Reinsurance
Internal Ceded Reinsurance
Subject to quota shares generally ranging from 80% to 100%, substantially all of the existing deposits held and new deposits generated by Athene’s U.S. insurance subsidiaries are reinsured to its Bermuda reinsurance subsidiaries. Athene maintains the same reserving principles for its Bermuda reinsurance subsidiaries as it does for its U.S. insurance subsidiaries. Athene also retrocedes certain organic and inorganic business to ACRA. Athene’s internal reinsurance structure provides it with several strategic and operational advantages, including the aggregation of regulatory capital, which makes the aggregate capital of its Bermuda reinsurance subsidiaries available to support the risks assumed by each entity, and enhanced operating efficiencies. As a result of its internal reinsurance structure and third-party direct to Bermuda business, a significant majority of Athene’s aggregate capital is held by its Bermuda reinsurance subsidiaries.
Third-Party Ceded Reinsurance
In addition, from time to time, Athene may opportunistically cede certain of its business from its U.S. insurance subsidiaries, or Bermuda reinsurance subsidiaries, to third party reinsurers, to generate capital and/or limit exposure to certain risks.
Ratings
As of December 31, 2025, each of Athene’s significant insurance subsidiaries is rated “A+” or “A1” by the four rating agencies that evaluate the financial strength of such subsidiaries. To achieve its financial strength ratings aspirations, Athene may choose to retain additional capital above the level required by the rating agencies to support operating needs. Athene believes there are numerous benefits to achieving stronger ratings over time, including increased recognition of and confidence in its financial strength by prospective business partners, particularly within product distribution, as well as potential profitability improvements in certain organic channels through lower funding costs. Financial strength and credit ratings directly affect Athene’s ability to access funding and the related cost of borrowing, the attractiveness of certain Athene products to customers, its attractiveness as a reinsurer to potential ceding companies and the requirements for collateral posting on its derivatives. These ratings are periodically reviewed by the rating agencies.
Credit ratings represent the opinions of rating agencies regarding an entity’s ability to repay its indebtedness. Financial strength ratings represent the opinions of rating agencies regarding the financial ability of an insurer or reinsurer to meet its obligations under an insurance policy or reinsurance arrangement and generally involve quantitative and qualitative evaluations by rating agencies of a company’s financial condition and operating performance. Generally, rating agencies base their financial strength ratings upon information furnished to them by the respective company and upon their own investigations, studies and assumptions. Financial strength ratings are based upon factors of concern to policyholders, agents, intermediaries and ceding companies and are not directed toward the protection of investors. Credit and financial strength ratings are not recommendations to buy, sell or hold securities and they may be revised or revoked at any time at the sole discretion of the rating organization.
Principal Investing
Our Principal Investing segment is comprised of our realized performance fee income, realized investment income earned from our balance sheet investments, and certain allocable expenses related to corporate functions supporting the entire company. The Principal Investing segment also includes our growth capital and liquidity resources at AGM. Over time, we may deploy capital into strategic investments that help accelerate the growth of our Asset Management segment, by broadening our investment management and/or product distribution capabilities or increasing the scalability and/or efficiency of our existing operations. We believe these investments may translate into greater compounded annual growth of Fee Related Earnings.
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Given the cyclical nature of realized performance fees, earnings from our Principal Investing segment, or PII, are inherently more volatile in nature than earnings from the Asset Management and Retirement Services segments. We earn fees based on the investment performance of the funds, partnerships, and accounts we manage and compensate our employees, primarily investment professionals, with a meaningful portion of these proceeds to align our team with investors whose capital we manage and incentivize them to deliver strong investment performance over time. To enhance this alignment, we have increased the proportion of performance fee income we pay to our employees over time.
Competition
Asset Management
Within the asset management business, Apollo operates in an intensely competitive industry, and expects it to remain so. We compete globally and on a regional, industry and niche basis.
We face competition both in the pursuit of investor capital and in making investments on behalf of funds and accounts we manage across credit and equity asset classes. We compete for investor capital based on a variety of factors, including:
• investment performance as a metric for assessing excess return per unit of risk;
• investor perception of investment managers’ drive, focus and alignment of interest;
• quality of service provided to and duration of relationship with investors;
• business reputation; and
• the level of fees and expenses charged for services.
We have seen capital demand increasing over six discrete markets on a global basis: institutional investor alternative allocations, individuals, insurance, traditional asset managers, institutional investors for fixed income and equity replacement, and defined contribution/401(k). With the growing demand for capital, we expect the composition of competition may shift and evolve over time.
Competition is also intense for the attraction and retention of qualified employees. Our ability to continue to compete effectively within our industry will depend upon our ability to attract new employees and retain and motivate our existing employees.
Retirement Services
Athene faces competition from a variety of large and small industry participants, including diversified financial institutions and insurance and reinsurance companies. These companies compete in one form or another for the growing pool of retirement assets driven by a number of external factors such as the continued aging of the population and the reduction in safety nets provided by governments and private employers. In the markets in which Athene operates, scale and the ability to provide value-added services and build long-term relationships are important factors to compete effectively. Athene believes that its leading presence in the retirement services market, diverse range of capabilities and broad distribution network uniquely position it to effectively serve consumers’ increasing demand for retirement solutions.
Athene experiences competition in the annuity market from traditional carriers and new entrants. Principal competitive factors for fixed annuities are initial crediting rates, reputation for renewal crediting action, product features, brand recognition, customer service, distribution capabilities and financial strength ratings of the provider. Competition may affect, among other matters, both business growth and the pricing of products and services.
Reinsurance markets are highly competitive, as well as cyclical by product and market. Within the reinsurance market, Athene competes with other insurance and reinsurance companies based on many factors, including, among other things, financial strength, pricing and other terms and conditions of reinsurance agreements, reputation, service, and experience in the types of business underwritten. The impact of these and other factors is generally not consistent across lines of business, domestic and international geographical areas, and distribution channels.
Athene encounters strong competition within its institutional channel. With respect to funding agreements, namely those issued in connection with its FABN program, Athene competes with other insurers that have active FABN programs. Within the funding agreement market, Athene competes primarily on the basis of financial strength and interest rates. With respect to
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guaranteed investment contracts, Athene competes with other insurers that have an active guaranteed investment contract program primarily on the basis of interest rates. With respect to group annuities, Athene competes with other insurers that offer such annuities. Within the pension group annuities market, it competes primarily on the basis of participant security, price, underwriting, investment capabilities and its ability to provide quality service to the corporate sponsor’s pension participants. Within the group annuity market for defined contribution plans, Athene competes primarily on overall product features and design, brand recognition and financial strength ratings.
Finally, Athene experiences competition in the market for acquisition targets and profitable blocks of insurance. Such competition has intensified as insurance businesses become more attractive acquisition targets for both other insurance companies and financial institutions and as the already substantial consolidation in the financial services industry continues. Athene competes for potential acquisition and block reinsurance opportunities based on a number of factors including perceived financial strength, brand recognition, reputation and the pricing it is able to offer, which, to the extent Athene determines to finance a transaction, is in turn dependent on its ability to do so on suitable terms. Athene has demonstrated patience in only pursuing transactions that meet its internal risk and return objectives. With the backdrop of increasing competition, Athene believes its demonstrated ability to source and consummate large and complex transactions and its inroads in other adjacent markets, including the Japanese savings market, is a competitive advantage over other potential acquirers.
For additional information concerning the competitive risks that we face, see “Item 1A. Risk Factors—Operating Risks— We operate in highly competitive industries, which could limit our ability to achieve our growth strategies and could materially and adversely affect our businesses, financial condition, results of operations, cash flows and prospects.”
Human Capital
Apollo’s talent is instrumental to our success as a global alternative asset manager and retirement services provider. Investing in and fostering a modern and inclusive high-performance culture is core to operating our business and delivering positive outcomes for our shareholders and fund investors, and our employee value proposition is designed to engage and develop our talent to deliver maximum impact. We believe our commitment to expanding opportunity across our ecosystem is central to the Apollo business model, an integrated platform which fosters strong collaboration across businesses and functions. Rooted in our core values, we strive to build a culture where all of our people can excel and grow in their careers.
Talent Development
We believe that ongoing professional development is a critical part of our culture at Apollo and an important enabler of our investment process. Because of our entrepreneurial culture, the breadth of our integrated platform, and our reputation for strong investment performance, we believe we can attract, develop and retain top talent. We have development programs in place across a variety of levels which demonstrate our commitment to developing, engaging and retaining our employees. In addition to our training and annual review programs, we have instituted annual employee surveys that measure employee satisfaction and engagement and help evaluate and guide human capital decision-making. We work in partnership with our employees to maintain a strong culture which prioritizes excellence and outperforming expectations to advance our goal of being a modern high-performance workplace that is also great place to work.
Compensation and Benefits
We work to offer a compelling employee value proposition to reward strong performance and support our employees’ professional development and well-being. Our pay for performance compensation philosophy is designed to reward employees for performance and to align employee interests with the firm’s long-term growth and with our shareholders. All of our employees are granted stock through a range of equity-based compensation programs, including our One Apollo stock program. Our benefits programs are intended to support our employees and their families, and include healthcare, wellness initiatives, retirement programs, paid time off and family leave.
Expanding Opportunity
Apollo is committed to championing opportunity and fostering a culture of excellence where everyone has an opportunity to thrive. We make talent decisions based on the qualities necessary to succeed in our modern high-performance workplace, focusing on skills, experience, and performance that drive results, rather than demographic characteristics or preferences. Reducing individuals to a single trait – whether gender, race, or ethnicity – misses the full picture of their capabilities, contributions, and potential impact. At the same time, we believe that a workforce of extraordinary people from a wide range of
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backgrounds and viewpoints helps us solve complex problems, drive innovation, and achieve great results over the long term. We are committed to expanding opportunity across our ecosystem – our workplace, in our marketplace, and in the communities where we live and work – to ensure that we attract and grow the best talent and business partners from a wide range of backgrounds, perspectives, and experiences who can perform at the highest levels for Apollo.
Citizenship
Apollo seeks to actively invest in our communities and engage our employees and other stakeholders in meaningful and impactful Citizenship Programs. Apollo offers its employees philanthropic, volunteer, and other forms of engagement to strengthen communities and expand opportunity around the globe. To empower employees to give back, Apollo hosts volunteer events and provides Citizenship Grants for matching gifts and volunteer rewards each year. Apollo is proud to amplify the efforts of employees, supporting the communities in which they live and the causes and organizations of greatest importance to them.
Foundations
The Apollo Opportunity Foundation and the Athene Charitable Foundation are committed to strengthening the communities where our employees live and work by creating lasting, positive impact through purposeful engagement and investment.
The Apollo Opportunity Foundation was launched in February 2022 to expand opportunity in communities where our employees live and work around the globe by deploying our capital and engaging our people to invest in career education, workforce development and economic empowerment for all. Leading with an employee-driven approach, the Apollo Opportunity Foundation partners with organizations that are championed by Apollo employees to advance economic prosperity and expand opportunity.
The Athene Charitable Foundation is deeply committed to making a meaningful difference in the communities where Athene employees live and work. Through hands-on volunteerism, strategic philanthropic giving, and purposeful community outreach, the Athene Charitable Foundation strives to create lasting, positive impact. Guided by four core pillars, education, human services, health and well-being, and environmental sustainability, the Athene Charitable Foundation’s efforts reflect a shared belief that strong communities are built when opportunity, compassion, and responsibility come together.
Regulatory and Compliance Matters
Our businesses, as well as the financial services and insurance industries generally, are subject to extensive regulation in the U.S. and around the world. Virtually all aspects of our business are subject to various laws and regulations, some of which are summarized below. Under these laws and regulations, agencies that regulate investment advisers, investment funds, insurance businesses, broker-dealers and other individuals and entities have broad administrative powers, including the power to limit, restrict or prohibit the regulated entity or person from carrying on business if it fails to comply with such laws and regulations.
Failure to comply with applicable regulatory and compliance requirements may result in a variety of consequences, including fines, administrative measures, suspension of voting rights, suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time or mandatory disposal of interests in any affected regulated entity, revocation of investment adviser, insurance, broker-dealer and other registrations, licenses or charters, censures and other regulatory sanctions.
The legal and regulatory requirements applicable to our business are ever evolving and may become more restrictive, which may make compliance with applicable requirements more difficult or expensive or otherwise restrict our ability to conduct our business activities in the manner in which they are now conducted. Our businesses have operated for many years within a legal framework that requires us being able to monitor and comply with a broad range of legal and regulatory developments that affect our activities. However, additional legislation, changes in rules promulgated by self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the U.S. or elsewhere, may directly affect our mode of operation and profitability.
The complex regulatory frameworks governing financial institutions, insurance companies, insurance distributors and their respective holding companies and subsidiaries, as well as those with investments in them, are very detailed and technical. Accordingly, the discussion below is general in nature, does not purport to be complete and is current only as of the date of this report.
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Financial Services Regulation
Our financial services businesses, subsidiaries and/or affiliates are regulated under, among others, the Investment Advisers Act; the Investment Company Act; the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”); the Commodity Exchange Act; the U.K. Financial Services and Markets Act 2000; the European Union Alternative Investment Fund Managers Directive and U.K. Alternative Investment Fund Managers Regulations 2013; the European Union Markets in Financial Instruments Directive (“MiFID”) and the assimilated U.K. law version of MiFID; the Financial Stability Oversight Council (the “FSOC”) and similar non-U.S. regulators; the Federal Reserve and the other U.S. federal prudential banking regulators; the SEC; the Financial Industry Regulatory Authority, Inc. (“FINRA”); the Commodity Futures Trading Commission and National Futures Association; the U.S. Department of Labor; the Internal Revenue Service (the “IRS”); the Federal Communications Commission; banking and financial regulators in the European Union, its member states and the U.K.; as well as rules and regulations over credit risk retention, real estate investment trusts, broker-dealers, “over the counter” derivatives markets, commodity pool operators, commodity trading advisors, gaming companies and natural resources companies.
Regulation under the Investment Advisers Act . We conduct our advisory business primarily through our directly owned investment adviser subsidiaries, including Apollo Capital Management, L.P., Apollo Investment Management, L.P., Apollo Credit Management, LLC, ARIS Management, LLC, Apollo Capital Credit Adviser, LLC, Apollo Real Estate Fund Adviser, LLC, Apollo Manager, LLC, Apollo S3 RIC Management, L.P. and Apollo MPS Management, LLC, each of which is registered as an investment adviser with the SEC under the Investment Advisers Act. Apollo Capital Management, L.P. has a number of relying advisers that operate a single advisory business and rely on umbrella registration to be deemed registered as an investment adviser with the SEC. All of our SEC-registered investment advisers are subject to the requirements and regulations of the Investment Advisers Act, including, among other things, maintaining an effective compliance program reasonably designed for our business, maintaining a Code of Business Conduct and Ethics and other established policies for personal trading, record keeping, marketing, disclosure, custody, and acting consistently with each advisers’ fiduciary duty to its clients.
Regulation as a Broker-Dealer . Apollo Global Securities, LLC (“AGS”), Griffin Capital Securities, LLC (“GCS”) and Athene Securities, LLC (“Athene Securities”), each of which is a subsidiary of Apollo, are registered as broker-dealers with the SEC and in the U.S. states and territories and are members of FINRA. Broker-dealers are subject to regulations that cover all aspects of the securities business, including, among other things, the implementation of a supervisory control system and effective compliance program, advertising, communications and sales practices, conduct of and compensation in connection with public securities offerings, trading practices and best execution, maintenance of adequate net capital and customer reserve accounts, financial and trade reporting, record keeping, and the conduct and qualifications of directors, officers, employees and other associated persons. State securities regulators also have regulatory oversight authority over AGS, GCS and Athene Securities. In addition, one of our non-U.S. subsidiaries, Apollo Capital Solutions Europe B.V., is regulated under relevant broker-dealer regulations in the Netherlands. See “—Regulated Entities Outside of the U.S.” below.
Regulation as a Commodity Pool Operator, Commodity Trading Advisor and Investment Company . Certain investment activities in which Apollo managers engage may subject those managers to provisions of the Commodities Exchange Act and oversight by the Commodity Futures Trading Commission (“CFTC”) and National Futures Association (“NFA”), including registration as a commodity pool operator or commodity trading advisor. Apollo intends to rely on exemptions from registration when available.
In addition, certain of the funds we manage are registered management investment companies under the Investment Company Act, and are subject to extensive substantive regulation concerning the governance, registration, disclosures and operations of those funds.
Other U.S. and Foreign Regulation . We are also subject to laws and regulations governing payments and contributions to public officials or other parties, including restrictions imposed by the U.S. Foreign Corrupt Practices Act, as well as economic sanctions and export control laws administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of Commerce and the U.S. Department of State. OFAC maintains and enforces economic sanctions against certain countries, regions, and persons in support of a variety of U.S. foreign policy and national security objectives, which prohibit U.S. persons from engaging in certain transactions with certain persons or entities.
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As a result of certain investments of ours and the funds we manage in financial institutions that operate outside of the U.S., Apollo is subject to regulatory supervision by international financial regulators, including European Union, European Union member state and U.K. financial regulators and applicable requirements set forth in the relevant banking, consumer finance and other financial services regulations of such jurisdictions. In certain cases, such regulations impose suitability and conduct standards on the Company and require notice to and in certain instances approval of, the relevant regulatory authority of an intent to increase or decrease holdings in the relevant entity outside of specified thresholds, or other contemplated changes in structure, or transactions. Failure to comply with these applicable requirements may result in a variety of consequences, including fines, administrative measures, suspension of voting rights, mandatory disposal of interests in the regulated entity or other regulatory sanctions.
Insurance Regulation
Our businesses, subsidiaries and affiliates are subject to a wide variety of insurance and insurance holding company system laws and regulations in both the U.S. and numerous other jurisdictions, including the European Union, Bermuda, the U.K., Switzerland, Italy, Germany, Belgium, the Netherlands, Australia, Singapore, Cayman Islands, Canada and Malaysia.
United States
Within the U.S., each state’s insurance laws require each of our insurance company subsidiaries to be licensed and regulated by the commissioner, superintendent or director of the insurance department (each, a “Commissioner”) of its domiciliary state and each state in which it transacts insurance as an admitted insurer. The extent of such regulation varies by state, but as a general matter, state Commissioners have broad administrative powers over the business activities and financial aspects of our insurance company subsidiaries, including pursuant to state laws and regulations requiring the licensing of producers who sell the insurance company’s products, regulating premium rates and approving policy forms, establishing reserve requirements, solvency standards and minimum capital requirements, regulating the type, amounts and valuations of investments permitted, examining the business conduct of licensed insurance companies and other matters.
As the ultimate controlling entity, we are subject to the insurance holding company system laws of the domiciliary state of each insurance company subsidiary, which requires, among other filings, its annual registration statement filing with the Commissioner of its domiciliary state and the submission of our financial information and other information about the operations of companies within its holding company system, including submission of an annual enterprise risk report identifying material risks within the holding company system that could pose enterprise risk to our insurance company subsidiaries. These laws also impose restrictions and limitations on the ability of an insurance company subsidiary to pay dividends and make other distributions to its parent company. In addition, transactions between an insurance company and other companies within its holding company system, including sales, loans, investments, reinsurance agreements, tax allocation agreements, management agreements and service agreements, must be on terms that are fair and reasonable and, if material or within a specified category, require prior notice to and approval or non-disapproval by the applicable domiciliary state Commissioner.
