AP Alternative Assets, L.P. Informs Investors of Update Letter to Athene Shareholders; AP Alternative Assets to Release Third Quarter 2014 Financial Results on October 30, 2014

GUERNSEY, Channel Islands--(BUSINESS WIRE)--Regulatory News:

In connection with AP Alternative Assets, L.P.’s (“AAA”; Euronext Amsterdam: AAA) equity investment in Athene Holding Ltd. (“Athene”), AAA, the largest shareholder of Athene, informs its investors that Athene issued an update letter to its shareholders. Below is the full text of Athene’s shareholder letter, and for additional information regarding Athene, please visit www.athene.bm.

AAA also announced today that it plans to release its financial results for the third quarter ended September 30, 2014 on October 30, 2014 prior to the start of trading on Euronext in Amsterdam.

In the letter below, Athene informed its shareholders, including AAA, that as part of Athene’s ongoing financial integration of Aviva USA and transition towards public-company standards for financial controls, the delivery of its financial statements for the quarter ended September 30, 2014 will be delayed. Since AAA is determining the value of its investment in Athene using an embedded value methodology, which is based on projected future cash flows of the business rather than GAAP financials, the delay in the delivery of Athene’s GAAP financial statements will not have an impact on AAA’s ability to prepare its financial statements for the quarter ended September 30, 2014. However, as a result of the delay, AAA will not be hosting a conference call to discuss AAA’s financial results for the third quarter of 2014, including the results of Athene.

ATHENE HOLDING LTD. LETTER TO SHAREHOLDERS

October 19, 2014

Dear Shareholder,

As we continue financial integration of Aviva USA and our transition towards public-company standards for financial controls, we would like to take this opportunity to update you on the progress being made at Athene. The Company remains fiscally and operationally strong, with recent positive results across the platform:

• Our retail sales continue to grow and are on plan for the year. Through September 2014 sales were $1.9 billion, which closely follows planned production for 2014. Through a variety of sales initiatives, including new product launches, consolidating sales and marketing offices, further strengthening our relationships with a well-established distribution channel, and building a retail business licensed to issue products in all 50 states, we are now one of the fastest growing writers of indexed annuities.
• Athene remains well capitalized, and the Company’s investments continue to perform well. For the quarter ended June 30, 2014, Athene had:
  • Onshore Risk Based Capital (RBC) ratio of 500% CAL¹, offshore BSCR of 188%², and consolidated statutory capital-to-reserves ratio of approximately 10% (in-line with investment grade peers)
  • U.S. combined statutory capital and surplus of $1.1 billion¹
  • Total consolidated statutory assets of $59 billion³
  • Consolidated statutory capital of $5.2 billion
  • Based on current information, net investment income in Q2 2014 was in line with Q1 2014, featuring strong performance in Athene’s core asset portfolio offset by volatility in alternative investments⁴

• After completing four acquisitions in five years, a major goal of the Company is to integrate the newly acquired businesses and consolidate operations. Throughout all of our integration processes, we have focused on upgrading our systems and organization with the goal of building a robust platform to support our block reinsurance and opportunistic M&A strategy. Our most recent integration process with Aviva USA continues to go well as we move more than 200 jobs from three offices located across the country to our West Des Moines, Iowa, operational headquarters. As a result, three offices handling marketing, sales and business operations will close by mid-2015, with our Kansas office closure slated for year end and our Delaware office relocation already completed this summer. Rebranding marketing and sales materials, product forms, systems and service correspondence to Athene was accomplished in August and we now have consistency in how we go to market with our distribution channel and policy holders. We are also working toward creating one product platform, moving our Delaware products to Iowa by mid-2015.
• We have $59 billion of consolidated statutory invested assets managed by our affiliate, Athene Asset Management, L.P. Our portfolio continues to be well-diversified and high quality with 88% of our rated securities carrying a 1 or 2 rating – the two highest categories – by the NAIC’s Securities Valuation Office. Based on our internal estimates, in the 12 months since closing the Aviva USA transaction we have purchased $8.4 billion of long-term investments at an average yield of 6.76%, which is in excess of management’s expectations at transaction close and has allowed us to increase yields on the acquired portfolio
• Finally, we are pleased to report that we have implemented a number of organizational changes with the goal of bolstering our Company and streamlining its structure. In October 2014, we hired Tom Daula as Chief Risk Officer of Athene Holding. Tom previously served as CRO of Morgan Stanley and brings a wealth of experience and expertise to the position. We look forward to working with Tom and welcome him to the Athene family. Additionally, as we move towards Athene’s goal of expanding our business and becoming a public company in the future, we have implemented a number of organizational changes that more clearly define the relationship between Athene Holding – the Bermuda parent of our insurance and re-insurance companies – and Athene Asset Management, L.P. (“AAM”), a subsidiary of Apollo Global Management, LLC which manages all of the assets of the insurance and re-insurance companies. Going forward, Jim Belardi will continue in his role as CEO and Director of Athene Holding and CEO of Athene Asset Management, but will be placing increased emphasis on AAM and its operations. Grant Kvalheim, President of Athene Holding, will be taking on additional executive decision-making responsibilities within the insurance company and will be reporting directly to the Athene Holding Board of Directors in that capacity.

