Athene Holding Ltd.

ATH Details

Athene Holding Ltd. (NYSE: ATH) is a financial services company that specializes in retirement services and issues, reinsures, and acquires savings products to fund the retirement needs of individuals and institutions. It is primarily focused on sourcing long-term, illiquid liabilities, and on investing in a high-quality investment portfolio. The company has USD 205.7 billion of total assets as of March 31, 2021, with operations in the United States, Bermuda, and Canada.

Pension Risk Transfer from JCPenny: On April 01, 2021, the company closed a pension risk transfer transaction according to which JCPenney transferred USD 2.8 billion in pension obligations to ATH. As a result, two of ATH's wholly-owned subsidiaries will now provide annuity benefits to ~30,000 participants of JCPenney's pension plan.

Recent M&As for Accelerating Growth: On March 30, 2021, ATH acquired substantially all of the assets of Donlen Corporation from Hertz Global Holdings, Inc., for a cash consideration of USD 891 million. The company intends to strengthen its business by investing in the Donlen platform, which develops innovative fleet management technology solutions. In addition, on March 08, 2021, ATH signed an agreement to merge with Apollo in an all-stock transaction valued at ~USD 11 billion on an equity value basis (for ATH). Under the deal terms, each outstanding Class A ATH share will be exchanged for 1.149 shares of Apollo common stock, resulting in current Apollo and ATH shareholders holding ~76% and 24% stake in the combined company, respectively.

Maximizing Retirement Savings: On March 30, 2021, ATH launched Athene AccuMax, a fixed indexed annuity focused on offering secure accumulation of "patient money" savings for long-term/retirement. AccuMax incorporates multi-year indexed interest crediting strategies and higher predictability of crediting rates on all its strategies that are guaranteed for the annuity's withdrawal charge period.

Q1FY21 Results: During Q1FY21 (ending March 31, 2021), the company’s revenues were USD 4.39 billion as compared to negative revenues of USD 1.55 billion reported in Q1FY20 (due primarily to investment-related losses of USD 3.57 billion in Q1FY20). ATH realized interest-sensitive contract and future/other policy benefits, aiding in reaching a net income of USD 77 million during Q1FY21 vs net loss of USD 1.22 billion reported in Q1FY20.

Key Risks: At FY20 end, 22.1% of ATH’s net invested assets were linked to real estate, the value of which depends on the financial condition of the borrowers, the value of the properties underlying the mortgages, the financial condition of the tenants of those properties, and the general economic trends. This concentration makes the company susceptible to risks arising from the above-mentioned factors.

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ATH Daily Technical Chart

Stock Recommendation: ATH surged 32.41% in the past 3 months and is currently leaning towards the higher band of the 52-week range of USD 29.17 to USD 68.00. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 73.401. We have valued the stock using the Price/Book Value-based relative valuation methodology and arrived at a target price of USD 56.44. Considering the significant uptick in the stock price, various growth initiatives, and current valuation, we recommend an “Expensive” rating on the stock at the current price of USD 67.73, up 0.33% as of July 01, 2021, at 1.39 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.