All states have insurance laws that require regulatory approval of a direct or indirect change of control of an insurer, which would include a change of control of its holding company. Such laws prevent any person from acquiring direct or indirect control of any of our U.S. insurance subsidiaries or their holding companies unless that person has filed a statement with specified information with the Commissioner and has obtained the Commissioner’s prior approval. Under such state statutes, generally acquiring 10% or more of a voting interest in an insurer or its parent company is presumptively considered a change of control, although such presumption may be rebutted. Accordingly, any person who acquires 10% or more of a voting interest in a direct or indirect parent of any of our U.S. insurance subsidiaries without the prior approval of the Commissioner of the applicable state will be in violation of the applicable state’s law and may be subject to injunctive action requiring the disposition or seizure of those securities by the Commissioner or prohibiting the voting of those securities and/or to other actions determined by the Commissioner. Further, a willful violation of these laws is punishable in each state as a criminal offense.
These laws may discourage potential acquisition proposals and may delay, deter or prevent an acquisition of control of a direct or indirect parent of any of our U.S. insurance subsidiaries (in particular through an unsolicited transaction), even if the stockholders of such parent consider such transaction to be desirable.
All 50 states, Puerto Rico and the District of Columbia have insurance guaranty fund laws requiring insurance companies doing business within those jurisdictions to participate in guaranty associations. Guaranty associations are organized to cover, subject
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to limits, contractual obligations under insurance policies issued by insurance companies which later become impaired or insolvent. These associations levy assessments, up to prescribed limits, on each member insurer doing business in a particular state on the basis of their proportionate share of the premiums written by all member insurers in the lines of business in which the impaired or insolvent insurer previously engaged. Most states limit assessments in any year to 2% of the insurer’s average annual premium for the three years preceding the calendar year in which the impaired insurer became impaired or insolvent. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets, usually over a period of years. Assessments levied against Athene’s U.S. insurance subsidiaries by guaranty associations during the year ended December 31, 2025 were not material. While we cannot accurately predict the amount of any such future assessments, or past or future insolvencies of competitors which would lead to such assessments, it is possible that any such assessments with respect to pending insurers’ and may have a material effect on our financial condition, results of operations, liquidity or cash flows, and any reserves we have previously established for these potential assessments may not be adequate.
Other Jurisdictions
The operations of our insurance subsidiaries and branches operating outside the U.S. are subject to the local regulatory and supervisory schemes in the jurisdictions in which they operate, which vary widely from country to country; however, regulators typically grant licenses to operate and control an insurance business in a specific jurisdiction. In general, insurance regulators in most jurisdictions have the administrative power to supervise the registration of agents, regulation of product features and product approvals, asset allocation, minimum capital requirements, solvency and reserves, policyholder liabilities, and investments. Regulatory authorities may also regulate affiliations with other financial institutions, stockholder structures and may impose restrictions on declaring dividends and the ability to effect certain capital transactions, and many jurisdictions require insurance companies to participate in policyholder protection schemes.
Many of the insurance regulatory frameworks that govern our and our affiliated funds’ insurance entities operating outside the U.S. require the prior consent of the applicable regulator in such jurisdictions before (1) any person can become a “controller”/“qualifying holder” or acquire a direct or indirect control/qualifying holding ( e.g. , 10%, 20%, 30% or 33% and 50%) in any regulated company, or over the parent undertaking of any such regulated company or (2) any increase of an existing holding that would result in a person reaching the applicable thresholds of the jurisdiction ( e.g. , 10%, 20%, 30% or 33% and 50%). In addition, certain regulators require the insurance entities or their controllers/qualifying holders to notify the appropriate regulator of any prospective changes in organizational structure of which they are aware, sometimes regardless of whether the controller/qualifying holder or the proposed controller/qualifying holder would be required to submit a change in control application or an application to acquire control/a qualifying holding as a result of such changes in organizational structure. Breach of the requirements to notify the relevant regulator of a decision to acquire or increase control/holding, or of the requirement to obtain approval before completing the relevant control/qualifying holding transaction may in some jurisdictions be a criminal offense attracting potentially unlimited fines. Regulators can also seek other remedies, including suspension of voting rights in the relevant insurance undertaking or having the acquisition .
In particular, the BMA, which regulates Athene, Athora and Catalina (as defined below), maintains supervision over the “controllers” of all registered insurers in Bermuda. For these purposes, a “controller” includes (1) the managing director of the registered insurer or its parent company, (2) the chief executive of the registered insurer or of its parent company, (3) a stockholder controller, and (4) any person in accordance with whose directions or instructions the directors of the registered insurer or its parent company are accustomed to act.
The definition of stockholder controller is set out in the Bermuda Insurance Act 1978 (the “Bermuda Insurance Act”) and generally refers to (1) a person who holds 10% or more of the shares carrying rights to vote at a stockholders’ meeting of the registered insurer or its parent company, (2) a person who is entitled to exercise 10% or more of the voting power at any stockholders’ meeting of such registered insurer or its parent company or (3) a person who is able to exercise significant influence over the management of the registered insurer or its parent company by virtue of its shareholding or its entitlement to exercise, or control the exercise of, the voting power at any stockholders’ meeting.
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Under the Bermuda Insurance Act, stockholder controller ownership is defined as follows:
Actual Stockholder Controller Voting Power
Defined Stockholder Controller Voting Power
10% or more but less than 20%
20% or more but less than 33%
33% or more but less than 50%
50% or more
Where the shares of a registered insurer, or the shares of its parent company, are traded on a recognized stock exchange, and such stockholder becomes a 10%, 20%, 33%, or 50% stockholder controller of the insurer, that stockholder shall, within 45 days, notify the BMA in writing that such stockholder has become, or as a result of a disposition ceased to be, a controller of any such category.
Any person or entity who contravenes the Bermuda Insurance Act by failing to give notice or knowingly becoming a controller of any description before the required 45 days has elapsed is guilty of an offense under Bermuda law and liable to a fine of $25,000 on summary conviction.
The BMA may file a notice of objection to any person or entity who has become a controller of any category when it appears that such person or entity is not, or is no longer, fit and proper to be a controller of the registered insurer. Before issuing a notice of objection, the BMA is required to serve upon the person or entity concerned a preliminary written notice stating the BMA’s intention to issue formal notice of objection. Upon receipt of the preliminary written notice, the person or entity served may, within 28 days, file written representations with the BMA which shall be taken into account by the BMA in making its final determination. Any person or entity who continues to be a controller of any description after having received a notice of objection is guilty of an offense and liable on summary conviction to a fine of $25,000 (and a continuing fine of $500 per day for each day that the offense is continuing) or, if convicted on indictment, to a fine of $100,000 and/or 2 years in prison.
The Bermuda Insurance Act regulates the insurance business of our Bermuda reinsurance subsidiaries, and provides that no person may carry on any insurance business in or from within Bermuda unless registered as an insurer under such act by the BMA. The BMA is required by the Bermuda Insurance Act to determine whether an applicant is a fit and proper body to be engaged in the insurance business and, in particular, whether it has, or has available to it, adequate knowledge and expertise to operate an insurance business. The continued registration of an insurer is subject to the insurer complying with the terms of its registration and such other conditions as the BMA may impose from time to time. The Bermuda Insurance Act also grants to the BMA powers to supervise, investigate and intervene in the affairs of insurers. The Bermuda Insurance Act imposes on Bermuda insurers solvency standards, as well as auditing and reporting requirements.
In the U.K., Apollo is considered the controller of certain insurance company (or equivalent) subsidiaries of Catalina Holdings (Bermuda) Ltd. (“Catalina”), including Catalina Worthing Insurance Limited. In addition, Catalina Services UK Limited is also domiciled in the U.K. and provides insurance distribution services for purposes of certain U.K. insurance regulations.
Apollo is deemed to hold an indirect qualifying holding in Athora Deutschland Verwaltungs GmbH, Athora Deutschland Holding GmbH & Co. KG, Athora Deutschland GmbH, Athora Lebensversicherung AG and Athora Pensionskasse AG, which are either German regulated insurance undertakings or German insurance holding companies.
Apollo is deemed to hold an indirect qualifying holding in Athora Belgium S.A./N.V. (“Athora Belgium”), which is a Belgian licensed insurance and reinsurance undertaking. In addition, some of Athora Belgium’s subsidiaries are registered with the Belgian regulator as insurance brokers and are subject to supervision by the Belgian regulator as regards their insurance distribution activities.
Apollo is deemed to hold an indirect qualifying holding in Athora Netherlands N.V. (formerly known as: VIVAT N.V.), Proteq Levensverzekeringen N.V., and SRLEV N.V., which are either Dutch regulated insurance undertakings or a Dutch insurance holding company, and Zwitserleven PPI N.V., which is a Dutch premium pension institution.
Additionally, Catalina carries on insurance business through its Singapore-domiciled subsidiary Asia Capital Reinsurance Group Pte. Ltd., which in turn operates through its subsidiaries in Malaysia.
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Regulation of an Insurance Group
Many insurers, including certain of our subsidiaries, operate within an insurance group structure with two or more affiliated persons, one or more of which is an insurer. U.S. state and international regulators have developed group supervisory frameworks in order to provide regulators with the ability to scrutinize the activities of an insurance group and assess its potential impact on individual insurers within the group.
Group supervisors may impose certain requirements on the insurance group, including to make provision for, among other things: (1) assessing the financial situation and the solvency position of the insurance group and/or its members and (2) regulating intra-group transactions, risk concentration, governance procedures, risk management and regulatory reporting and disclosure. These requirements as applied in substance to us or our affiliates have been applied as part of larger prudential regulatory initiatives.
Government agencies and insurance standard setters in the U.S. and worldwide have become increasingly interested in potential risks posed by the insurance industry as a whole, and to commercial and financial activities and systems in general, as indicated by the adoption in 2019 of the Common Framework for the Supervision of Internationally Active Insurance Groups (“ComFrame”) by the International Association of Insurance Supervisors (“IAIS”). ComFrame applies to all large internationally active insurance groups (“IAIGs”) designated as an IAIG by their group-wide supervisor. The Iowa Insurance Division (the “IID”) identified itself as the group-wide supervisor for Apollo (in a distinct capacity from its role as supervisor for Athene). In February 2024, the IID, in its capacity as the group-wide supervisor for Apollo, identified Apollo as meeting the criteria as an IAIG and further identified Athene as the head of the IAIG. In general, the head of the IAIG is the uppermost entity to which obligations associated with an IAIG designation attach. Athene will therefore be subject to the relevant capital standard that the U.S. applies to IAIGs. At this time, we do not expect a significant impact on Athene’s capital position or capital structure; however, we cannot fully predict with certainty the impact (if any) on Athene’s capital position or capital structure and any other burdens being named an IAIG may impose on Athene or its insurance affiliates.
Capital Requirements
Regulators of each jurisdiction in which we operate have discretionary authority in connection with our insurance and reinsurance subsidiaries’ continued licensing to limit or prohibit sales to policyholders within their respective jurisdiction or to restrict continued operation of insurers or reinsurers domiciled in their respective jurisdiction if, in their judgment, such entities have not maintained the required level of minimum surplus or capital or that the further transaction of business would be hazardous to policyholders or reinsurance counterparties.
Restrictions on Dividends and Other Distributions
Our U.S. insurance subsidiaries are also subject to restrictions on the payment of dividends. Any proposed dividend in excess of the amount permitted by law is considered an extraordinary dividend or extraordinary distribution and may not be paid until it has been approved, or generally a 30-day waiting period has passed during which it has not been disapproved, by the Commissioner. In addition, Bermuda regulated insurers are strictly prohibited from declaring or paying any dividends unless certain financial conditions are met or prior approval from the BMA is received.
Consumer Protection Laws and Privacy, Data Security and AI Regulation
Federal and state consumer protection laws affect our operations. As part of the Dodd-Frank Act, Congress established the Consumer Financial Protection Bureau to supervise and regulate institutions that provide certain financial products and services to consumers. In addition, the Gramm-Leach-Bliley Act of 1999 implemented fundamental changes in the regulation of the financial services industry in the U.S. and includes privacy and security requirements for financial institutions, including obligations to protect and safeguard consumers’ nonpublic personal information and records, limitations on the re-disclosure and re-use of such information and requirements to notify customers and other individuals about their policies and practices relating to their collection and disclosure of such information and their practices relating to protecting the security and confidentiality of that information. Federal privacy and data security laws are enforced primarily by functional regulators (i.e., state insurance regulators for our insurance company affiliates) and by the SEC, CFTC and self-regulatory organizations for our affiliates registered with such functional regulators.
In addition to federal and other financial institution-specific privacy laws and regulations, an increasing number of states are considering and passing comprehensive privacy legislation, as well as laws or regulations around automated decision making or
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artificial intelligence (“AI”) technologies. Moreover, the issues surrounding data security and the safeguarding of consumers’ protected information are under increasing regulatory scrutiny by state and federal regulators.
Regulated Entities Outside of the U.S.
Certain of our subsidiaries and the funds that we manage that operate in jurisdictions outside of the U.S. are licensed by or have obtained authorizations to operate in their respective jurisdictions outside of the U.S., and as a result are regulated by various international regulators and subject to applicable regulation. These registrations, licenses or authorizations relate to providing investment advice, discretionary investment management, arranging deals, marketing securities, capital markets activities and other regulated activities. Failure to comply with the laws and regulations governing these subsidiaries that have been registered, licensed or authorized could expose us to liability and/or damage our reputation.
Outside of the U.S., our subsidiaries and the funds that we manage, including Apollo Management International LLP, Apollo Credit Management International Limited, Apollo Asset Management Europe LLP, Apollo Investment Management Europe LLP, Apollo Investment Management Europe (Luxembourg) S.à r.l., Apollo Capital Solutions Europe B.V., Apollo Advisors (Mauritius) Ltd, AION Capital Management Limited, Apollo Management Singapore Pte. Ltd., Apollo Management Asia Pacific Limited and Apollo Management Japan Limited, are subject to regulation in the European Union, the Abu Dhabi Global Market, the U.K., India, Mauritius, Singapore, Australia, Hong Kong and Japan.
Other Regulatory Considerations . Certain of our businesses are subject to compliance with laws and regulations of U.S. federal and state governments, non-U.S. governments, their respective agencies and/or various self-regulatory organizations or exchanges relating to, among other things, the privacy of client information, cybersecurity and AI. Any failure to comply with these regulations could expose us to liability and/or reputational damage.
Rigorous legal and compliance analysis of our businesses and investments is important to our culture. We strive to maintain a culture of compliance through the use of policies and procedures, such as our code of ethics, compliance systems, communication of compliance guidance and employee education and training. We have a compliance group that monitors our compliance with the regulatory requirements to which we are subject and manages our compliance policies and procedures. Our Chief Compliance Officer supervises our compliance group, which is responsible for addressing all regulatory and compliance matters that affect our activities. Our compliance policies and procedures address a variety of regulatory and compliance risks such as the handling of material non-public information, personal securities trading, anti-bribery, financial crimes compliance, valuation of investments on a fund-specific basis, document retention, potential conflicts of interest and the allocation of investment opportunities.
Apollo has established certain one-way and/or two-way information barriers in respect of discrete investment strategies (based on established policies and procedures in respect of information barriers), including certain secondary trading activities. Nonetheless, we generally operate without permanent information barriers between our asset management businesses. In an effort to manage possible risks resulting from our decision not to implement additional barriers, our compliance personnel maintain restricted securities lists and other internal controls. We could in the future decide that it is advisable to establish permanent information barriers, particularly as our business expands and diversifies. In such event our ability to operate as an integrated platform would be restricted.
Available Information
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Section 13(a) of the Exchange Act are made available free of charge on or through our website at ir.apollo.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. The information on our website is not, and shall not be deemed to be, part of this report or incorporated into any other filings we make with the SEC. The reports and the other documents we file with the SEC are available on the SEC’s website at www.sec.gov.
From time to time, we may use our website as a channel of distribution of material information. Financial and other material information regarding the Company is routinely posted on and accessible at www.apollo.com.
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ITEM 1A. RISK FACTORS
The following risk factors and other information included in this report should be carefully considered. The occurrence of any of the following risks or of unknown risks and uncertainties may adversely affect our business, financial condition, results of operations and cash flows.
Macroeconomic Risks
Evolving political, market and economic conditions, including increased policy uncertainty and market volatility, may adversely affect our businesses and financial results.
Our businesses are materially affected by conditions in the political environment and financial markets and economic conditions throughout the world, such as changes in interest rates, availability of credit, inflation rates (including persistent inflation), economic uncertainty, changes in laws (including laws relating to taxation), changes in governmental policy and regulatory reform, changes in trade or immigration policy, tariffs and trade sanctions on goods, trade wars, U.S.-China relations, commercial and trading relations between the U.S., Canada, Mexico and the European Union, imposition or maintenance of trade barriers (including tariffs), labor shortages, the ongoing Russia-Ukraine conflict, the conflicts in the Middle East, the tensions between China and Taiwan, supply chain disruptions, economic, political, fiscal and/or other developments in or affecting Eurozone countries, commodity prices, currency exchange rates and controls, wars, other national and international political circumstances (including terrorist acts or security operations), natural disasters, climate change, pandemics, epidemics, disease outbreaks or other severe public health crises and related governmental actions, and other events outside of our control. Recent macroeconomic conditions have been shaped by increasingly fragmented global growth and a more and transactional policy environment. Economic performance has diverged across regions, with relatively resilient demand in the U.S. offset by growth in parts of Europe and a in China, while global trade and investment flows have been influenced by heightened geopolitical tensions and a shift toward trade nationalism and industrial policy. Governments have increasingly relied on tariffs, export controls, investment screening and other policy tools to advance domestic economic and national security objectives, contributing to supply-chain reconfiguration, front-loading of imports, higher costs and reduced visibility into cross-border activity. These developments have increased uncertainty around global demand, pricing, capital allocation and exit environments, which could affect portfolio company operating results and valuations, the availability and cost of financing, the timing and execution of asset sales and refinancings, and the investment performance of the funds we manage.
At the same time, inflation dynamics and monetary policy have become more uneven across jurisdictions. While inflation has moderated in certain economies, it has remained elevated or proven more persistent in others due to services inflation, labor market tightness, fiscal spending and tariff-related cost pressures, leading central banks to pursue increasingly divergent policy paths. As a result, interest rates may remain elevated for longer than in prior cycles or increase further in certain markets, contributing to volatility in interest rates, foreign exchange markets and financial conditions. These conditions may increase financing costs, pressure valuations and liquidity, and disproportionately affect interest-rate-sensitive assets and liabilities held by us and the portfolio companies of the funds we manage, particularly in an environment of slowing growth or heightened market uncertainty. Although the Federal Reserve in the U.S. and central banks in various other countries have cut interest rates as the rate of inflation slowly weakened, they may again raise, and some countries, such as Japan, have already raised, interest rates in response to about inflation in the future, which, coupled with reduced government spending and in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. Interest rate increases or other government actions taken to reduce inflation could also result in pressures in many parts of the world. Interest rate risk a significant market risk to us as a result of interest rate-sensitive assets ( e.g. , fixed income assets) and liabilities ( e.g. , fixed deferred and immediate annuities) held by us, the funds we manage and by the portfolio companies of the funds we manage. Certain portfolio companies of the funds we manage may also be impacted by inflation. If such portfolio companies are to pass any increases in their costs along to their customers, it could affect their results and their ability to pay interest and principal on their loans, particularly if interest rates rise further in response to inflation. In addition, any projected future decreases in such portfolio companies’ operating results due to inflation could impact the fair value of those investments. Any decreases in the fair value of our and our funds’ investments could result in future unrealized and therefore reduce our net assets resulting from operations.