As part of the ongoing Aviva integration and preparatory work as we ready our organization for a public offering in the future, we are taking the opportunity to strengthen our financial systems and ensure that our reporting processes and controls are appropriate for a public company. In preparing our financial statements for the year ended December 31, 2013, which date also included the first quarter of our ownership of the carved-out Aviva USA business, we identified the existence of material weaknesses in the controls over financial reporting of actuarial reserves and tax balances. Because we hold ourselves to a best-in-class standard and expect our systems to operate in a manner appropriate for a public company, we are taking this opportunity to (i) fully examine and remedy all areas related to the material weaknesses, and (ii) more broadly, strengthen our financial systems and processes.

The actuarial material weakness principally relates to the recently acquired Aviva USA operations. In particular, we determined that the existing control procedures in place to identify unusual trends or balances within the actuarial reserves or to validate some of our modeled results were not and are not sufficient. These control deficiencies impact interest sensitive contract liabilities, including value of business acquired (“VOBA”), reported within that balance, and deferred acquisition costs (“DAC”). We have deployed significant internal and external resources to review and enhance our models and to revamp our processes to instill best practices and uniformity across the organization and remedy this weakness as expeditiously as possible.

The Aviva transaction catalyzed a tax-related material weakness stemming from the scaled people and process needs of the combined Aviva-Athene business. To remedy this material weakness, we hired Rich Burness as our new Global Head of Tax. Previously, Rich was a senior partner in Deloitte’s tax practice covering a wide variety of domestic and foreign insurance tax matters for global insurance institutions. Ramping up within Athene, Rich is actively supplementing his new team with more expertise across multiple jurisdictions. We plan to add or improve software to support the work of our tax reporting area, and we are in the middle of a comprehensive review of our processes for timely preparation of support for our tax accounting positions. Finally, we are undertaking a review of our processes and capabilities for managing the complexity of accounting for the tax consequences of insurance acquisitions that will enhance our ability to respond to these challenges should we undertake another acquisition.

While our reviews remain ongoing, and there can be no assurance as to the ultimate outcome, our preliminary work at this time has not identified anything that we believe would lower our Q1 2014 GAAP book value. To provide us with ample time to complete our actuarial and tax reviews, upgrade our controls over financial reporting, and improve our overall financial systems and processes, Athene’s Audit Committee has approved an extension of financial statement delivery for Q2 2014, Q3 2014, full year 2014, and Q1 2015 GAAP financials to June 30, 2015.

Please note that Athene Holding and its insurance subsidiaries have continued to meet all regulatory filing deadlines with regard to financial statements prepared in accordance with Statutory Accounting principles.

While delivery of our financial statements is delayed, we will continue to update you on our ongoing operational performance and will provide statutory financial updates as available. In addition, Athene will continue to provide a quarterly per share valuation of its equity to investors. The implied market value for one share of Athene Holding stock at September 30, 2014 will be provided to shareholders following the release of AP Alternative Assets, LP’s third quarter financials in the coming weeks.

We appreciate your interest in Athene and your understanding of our GAAP reporting extension. We will continue to keep you updated on our progress and look forward to your continued support.

Brenda J. Cushing
Chief Financial Officer
Athene Holding Ltd.

About Athene Holding Ltd.

Athene Holding, through its subsidiaries, is a leading provider of products in the retirement savings market. Athene’s principal subsidiaries include Athene Annuity & Life Assurance Company and Athene Life Insurance Company, Delaware-domiciled insurance companies, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York and Athene Life Insurance Company of New York, New York-domiciled insurance companies, and Athene Life Re Ltd., a Bermuda-domiciled reinsurer.

Athene Holding provides investment solutions, including tax-efficient savings products, to support retirees as well as those saving for retirement. The products offered by Athene include:

• Retail fixed and equity indexed annuity products
• Institutional products, such as funding agreements
• Co-insurance and reinsurance arrangements with third-party annuity providers

Further information about our companies can be found at www.athene.bm.

About AP Alternative Assets

AAA was established by Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”) and is a closed-end limited partnership established under the laws of Guernsey. Apollo is a leading global alternative investment manager with 24 years of experience investing across the capital structure of leveraged companies. AAA is managed by Apollo Alternative Assets, L.P., a subsidiary of Apollo. For more information about AP Alternative Assets, please visit www.apolloalternativeassets.com.

This announcement does not constitute or form part of an offer to sell or solicitation of an offer to purchase or subscribe for securities in the United States or in any other jurisdiction.

This press release contains forward-looking statements. Forward-looking statements involve risks and uncertainties because they relate to future events and circumstances. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results and developments to differ materially from the historical experience and expressed or implied expectations of AAA. Undue reliance should not be placed on such forward-looking statements. Forward-looking statements speak only as of the date on which they are made and AAA does not undertake to update its forward-looking statements unless required by law.

This announcement does not constitute a prospectus or an offer within the meaning of article 3 of the Prospectus Directive (Directive 2003/71/EC). This announcement has not been submitted to nor approved by any regulatory body. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.

¹ RBC and Capital & Surplus are for Athene Annuity & Life Assurance Company, which sits at the top of our chain of U.S. insurance subsidiaries.

² Athene Life Re, Bermuda Solvency Capital Requirement. This has been adjusted for anticipation of future regulatory changes.

³ Consolidated Statutory metrics throughout this communication are calculated using materially different accounting principles than similar metrics calculated in accordance with US GAAP. The consolidated statutory metrics are the sum of Athene Annuity & Life Assurance Company and Athene Life Re Ltd., which is Athene’s only material Bermuda insurance subsidiary, and Athene’s non-life insurance companies.

⁴ Athene’s net investment income is a single line item in the revenue portion of the Company’s income statement and is therefore not indicative of the Company’s overall performance or net income. Athene has not closed the books for Q2 2014 and, as such, the net investment income referenced herein is not final.