Q3 2023 Apollo Global Management Inc Earnings Call

Good morning, and welcome to Apollo Global management's third quarter 2023 earnings conference call. During todays discussion all callers will be placed in listen only mode and during managements and following prepared management's prepared remarks, the conference call will be opened for questions.

Please limit yourself to one question then rejoin the queue.

Conference call is being recorded.

The call May include forward, looking statements and projections, which do not guarantee future events or performance. Please refer to apollo's. Most recent SEC filings for risk factors related to these statements.

Paulo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business.

non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any Apollo fund.

I will now turn the call over to Noah Gunn Global head of Investor Relations. Please go ahead.

Great. Thanks, Donna and welcome again, everyone to our call earlier. This morning, we published our earnings release and financial supplement on the Investor Relations portion of our website, we reported strong third quarter financial results, which included record quarterly FRE of $472 million or 77 cents per share and record.

Orderly, sorry of $873 million or $1 43 per share together. These two earning streams totaled $1 $3 billion in the third quarter third quarter, increasing more than 30% year over year, and reflecting solid execution from both our asset management and retirement services.

Businesses.

Bind with principal investing income holdco financing costs and taxes, we reported adjusted net income of $1 billion or $1 71 per share up 23% year over year.

Joining me this morning to discuss our results and strong relative positioning in further detail, our Marc Rowan CEO, Scott Kleinman co President and Martin Kelly CFO and one quick plugged before we proceed in a couple of weeks on the afternoon of November 14th we will be hosting a deep dive presentation on our platform origination strategy.

G a top area of Investor focus.

Which will provide insights into various platforms and detail how in aggregate, we believe they provide a competitive and sustainable advantage to Apollo and sourcing excess spread.

Our live video cast of this session will be available through our Investor Relations page and with that now back to our regularly scheduled earnings programming Mark.

Thanks, Noah and good morning, Tal another great quarter amidst interesting financial markets and certainly a challenging year for many in our industry just to highlight performance quarterly FRE up 29% year over year quarterly sorry, 36% year over year.

Margin expansion three quarters in a row now.

Inflows for the third quarter of 33 billion 125 billion year to date deployment 36 billion fundamentally momentum.

Both sides of the business.

Our business model is very robust as I will.

Track for you, we expect another $30 billion plus minus of inflows for Q4.

Bringing total inflows for the year to 150 billion the momentum we see in the business tells me we will have an on track.

Continued good performance heading into into Q4.

Obviously, a quarter is not done yet, but everything we see tells us the momentum will continue.

In global wealth, which I'll just do a quick shout out to given how hard the team has been working there are now seven perpetual wealth products in the market today.

<unk> will go through this in detail.

And just to be just to close out origination volume tracking north of the 100 billion on an annualized level.

Fundamentally everything in the business is working.

Unknown Executive: Good morning, and welcome to Apollo Global Management's third quarter 2023 earnings conference call. During today's discussion, all callers will be placed in listen only mode and during management and following prepared management prepared remarks, the conference call will be open for questions. Please limit yourself to one question and rejoin the queue. This conference call is being recorded. This call may include forward looking statements and projections which do not guarantee future events or performance.

And I believe we're set up appropriately to.

To benefit from the current market almost everything in our business works better with higher rates.

Credit as you know is a much bigger part of our business mix than most of our peer group something we've built over a long period of time and as to remind you. We are focused on senior secured top of the capital structure.

This is a big difference between what people normally think of as private credit and otherwise, but we want a business that last one that has duration. One that is set up for a difficult economy, notwithstanding all the positives happening in the credit market.

Unknown Executive: Please refer to Apollo as most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-gap measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-gap measures are reconciled to gap figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Apollo fund.

To give you a sense impairments out of athene at or below last year's level we.

We expect for the year and year to date, notwithstanding some back and forth quarter to quarter fundamentally. The book is in very good shape on the equity side of our business purchase price matters, which is our strategy.

Noah Gunn: I will now turn the call over to Noah Gunn, Global Head of Investor Relations. Please go ahead. Great. Thanks, Donna, and welcome again everyone to our call. Earlier this morning we published our earnings release and financial supplement on the investor relations portion of our website. We reported strong third quarter financial results, which included record quarterly FRE of $472 million or $0.77 per share. And record quarterly FRE of $873 million or $1.43 per share. Together these two earnings streams totaled $1.3 billion in the third quarter, increasing more than 30% year-over-year and reflecting solid execution from both our asset management and retirement services businesses.

Has really paid off many theres a lots of dry powder in the equity business in private markets, but many people are sitting on the sidelines. They have no idea how much of their existing capital is going to need to be used to solve problems in their existing portfolio to get refinancings done.

Purchase price matter in being disciplined over the past decade.

[noise] has left us with a very small number of situations that will require fixing and therefore, we have been on offense a tremendous deployment with.

Which Scott will detail in our private equity business.