Past, ongoing and potential armed conflicts and military hostilities in various regions, such as the conflict between Russia and Ukraine and the conflict in the Middle East, and heightened political and economic uncertainty across certain emerging markets and certain regions of strategic geopolitical significance, have increased, and may continue to increase in the future, global economic and political uncertainty. In response to such conflicts, hostilities and uncertainties, governments may impose a range
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of trade, export control, investment, financial or other restrictions affecting certain countries, regions, industries or counterparties. For example, governments in the U.S., U.K., and EU have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia, and additional controls and sanctions could be enacted in the future. We are continuing to actively monitor geopolitical developments and assess their impact on our business and the business and operations of the portfolio companies of the funds we manage (particularly the impact on portfolio companies that operate in industries such as chemicals, oil and gas and aviation). We have no significant exposure to Russia, Ukraine or the Middle East and as such, to date, these conflicts have not had a material impact on our business, financial condition or results of operations. However, it is possible that these conflicts may escalate or expand, and the scope, extent and duration of the military action, current or future sanctions and resulting market and geopolitical disruptions could be significant. For example, any global energy crisis, including as a result of restrictions on Russia’s energy exports or any future continuation or expansion of the Middle East conflicts, could similarly have an impact on certain of the geographies where we do business and certain business and operations of the portfolio companies of the funds we manage. We cannot predict the impact these may have on the global economy or our business, financial condition and operations in the future. These may also heighten the impact of other risks described herein.
Additionally, investing in securities and other financial instruments of companies organized or based outside the U.S. and operating outside the U.S. may also expose us to increased compliance risks, as well as higher compliance costs to comply with U.S. and non-U.S. anti-corruption, anti-money laundering and sanctions laws and regulations. These factors are outside our control and may affect the level and volatility of securities prices and the liquidity and the value of investments, and we may not be able to or may choose not to manage our exposure to these conditions.
Volatility caused by political, market or economic conditions can materially hinder the initiation of new, large-sized transactions for funds in our asset management business and, together with volatility in valuations of equity and debt securities, may adversely impact our operating results. It may also increase the risk that cash flows generated from our operations or the collateral underlying the structured products we own may differ from our expectations in timing or amount. In addition, many of our classes of investments, but in particular our alternative investments, may produce investment income that fluctuates significantly from period to period. Any event reducing the estimated fair value of these securities, other than on a temporary basis, could have a material and adverse effect on our business, results of operations, financial condition, liquidity and cash flows. Volatility and general economic trends are also likely to impact the performance of portfolio companies in many industries, particularly industries that are more affected by changes in consumer demand, such as the packaging, manufacturing, chemical and refining industries, as well as the travel and leisure, gaming and real estate industries. Our performance, and the performance of the funds we manage, may be affected to the extent portfolio companies in these industries experience performance or additional pressure due to trends. There is also a risk of both sector-specific and broad-based and/or in the equity and/or credit markets. Our may also be affected by our fixed costs and the possibility that we would be to scale back other costs, within a time frame sufficient to match any further decreases in net income or increases in net relating to changes in market and economic conditions.
Moreover, our retirement services business is materially affected by conditions in the capital markets and the U.S. economy generally, as well as by the global economy. Actual or perceived stressed conditions, volatility and disruptions in financial asset classes or various capital and credit markets can have an adverse effect on our retirement services business, both because such conditions may decrease the returns on, and value of, its investment portfolio and because its benefit and claim liabilities are sensitive to changing market factors. In times of economic hardship, the policyholders of our retirement services business may choose to defer paying insurance premiums, stop paying insurance premiums altogether or surrender their policies. In addition, actual or perceived difficult conditions in the capital markets may discourage individuals from making investment decisions and purchasing our retirement services products.
In addition, certain investments by funds or vehicles we manage may be based, in part, on assumptions regarding the availability, amount or duration of federal, state, local or foreign government programs, incentives, subsidies, regulatory frameworks or tax credits applicable to particular industries, assets or business activities. Such programs or incentives are often available only for limited periods, may be subject to phase-outs, caps or eligibility requirements, and may depend on continued legislative, regulatory or budgetary support. As a result, such programs or incentives may not be available for the full anticipated investment horizon, or on the terms initially expected, and may be delayed, modified, not renewed or eliminated. Any such developments could adversely affect the anticipated profitability, cash flows, valuation or exit opportunities of these investments, which in turn could negatively affect the performance of the funds or vehicles we manage, and our results of operations and cash flows.
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Operating Risks
A portion of our revenues, earnings and cash flow is highly variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis, which may cause the price of our shares to be volatile.
A portion of our revenues, earnings and cash flow is highly variable, primarily due to the fact that performance fees from our asset management business and the transaction, structuring, advisory and other fees that we receive, can vary significantly from quarter to quarter and year to year. In addition, the investment returns of most of the funds and other vehicles we manage are volatile. We may also experience fluctuations in our results from quarter to quarter and year to year due to a number of other factors, including changes in the values of investments of the funds and other vehicles we manage, changes in the amount of distributions, dividends or interest paid in respect of investments, changes in our operating expenses, policyholder behavior, the degree to which we encounter competition and general economic and market conditions. Our future results will also be significantly dependent on the success of the larger funds we manage ( e.g. , Fund IX, Fund X and AAA), changes in the value of which may result in fluctuations in our results. In addition, performance fees from some of the funds and other vehicles we manage are subject to contingent repayment by the general partner if, upon the final distribution, the relevant fund’s general partner has received cumulative performance fees on individual portfolio investments in excess of the amount of performance fees it would be entitled to from the profits calculated for all portfolio investments in the aggregate. Such variability may lead to in the trading price of our shares and cause our results for a particular period not to be indicative of our performance in a future period. It may be for us to steady growth in earnings and cash flow on a quarterly basis, which could in turn lead to large movements in the price of our shares or increased in the price of our shares in general.
The timing of performance fees generated by the funds and other vehicles we manage is uncertain and will contribute to the volatility of our results. Performance fees depend on the performance of the funds and other vehicles we manage. It takes a substantial period of time to identify attractive investment opportunities, to raise all the funds needed to make an investment and then to realize the cash value or other proceeds of an investment through a sale, public offering, recapitalization or other exit. Even if an investment proves to be profitable, it may be several years before any profits can be realized in cash or other proceeds. We cannot predict when, or if, any realization of investments will occur. Generally, if the funds we manage were to have a realization event in a particular quarter or year, it may have a significant impact on our results for that particular quarter or year that may not be replicated in subsequent periods. With respect to a number of credit funds, our performance fees are generally paid annually, semi-annually or quarterly, and the varying frequency of these payments will contribute to the volatility of our revenues and cash flow. Furthermore, we earn these performance fees only if the net asset value of a fund has increased or, in the case of certain funds, increased beyond a particular threshold, which is referred to as a “high water mark.” Such performance fees we earn are therefore dependent on the net asset value of investors’ investments in the fund or vehicle, which could lead to significant in our results.
We may not be successful in expanding into new investment strategies, geographic markets and businesses and in attracting new types of investors, each of which may result in additional risks and uncertainties in our businesses.
We actively consider the opportunistic expansion of our businesses, both geographically and into new investment strategies and platforms, and intend, to the extent that market conditions warrant, to grow our businesses by increasing AUM in existing businesses and expanding into new investment strategies, platforms, geographic markets, businesses and distribution channels, including the retail channel. We intend to grow our business in the future in part by acquisitions and joint ventures, each of which could require additional cash and equity, systems development and skilled personnel. We may experience challenges identifying, financing, consummating and integrating such acquisitions and transactions. Our organizational documents do not limit us to the asset management and retirement services businesses. Accordingly, we may pursue growth through acquisitions of other investment management companies (such as our acquisition of Bridge Investment Group Holdings Inc. in 2025), acquisitions of critical business partners or other strategic initiatives, including entering into new lines of business.
We may not be successful in any such attempted expansion. Attempts to expand our businesses involve a number of special risks, including the diversion of management’s attention from our core businesses; the disruption of our ongoing businesses; entry into markets or businesses in which we may have limited or no experience; increasing demands on our operational systems and infrastructure; potential increase in investor concentration; enhanced regulatory scrutiny and greater reputational and litigation risk; difficulty in combining or integrating operational and management systems; and the broadening of our geographic footprint, increasing the risks associated with conducting operations in foreign jurisdictions (including regulatory, tax, legal and reputational consequences). Additionally, any expansion of our businesses could result in significant increases in
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our outstanding indebtedness and debt service requirements, which would increase the risks of investing in our shares, and may adversely impact our results of operations and financial condition.
We also may not be successful in identifying new investment strategies or geographic markets that increase our profitability, or in identifying and acquiring new businesses that increase our profitability. We have also entered into strategic partnerships, separately managed accounts and sub-advisory arrangements, which lack the scale of the funds we traditionally manage and are more costly to administer. The prevalence of these accounts may also present conflicts, introduce complexity in the deployment of capital and result in additional costs and expenses.
Before expanding into new investment strategies, or making any fund investments generally, we conduct due diligence that we deem reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, we may be required to evaluate important and complex issues, including but not limited to those related to business, financial, credit risk, tax, accounting, environmental, legal and regulatory and macroeconomic trends. The due diligence investigation that we will carry out may not reveal or highlight all relevant facts (including fraud) or risks that may be necessary or helpful in evaluating such investment opportunity, including past or current violations of law and related legal exposure, and we may not identify or foresee future developments that could have a material adverse effect on an investment ( e.g. , technological disruption across an industry).
We have increasingly undertaken business initiatives to increase the number and type of products offered to individual investors, which could expose us to new and greater levels of risk.
We have increasingly undertaken business initiatives to increase the number and type of products, including externally managed vehicles, offered to investors, especially individual (non-institutional) investors (including investors often described as high net worth individuals, family offices and mass affluent individuals), in the U.S. and other jurisdictions around the world. Our investment adviser subsidiaries or affiliates currently externally manage or advise a number of such vehicles, and a number of other vehicles are expected to be launched at various times in the future. In some cases, the offerings are distributed to such investors indirectly through third-party managed vehicles sponsored by brokerage firms, private banks or other third parties, and in other cases directly to the qualified clients of private banks, independent investment advisors and brokers. In other cases, we create products specifically designed for direct investment by individual investors in the U.S., many of whom are not accredited investors, or similar investors in non-U.S. jurisdictions, including in Europe and Asia. Such products are regulated by the SEC in the U.S. and by other similar regulatory bodies in other jurisdictions.
Accessing individual investors and selling products directed at such investors exposes us to new and greater levels of risk, including heightened litigation and regulatory enforcement risks, an increased compliance burden, and more complex administration and accounting operations. As the number and complexity of our investment products and vehicles increases, the operational demands and complexity of our business has also increased, which could strain the sufficiency of our systems, infrastructure, and personnel required to manage the volume and complexity of this growth. We also may be subject to claims related to matters such as the adequacy of disclosures, appropriateness of fees, suitability and board of directors’ oversight, each which could result in civil lawsuits, regulatory penalties and enforcement actions. Our registered investment advisers could also be subject to direct or derivative claims from a fund’s investors or board of directors for alleged mismanagement of the fund. In addition, regulatory requirements imposing on the ability of affiliates of certain of our vehicles to engage in certain transactions may limit our funds’ ability to engage in otherwise investment .
We continue to distribute products through new channels and markets, including through unaffiliated third-party firms, and we may not be able to effectively monitor or control the manner of distribution, which could result in litigation or regulatory action against us, including with respect to, among other things, claims that products distributed through such channels are distributed to investors for whom they are unsuitable, or claims related to conflicts of interest or the adequacy of disclosure to investors or claims that the products are distributed in a manner inconsistent with our regulatory requirements or otherwise inappropriate manner. In addition, regulations applicable to our arrangements with such distributors and channels increase the compliance burden associated with onboarding new distributors or pursuing new distribution channels, resulting in increased cost and complexity. Although we engage in due diligence and onboarding procedures that seek to issues relating to the third parties through which individual investors access our products, we do not control and have limited information regarding many of these third-party channels and, therefore, we are to the risks of reputational , regulatory and legal liability to the extent such third parties sell our products to investors.
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Similarly, there is a risk that Apollo employees involved in the direct distribution of our products, or employees who oversee independent advisors, brokerage firms and other third parties around the world involved in distributing our products, do not follow our compliance and supervisory procedures. In addition, the distribution of such products, including through new channels, whether directly or through market intermediaries, could expose us to allegations of improper conduct and/or actions by state and federal regulators in the U.S. and regulators in jurisdictions outside of the U.S. with respect to, among other things, product suitability, distributor eligibility, investor classification, compliance with securities laws, conflicts of interest and the adequacy of disclosure to investors to whom our products are distributed through those channels.
In addition, many of the products that we make available to individual investors contain terms that permit such investors to request redemption or repurchase of their interests on a periodic basis and, subject to certain limitations, include limits on the aggregate amount of such interests that may be redeemed or repurchased in a given period. Challenging market or economic conditions and liquidity needs could cause elevated share redemption or repurchase requests from investors in such products. In addition, limitations can be placed on the amount of redemptions or repurchases that are fulfilled. Such limitations are particularly possible in the event redemption or repurchase requests are elevated or investor subscriptions to such products are concurrently at reduced levels. Such limitations may subject us to reputational harm and may make such vehicles less attractive to individual investors, which could have a material adverse effect on the cash flows of such vehicles. This may in turn negatively impact the revenues we derive from such vehicles.
As we expand the distribution of products to individual investors outside of the U.S., we are increasingly exposed to risks in non-U.S. jurisdictions. While many of the risks we face in non-U.S. jurisdictions are similar to those that we face in the distribution of products to individual investors in the U.S., securities laws and other applicable regulatory regimes can be extensive, complex and vary by jurisdiction. In addition, the distribution of products to individual investors outside of the U.S. may involve complex structures and market practices that vary by local jurisdiction. As a result, this expansion subjects us to additional complexity, litigation and regulatory risk.
In addition, our initiatives to expand our individual investor base, including outside of the U.S., requires the investment of significant time, effort and resources, including the potential hiring of additional personnel, the implementation of new operational, compliance and other systems and processes and the development or implementation of new technology. There is no assurance that such efforts will be successful. Moreover, as individual investor targeted initiatives continue to grow across the alternative asset management industry, there may be the introduction of new regulatory, oversight or disclosure requirements that make our initiatives to expand our individual investor base more difficult to achieve.
We operate in highly competitive industries, which could limit our ability to achieve our growth strategies and could materially and adversely affect our businesses, financial condition, results of operations, cash flows and prospects.
We operate in highly competitive markets and compete with a large number of investment management and alternative asset management firms, private equity, credit and real assets fund sponsors, U.S. and non-U.S. insurance and reinsurance companies, broker-dealers, financial advisors, asset managers and other financial institutions. In particular, competition in our asset management business is based on a variety of factors, including investment performance, business relationships, quality of service provided to clients, investor availability of capital and willingness to invest, fund terms (including fees and liquidity terms), brand recognition, types of products offered and business reputation. Our investment business, as well as our investment funds, compete with a number of private funds, specialized investment funds, funds structured for individual investors, hedge funds and other sponsors managing pools of capital, as well as corporate buyers and traditional asset managers.
Competition for our business extends beyond fundraising and includes competition to source, originate, structure, finance and syndicate investments, acquire portfolio companies and strategic assets and deploy capital across private equity, private credit, real assets and other alternative strategies. We also compete with financial institutions and other market participants in connection with acquisitions, investments, financings, originations, syndications and other strategic transactions, and competitive pressures in these areas may affect pricing, transaction terms, investment returns and our ability to deploy capital efficiently. In addition, our retirement services business faces significant competition from traditional insurers and reinsurers, asset managers and other financial institutions offering annuity, pension risk transfer and other retirement products, as well as from alternative capital providers seeking exposure to similar long-duration liabilities or asset classes. In these markets, competition is based on factors such as pricing, product design and structure, underwriting standards, investment performance, financial strength, financial strength ratings, credit ratings, scale, distribution capabilities, regulatory capital considerations and the ability to source and manage assets aligned with retirement and insurance liabilities.
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Our competitors may have greater financial, fundraising, technical, research, marketing and other resources, more established relationships, broader product offerings, lower costs of capital or higher risk tolerances than we do. Some competitors may be willing or able to pursue opportunities or strategies or retirement-related transactions on more aggressive terms, including by accepting lower returns or greater risk, which could reduce the availability of attractive opportunities or require us to adjust pricing, structure or terms. As a result of these competitive dynamics across our asset management and retirement services businesses, we may experience increased difficulty in attracting and retaining investors, originating or executing transactions on favorable terms, maintaining or increasing fees, deploying capital effectively or achieving our growth objectives.
In addition, we may face other competitive risks beyond those specific to the businesses in which we operate. For example, the use and implementation of artificial intelligence, including machine learning technology and generative artificial intelligence (collectively, “AI Technologies”), and products and platforms involving digital assets and distributed ledger technologies also have the potential to significantly disrupt the way financial institutions, including investment managers and asset managers, do business or attract and address investor demands and strategies, resulting in further competitive pressures for our business. These competitive pressures may materially adversely affect on our growth, business, financial condition, results of operations, cash flows and prospects.
Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results.
We make and rely on certain assumptions and estimates regarding many matters related to our businesses, including valuations, interest rates, investment returns, expenses and operating costs, tax assets and liabilities, tax rates, business mix, surrender activity, mortality and contingent liabilities. We also use these assumptions and estimates to make decisions crucial to our business operations. We use assumptions and estimates to make decisions about pricing, target returns and expense structures for our insurance subsidiaries’ products and pension group annuity transactions; determining the amount of reserves our retirement services business is required to hold for its policy liabilities; determining the price our retirement services business will pay to acquire or reinsure business; determining the hedging strategies we employ to manage risks to our business and operations; and determining the amount of regulatory and rating agency capital that our insurance subsidiaries must hold to support their businesses. Similarly, our management teams make similar assumptions and estimates in planning and measuring the performance of our asset management business. In addition, certain investments and other assets and liabilities of our asset management business and our retirement services business must be, or at our election are, measured at fair value the determination of which involves the use of various assumptions and estimates and considerable judgment. The factors influencing these various assumptions and estimates cannot be calculated or predicted with certainty, and if our assumptions and estimates differ significantly from actual outcomes and results, our business, financial condition, results of operations, liquidity and cash flows may be materially and affected.
We depend on certain key personnel and the loss of their services could have a material adverse effect on us.
The success of our businesses depends on the efforts, judgment, business relationships, personal reputations and continued service of our key personnel. The loss of the services of any of our key personnel or damage to their personal or professional reputation could have a material adverse effect on our business. Accordingly, our retention of our key personnel and our success in recruiting additional personnel is crucial to our success. If any of our key personnel were to join or form a competitor, our business could similarly suffer a material adverse effect. For example, some of the investors in the funds we manage could choose to invest with that competitor, another competitor or not at all, rather than in the funds we manage. We do not carry any “key man” insurance that would provide us with proceeds in the event of the death or disability of any of our key personnel. We may also not succeed in recruiting additional personnel because the market for qualified professionals is extremely competitive. Efforts to retain or attract key personnel may result in significant additional expenses, which could affect our .
In addition, the governing agreements of certain of the funds we manage provide that in the event certain investment professionals and other key personnel fail to devote the requisite time to our businesses, the investment period will terminate. In some instances, such termination becomes effective only if coupled with a certain percentage in interest of the fund investors or the respective fund advisory board, if applicable, not voting to continue the investment period. In addition to having a significant negative impact on our revenue, net income and cash flow, the occurrence of such an event with respect to any of the funds we manage would likely result in significant reputational damage to us.
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Actual or alleged misconduct, unethical behavior and other activities by our current and former employees, directors, advisers, third-party service providers or others affiliated with us could harm us by impairing our ability to attract and retain investors and by subjecting us to significant legal liability, regulatory scrutiny and reputational harm.
There is a risk that our employees, directors, advisers, third-party service providers or others affiliated with us could engage, including deliberately or recklessly, in actual or perceived misconduct, unethical behavior or fraud and/or participate in outside activities that creates reputational harm and/or legal exposure for us and adversely affects our businesses. With respect to our retirement services business, our insurance businesses rely on third-party intermediaries to sell our products and services and we further rely on third-party administrators to administer a portion of our annuity contracts as well as our legacy life insurance business. If anyone associated or affiliated with us, or the portfolio companies of the funds we manage, were to engage, or be accused of engaging, in illegal, unethical or suspicious activities, sexual harassment, discrimination, use or disclosure of confidential information, , payment or solicitation of , of products and services or any other type of similar or of other laws and regulations, regardless of whether such activity is related to our business, management’s resources and attention could be , and we could receive publicity, to our brand and reputation, be subject to increased regulatory , or sanctions, face in raising funds or generating business, experience a broader backlash the company and its affiliated entities, to our financial position and current and future business relationships, as well as face potentially significant or .
