Athene reports net loss for Q1 but insists long term earnings potential looks healthy

Athene Holding reported a net loss of $1.1 billion for Q1 2020, compared to net profit of $708 million for the same period in 2019, which it said was primarily driven by a decline in the fair value of its reinsurance assets due to widening credit spread.

It generated $861 million of new deposits in its flow reinsurance business in Q1, a decrease of 16 percent year-over-year. Deposits in Q1 also declined 28 percent from a particularly strong result in the prior quarter, mostly driven by strong volumes from partnerships established over the prior 18 months, Athene said.

“Despite the sequential decline in volumes, as expected, flow reinsurance activity gained momentum in March amid a peak in market volatility, as key partners remained active in underwriting new retail annuity policies,” Athene said.

Jim Belardi, CEO of Athene, said: “Athene’s core earnings power remains intact and continues to grow and generate attractive levels of profitability. Our actions over the past year have allowed us to operate from a position of strength.”

Belardi noted that COVID-19 had caused mark-to-market volatility in Athene’s financials during Q1, but predicted “these impacts will be transitory and have little impact on Athene’s long-term earnings trajectory.”

He added: “We are armed with one of the best capitalised balance sheets in the industry, and when combined with resources in our sidecar capital vehicle, ACRA, we have more than $7 billion of deployable capital which can be used to support nearly $90 billion of opportunistic growth. We have record levels of liquidity, a proven ability to take advantage of dislocation, and I’m confident that we will emerge from this crisis even stronger than before.”