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Athene: A Solid Under The Radar Financial

Jun. 08, 2020 4:01 PM ETAthene Holding Ltd. (ATH), ATH.PR.A1 Comment
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Manatee Research


  • Athene has a solid track record and expansive investment portfolio.
  • Q1 2020 was marred by some earnings volatility but the core business remains intact.
  • Good valuation offset by some governance and clarity issues makes Athene a buy.


Athene (NYSE:ATH) is a unique financial that focuses mostly on annuities and related projects. Unlike many insurance companies that also do annuities, they appear to lack any long-term traditional life insurance products, but do operate in a few unique areas like pension re-insurance and other pension risk transfer strategies.

2019 Results

2019 was a good year for Athene, but it is hard to compare apples to apples versus any previous year because the company has been expanding rapidly, mostly through inorganic means. They have acquired large blocks of annuities and other products in recent years.

Book value per share increased from $46 per share to $76. Net income doubled to $2 billion. Helping this, however, was a very large investment gain to the tune of $5.39 per share. Absent this, net income growth would be flat.

Source:2019 Annual Report

The large increase in assets and policies was funded mostly by preferred equity, resulting in the balance sheet remaining very underleveraged and the per share count actually falling year over year thanks to a pickup in buyback activity.

Debt was only about 10% of the capitalization structure at the end of 2019.

Source:2019 Annual Report

The company continues to generate strong cash flow and has been spending most of the excess on stock buybacks. The company repurchased $832 million in 2019 after a few years of almost no buybacks. It will be interesting to see if buyback activity falls off as the company finds more opportunities to buy assets at attractive prices during this economic downturn.

Financial companies of all stripes are difficult to analyze because so much depends on unknowns for the outside investor. While a company may look attractive trading under book value, with a strong record, poor risk management and underwriting of acquisitions can have long-term disastrous consequences that are

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Comments (1)

Thanks. I found this company less than a couple of months ago and am enjoying the ride.
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