Fraud, payment or solicitation of bribes and other deceptive practices or other misconduct at the portfolio companies of the funds we manage could similarly subject us to liability and reputational damage and also harm our performance. There are a number of grounds upon which such misconduct at a portfolio company could subject us to criminal and/or civil liability, including on the basis of actual knowledge, willful blindness, or control person liability.
We rely on technology and information systems, many of which are controlled by third-party vendors, to maintain the security of our information and technology networks and to conduct our businesses, and any failures or interruptions of these systems could adversely affect our businesses and results of operations.
We are subject to various risks and costs associated with the collection, handling, storage and transmission of personally identifiable information. In the ordinary course of our business, we collect and store a range of data, including our proprietary business information and intellectual property, and personally identifiable information of our employees, our investors, our retirement services business policyholders and other third parties, in our data centers and on our networks and we rely on technology and information systems to execute, confirm and settle transactions. We rely on a host of information systems and hardware systems for the secure processing, maintenance and transmission of this information, and the unavailability of these systems or the failure of these systems to perform as anticipated for any reason could disrupt our businesses and could result in decreased performance and increased operating costs, causing our businesses and results of operations to suffer.
Although we are not currently aware of any security incidents or cyberattacks that, individually or in the aggregate, have materially affected, or would reasonably be expected to materially affect, our operations or financial condition, there can be no assurance that the various procedures and controls we utilize to mitigate these threats will be sufficient to prevent disruptions to our systems, especially because the cyberattack techniques used change frequently and are not recognized until launched, the full scope of a cyberattack may not be realized until an investigation has been performed and cyberattacks can originate from a wide variety of sources. We rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems. Although we take protective measures and endeavor to strengthen our computer systems, software, technology assets and networks to prevent and address potential cyberattacks, there can be no assurance that any of these measures will prove . Furthermore, in the maintenance, updates, upgrading, or patching of our information systems could impact their effectiveness or could us, as well as our clients and others who rely upon, or have exposure to, our systems, to security and other risks. The rapid evolution and increasing prevalence of AI Technologies may also increase our cybersecurity risks, and we may not be to anticipate, prevent, mitigate or remediate all of the potential risks, or impacts as a result of the use of AI Technologies.
We are also dependent on an increasingly concentrated group of third-party vendors that we do not control for hosting the information systems and hardware systems that are critical to our businesses. We rely on third-party service providers for certain aspects of our businesses, including for certain information systems, technology and administration of the funds we manage and compliance matters. While we require our critical third-party suppliers to implement and maintain what we believe to be effective cybersecurity and data protection measures, we cannot guarantee that third parties and infrastructure in our supply chain or our partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs
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that could result in a breach of or disruption to our information technology systems or the third-party information technology systems that support our services. Our ability to monitor these third parties’ information security practices is limited, and they may not have adequate information security measures in place. In addition, if one of our third-party suppliers suffers a security breach, which has happened in the past, our response may be limited or more difficult because we may not have direct access to their systems, logs and other information related to the security breach. A disaster, disruption or compromise in technology or infrastructure that supports our businesses, including a disruption involving electronic communications or other services used by us, our vendors or third parties with whom we conduct business, may have an adverse impact on our ability to continue to operate our businesses without interruption which could have a material effect on us. These risks could increase as vendors increasingly offer cloud-based software services rather than software services that can be operated within our own data centers. These risks also increase to the extent we engage in operations outside the U.S. We also rely on data processing systems and the secure processing, storage and transmission of information, including payment and health information. A or compromise of these systems could have a material effect on our business. In addition, costs related to data security or may not be fully insured or indemnified by other means.
As new technologies, including tools that harness generative artificial intelligence and other machine learning techniques, rapidly develop and become even more accessible, the use of such new technologies by us, our affiliates and our third-party service providers will present additional known and unknown risks, including, among others, the risk that confidential information may be stolen, misappropriated or disclosed and the risk that we and/or third-party service providers may rely on incorrect, unclear or biased outputs generated by such technologies, any of which could have an adverse impact on us, our reputation and our business.
A significant actual or potential theft, loss, corruption, exposure, fraudulent, unauthorized or accidental use or misuse of investor, policyholder, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of our privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation and regulatory actions against us by the U.S. federal and state governments, the EU or other jurisdictions, various regulatory organizations or exchanges, or affected individuals, in addition to significant reputational harm.
Additionally, although the prevalence and scope of applications of distributed ledger technology, cryptocurrency and similar technologies is growing, the technology is nascent and may be vulnerable to cyberattacks or have other inherent technological weaknesses. We and the funds we manage are exposed to risks, and may become exposed to additional risks, related to distributed ledger technology and the financial products that use it, such as blockchain, cryptocurrencies and other digital assets, or decentralized finance (DeFi) and related applications, including through our offering funds and other products, facilitating clients’ activities and investing in financial products that use blockchain, cryptocurrencies or other digital assets; our reliance on companies that use, develop or rely on distributed ledger technology; use of distributed ledger technology by third-party vendors, clients, counterparties, clearinghouses and other financial intermediaries with whom we transact; and the receipt of cryptocurrencies or other digital assets as collateral. Market volatility of financial products using distributed ledger technology may increase these risks and may also expose us to increased compliance risks.
AI Technologies could increase competitive, operational, legal and regulatory risks to our businesses in ways that we cannot predict.
Technological developments in AI Technologies and their current and potential future applications, including in the private investment, financial and insurance sectors, as well as the legal and regulatory frameworks within which they operate, are rapidly evolving. The full extent of current or future risks related thereto is not possible to predict and we may not be able to anticipate, prevent, mitigate or remediate all of the potential risks, challenges or impacts of such changes. AI Technologies could significantly disrupt the business models, investment strategies, operational processes, and markets in which we operate and subject us to increased competition, legal and regulatory risks and compliance costs, which could have a material and adverse effect on our business, financial condition, results of operations, liquidity and cash flows. We also face competitive risks if we fail to adopt AI Technologies in a timely fashion. Advancements in computing and AI Technologies, including efficiency improvements, without related increases in the adoption and development of such technologies, could also negatively impact demand for, and the valuation of, digital infrastructure assets, a sector to which certain of our investment strategies have significant exposure.
Through our use of AI Technologies, we avail ourselves of the potential benefits, insights and efficiencies resulting from these technologies. For example, our employees can utilize internal generative AI-powered applications to help summarize, search or
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translate documents or gather information on a wide variety of topics. However, these technologies also present a number of potential risks that cannot be fully mitigated. If the data we, our affiliates or third parties whose services we rely on, use in connection with the possible development or deployment of AI Technologies (including employee data and data related to, or used in, workplace operations) is incomplete, incorrect, inadequate or biased in some way, it may result in flawed algorithms, reduce the effectiveness of AI Technologies, adversely impact us and our operations, and could subject us to legal and regulatory investigations and/or actions. There is also a risk that AI Technologies and data used therewith may be misused or misappropriated by our employees or third-party service providers or other third parties. Further, we may not be able to control how third-party AI Technologies that we choose to use are developed or maintained, or how data we input is used or disclosed, even where we have sought contractual protections with respect to these matters. The or of our data, including material non-public information, in the practices associated with data collection, training AI technology on large data sets and big data analytics and in validating data could have an impact on our reputation, subject us to legal and regulatory and/or actions and create competitive risk. Additionally, the volume and reliance on data and algorithms also make AI Technologies, and in turn us, more to cybersecurity , including compromising underlying models, training data, or other intellectual property. We could be to risks to the extent of our use or third-party service providers, or any counterparties use of AI Technologies in their business activities. While we expect, from time to time, to adopt and adjust usage policies and procedures governing the use of AI Technologies by our personnel, there is a risk of of such AI Technologies, of such AI Technologies to be available or to perform, or data leakage on account of use of such AI Technologies, any of which could cause a material to us or our portfolio companies. In addition, some of our competitors may be more than us in the development and implementation of new technologies, including services and platforms based on artificial intelligence, to address investor demands or operations. If we are to advance our capabilities in these areas, or do so at a pace than others in our industry, we may be at a competitive .
The use of AI Technologies also requires our compliance with legal or regulatory frameworks that are not fully developed or tested, and we may face litigation and regulatory actions related to our use of AI Technologies, including intellectual property infringement and misappropriation claims, and claims related to alleged misuse or misappropriation of our data. This could have a material and adverse impact on our business, financial condition, results of operations, liquidity and cash flows. There has been increased scrutiny, including from global regulators, regarding the use of “big data,” diligence of data sets and oversight of data vendors. Our ability to use data to gain insights into and manage our business may be limited in the future by regulatory scrutiny and legal developments. We may also communicate externally regarding AI Technology-related initiatives, including our development and use of AI Technologies, which subjects us to the risk of being of making or statements regarding our ability to avail ourselves of the potential benefits of AI Technology.
Regulations related to AI Technologies continue to evolve and may also impose on us certain obligations and costs related to monitoring and compliance. The costs of preparing for, monitoring and complying with laws and regulations related to AI Technologies, and any claims or penalties as the result of any use of or reliance on AI Technologies, could, if applicable, adversely affect us, us and/or third parties connected to us (whether directly or indirectly), which could adversely affect our business and results of operations.
Many of the funds we manage invest in illiquid assets and many of the investments of our retirement services business are relatively illiquid and we may fail to realize profits from these assets for a considerable period of time, or lose some or all of the principal amount we invest in these assets if we are required to sell our invested assets at a loss at inopportune times or in response to changes in applicable rules and regulations.
Many of the funds we manage invest in securities or other financial instruments that are not publicly traded or are otherwise viewed as “illiquid.” In many cases, the funds we manage may be permitted by contract or by applicable securities laws to sell such securities only after a period of time and then only at such times when we do not possess material nonpublic information. The ability of many funds, particularly the private equity funds, to dispose of investments is heavily dependent on the capital markets and in particular the public equity markets, including hybrid equity and hybrid credit markets. Many of the funds we manage invest in private credit opportunities and the ability to dispose of such instruments prior to maturity is heavily dependent upon the secondary trading market for such instruments. Such markets are still developing and could be subject to periods where the general partner of the fund deems the level of trading not to be appropriate. Furthermore, large holdings even of publicly traded securities can often be disposed of only over a substantial period of time, exposing the investment returns to risks of downward movement in market prices during the disposition period. Accordingly, the funds we manage may be , under certain conditions, to sell securities at a .
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In addition, many investments by our retirement services business are in securities that are not publicly traded or that otherwise lack liquidity, such as its privately placed fixed maturity securities, below investment grade securities, investments in mortgage loans and other alternative investments. These relatively illiquid types of investments are recorded at fair value. If a material liquidity demand is triggered and we are unable to satisfy the demand with the sources of liquidity available to us, our retirement services business could be forced to sell certain of its assets and there can be no assurance that it would be able to sell them for the values at which such assets are recorded and it might be forced to sell them at significantly lower prices. In many cases, our retirement services business may also be prohibited by contract or applicable securities laws from selling such securities for a period of time. Thus, it may be impossible or costly to liquidate positions rapidly in order to meet withdrawal or recapture obligations. This potential between the liquidity of assets and liabilities could have a material and effect on our business, financial condition, results of operations and cash flows.
Further, governmental and regulatory authorities periodically review legislative and regulatory initiatives, and may promulgate new or revised, or adopt changes in the interpretation and enforcement of existing, rules and regulations at any time that may impact our investments. Such changes in regulatory requirements could disrupt market liquidity, make it more difficult for us to source and invest in attractive private investments, and cause securities that are not publicly traded to lose value, any of which could have a material and adverse effect on our business, financial condition or results of operations.
We rely on the financing markets for the operation of our business.
We rely on the debt and equity financing markets for the operation of our business. To the extent that debt and equity markets render financing difficult to obtain, refinance or extend, or more expensive, this may have a material and adverse effect on our business, financial condition, results of operations, liquidity and cash flows. In addition, the ability of the funds we manage to exit investments on favorable terms or at all is heavily dependent on the condition of the applicable markets.
Many of the funds we manage utilize subscription lines of credit, net asset value-based fund finance facilities or similar financing arrangements, margin loans or other derivative financing arrangements to fund operations and investments, including their equity contributions in a portfolio company. Some of these are also intended as a source of longer-term borrowings for investments by the relevant funds. In other cases, some funds make investments through the use of such facilities or arrangements that are backed by the fund’s investment portfolio. The interest expense and other costs incurred in connection with such indebtedness may not be recovered by appreciation in the assets purchased or carried, and will be lost, and the timing and magnitude of such losses may be accelerated or exacerbated in the event of a decline in the market value of such assets. Gains realized with borrowed funds may cause the fund’s net asset value to increase at a faster rate than would be the case without borrowings. However, if investment results fail to cover the cost of borrowings, the fund’s net asset value could also decrease faster than if there had been no borrowings. The inability to obtain such financing on terms or at all may impact the ability of the funds we manage to targeted rates of return. Moreover, certain of the funds we manage allow for investors to leverage part of their subscription, and consequently any or results at the fund-level could be . Because leveraged investments are inherently more sensitive to in revenues and to increases in expenses and interest rates, levered investors may also be at substantially increased risk of of their investment.
Additionally, certain investments by the funds we manage rely heavily on the use of leverage. The absence of available sources of debt financing for extended periods of time could materially and adversely affect the funds we manage. In the event that funds we manage are unable to obtain committed debt financing for potential investments, including acquisitions, or can only obtain debt at an increased interest rate or otherwise on unfavorable terms, such funds may be forced to find alternative sources of financing (including equity), may have difficulty completing otherwise profitable investments or may generate profits that are lower than would otherwise be the case, any of which could lead to a decrease in the investment income earned by us. Any failure by lenders to provide previously committed financing can also expose us to potential claims by counterparties with which funds we manage have contracted to effectuate an investment transaction ( i.e. , sellers of businesses that funds we manage may have contracted to purchase). In addition, to the extent that the current markets make it or for a portfolio company to refinance debt that is maturing in the near term, it may face substantial as to its status as a going (which may result in an event of under various agreements) or it may be to repay such debt at maturity and be to sell assets, undergo a recapitalization or seek protection. Furthermore, investments in highly leveraged entities are inherently more sensitive to in revenues, increases in expenses and interest rates and economic, market and industry developments. As a result, the risk of associated with a leveraged entity is generally than for companies with comparatively less debt.
In addition, our retirement services business relies on access to lending and debt markets to provide capital and liquidity. Changes in debt financing markets may impact our retirement services business’ access to capital and liquidity. Calculations of
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required insurance capital may move with market movements and result in greater capital needs during economic downturns. Our retirement services business may also need additional liquidity to pay insurance liabilities in excess of its assumptions due to market impacts on policyholder behavior.
We are subject to operating and financial restrictions arising from our indebtedness.
We are subject to operating and financial restrictions arising from our indebtedness, which include restrictive covenants that, subject to certain exceptions, limit certain operational, financial or structural decisions we can make. As a result of these restrictions, we may be limited in how we conduct our operations and may be unable to raise additional debt financing to compete effectively or to take advantage of new business opportunities. Any future indebtedness we incur may also contain significant operating and financial restrictions.
Risks Relating to Our Asset Management Business
We may experience a decline in revenue from our asset management business.
In our asset management business, we derive revenues from:
• capital committed to the funds, invested by the funds, or the net asset value of the funds;
• management fees, which are based generally on the amount of capital committed or invested in, or the net asset value of, the funds we manage;
• in connection with services relating to investments by the funds we manage, fees earned or otherwise collected by one or more service providers affiliated with us;
• performance fees, based on the performance of the funds we manage; and
• investment income from our investments, including as general partner.
If a fund we manage performs poorly, we will receive little or no performance fees with regard to the fund and little income or possibly losses from any principal investment in the fund. Furthermore, if, as a result of poor performance of later investments in a fund’s life, the fund does not achieve total investment returns that exceed a specified investment return threshold for the life of the fund, we could be obligated to repay the amount by which performance fees that were previously distributed to us exceeds amounts to which we are ultimately entitled. We have in the past, and may in the future, incur such clawback repayment obligations in respect of the funds we manage.
A variety of fees that we earn, such as origination, syndication, arranger, placement, sourcing, structuring and other similar fees, are driven in part by the pace at which the funds we manage commit to make or make investments. Any decline in the pace at which the funds we manage make investments would reduce our origination, syndication, arranger, placement, structuring, sourcing and other similar fees and could make it more difficult for us to raise capital. Likewise, any increase in the pace at which the funds we manage exit investments would reduce origination, syndication, arranger, placement, structuring, sourcing and other similar fees to the extent additional investment opportunities are not available to redeploy all or a portion of the proceeds. In addition, we will experience a decrease in the amount of fee revenue if we share with fund investors a larger portion, or all, of certain types of fees generated by funds’ investments, such as management consulting fees and merger and acquisition transaction advisory fees, or if expenses arising from the operation of the funds we manage are borne by us alone, rather than the funds.
Additionally, certain of our subsidiaries perform underwriting, syndicating and securities placement services for the funds we manage and their portfolio companies, for investments made by our retirement services business and for third parties. Our ability to maintain or grow these services, and the related fees we earn therefrom, depends on a number of factors, some of which are outside our control, including conditions in the debt or equity markets.
In each instance, a decrease in the fees we receive from the funds we manage and other operating activities will lead to a decrease in our revenues and may have a materially adverse impact on our business and results of operations.
We depend on investors in the funds we manage for the continued success of our asset management business.
It could become increasingly difficult for the funds we manage to raise capital as funds compete for investments from a limited number of qualified investors. Without the participation of investors, the funds we manage will not be successful in
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consummating their capital-raising efforts, or they may consummate them at investment levels lower than those currently anticipated.
Certain institutional investors have publicly criticized compensation arrangements, including management consulting fees and merger and acquisition transaction advisory fees, as well as additional types of fees paid to affiliated service providers, such as syndication, sourcing, structuring and placement fees, many of which are not subject to management fee-offsets as contemplated by governing documents of the funds we manage. Although we have no obligation to modify any fees or other terms with respect to the funds we manage, we experience pressure to do so. In addition, certain institutional investors, including sovereign wealth funds and public pension funds, continue to demonstrate an increased preference for alternatives to the traditional investment fund structure, such as managed accounts, specialized funds and co-investment vehicles. Even though we have entered into such strategic arrangements, there can be no assurance that such alternatives will be as profitable to us as traditional investment fund structures. While we have historically competed primarily on the performance of the funds we manage, and not on the level of our management fees or performance fees relative to those of our competitors, there is a risk that management fees and performance fees in the alternative investment management industry will decline, without regard to the historical performance of a manager. Management fee or performance fee reductions on existing or future funds, without corresponding decreases in our cost structure even if other revenue streams increase, would affect our revenues and .
The failure of the funds we manage to raise capital in sufficient amounts and on satisfactory terms could result in a decrease in AUM, performance fees and/or fee revenue or could result in us being unable to achieve an increase in AUM, performance fees and/or fee revenue, and could have a material adverse effect on our financial condition and results of operations. Similarly, any modification of our existing fee arrangements or the fee structures for new funds could adversely affect our results of operations.
