Athene Holding Ltd. (NYSE:ATH) Q2 2019 Earnings Conference Call - Final Transcript

Aug 05, 2019 • 10:00 am ET

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Athene Holding Ltd. (NYSE:ATH) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
James R. Belardi

would like to thank all of my Athene colleagues for their great effort in building our superior business. And I would also like to thank our shareholders, who have trusted us to continue generating superior results. Looking ahead, we know there is plenty more to accomplish and we are incredibly excited about our prospects.

Now turning to our results in the second quarter, we executed on many of Athene's I just discussed. We continued our long-term track record of producing consistently growing earnings and adjusted book value per share. We also deployed capital in a number of accretive opportunity. On the back of strong investment returns, we produced a near record $370 million of adjusted operating income in the second quarter approximately 30% higher than the prior year quarter, reflecting our stronger earnings power from our significant growth in the back half of 2018.

Next, we grew total invested assets with $4 billion of organic growth across our multi-channel distribution model, all of which continues to be underwritten to mid-teens returns. And finally, we continued to compound book value at our long-term high teens level. This quarter we found that the highest and best use of our capital deployment was repurchasing our own shares. As we deployed more than $375 million of capital repurchasing our stock at very accretive levels. All these achievements reflect our ability to invest well remain disciplined and pivot toward opportunity.

Picking up on the discussion from our Q1 call, at Athene, we believe the primary driver of long-term shareholder value is effective capital allocation. We are often fortunate to be provided with an abundance of opportunities to deploy capital at attractive returns. We sum up today's opportunity set in four primary categories; Organic growth, acquisitions, share buybacks and strengthening our balance sheet to drive ratings upgrades.

In addition, retaining capital to deploy opportunistically in times of volatility is also paramount to our long-term ability to create shareholder value. Therefore, we are consistently balancing the natural tension between increasing our capital base to fund tomorrow's opportunity, while also generating attractive returns today.

We believe it is possible to achieve these goals concurrently, and we've demonstrated some of the actual ways we're making progress in the second quarter. First, as you recall, in the prior quarter we announced the formation of a strategic and shareholder friendly, capital solution called ACRA, which is shorthand for Athene Co-Invest Reinsurance Affiliate. ACRA provides Athene with on-demand -- with an on-demand long-term capital vehicle, which will allow us to fund inorganic growth increase our flexibility around various accretive forms of capital deployment, including share repurchases and augment our balance sheet strength without diluting the earnings power of Athene.

Fundraising is going well and our current expectation is that ACRA will receive its initial funding at the beginning of the fourth quarter, which will be reflected in our financials, starting October 1. We remain confident that the combination of Athene's strong balance sheet and the additional capacity from ACRA, will significantly widen