We continue to depend on investors in the funds we manage even after the capital-raising phase of any fund. Investors in many of the funds we manage make capital commitments to those funds that we are entitled to call from those investors at any time during prescribed periods. If investors were to fail to satisfy a significant amount of capital calls for any particular fund or funds, the operation and performance of those funds could be materially and adversely affected. Additionally, the governing documents of substantially all of the funds we manage in which there are third-party investors provide that a simple majority-in-interest of a fund’s unaffiliated investors have the right to liquidate that fund for any or no reason, which would cause management fees and performance fees to terminate. We do not know whether, and under what circumstances, the investors in the funds we manage are likely to exercise such right. Furthermore, the management agreements of the funds we manage would also terminate if we were to experience a change of control without obtaining fund investor consent. We cannot be certain that consents required for the assignment of our management agreements will be obtained if such a deemed change of control occurs.
The governing agreements of certain of the funds we manage allow the investors of those funds to, among other things, (i) terminate the investment period of the fund in the event that certain “key persons” fail to devote the requisite time to managing the fund, (ii) (depending on the fund) terminate the investment period, dissolve the fund or remove the general partner if we, as general partner or manager, or certain “key persons” engage in certain forms of misconduct, (iii) dissolve the fund or terminate the investment period upon the affirmative vote of a specified percentage of limited partner interests entitled to vote, or (iv) dissolve the fund or terminate the investment period upon a change of control. In addition to having a significant negative impact on our revenue, net income and cash flow, the occurrence of such an event with respect to any of the funds we manage would likely result in significant reputational damage to us.
Investors in some of the funds we manage may also at times redeem their investments on an annual, semiannual, quarterly or monthly basis following the expiration of a specified period of time when capital may not be redeemed (typically between one and five years). In a declining market, the pace of redemptions and consequent reduction in our AUM could accelerate. We also refer to a significant portion of our AUM as perpetual capital or permanent capital as such assets have an indefinite duration and may only be withdrawn under certain conditions or subject to certain limitations. The investment management, advisory or other service agreements with our perpetual capital vehicles may be terminated under certain circumstances and investors can redeem from certain perpetual capital vehicles subject to certain conditions and limitations. This perpetual capital component of our AUM should not be viewed as being permanent without exception given that the assets can be subject to material reductions and even termination. The decrease in revenues that would result from significant redemptions in these funds or material reductions in, or terminations with respect to, our perpetual capital could have a material adverse effect on our businesses, revenues, net income and cash flows.
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We are also subject to certain guidelines regarding investment allocation and strategy and other investment restrictions or limitations imposed by the governing documents of the funds we manage as well as arrangements with investors in the funds, accounts and other vehicles we manage. Our failure to comply with such guidelines, restrictions or limitations could result in clients terminating their investment management agreements with us, and investors seeking to withdraw from funds and/or being unwilling to commit new capital, which could cause our earnings to decline.
Certain investors have placed increased importance on the impact of investments made by the funds to which they commit capital on sustainability-related issues and, conversely, certain other investors may sell to minimize or restrict the application of such restraints on the investment-deployment process. Consequently, certain investors may decide not to commit capital in fundraises, or to withdraw previously committed capital from the funds we manage, based on their evolving priorities. Certain investors may also condition capital commitments in a way that may constrain a fund’s capital deployment opportunities, including by limiting investment opportunities in certain sectors, or taking certain actions, or refraining therefrom, that could adversely impact the value of an investment or that could improve the value of an investment. In addition, regulatory initiatives requiring asset managers and investors to make sustainability-related disclosures for, and/or classify, certain funds and their investments against certain criteria are becoming more common. Some disclosure and/or categorization requirements may be subjective and, accordingly, open to interpretation. If regulators disagree with our interpretation of such disclosure obligations and/or the categorization methodologies we use, or new regulations, legislation, or regulatory guidance require a methodology of measuring or sustainability-related information that is different from our current practice, it could result in increased compliance costs and/or have an effect on fundraising efforts. Given the on sustainability-related matters as well as the increasing number of regulatory obligations relating to our business, our investors, the funds we manage, and their investments, we risk being perceived as or of making or statements regarding the investment strategies of the funds we manage, as well as about our, the funds’, and their investments’ performance sustainability-related measures and/or initiatives. Any such perception or could impact our ability to raise capital and attract new investors.
Conversely, so-called “anti-DEI” sentiment and related public policy actions have gained prominence in the U.S. In recent periods and as part of evolving public policy initiatives, certain federal and state authorities have issued executive orders, enacted or proposed legislation, issued legal opinions or taken other actions that restrict, discourage or prohibit DEI initiatives, including by eliminating or limiting DEI programs or offices within governmental entities, restricting DEI-related training or policies and, in some cases, imposing requirements or conditions on entities that contract with, receive funding from, or otherwise conduct business with governmental authorities. For example, certain executive orders have directed federal agencies to terminate DEI programs and to eliminate policies perceived as providing preferential treatment based on protected characteristics, and similar actions have been taken or proposed at the state level. In addition, certain governmental officials and regulators have publicly criticized or targeted DEI-related policies and practices and have initiated or threatened investigations, enforcement actions or other proceedings in connection with such initiatives. If we, the funds we manage, or the portfolio companies in which they invest, are perceived to promote or implement DEI-related policies or practices that are viewed as with such legal, regulatory or policy developments, we could be subject to increased , , , , or from government contracting, or reputational . Moreover, certain investors, counterparties or governmental entities may elect not to invest in, allocate capital to, conduct business with, or otherwise engage with us, the funds we manage or certain investment vehicles, or the portfolio companies in which they invest, may withdraw existing investments, or may seek to exclude us based on perceptions of our DEI-related practices, which could affect the price of our common stock, the performance of the funds we manage, the ability to raise future capital, business results or financial condition, or cause reputational .
In addition, “anti-ESG” sentiment has also gained momentum across the U.S., with several states and federal authorities having enacted or proposed “anti-ESG” policies, legislation or issued executive orders and legal opinions, and engaged in related investigations and litigation. For example, anti-boycott legislation in certain states target financial institutions that are perceived as “boycotting” or “discriminating against” companies in certain industries (e.g., energy and mining) and prohibit government entities from doing business with such institutions and/or investing the government’s assets (including pension plan assets) through such institutions. Similar policies have been implemented or are being proposed at the federal level. In addition, certain jurisdictions now require that relevant government entities or managers/administrators of government investments make investments based solely on pecuniary factors without consideration of non-pecuniary environmental, social and governance factors. If investors subject to such legislation viewed our funds, policies or practices as being in contradiction of such “anti-ESG” policies, legislation, initiatives or legal opinions, such investors may not invest in our funds, our ability to maintain the size of our funds could be , our results of operations or cash flow could be affected and it could affect the price of our common stock. A regulatory framework that funds or vehicles that apply sustainability-related principles to their investment criteria also makes it harder for those funds or vehicles to operate across jurisdictions.
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Historical performance metrics are unreliable indicators of our current or future results of operations.
We have presented returns relating to the historical performance of the funds we manage and certain targets of our future performance, including by reference to the internal rate of return (“IRR”) of certain funds’ performance using a gross IRR and a net IRR calculation. The returns are relevant to us primarily insofar as they are indicative of performance fees we have earned in the past and may earn in the future, our reputation and our ability to raise new funds. The returns of the funds we manage are not, however, directly linked to returns on our shares of common stock. Moreover, the historical returns of the funds we manage should not be considered indicative of the future returns of such funds or any future funds we may raise. Performance metrics, such as IRR, going forward for any current or future fund may vary considerably from the historical performance generated by any particular fund, or for the funds we manage as a whole.
Valuations for the funds we manage entail significant complications and are not an indicator for actual realizations.
We value the illiquid investments held by the funds we manage based on our estimate of their fair value as of the date of determination based on third-party models, or models developed by us. In addition, because many of the illiquid investments held by the funds we manage are in industries or sectors that are unstable, in distress, or undergoing some uncertainty, such investments are subject to rapid changes in value caused by sudden company-specific or industry-wide developments. We also include the fair value of illiquid assets in the calculations of net asset values, returns of the funds we manage and our AUM. Furthermore, we recognize performance fees based in part on these estimated fair values. Because these valuations are inherently uncertain, they may fluctuate greatly from period to period. Also, they may vary greatly from the prices that would be obtained if the assets were to be liquidated on the date of the valuation and often do vary greatly from the prices the funds we manage eventually realize.
If a fund realizes value on an investment that is significantly lower than the value at which it was reflected in a fund’s net asset values, the fund would suffer losses. This could in turn lead to a decline in our management fees and a loss equal to the portion of the performance fees reported in prior periods that was not actually realized upon disposition, and could slow the pace and reduce the likelihood that we earn carried interest. These effects could become applicable to a large number of investments by the funds we manage if the funds’ current valuations differ from future valuations due to market developments or other factors that are beyond our control. If asset values turn out to be materially different than values reflected in fund net asset values, fund investors could lose confidence which could, in turn, result in redemptions from the funds we manage that permit redemptions or difficulties in raising additional capital.
Investments made by the funds we manage entail significant risks and uncertainties.
We invest in a number of industries, products, geographical locations and strategies that entail significant risks and uncertainties, which may, if realized, have a material adverse effect on our business and results of operations. For example:
• The funds we manage often invest in companies with weak financial conditions, poor operating results, substantial financial needs, negative net worth and/or special competitive or regulatory problems, including in business enterprises that are or may become involved in work-outs, liquidations, spin-offs, reorganizations, bankruptcies and similar transactions.
• Investments by many of the funds we manage include debt instruments, including private credit, equity securities, and other financial instruments of companies that the funds we manage do not control. Those investments will be subject to the risk that the company in which the investment is made may make business, financial or management decisions with which we do not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve the interests of the funds we manage.
• We generally establish the capital structure of portfolio companies and certain other fund investments, including real estate investments, on the basis of financial projections for such investments that are based primarily on management judgments.
• The funds we manage acquire and dispose of investments that are subject to contingent liabilities, which could be unknown to us at the time of the transaction or, if they are known to us, we may not accurately assess or protect against the risks that they present, and could in each case result in unforeseen losses for the funds we manage.
• A significant portion or all of a fund’s capital may be invested in a single investment or portfolio company and a loss with respect to such an investment or portfolio company could have a significant adverse impact on such fund’s capital.
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• Certain of the funds we manage invest in infrastructure assets and real assets, which may expose us and the funds we manage to increased risks and liabilities that are inherent in the ownership, development and monetization of real assets.
• Certain of the funds we manage invest in cryptocurrencies, which may expose us and such funds to increased risks and liabilities that are inherent in the ownership, development and monetization of cryptocurrencies.
• Political changes could affect the anticipated profitability or viability of investments by certain of the funds we manage.
• The funds we manage invest in assets denominated in currencies that differ from the currency in which the relevant fund is denominated.
• We have undertaken business initiatives to increase the number and type of investment products we could offer to investors.
In each of these cases, the investments are exposed to significant risks and uncertainties, including regulatory and legal risks and oversight, adverse publicity and investor perceptions, reputational harm, counterparty default risk, inaccuracy of financial projections, inability to obtain full information as to the exact financial and operating conditions of the investment, increased likelihood that the assumptions on which we have based the investment are delayed, change or are never materialized, the effect of disruptions or volatility in the financial markets, inflation, commodity price risk, and additional exposures associated with attempts to hedge and otherwise protect from the downside of the investments. In each instance, if such risks were to materialize, the objective of our investments may not be fully realized, which could have a material adverse effect on our business and results of operations.
The performance of the funds we manage, and our performance, may be adversely affected by the financial performance of portfolio companies of the funds we manage and the industries in which the funds we manage invest.
Our performance and the performance of many of the funds we manage are significantly affected by the value of the companies in which the funds we manage have invested. The funds we manage invest in companies in many different industries, each of which is subject to volatility based upon a variety of factors, including economic, political and market factors. For example:
• The performance of certain of the portfolio companies of the funds we manage in the leisure and hospitality industry has been negatively impacted by macroeconomic conditions, such as inflation, and geopolitical events, such as the conflict between Russia and Ukraine and the conflicts in the Middle East.
• The performance of the investments of the funds we manage in the commodities markets is substantially dependent upon prevailing prices of oil and natural gas.
• The investments of the funds we manage in companies in the financial services and finance sectors, including consumer, are subject to government regulations, disclosure requirements, limits on fees, increasing borrowing costs or limits on the terms or availability of credit to such portfolio companies, and other regulatory requirements each of which may impact the conduct of such portfolio companies.
• The real estate and infrastructure investments of the funds we manage are exposed to rising mortgage interest rates, increasing consumer debt and a low level of consumer confidence in the economy and/or the residential real estate market.
• Investments of the funds we manage in commercial mortgage loans and other commercial real-estate related loans are subject to risks of delinquency and foreclosure, risks of loss that are greater than similar risks associated with mortgage loans made on the security of residential properties, and success of tenant businesses, property management decisions, competition from comparable types of properties and declines in regional or local real estate values and rental or occupancy rates.
• Investments of the funds we manage in the power and energy industries involve various risks, including regulatory and market risks. The increased scrutiny of regulators and investors on the negative impacts of the power and energy industries may negatively impact the value of investments in these sectors and our ability to exit certain investments on favorable terms. Future regulatory or legislative efforts by government agencies could place additional limitations on carbon-intensive forms of power generation or the exploration, mining, extraction, distribution and/or refining of certain fossil fuels.
• Rapid and unforeseen technological transformations, such as the emergence of large language models and generative AI, and/or the anticipated impact of such transformations, may introduce operating risks to certain portfolio companies and other investments, particularly those in the software industry and other related sectors, may cause volatility in their valuations and their stock price and may negatively affect their performance.
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In addition, portfolio companies of the funds we manage across a wide range of industries experienced in the past significant challenges in their global supply chain, including shortages in supply, or disruptions or delays in shipments, of certain materials or components used in their products, and related price increases. While many of these portfolio companies were able to manage the challenges associated with these delays and shortages without significant disruption to their business, no assurance can be given that these efforts will be successful in the case of future supply chain constraints. Deterioration in the domestic or international economic environment may cause decreased demand for the products and services of the portfolio companies of the funds we manage and increased competition, which could result in lower sales volume and lower prices for their products, longer sales cycles, and slower adoption of new technologies.
The performance of the funds we manage, and our performance, may be adversely affected to the extent the portfolio companies of the funds we manage experience adverse performance or additional pressure due to downward trends in their respective industries.
The funds that we manage in our credit strategy are subject to numerous additional risks.
The funds we manage in our credit strategy are subject to numerous additional risks, including the risks set forth below.
• The funds we manage may concentrate investments in any one borrower or other issuer, product category, industry, region or country.
• The funds we manage sometimes hold positions (including outright positions in issuers and exposure to such issuers derived through any synthetic and/or derivative instrument) in multiple tranches of securities of an issuer (or other interests of an issuer) or multiple funds sometimes have interests in the same tranche of an issuer.
• Certain of these funds may engage in short-selling, which is subject to a theoretically unlimited risk of loss.
• These funds are exposed to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the fund to suffer a loss.
• The efficacy of the investment and trading strategies of certain funds may depend largely on the ability to establish and maintain an overall market position in a combination of different financial instruments, which can be difficult to execute.
• Certain of these funds originate, acquire or participate in (including through assignments and sub-participation) loans, including, but not limited to, secured and unsecured notes, senior and second lien loans, mezzanine loans, non-performing loans or other high-risk receivables and other similar investments in below investment grade or unrated debt, or preferred equity securities with debt-like or convertible features, which are or may become illiquid.
• These funds’ investments are subject to risks relating to investments in commodities, swaps, futures, options and other derivatives, the prices of which are highly volatile and may be subject to a theoretically unlimited risk of loss in certain circumstances.
• Certain of the funds we manage invest in private credit opportunities (including through direct origination), which may be illiquid, difficult to value and exit prior to maturity, and susceptible to credit deterioration, restructurings or losses.
Risks Related to Our Retirement Services Business
A financial strength rating downgrade, potential downgrade or any other negative action by a rating agency could make our product offerings less attractive, inhibit our ability to acquire future business through acquisitions or reinsurance and increase our cost of capital, which could have a material adverse effect on our business.
Various Nationally Recognized Statistical Rating Organizations (“NRSROs”) review the financial performance and condition of insurers and reinsurers, including our subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to meet policyholder obligations. These ratings are important to maintain public confidence in our insurance subsidiaries’ products, our insurance subsidiaries’ ability to market their products and our competitive position. Factors that could negatively influence this analysis include:
• changes to the business practices or organizational business plan of our retirement services business in a manner that no longer supports its ratings;
• unfavorable financial or market trends;
• changes in NRSROs’ capital adequacy assessment methodologies in a manner that would adversely affect the financial strength ratings of our insurance subsidiaries;
• a need to increase reserves to support the outstanding insurance obligations of our retirement services business;
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• our inability to retain our senior management and other key personnel;
• rapid or excessive growth, especially through large reinsurance transactions or acquisitions, beyond the bounds of capital sufficiency or management capabilities as judged by the NRSROs; and
• significant losses to the investment portfolio of our retirement services business.
Some other factors may also relate to circumstances outside of our control, such as views of the NRSRO and general economic conditions. Any downgrade or other negative action by a NRSRO with respect to the financial strength ratings of our insurance subsidiaries, or an entity we acquire, or credit ratings of our retirement services business, could materially adversely affect us and our retirement services business’ ability to compete in many ways, including the following:
• reducing new sales of insurance products;
• harming relationships with or perceptions of distributors, IMOs, sales agents, banks and broker-dealers;
• increasing the number or amount of policy lapses or surrenders and withdrawals of funds, which may result in a mismatch of our overall asset and liability position;
• requiring our retirement services business to offer higher crediting rates or greater policyholder guarantees on its insurance products in order to remain competitive;
• increase borrowing costs of our retirement services business;
• reducing the level of profitability and capital position of our retirement services business generally or hindering its ability to raise new capital; or
• requiring our retirement services business to collateralize obligations under or result in early or unplanned termination of hedging agreements and harming the ability of our retirement services business to enter into new hedging agreements.
In order to improve or maintain their financial strength ratings, management may attempt to implement strategies which improve capital ratios or other measures and perceptions of our subsidiaries. We cannot guarantee any such measures will be successful. We cannot predict what actions NRSROs may take in the future, and failure to maintain current financial strength ratings could materially and adversely affect our business, financial condition, results of operations and cash flows.
If we are unable to attract and retain IMOs, banks and broker-dealers, sales of our retirement services products may be adversely affected.
In our retirement services business, we distribute annuity products through a variable cost distribution network, which includes numerous IMOs, banks and broker-dealers, collectively representing numerous independent agents. We must attract and retain such marketers, agents and financial institutions to sell our products. In particular, insurance companies compete vigorously for productive agents. We compete with other life insurance companies for marketers, agents and financial institutions primarily on the basis of our financial position, support services, compensation, credit ratings and product features. Such marketers, agents and financial institutions may promote products offered by other life insurance companies that may offer a larger variety of products than we do. Our competitiveness for such marketers, agents and financial institutions also depends upon the long-term relationships we develop with them. There can be no assurance that such relationships will continue in the future. In addition, our growth plans include increasing the distribution of annuity products through banks and broker-dealers. If we are unable to attract and retain sufficient marketers and agents to sell our products or if we are not successful in expanding our distribution channels within the bank and broker-dealer markets, our ability to compete and our sales volumes and results of operations could be adversely affected.
As a financial services company, we are exposed to liquidity risk, which is the risk that we are unable to meet near-term obligations as they come due.
Liquidity risk is a manifestation of events that are driven by other risk types ( e.g. , market, policyholder behavior, operational). A liquidity shortfall may arise in the event of insufficient funding sources or an immediate and significant need for cash or collateral. In addition, it is possible that expected liquidity sources, such as the AHL credit facility and AHL liquidity facility, may be unavailable or inadequate to satisfy the liquidity demands described below. Geopolitical and macroeconomic conditions contribute to volatility in the financial markets and may restrict the liquidity sources available to us and further may result in an increase of our liquidity demands. We primarily have liquidity exposure through our collateral market exposure, asset liability mismatch, dependence on the financial markets for funding and funding commitments. If a material liquidity demand is triggered and we are unable to satisfy the demand with the sources of liquidity readily available to us, it may have a material adverse impact on our business, financial condition, results of operations, liquidity and cash flows.
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The amount of statutory capital that our insurance and reinsurance subsidiaries have, or that they are required to hold, can vary significantly from time to time and is sensitive to a number of factors outside of our control.
The U.S. insurance subsidiaries of our retirement services business are subject to state regulations that provide for minimum capital requirements (“MCR”) based on RBC formulas for life insurance companies relating to insurance, business, asset, interest rate and certain other risks. Similarly, the Bermuda reinsurance subsidiaries of our retirement services business are subject to MCR imposed by the BMA through the BMA’s Enhanced Capital Requirement (“ECR”) and minimum margin of solvency.
In any particular year, our subsidiaries’ capital ratios and/or statutory surplus amounts may increase or decrease depending on a variety of factors, some of which are outside of our control and some of which we can only partially control, including, but not limited to, the following: the amount of statutory income or loss generated by our insurance subsidiaries; the amount of additional capital our insurance subsidiaries must hold to support their business growth; changes in reserve requirements applicable to our insurance subsidiaries; changes in market value of certain securities in our investment portfolio; recognition of write-downs or other losses on investments held in the investment portfolio of our retirement services business; changes in the credit ratings of investments held in the investment portfolio of our retirement services business; changes in the value of certain derivative instruments; changes in interest rates; credit market volatility; changes in policyholder behavior; changes in corporate tax rates; changes to the RBC formulas and interpretations of the NAIC instructions with respect to RBC calculation methodologies; and changes to the ECR, Bermuda Solvency Capital Requirement (“BSCR”), or target capital level (“TCL”) formulas and interpretations of the BMA’s instructions with respect to ECR, BSCR, or TCL calculation methodologies.
Further to NAIC activities with respect to RBC calculation methodologies, the NAIC has recently adopted and is currently considering a variety of reforms to its RBC framework, which could increase the capital requirements for our U.S. insurance subsidiaries. For example, the NAIC recently adopted changes to certain statements of statutory accounting principles in connection with its principles-based bond project, which became effective on January 1, 2025, setting forth the factors to determine whether an investment in asset-backed securities qualifies for reporting on an insurer’s statutory financial statement as a bond on Schedule D-1 as opposed to Schedule BA (other long-term invested assets), the latter of which could result, among other things, in the capital charge treatment of an investment being less favorable. The NAIC also adopted an interim change to the life RBC formula for year-end 2023 and 2024 reporting to increase the RBC base factor for residual tranches of structured securities, and increased the base factor in 2024. In addition, the NAIC is reviewing changes related to filing exempt status for certain securities, including a proposal that sets forth procedures for the NAIC’s review of investments that are exempt from filing with the NAIC’s Securities Valuation Office, which could result in, among other things, the capital charge treatment of the investment being less favorable.
In March 2024, the BMA published revised rules and new guidance notes to enhance Bermuda’s regulatory regime for commercial insurers. The material enhancement to the framework included updates to the technical provisions, the computation of the BSCR and the BSCR adjustment framework.
NRSROs may also implement changes to their internal models, which differ from the RBC and BSCR capital models, that have the effect of increasing or decreasing the amount of statutory capital our subsidiaries must hold in order to maintain their current ratings. To the extent that one of our insurance subsidiary’s solvency or capital ratios is deemed to be insufficient by one or more NRSROs to maintain their current ratings, we may take actions either to increase the capitalization of the insurer or to reduce the capitalization requirements. If we are unable to accomplish such actions, NRSROs may view this as a reason for a ratings downgrade. Regulatory developments, including the NAIC’s adoption of amendments to its Insurance Holding Company System Regulatory Act and Model Regulation requiring, subject to certain exceptions, that our retirement services business file a confidential annual group capital calculation and an annual liquidity stress test with the Iowa Insurance Division, the lead state insurance regulator of its U.S. insurance subsidiaries, may increase the amount of capital that our retirement services business is required to hold and could result in it being subject to increased regulatory requirements.
If a subsidiary’s solvency or capital ratios reach certain minimum levels, it could subject us to further examination or corrective action imposed by our insurance regulators. Corrective actions may include limiting our subsidiaries’ ability to write additional business, increased regulatory supervision, or seizure or liquidation of the subsidiary’s business, each of which could materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.
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Repurchase agreement programs subject us to potential liquidity and other risks.
Our retirement services business may engage in repurchase agreement transactions whereby it sells fixed income securities to third parties, primarily major brokerage firms or commercial banks, with a concurrent agreement to repurchase such securities at a determined future date. These repurchase agreements provide our retirement services business with liquidity and in certain instances also allow it to earn spread income. Under such agreements, our retirement services business may be required to deliver additional securities or cash as margin to the counterparty if the value of the securities sold decreases prior to the repurchase date. If our retirement services business is required to return significant amounts of cash collateral or post cash or securities as margin on short notice or have inadequate cash on hand as of the repurchase date, it may be forced to sell securities to meet such obligations and may have difficulty doing so in a timely manner or may be forced to sell securities in a volatile or illiquid market for less than it otherwise would have been able to realize under normal market conditions. Rehypothecation of subject securities by the counterparty may also create risk with respect to the counterparty’s ability to perform its obligations to tender such securities on the repurchase date. Such facilities may not be available to our retirement services business on terms or at all in the future.
Our retirement services business is subject to the credit risk of its counterparties, including ceding companies, reinsurers, plan sponsors, and derivative counterparties.
Athene and its insurance subsidiaries encounter various types of counterparty credit risk. Athene’s insurance subsidiaries cede certain risk to third-party insurance companies that may cover large volumes of business and expose them to a concentration of credit risk with respect to such counterparties. Such subsidiaries may not have a security interest in the underlying assets and despite certain indemnification rights, they retain liability to their policyholders if a counterparty fails to perform. Certain of Athene’s insurance subsidiaries also reinsure liabilities from other insurance companies and these subsidiaries may be negatively impacted by changes in the ceding companies’ ratings, creditworthiness, and market perception, or any policy administration issues. Athene further assumes pension obligations from plan sponsors that expose it to the credit risk of the plan sponsor. In addition, our retirement services business may be exposed to credit loss in the event of nonperformance by its derivative agreement counterparties. If any of these counterparties are not able to its obligations to us or third parties, including policyholders, we may not our targeted returns and our financial position, results of operations, liquidity and cash flow may be materially affected.
The investment portfolio of our retirement services business may be subject to concentration risk, particularly with respect to single issuers, including Athora, among others; industries, including financial services; and asset classes, including real estate.
Our retirement services business faces single issuer concentration risk both in the context of alternative investments, in which it occasionally holds significant equity positions, and large asset trades, in which it generally holds significant debt positions. The most significant concentration risk exposures of our retirement services business arising in the context of alternative investments, on a risk-adjusted basis, is its investment in Athora, an insurance holding company focused on the European life insurance market. Given our retirement services business’ significant exposure to these issuers, it is subject to the risks inherent in their business. For example, as a life insurer, Athora is subject to credit risk with respect to its investment portfolio and mortality risk with respect to its product liabilities, each of which may be exacerbated by unforeseen events. Further, Athora has significant European operations, which expose it to volatile economic conditions and risks relating to European member countries and withdrawals thereof. In addition, Athora is subject to multiple legal and regulatory regimes that may hinder or prevent it from achieving its business objectives. To the extent that our retirement services business suffers a significant on its investment in these issuers, including Athora, our financial condition, results of operations and cash flows could be affected.
In addition, from time to time, in order to facilitate certain large asset trades and in exchange for commitment fees, our retirement services business may commit to purchasing a larger portion of an investment than it ultimately expects to retain, and in such instances our retirement services business is reliant upon the ability of our asset management business to syndicate the transaction to other investors. If our asset management business is unsuccessful in its syndication efforts, our retirement services business may be exposed to greater concentration risk than what it would deem desirable from a risk appetite perspective and the commitment fee that it receives may not adequately compensate it for this risk.
Our retirement services business also has significant investments in nonbank lenders focused on providing financing to individuals or entities. As a result, through these investments, we have significant exposure to credit risk. In addition to the concentration risk arising from our retirement services business’ investments in single issuers within the nonbank lending sector
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of the financial services industry, we have significant exposure to the financial services industry more broadly as a result of the composition of investments in our retirement services business’ investment portfolio. Economic volatility or any further macroeconomic, regulatory or other changes having an adverse impact on the financial services industry more broadly, could have a material and adverse effect on our business, financial condition, results of operations and cash flows.
A significant portion of the net invested assets of our retirement services business is invested in real estate-related assets. Any significant decline in the value of real estate generally or the occurrence of any of the risks described elsewhere in this report with respect to the real estate-related investments of our retirement services business could materially and adversely affect our financial condition and results of operations. Specifically, through the investments of our retirement services business in CML and CMBS, we have exposure to certain categories of commercial property, including office buildings and retail, that have been adversely affected by the continuing work from home trend. In addition, the CML our retirement services business holds, and the CML underlying the CMBS that our retirement services business holds, face both default and delinquency risk.
Conflicts of Interest
Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our businesses.
We increasingly confront potential and actual conflicts of interest relating to our business, our investment activities and the investment activities of the funds we manage. As an asset manager, conflicts of interest arise, and may continue to arise in the future, in connection with investment decisions, including regarding the identification, making, management, valuation, disposition, and timing of a fund’s investments. These conflicts of interest include conflicts that arise among the funds we manage as well as between us and the funds we manage and other client accounts, including investment allocation decisions. Certain inherent conflicts of interest arise from the nature of our business, including from the fact that (i) we provide investment management services to more than one fund or client, (ii) the funds we manage often have one or more overlapping investment strategies, and (iii) we could choose to allocate an investment to more than one fund or to ourselves. Also, the investment strategies employed by us for current and future clients, or on our own behalf, could conflict with each other, and may adversely affect the prices and availability of other securities or instruments held by, or potentially considered for, one or more clients. If participation in specific investment is appropriate for more than one of the funds or other advisory clients we manage, participation in such will be allocated pursuant to our allocation policies and procedures, which take into account the terms of the relevant partnership or investment management agreement as well as the decisions of our allocations committees.
In addition, there are a variety of circumstances inherent in our business that give rise to the potential for conflicts of interest, which have, in certain instances, resulted in actual conflicts between us and the funds and accounts we manage and may do so again in the future, including: (i) the allocation of investment opportunities between Apollo and the funds and accounts Apollo manages; (ii) the allocation of investment opportunities among funds and accounts with different performance fee structures, or where our personnel have invested more heavily in one fund than another; (iii) the determination of what constitutes fund-related expenses and the allocation of such expenses between us and our managed funds and accounts; (iv) the ability of our personnel to, in certain circumstances, make investments in the funds we manage or funds managed by third parties on more favorable terms; (v) the selection of investments that could generate more fees for service providers affiliated with us; and (vi) the execution of securities trades by Apollo’s affiliated broker-dealer on behalf of the funds and accounts we manage.
Further, from time to time, issues arise that present actual conflicts of interest, including between us and the funds we manage, among the funds we manage, or between our employees and the funds we manage. Examples of such conflicts include, without limitation, side-by-side managed funds with overlapping investment mandates; affiliated transactions (including principal transactions, cross trades, and agency cross trades) between (a) the funds we manage and/or between the funds we manage and Apollo and/or their portfolio investments, and/or (b) our managed accounts and funds and an affiliated broker-dealer; multi-tranche investments where the funds we manage are invested in one or more tranches of a portfolio investment while others are invested on a non-pari passu basis in the same or different tranches of such investment; and the use of affiliated service providers, including the execution of securities trades by Apollo’s affiliated broker-dealer on behalf of the funds and accounts we manage and/or the engagement of an affiliated fund servicer. Funds we manage hold interests in businesses, including operating companies and/or portfolio investments, that originate assets on a recurring basis, which we refer to as origination platforms. Through their origination business, the origination platforms create investment opportunities for us, our affiliates, as well as for the funds we manage in addition to third parties. Where such investment are allocated to the funds we manage, they can give rise to management fees, incentive compensation payable or allocable to us, and additional transaction-based compensation payable to our affiliated service providers, including the capital solutions fees discussed herein, which gives rise to of interest among us and the funds we manage.
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The governing documents of the funds we manage typically do not mandate specific allocations with respect to co-investments. The investment advisers of the funds and accounts we manage have an incentive to provide potential co-investment opportunities to certain investors in lieu of others and/or in lieu of an allocation to the funds we manage (including, for example, as part of an investor’s overall strategic relationship with us) if such allocations are expected to generate relatively greater fees or performance allocations to us than would arise if such co-investment opportunities were allocated otherwise.
The funds we manage invest in portfolio companies whose operations may be substantially similar to and/or competitive with the portfolio companies in which our other funds have invested. The performance and operation of such competing businesses could conflict with and adversely affect the performance and operation of the portfolio companies of the funds we manage, and may adversely affect the prices and availability of business opportunities or transactions available to such portfolio companies. In addition, we may take different actions across funds with similar investment programs, objectives or strategies. For example, one of the private equity funds we manage could have an interest in pursuing an acquisition, divestiture or other transaction, even though the proposed transaction would subject one or more of the investments of the credit funds we manage to additional or increased risks. We may also advise clients with investment objectives or strategies that conflict with those of certain of the funds we manage. We, the funds we manage or the portfolio companies of the funds we manage may also have ongoing relationships with issuers whose securities have been acquired by, or are being considered for investment by us. In addition, a dispute may arise between the portfolio companies of the funds we manage, and the investors in the funds we manage may be with our handling of such .
Apollo has established certain one-way and/or two-way information barriers in respect of discrete investment strategies (based on established policies and procedures in respect of information barriers), including secondary trading activities. Nonetheless, because we generally operate without the permanent information barriers in our asset management business that some other investment management firms implement to separate business units and/or to separate persons who make investment decisions from others who might possess material non-public information that could influence such decisions, our executive officers, investment professionals or other employees may acquire confidential or material non-public information and, as a result, they, we, the funds we manage and other clients may be restricted from initiating transactions in certain securities. In the event that any of our employees obtains such material non-public information, we may be restricted in acquiring or disposing of investments on behalf of the funds we manage, which could impact the returns generated for such funds. Notwithstanding the maintenance of restricted securities lists and other internal controls, it is possible that the internal controls relating to the management of material non-public information could fail and result in us, or one of our investment professionals, buying or selling a security while, at least constructively, in possession of material non-public information. trading on material non-public information could have effects on our reputation, result in the imposition of regulatory, financial or judicial sanctions and, as a consequence, impact our ability to provide our investment management services to our clients and the funds we manage.
The functions of certain of our affiliates also give rise to a number of conflicts of interest. For example, certain of our affiliates are broker-dealers registered with the SEC and members of FINRA, the U.K. Financial Conduct Authority and the European Securities and Market Authority that principally conduct private placements and provide services in respect of the underwriting and syndication of securities, transaction advisory services, capital markets advisory and structuring services, placement services, sourcing services, origination services and merger and acquisition advisory services, including in connection with exiting investments, as well as certain authorized market making services. Additionally, certain of our affiliates and/or portfolio companies of the funds we manage provide a variety of services with respect to financial instruments, including loans, that are not subject to broker-dealer regulations, such as originating, administering, arranging, sourcing, structuring, placing and syndicating loans, advisory and other similar services to the funds we manage and their portfolio companies, as well as third parties. While we believe these kinds of transactions are beneficial to our clients and the funds we manage, the functions that our affiliates may perform give rise to a number of conflicts of interest, including, for example, with respect to the allocation of investment opportunities and the imposition of additional fees that are borne, directly or indirectly, by the funds we manage. Additionally, in secondary market trades involving securities, certain of interest and risks may be posed by our affiliated broker-dealer’s ability to execute trades on a principal, riskless principal, or agency basis and could elect to hold inventory of securities as part of its secondary market activities in anticipation of demand for such securities. Such activity may pose of interest relating to the allocation of investments and the allocation of fees and expenses to the funds and accounts we manage, as well as increased risks relating to the valuation of assets and asset liquidity.
In connection with the services rendered by our affiliates to the funds we manage and their portfolio companies, such affiliates and/or the portfolio companies receive fees from the funds we manage, portfolio companies of the funds we manage and third-party borrowers. Furthermore, a borrower or an issuer may view all fees, expense reimbursements and interest related to
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financing (or similar instrument) as one charge it is incurring as part of our financing package to them and therefore doesn’t distinguish between (x) the fees paid to our affiliates and (y) returns earned by the funds we manage whether in the form of interest, investment returns or other fees. As a result of a borrower or issuer taking this view, there could be less negotiation over fees paid to our affiliates, potentially resulting in reduced returns for the funds we manage and an incentive to pursue investment opportunities with greater fee opportunities for our affiliates even at the expense of the investment returns sought by our clients and the funds we manage. Consequently, our relationship with these entities may give rise to conflicts of interest between (i) us and portfolio companies of the funds we manage and/or (ii) us and the funds we manage. Additionally, certain personnel affiliated with our broker-dealers are associated with other affiliated organizations. We employ commercially reasonable efforts to use separate teams for investment opportunities (one for our affiliated investment manager and the other for our affiliated service provider) and identify the distinct services provided by each team. However, we may not be able to maintain a distinct set of services provided by the two teams for some investment , and such dual affiliation gives rise to of interest, including for example with respect to allocation of time, resources, and investment .
Certain of our executive officers and other senior employees have established family offices to provide investment advisory, accounting, administrative and other services to their respective family accounts (including certain charitable accounts) in connection with their personal investment activities unrelated to their investments in Apollo entities. The investment activities of the family offices, and any involvement of the executive officer or senior employee in these activities may give rise to potential conflicts between the personal financial interests of the executive officer or senior employee and the interests of us, any of our subsidiaries, the funds we manage, our clients or any stockholder other than such executive officer or senior employee.
From time to time, we finance, securitize or employ structured finance arrangements in respect of certain of our balance sheet assets. We could also employ structured financing arrangements with respect to co-investment interests and investments in other funds made by our entities (including, potentially, co-investments with the funds we manage). These structured financing arrangements could alter our returns and risk exposure with respect to the applicable balance sheet assets as compared to our returns and risk exposure if we held such assets outside of such structured financing arrangements, and could create incentives for us to take actions in respect of such assets that we otherwise would not in the absence of such arrangements or otherwise alter our alignment with investors in such investments. These arrangements could also result in us realizing liquidity with respect to our equity investment in a fund or other entity at a different point in time (including earlier) than the limited partners of such fund or entity.
In addition to such finance arrangements, we also opportunistically invest or otherwise deploy the assets on our balance sheet. Such investments may create a platform of businesses directly owned by us, outside of the funds we manage and their portfolio companies or directly owned by the funds we manage. Consequently, such investments have resulted in the past and may result in the future in conflicts of interest between operating such platform businesses and the funds we manage and their portfolio companies. In addition, certain entities in which Apollo has made a balance sheet investment provide services to Apollo, the funds we manage or their portfolio companies, which gives rise to conflicts of interest.
In addition, the funds we manage may, subject to applicable requirements in their governing documents, which may include obtaining advisory board consent, determine to sell a particular portfolio investment into a separate vehicle, which may be managed by us, with different terms ( i.e. , longer duration) than the fund that originally acquired the portfolio investment, and provide fund investors with the option to monetize their investment with the fund at the time of such sale, or to roll all or a portion of their interest in the portfolio investment into a new vehicle. Under such circumstances, we may invest in or alongside the new vehicle, or hold the entirety of the portfolio investment sold by the fund through or alongside the new vehicle ( i.e. , in the event that all limited partners elect to monetize their investment at the time of sale to the new vehicle). As a consequence, conflicts of interest may arise across the funds we manage, limited partners, and us.
Most of the funds we manage obtain subscription line facilities and other financing arrangements to facilitate investments and operations, including the payment of fees and expenses. If a fund obtains a subscription line facility, the fund’s working capital needs will in most instances be satisfied through borrowings by the fund under the subscription line facility, and, less so, by drawdowns of capital contributions by the fund. As a result, capital calls are expected to be conducted in larger amounts on a less frequent basis in order to, among other things, repay borrowings and related interest expenses due under such subscription line facilities.
Where an investment fund uses borrowings under a subscription line facility, a net asset value-based finance fund facility or other financing arrangement in advance or in lieu of receiving capital contributions from investors to repay any such borrowings and related interest expenses, the use of such facility or arrangement will result in a different (and perhaps higher)
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reported internal rate of return than if the facility had not been utilized and instead capital contributions from investors had been contributed at the inception of an investment. Because the preferred return of investment funds typically does not accrue on such borrowings, but rather only accrues on capital contributions when made, the use of such subscription line facilities, net asset value-based finance fund facilities and other similar financing may reduce or eliminate the preferred return received by the investors and accelerate or increase distributions of performance-based allocation to the relevant general partner. This will provide the general partner with an economic incentive to fund investments through such facilities in lieu of capital contributions. However, since interest expense and other costs of borrowings under subscription lines of credit, net asset value-based finance fund facilities and other similar financing arrangements are an expense of the investment fund, the investment fund’s incurred expenses will be increased, which may reduce the amount of performance fees generated by the fund.
Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation which would materially adversely affect our business and results of operations.
Risks Related to Regulation and Litigation
Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. Increased regulatory focus would result in additional burdens on our businesses.
We are subject to extensive regulation, including periodic examinations, inquiries and investigations and requirements to obtain and maintain licenses and/or other approvals, by government agencies and self-regulatory organizations in the jurisdictions in which we operate around the world. Many of the various laws and regulations to which we are subject are discussed in “Item 1. Business—Regulatory and Compliance Matters.” As detailed in that section, certain of our businesses, subsidiaries and/or affiliates are, among others, regulated under the Investment Advisers Act; the Investment Company Act; the Dodd-Frank Wall Street Reform and Consumer Protection Act; the Commodity Exchange Act; the EU Alternative Investment Fund Managers Directive; the EU Markets in Financial Instruments Directive; the U.K. Financial Services and Markets Act 2000; the EU General Data Protection Regulation (as implemented in countries in the European Economic Area) and the U.K. General Data Protection Regulation; the U.K. Data Protection Act 2018 (as amended by the U.K. Data (Use and Access) Act 2025) and potentially various new and emerging EU and U.K. cybersecurity and digital operational resilience laws, such as the EU Digital Operational Resilience Act; the Cayman Islands Data Protection Act; the Gramm-Leach-Bliley Act; the California Consumer Privacy Act of 2018 and a variety of other U.S. and international state privacy, cybersecurity and AI laws and regulations; as well as by the Financial Stability Oversight Council and similar non-U.S. regulators; the Federal Reserve; the SEC; FINRA; the CFTC; the NFA; the U.S. Department of Labor; the IRS; the Federal Communications Commission; insurance law and regulations by regulators in U.S. states, the EU, Bermuda, U.K., Italy, Switzerland, Germany, Belgium, the Netherlands, Australia, Singapore, Canada, Cayman Islands and Malaysia; as well as rules and regulations regarding CLO risk retention, real estate investment trusts, broker-dealers, “over the counter” derivatives markets, commodity pool operators, commodity trading advisors, gaming companies, and natural resources companies. We distribute many of our products through financial intermediaries, including third-party broker-dealers, and as such, increasing broker-dealer regulation (particularly concerning marketing and sales practices) could make it more and expensive for us to distribute such products. We are also subject to laws and regulations governing payments and contributions to public officials or other parties, including restrictions imposed by the U.S. Foreign Practices Act, as well as economic sanctions and export control laws administered by the U.S. Treasury Department’s Office of Foreign Assets Control, the U.S. Department of Commerce and the U.S. Department of State.
We are or may be subject to new initiatives and additional rules and regulations relating to sustainable finance and/or other sustainability-related matters, including but not limited to: in the EU, the EU Regulation on the Establishment of a Framework to Facilitate Sustainable Investment, the EU Sustainable Finance Disclosure Regulation and supporting regulatory technical standards, and the ESG Ratings Regulation; in the U.K., the U.K. FCA’s disclosure rules for asset managers aligned with the recommendations of the Taskforce on Climate-Related Financial Disclosures as well as the Sustainability Disclosure Requirements (including both a fund labelling regime and a general anti-greenwashing rule), and The Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025; and, in the U.S., new and proposed legislation in certain states that would require the disclosure of greenhouse gas emissions data, carbon offset information, and/or climate-related financial risk disclosures, as well as legislation that would impose new or expanded divestment mandates on fiduciaries of state funds. Compliance with such laws and regulations requires increasing amounts of resources and the attention of our management team. Any violation, even if alleged, of such laws and regulations or any failure to obtain or maintain licenses and/or other regulatory approvals as required for our operations may have a material effect on our businesses, financial condition, results of operations, liquidity, cash flows and prospects. Numerous jurisdictions in which we operate have also seen,
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and may see additional, legislation or regulation opposing investment strategies or opportunities that are guided by sustainability-related considerations, making it harder for vehicles that apply such criteria to operate across jurisdictions. In addition, as we have seen in recent years, different laws and regulations on the same topic may not always have the same requirements, and even when requirements overlap, the rules are not always consistently implemented, interpreted, and enforced from jurisdiction to jurisdiction.
Many of these laws and regulations empower regulators, including U.S. and foreign government agencies and self-regulatory organizations, as well as state securities commissions and insurance departments in the U.S., to conduct investigations and administrative proceedings that can result in penalties, fines, suspensions or revocations of licenses and/or other regulatory approvals, third-party oversight of various business processes, divestiture of certain investments, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders, enforcement actions and settlements, or the suspension or expulsion of an investment adviser from registration or memberships. Even if an investigation or proceeding does not result in a sanction or the sanction imposed against us or our personnel by a regulator is small in monetary amount, the publicity relating to the , proceeding or imposition of these sanctions could our reputation and cause us to existing investors or to new investors. These requirements imposed by our regulators are designed primarily to ensure the of the financial markets and to protect investors in the funds and other vehicles we manage and policyholders of our retirement services and other businesses and may not necessarily be designed to protect our stockholders. Other regulations, such as those promulgated by the Committee on Foreign Investment in the U.S. and similar foreign direct investment regimes in other jurisdictions, may our ability to invest the funds and other vehicles we manage and/or for such funds or vehicles to realize full value from our investments in certain industries and countries.
Our businesses may be adversely affected as a result of new or revised legislation or regulations imposed by U.S. or foreign government agencies or self-regulatory organizations. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these government agencies and self-regulatory organizations. For instance, regulators have been increasing regulation of private funds and advisers to private funds, and this type of regulation may make it more difficult for us to manage and distribute both our private fund products and our products that are purchased by third-party private fund managers. Changes regarding immigration and work permit policies and practices could affect local or global labor markets and supply chains.
In addition to the foregoing risks, the financial services and insurance industry is the focus of increased regulatory scrutiny as various U.S. state and federal government agencies and self-regulatory organizations conduct inquiries and investigations into the products and practices of the companies within this industry. Government authorities and insurance standard setters in the U.S. and worldwide (including the NAIC and the IAIS) have become increasingly interested in potential risks posed by the insurance industry as a whole, and to commercial and financial activities and systems in general, as indicated by the development of the global insurance capital standard by the IAIS to be applicable to IAIGs, as well as NAIC’s adoption of the group capital calculation and liquidity stress test, each of which the IID has adopted and is applicable to us. In February 2024, the IID identified AGM as meeting the criteria as an IAIG and further identified Athene as the head of the IAIG. As a result of these identifications, Athene will be subject to the relevant capital standard that the U.S. applies to IAIGs. At this time, we do not expect a significant impact on Athene’s capital position or capital structure; however, we cannot fully predict with certainty the impact (if any) on Athene’s capital position or capital structure and any other burdens being named an IAIG may impose on Athene or its insurance affiliates.
As we and the funds we manage become more actively involved in digital asset markets, the regulatory risks described herein will be heightened and we will be subject to supplemental and/or increased regulation that applies (or, in the future, will likely apply) specifically to digital assets and related activities. The scope, interpretation, and practical impact of such regulatory measures will depend on their implementation, interpretation, and interaction with existing regulatory regimes, continue to evolve, and may differ materially across jurisdictions, resulting in increased compliance costs and obligations for us and the funds we manage.
Guaranty associations may also subject member insurers, including Athene, to assessments that require the insurers to pay funds to cover contractual obligations under insurance policies issued by insurance companies that become impaired or insolvent. These associations levy assessments, up to prescribed limits, on each member insurer doing business in a particular state on the basis of their proportionate share of the premiums written by all member insurers in the lines of business in which the impaired or insolvent insurer previously engaged. Most states limit assessments in any year to 2% of the insurer’s average annual premium for the three years preceding the calendar year in which the impaired insurer became impaired or insolvent. Although Athene has not historically paid material amounts in connection with these assessments, we cannot accurately predict the magnitude of such amounts in the future, or accurately predict which past or future insolvencies of other insurers could lead
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to such assessments. If material, any such future assessments may have an adverse effect on our financial condition, results of operations, liquidity or cash flows, and any liability we have previously established for these potential assessments may not be adequate.
We have been and may be the target or the subject of third-party litigation from time to time that could result in significant liabilities and/or reputational harm, which could have a material adverse effect on our results of operations, financial condition and liquidity.
The activities of our businesses, including the investment activities of the funds and other vehicles we manage and activities of our employees in connection with the funds or vehicles, their portfolio companies, our insurance subsidiaries, as well as publicly listed vehicles we manage or sponsor may subject us and certain of our employees to the risk of litigation, including class actions, by third parties, including investors dissatisfied with the performance or management of such funds or vehicles, holders of our or the funds’ or other vehicles’ portfolio companies’ debt or equity, policyholders of our retirement services business, public stockholders and a variety of other potential litigants. In general, we will be exposed to risk of litigation by our investors if our management of any fund or vehicle is alleged to constitute bad faith, gross negligence, willful misconduct, fraud, willful or reckless for our duties to the fund, of fiduciary duties or securities laws, or other forms of . If such are made our Board or management, Section 220 of the Delaware General Corporation Law (the “DGCL”) allows stockholders to access corporate books and records to . Investors could us to recover amounts by the funds or vehicles we manage due to our , up to the entire amount of . Further, we may be subject to arising from investor with the performance of the funds or other vehicles we manage or from third-party that we (i) exercised control or influence over companies in which the funds or vehicles we manage have large investments or (ii) are liable for actions or taken by portfolio companies that such third parties we control. We are also to risks of or relating to transactions that presented of interest that were not properly addressed. Our rights to indemnification by the funds or vehicles we manage may not be upheld if , and our indemnification rights generally do not cover faith, gross , willful , , willful or for our duties to the fund or vehicle or other forms of . With many highly paid employees and complex compensation and incentive arrangements, we face the risk of lawsuits relating to for compensation, which may individually or in the aggregate be significant in amount. We are also increasingly faced with the risk of or in relation to sustainability-related issues given the increasing of such issues by investors, other stakeholders, regulators, and other third parties as well as due to the increasing disclosure obligations on our businesses, the funds and other vehicles we manage, and their portfolio companies. Such risks may relate to concerning but not limited to: (i) the activities of portfolio companies, including environmental and of labor and human rights; (ii) non-compliance of portfolio companies with corporate sustainability-related regulations, such as the EU’s Corporate Sustainability Reporting Directive and/or Corporate Sustainability Due Diligence Directive, (iii) of the investment strategies of the funds and other vehicles we manage as well as about our, the funds’ or other vehicles’, and their investments’ performance sustainability-related measures and/or initiatives; or (iv) of fiduciary duty in relation to the funds and other vehicles we manage and other of law related to the management of sustainability-related risks.
If any civil or criminal litigation brought against us were to result in a finding of substantial legal liability or culpability, the litigation could, in addition to any financial damage, cause significant reputational harm to us, which could seriously harm our business. In addition, we may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage levels against potential liabilities we may face in connection with potential claims, which could have a material adverse effect on our business.
In addition, our business has been, and may continue to be, the subject of litigation between third parties that could negatively impact us. For example, beginning in March 2024, a number of putative class actions were filed in federal courts in the U.S. against certain customers of Athene, in their respective capacities as plan sponsors, alleging violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) in connection with their transfer of pension obligations under defined benefit plans governed under ERISA and their purchase of pension group annuity contracts from Athene. The lawsuits seek, inter alia , that defendants guarantee the annuities purchased from Athene and disgorge any profits earned from the transactions. Although Athene is not a named defendant, the lawsuits make several negative allegations about Athene and its business, which we believe to be untrue. Recently, similar claims have been filed customers of other insurance companies that have transferred their pension obligations to such other insurance companies. public perceptions of Athene and its business have affected, and may continue to affect, its ability to attract and retain customers in its pension group annuity business, which could have a material effect on our business, results of operations, financial condition and cash flows. To the extent these lawsuits continue to spread to customers of other insurance companies, future activity in the overall
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pension risk transfer industry may be reduced. In addition, these lawsuits could lead to increased regulatory and governmental scrutiny of Athene’s business and the industry overall, and/or result in Athene becoming involved in these lawsuits or even being named as a defendant in future lawsuits related to its pension group annuity business, which could result in additional expenses, adverse regulations and oversight, and/or additional reputational harm. These lawsuits could also spur similar copycat lawsuits, which could further impact Athene’s pension group annuity business. To the extent that the inflows in Athene’s pension group annuity business continue to be negatively impacted by these lawsuits, and in the event of any related regulatory and governmental scrutiny, Athene may seek to increase its inflows in its other distribution channels, including by issuing additional funding agreements within its institutional channel. However, there are no assurances that Athene would be successful in replacing any future pension group annuity inflows with inflows from other distribution channels or that such other inflows would result in comparable spreads.
Climate change-related risks and regulatory and other efforts to address climate change could adversely affect our business.
We and the portfolio companies of the funds we manage face a number of risks associated with climate change, including both transition and physical risks. The transition risks that could impact us and the investments of the funds we manage include those risks related to the impact of U.S. and foreign climate-related legislation and regulation, as well as risks arising from climate-related business trends. Moreover, our investments, and the investments of the portfolio companies of the funds we manage, are subject to risks stemming from the physical impacts of climate change. In particular, climate change may impact asset prices, increase insurance costs and decrease the value of investments linked to real estate. For example, rising sea levels may lead to decreases in real estate values in coastal areas. We and the funds we manage could have significant concentrations of real estate investments and collateral underlying investments linked to real estate in areas of the U.S. prone to severe weather and climate events (such as wildfires, droughts, hurricanes and floods), including California, sections of the Northeastern U.S., the South Atlantic states and the Gulf Coast.
Climate change-related regulations or interpretations of existing laws have resulted, and may continue to result, in enhanced disclosure obligations that could negatively affect us or the investments of the portfolio companies of the funds we manage and also materially increase our regulatory burden. We also face business trend-related climate risks. Certain fund investors are increasingly taking climate-related risks into account when determining whether to invest in the funds we manage. Conversely, certain fund investors may also be concerned if our funds take climate change-related risks into account when making portfolio management decisions. Our reputation and investor relationships could be damaged as a result of our involvement, or the involvement of the funds we manage, in certain industries, portfolio companies or transactions associated with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.
Risks Related to Taxation
The tax treatment of our structure is complex and may be subject to change as a result of new laws or regulations or differing interpretations of existing laws and regulations, under audit or otherwise, potentially on a retroactive basis.
The tax treatment of our structure and transactions undertaken by us depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal, state, local and non-U.S. income and other tax laws for which no clear precedent or authority may be available. In addition, U.S. federal, state, local and non-U.S. income and other tax rules are constantly under review by persons involved in the legislative process, the IRS, the U.S. Department of the Treasury, and U.S. state and local and non-U.S. legislative, taxation and regulatory bodies, which frequently results in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. It is possible that future legislation increases the U.S. federal income and non-U.S. tax rates applicable to corporations, limits further the deductibility of interest, or effects other changes that could have a material adverse effect on our business, results of operations and financial condition. Changes in some jurisdictions (particularly in the U.K.) to the rate, basis, qualifying conditions or nature of carried interest taxation (whether arising because of a change of government policy, law or otherwise) could also have a detrimental effect on our business, as a result of difficulties with hiring, compensating and retaining talent in the U.K. or other jurisdictions.
We cannot predict whether any particular proposed legislation will be enacted or, if enacted, what the specific provisions or the effective date of any such legislation would be, or whether it would have any effect on us. As such, we cannot assure you that future legislative, administrative or judicial developments will not result in an increase in the amount of U.S. (including state or local) or non-U.S. tax payable by us, the funds we manage, portfolio companies owned by such funds or by investors in our
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shares. If any such developments occur, our business, results of operations and cash flows could be adversely affected and such developments could have an adverse effect on your investment in our shares.
Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties as interpreted and applied by various jurisdictions. These laws, regulations and treaties are complex, and the manner in which they apply to us and our subsidiaries is sometimes open to interpretation. Moreover, the application of such laws, regulations and treaties may not be compatible with one another. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Although management believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities, the tax authorities could challenge our interpretation resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate and/or have other unforeseen adverse tax consequences.
In addition, we or certain of our subsidiaries or certain portfolio companies of the funds we manage are currently (or have been recently) under tax audit in various jurisdictions, and these jurisdictions or any others where we conduct business may assess additional tax against us. While we believe our tax positions, determinations, and calculations are reasonable, the final determination of tax upon resolution of any audits could be materially different from our historical tax provisions and accruals. Should additional material taxes be assessed as a result of an audit, assessment, or litigation, there could be an adverse effect on our results of operations and cash flows in the period or periods for which that determination is made. Even where an audit, assessment or litigation is resolved favorably to us, the additional costs incurred in resisting or resolving such audits, assessments or litigation may adversely affect our business.
Our structure is subject to a number of minimum tax regimes, the implementation of which remains uncertain. These regimes may not be compatible with one another and may cause us adverse tax consequences.
The U.S. Congress, the Organisation for Economic Co-operation and Development (the “OECD”) and other government bodies and organizations in jurisdictions where we and our affiliates are established, invest or conduct business continue to recommend and implement changes related to the taxation of multinational companies. The OECD/G20 Inclusive Framework on BEPS (the “Inclusive Framework”), which currently includes over 145 countries and jurisdictions has proposed and driven the implementation by its participating jurisdictions of changes to numerous long-standing tax principles through its base erosion and profit shifting (“BEPS”) project, which is focused on a number of issues, including the prevention of profit shifting among affiliated entities in different jurisdictions, limitation of improper interest deductibility claims and ensuring eligibility of taxpayers claiming the benefits of double tax treaties. The BEPS project includes a two-pillar initiative, “BEPS 2.0,” which is aimed at (1) shifting taxing rights to the jurisdiction of the consumer (“Pillar One”) and (2) ensuring all companies pay a global minimum tax (“Pillar Two”).
Pillar One will, broadly, re-allocate taxing rights over 25% of the residual profits of multinational enterprises (“MNEs”) with global turnover in excess of 20 billion euros (excluding extractives and regulated financial services) to the jurisdictions where the customers and users of those MNEs are located. While the OECD continues to seek agreement regarding the form and timing of implementation of Pillar One, no concrete proposal has yet been achieved. The form, scope and timing of measures to implement Pillar One and their impact on our business and the taxes we pay remain unclear and subject to ongoing negotiations and, therefore, we cannot currently say whether these measures have an adverse effect on our business.
Pillar Two consists of two interlocking domestic rules (together the Global Anti-Base Erosion Rules (“GloBE Rules”)): (1) an Income Inclusion Rule (“IIR”), which imposes top-up tax on a parent entity in respect of the low-taxed income of a constituent entity within that parent entity’s group; and (2) an Undertaxed Payment Rule (“UTPR”), which denies deductions or requires an equivalent adjustment to the extent the low-taxed income of a constituent entity is not subject to tax under an IIR. Pillar Two also includes a treaty-based Subject to Tax Rule that allows source jurisdictions to impose limited source taxation on certain related party payments subject to tax below a minimum rate, and a limited number of Inclusive Framework members have either signed or expressed an intention to sign a multilateral convention to implement the Subject to Tax Rule. The timeline for implementation of this Subject to Tax Rule remains uncertain.
The ultimate application of Pillar Two as implemented by jurisdictions which may seek to assert taxing rights with respect to our business remains uncertain and subject to legislative and interpretative change. The Inclusive Framework released model GloBE rules in late 2021 and has continued to release guidance on the interpretation and application of the model GloBE Rules, and jurisdictions enacting legislation in respect of Pillar Two have sought to implement these updates (either by way of legislative amendment or the release of further domestic guidance). We expect that the Inclusive Framework will continue to
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release updates to its administrative guidance which may result in further amendments to the Pillar Two rules as they apply in relevant jurisdictions. As such, several aspects of Pillar Two, including whether some or all of our activities may fall within the scope of the exclusions therefrom, currently remain uncertain.
The U.K. has enacted legislation implementing the IIR via a “multinational top-up tax” (“MTT”), alongside a U.K. domestic top-up tax, that applies to MNEs for accounting periods beginning on or after December 31, 2023. Amendments to the MTT include new provisions relating to the U.K.’s implementation of a UTPR rule for accounting periods beginning on or after December 31, 2024. Additionally, as part of the 2025 Autumn Budget, the U.K. announced measures to further amend the U.K.’s Pillar Two rules which include measures to give effect to certain amendments contained in the OECD’s guidance released on January 15, 2025.
On January 5, 2026, members of the Inclusive Framework agreed on several new safe harbors as part of a package of measures on Pillar Two aimed at reducing compliance burdens and ensuring fair treatment of substance-based tax incentives. A key element of the package includes measures designed to ensure that, subject to certain conditions, neither the IIR nor the UTPR would apply to certain U.S. headquartered MNEs (or any foreign subsidiaries included in the group’s consolidated financial statements) for financial years commencing on or after January 1, 2026 (the “SbS Safe Harbor”). While these measures could, if implemented as contemplated, significantly reduce the potential impact of the Pillar Two rules to some or all of our business, the practical impact of these measures remains uncertain and will depend on local law enactment, administrative guidance, and interpretation in the relevant jurisdictions. In addition, local Pillar Two regimes, including qualified domestic minimum top-up taxes, may continue to apply in jurisdictions in which our business operates. In the U.K., the Exchequer Secretary to His Majesty’s Treasury announced on January 7, 2026 that measures to implement the new provisions in the U.K., applicable to accounting periods beginning on or after January 1, 2026, will be subject to technical consultation and then brought forward in the next Finance Bill. However, no assurances can be provided that such measures will be enacted or, if enacted, what their effective date may be.
It is likely that other countries or jurisdictions will continue to implement the recommended model GloBE Rules (including either or both of the IIR or UTPR) as drafted or in a modified form, although some countries may not introduce such changes. As noted below, Bermuda in particular has enacted the Bermuda Corporate Income Tax Act 2023 (the “Bermuda CIT”) in response to the Pillar Two initiative. The implications of these rules for our business remain uncertain, both at a domestic level in Bermuda and in terms of how the Bermuda CIT (which came into full effect on January 1, 2025) might interact with the MTT and UTPR legislation or other Pillar Two implementing legislation in relevant jurisdictions. These rules also now need to be considered against the backdrop of the above mentioned SbS Safe Harbor measures which have the potential to exclude certain US-headed groups from the IRR and UTPR altogether. As noted below, we have taken specific steps under the Bermuda CIT in response to the SbS Safe Harbor measures.
In addition, depending on how the model GloBE Rules are implemented or clarified by additional commentary or guidance in the future, they may result in material additional tax being payable by our business and the businesses of the companies in which we invest. The ultimate implementation of the BEPS project may also increase the complexity and the burden and costs of compliance and advice relating to our ability to efficiently fund, hold and realize investments, and could necessitate or increase the probability of some restructuring of our group or business operations. This may also lead to additional complexity in evaluating the tax implications of ongoing investments and restructuring transactions within our business.
As noted above, on December 27, 2023, the Government of Bermuda enacted the Bermuda CIT. Commencing on January 1, 2025, the Bermuda CIT imposes a 15% corporate income tax on entities that are tax residents in Bermuda or have a Bermuda permanent establishment and are members of multi-national groups with consolidated revenues in excess of €750 million for at least two of the last four fiscal years. The Bermuda CIT also includes various transitional provisions and elections that may reduce the economic impact of the tax imposed. We expect that our subsidiaries that are organized in Bermuda generally will be subject to tax under the Bermuda CIT although we do not expect to owe any cash tax thereunder. As discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Retirement Services Liquidity—Bermuda Corporate Income Tax”, in response to the SbS Safe Harbor measures described above, and the announcement by the Exchequer Secretary to His Majesty’s Treasury in the U.K. that measures to implement the new provisions will be brought forward in the next Finance Bill, ACRA revoked its election to be subject to Bermuda CIT. As discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Retirement Services Liquidity—Bermuda Corporate Income Tax”, we expect the revocation of this election to result in a reduction to other assets and a corresponding increase to income tax provision, which results in a reduction to equity, equal to the net amount of the Bermuda deferred tax assets of $1.7 billion. Prior to the enactment of the Bermuda CIT, certain of our subsidiaries had received from the Bermuda Minister of Finance, under the
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Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, Tax Assurance Certificates that they generally would not be subject to income or estate tax until March 31, 2035. No assurances can be provided that the Bermuda CIT, future amendments, regulations or other guidance in respect of the Bermuda CIT, the interaction of the Bermuda CIT with SbS Safe Harbor implementing legislation (if any), any consequences of our revocation of ACRA’s election to be subject to Bermuda CIT or the limited nature and duration of the Tax Assurances Certificate will not negatively affect our earnings and results of operations.
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains a number of tax-related provisions, including a 15% minimum corporate income tax on certain large corporations (“CAMT”) as well as an excise tax on stock repurchases. On September 12, 2024, the IRS and the U.S. Treasury Department released proposed regulations on the CAMT which include rules for determining the income base on which the CAMT is imposed and for determining when a corporation is subject to the CAMT. On November 21, 2025, the IRS and the U.S. Treasury Department released final regulations governing the excise tax on stock repurchases. Based on interpretations of the proposed regulatory guidance and assumptions we have made regarding the CAMT, and the regulatory guidance regarding the excise tax on stock repurchases, we do not currently expect the CAMT or excise tax on stock repurchases to have a material impact on our effective tax rate. The impact of the IRA on our financial condition will depend on the facts and circumstances of each year.
The Base Erosion and Anti-Abuse Tax (“BEAT”) also operates as a minimum tax and is generally calculated as a percentage (10% for taxable years before 2026 and 10.5% thereafter) of the “modified taxable income” of an “applicable taxpayer” and applies for a taxable year only to the extent it exceeds a taxpayer’s regular corporate income tax liability for such year, determined without regard to certain tax credits. Certain of our reinsurance agreements require our U.S. subsidiaries, including any non-U.S. subsidiaries that have elected to be subject to U.S. federal income taxation, to pay or accrue substantial amounts to certain of our non-U.S. reinsurance subsidiaries that would be characterized as “base erosion payments” with respect to which there are “base erosion tax benefits.” These and any other “base erosion payments” may cause us to be subject to the BEAT. In addition, tax authorities may disagree with our BEAT calculations, or the interpretations on which those calculations are based, and assess additional taxes, interest and penalties. There may be material adverse consequences to our business if tax authorities our BEAT calculations, in light of the uncertainties described above.
Certain of our non-U.S. subsidiaries may be subject to U.S. federal income taxation in an amount greater than expected.
Certain of our non-U.S. subsidiaries are treated as foreign corporations under the Internal Revenue Code of 1986, as amended (such subsidiaries, the “Non-U.S. Subsidiaries”). Each of the Non-U.S. Subsidiaries currently intends to operate in a manner that will not cause it to be subject to U.S. federal income taxation on a net basis in any material amount. However, there is considerable uncertainty as to whether a foreign corporation is engaged in a trade or business (or has a permanent establishment) in the U.S., as the law is unclear and the determination is highly factual and must be made annually. Therefore, there can be no assurance that the IRS will not successfully contend that a Non-U.S. Subsidiary that does not intend to be treated as engaged in a trade or business (or as having a permanent establishment) in the U.S. does, in fact, so engage (or have such a permanent establishment). If any such Non-U.S. Subsidiary is treated as engaged in a trade or business in the U.S. (or as having a permanent establishment), it may incur greater tax costs than expected on any income not exempt from taxation under an applicable income tax treaty, which could have a material adverse effect on our financial condition, results of operations and cash flows.
In addition, certain of our subsidiaries are treated as resident in the U.K. for U.K. tax purposes (the “U.K. Resident Companies”) and expect to qualify for the benefits of the income tax treaty between the U.S. and the U.K. (the “U.K. Treaty”) by reason of being subsidiaries of AGM or by reason of satisfying an ownership and base erosion test. Accordingly, our U.K. Resident Companies are expected to qualify for certain exemptions from, or reduced rates of, U.S. federal taxes that are provided for by the U.K. Treaty. However, there can be no assurances that our U.K. Resident Companies will continue to qualify for treaty benefits or satisfy all of the requirements for the tax exemptions and reductions they intend to claim. If any of our U.K. Resident Companies fails to qualify for such benefits or satisfy such requirements, it may incur greater tax costs than expected, which could have a material adverse effect on our financial condition, results of operations and cash flows.
Our ownership of certain non-U.S. entities could cause us to be subject to U.S. federal income tax in amounts greater than expected, which could adversely affect the value of your investment.
Certain of our investments may be in foreign corporations or may be acquired through foreign subsidiaries that would be classified as corporations for U.S. federal income tax purposes. Such entities may be passive foreign investment companies (“PFICs”) or controlled foreign corporations (“CFCs”) for U.S. federal income tax purposes. For example, certain of our
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subsidiaries are non-U.S. companies and certain portfolio companies owned by the funds we manage are considered to be CFCs for U.S. federal income tax purposes. In addition, in December 2017, the TCJA introduced changes to the determination of when a foreign corporation is treated as a CFC (including through downward attribution) and whether a U.S. shareholder of a CFC is required to include its pro rata share of certain income generated by the CFC into income currently regardless of whether the shareholder receives any related distributions of cash. The One Big Beautiful Bill Act (the “OBBBA”) made several changes to the determination of CFC status including reinstating the limitation on downward attribution from non-U.S. persons for purposes of determining CFC status, introducing the “foreign controlled U.S. shareholders” of “foreign-controlled corporations” provisions which apply downward attribution in certain cases, and modifying the pro rata share rules by replacing the “last day” rule with a full year approach. Aspects of these changes remain uncertain, and we may experience adverse U.S. tax consequences as a result of our ownership of non-U.S. companies, including the recognition of taxable income attributable to such companies’ non-U.S. operations and as a result, our financial condition, results of operations and cash flows could be affected. In addition, if a reinsurance agreement is entered into among related parties, the IRS is permitted to reallocate or recharacterize income, deductions or certain other items, and to make any other adjustment, to reflect the proper amount, source or character of the taxable income of each of the parties. Reinsurance agreements between our U.S. insurance companies and their Bermuda affiliates may be subject to such by the IRS. If the IRS were to our reinsurance arrangements, our financial condition, results of operations and cash flows could be affected.
Changes in tax law could adversely impact our earnings.
Many of the products that our retirement services business sells and reinsures benefit from one or more forms of tax-favored status under current U.S. federal and state income tax regimes. For example, our retirement services business sells and reinsures annuity contracts that allow the policyholders to defer the recognition of taxable income earned within the contract. Future changes in U.S. federal or state tax law could reduce or eliminate the attractiveness of such products, which could affect the sale of retirement services’ products or increase the expected lapse rate with respect to products that have already been sold. Decreases in product sales or increases in lapse rates, in either case, brought about by changes in U.S. tax law, may result in a decrease in net invested assets and therefore investment income and may have a material and adverse effect on our business, financial position, results of operations and cash flows.
On July 4, 2025, the U.S. government enacted the OBBBA which further modifies various provisions of the U.S. federal tax rules, including certain provisions of the IRA. The OBBBA made permanent many provisions of the TCJA including the corporate tax rate structures. The OBBBA also made substantial modifications to the international tax rules applicable to U.S. persons, including changes to the global intangible low-taxed income regime, the foreign-derived deduction eligible income regime, and BEAT (as discussed above). The OBBBA introduced other legislative changes, including the restoration of deductible net business interest expense under Internal Revenue Code Section 163(j) to 30% of earnings before interest, taxes, depreciation and amortization. The impact of the OBBBA on our financial condition will depend on the facts and circumstances of each year.
In addition, several of the BEPS measures, including measures covering treaty abuse, the deductibility of interest expense, local nexus requirements, transfer pricing and hybrid mismatch arrangements, are relevant to some of our fund structures and could have an adverse impact on the funds we manage, investors and the portfolio companies of the funds we manage. Inclusive Framework members have been moving forward on the BEPS agenda and significant aspects of the proposals have been implemented or are scheduled for implementation but, because the timing of implementation and the specific measures adopted vary among participating member countries, significant uncertainty remains regarding the full impact of the BEPS project for our business. Uncertainty remains around, among other matters, access to tax treaties for some of the investments’ holding platforms, which could create situations of double taxation and adversely impact the investment returns of the funds we manage.
Risks Related to Our Common Shares
The market price and trading volume of our shares may be volatile, which could result in rapid and substantial losses for our stockholders.
The market price of our shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our shares may fluctuate and cause significant price variations to occur. You may be unable to resell your shares at or above your purchase price, if at all. Some of the factors that could negatively affect the price of our shares or result in fluctuations in the price or trading volume of our shares include: variations in our quarterly operating results, which variations we expect will be substantial, or dividends; our policy of taking a long-term perspective on making investment, operational and strategic
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decisions, which is expected to result in significant and unpredictable variations in our quarterly returns; our creditworthiness, results of operations and financial condition; the credit ratings of the shares; dilution caused by the conversion of our Mandatory Convertible Preferred Stock; the prevailing interest rates or rates of return being paid by other companies similar to us and the market for similar securities; failure to meet analysts’ earnings estimates; publication of research reports about us, the investment management industry or the retirement services industry or the failure of securities analysts to cover our shares; additions or departures of key management personnel; adverse market reaction to any indebtedness we may incur or securities we may issue in the future; actions by stockholders; changes in market valuations of similar companies; removal of our shares from any stock index; speculation in the press or investment community; changes or proposed changes in laws or regulations or differing interpretations thereof affecting our businesses or enforcement of these laws and regulations, or announcements relating to these matters; a lack of liquidity in the trading of our shares; adverse publicity about the investment management industry generally or individual , specifically; a of our computer systems, software or networks, or of our proprietary information; and economic, financial, geopolitical, regulatory or judicial events or conditions that affect us or the financial markets.
An investment in our shares is not an investment in any of the funds we manage, and the assets and revenues of such funds are not directly available to us.
Our shares are securities of Apollo Global Management, Inc. only. While our historical consolidated and combined financial information includes financial information, including assets and revenues of certain funds we manage on a consolidated basis, and our future financial information will continue to consolidate certain of these funds, such assets and revenues are available to the fund, and not to us except through management fees, performance fees, distributions and other proceeds arising from agreements with funds, as discussed in more detail in this report.
Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or employees, and the enforceability of the exclusive forum provision may be subject to uncertainty.
Article XIV of our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, other employees or stockholders to us or our stockholders; (c) any action asserting a claim arising pursuant to any provision of the DGCL, the Certificate of Incorporation or our Bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (d) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (a) through (d) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. The exclusive forum provision also provides that it will not apply to arising under the Securities Act, the Exchange Act or other federal securities laws for which there is federal or concurrent federal and state jurisdiction, in which case the U.S. federal district courts shall be the forum for such unless the Company consents in writing to an alternative forum. Stockholders cannot waive, and will not be deemed to have waived under the forum provision, the Company’s compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this forum provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, this forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds for with us or any of our directors, officers, other employees or stockholders, which may lawsuits with respect to such . Further, in the event a court finds the forum provision contained in the Certificate of Incorporation to be unenforceable or inapplicable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could our business, operating results and financial condition.
Declaration, payment and amounts of dividends, if any, to holders of our shares will be uncertain.
It is expected that we will continue to pay an annual dividend on our common stock, with increases based on the growth of the business as determined by our board of directors. The amount of dividends, if any, that are declared or paid to our stockholders, depends on a number of factors. Our board of directors will have sole discretion to determine whether any dividends will be declared, when dividends, if any, are declared, and the amount of such dividends. We expect that such determination would be
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based on a number of considerations, including our results of operations and capital management plans and the market price of our shares, the availability of funds, our access to capital markets as well as industry practice and other factors deemed relevant by our board of directors, such as insurance regulatory requirements applicable to our subsidiaries. In addition, our ability to pay dividends and the amount of any dividends ultimately paid in respect of our shares will, in each case, be subject to receiving funds, directly or indirectly, from our operating subsidiaries, AAM and AHL. Furthermore, the ability of these operating subsidiaries to make distributions to us will depend on satisfying applicable law with respect to such distributions and making prior distributions on the AHL outstanding preferred stock, and the ability of AAM and AHL to receive distributions from their own respective subsidiaries will continue to depend on applicable law with respect to such distributions. There can be no guarantee that our stockholders will receive or be entitled to dividends commensurate with our historical dividends.
In addition, on August 11, 2023, we issued 28,750,000 shares of Mandatory Convertible Preferred Stock with a dividend rate of 6.75% per annum on the liquidation preference of $50 per share. The Mandatory Convertible Preferred Stock, which is expected to be subject to mandatory conversion on July 31, 2026, ranks senior to our common stock with respect to the payment of dividends. As long as any share of Mandatory Convertible Preferred Stock is outstanding, unless all accumulated and unpaid dividends on the Mandatory Convertible Preferred Stock for all preceding dividend periods have been declared and paid in full or declared and set apart for payment, we may not declare, pay or set apart for payment any dividends on our common stock or any other class or series of stock that ranks junior to the Mandatory Convertible Preferred Stock. Dividends on the Mandatory Convertible Preferred Stock are discretionary and cumulative. Holders of Mandatory Convertible Preferred Stock will only receive dividends on their shares when, as and if declared by our board of directors. If dividends on the Mandatory Convertible Preferred Stock have not been declared and paid for the equivalent of six or more quarterly dividend periods, whether or not consecutive, holders of Mandatory Convertible Preferred Stock, together as a class with holders of any other series of parity stock with like voting rights, will be entitled to vote for the election of two additional directors to our board of directors. This right to elect additional directors to our board of directors will dilute the representation of our stockholders on our board of directors and may affect the market price of our common stock. When quarterly dividends have been declared and set apart for payment in full, the right of the holders of Mandatory Convertible Preferred Stock to elect these two additional directors will , the terms of office of these two directors will forthwith and the number of directors constituting our board of directors will be reduced accordingly. In addition, the anticipated issuance of additional shares of our common stock in connection with the mandatory conversion of the Mandatory Convertible Preferred Stock may result in additional dilution to existing stockholders, impact per-share financial metrics and contribute to increased in the market price of our common stock, including prior to the conversion date. Additional risks related to the Mandatory Convertible Preferred Stock are contained in the prospectus supplement dated August 8, 2023.