And in our hybrid business, if you like something now in the equity business given all the geopolitical implications given the concerns of a recession given the high rate environment. Given what is generally very difficult financing conditions, you really like it on the margin deployment into the equity business I think for all.

Noah Gunn: Combined with principal investing income, hold co-financing costs and taxes, we reported adjusted net income of $1 billion or $1.71 per share, up 23% year-over-year.

[noise] twenty-three will prove for our industry to be very very attractive.

Noah Gunn: Joining me this morning to discuss our results and strong relative positioning in further detail are Mark Rowan, CEO, Scott Climent, co-president, and Martin Kelly, CFO.

So what's really happening let me step back and give you my view at least on what I think is happening in markets and in private markets and I'll start I look at those in my career, which is now 39 years.

Noah Gunn: And one quick plug before we proceed, in a couple weeks on the afternoon of November 14th we will be hosting a deep dive presentation on our platform origination strategy, a top area of investor focus, which will provide insights into various platforms and detail how, in aggregate, we believe they provide a competitive and sustainable advantage to Apollo and sourcing excess spread. A live video cast of the session will be available through our investor relations page. And with that now back to our regularly scheduled earnings programming, Mark.

And I think we've benefited from four tailwind over this period of time.

We've had rates generally going from high to low we have printed a massive amount of money.

We have borrowed forward future demand through fiscal stimulus and physical borrowing and we've had the benefit of globalization.

It does not surprise me with those four tailwind that risk assets equities growth real estate things like that.

Did really well.

Mark Rowan: Thanks Noah and good morning tall. Another great quarter amidst interesting financial markets and certainly a challenging year for many in our industry. Just to highlight performance, quarterly FRE up 29% year-over-year, quarterly SRE, 36% year-over-year, margin expansion, three quarters in a row now, inflows for the third quarter, $33 billion, $125 billion year-to-date deployment, $36 billion, fundamentally momentum both sides of the business.

But I ask myself or any of those four things true today.

I think theres, an argument as to whether they're headwinds or just the absence of tailwind, but everything that I see tells me that we looking backwards is not likely to be a good indication of what needs to be done going forward for investment success in particular looking backward over the past 10 years, which I view as an absolute aberration will not.

Be a good guide going forward.

And the strategies that performed over the past period of time with these tail winds are not going to perform in the new environment that we have.

Mark Rowan: Our business model is very robust as I will. We'll track for you. We expect another 30 billion plus minus of inflows for Q4, bringing total inflows for the year to 150 billion. The momentum we see in the business tells me we will have an on track continued good performance heading into Q4. Obviously, a quarter's not done yet, but everything we see tells us the momentum will continue.

I also think there have been fundamental changes that have happened to markets and market structure.

Over the past years as well the most significant of which happened in 2008 2008, we came very close to an absolute debacle in our financial system.

And the rules of how our financial markets work, where fundamentally rewritten.

We not just Apollo, but all of US we just didn't notice because right. After we changed the rules, we printed a trillion dollars and everything went up into the right.

Mark Rowan: In global wealth, which I'll just do a quick shout out to given how hard the team has been working, there are now seven perpetual wealth products in the market today. Scott will go through this in detail, and just to close out origination volume tracking north of the hundred billion on an annualized level. Fundamentally, everything in the business is working, and I believe we're set up appropriately to benefit from the current market.

Well now that we are no longer doing that now that rates are up now that there are headwinds.

We are starting to notice some of these changes and I'll I'll stick to three and I'll talk about their implications.

One is liquidity public market liquidity.

By some estimates dealer capital capital that facilitates trading is roughly 10% today of what it was in 2008 markets are three times their size.

Mark Rowan: Almost everything in our business works better with higher rates. Credit, as you know, is a much bigger part of our business mix than most of our peer group, something we've built over a long period of time. And as to remind you, we are focused on senior secured top of the capital structure. This is a big difference between what people normally think of as private credit and otherwise, but we want a business that lasts one that has duration, one that is set up for a difficult economy, notwithstanding all the positives happening in the credit market.

That tells me we have just less liquidity in public markets. We have already seen the first complete breakdown of functioning in market, which was U K L. D. I last year. It will not surprise me going forward to see liquidity challenged public markets challenged and investors beginning to understand that liquidity AUM.

Exists on the way up and does not exist on the way down we should expect a more volatile less liquid world in public markets.

The second is the role of banks not just in our economy, but in economies around the world.

Mark Rowan: To give you a sense, impairments at a scene, at or below last year's level, we expect for the year and year to date, notwithstanding some back and forth quarter to quarter. Fundamentally, the book is in very good shape. On the equity side of our business, purchase price matters, which is our strategy, has really paid off. Many, there's lots of drive powder in the equity business in private markets, but many people are sitting on the sidelines.

Franking in theory was targeted at constraining the power of the four big banks in the U S. Following the financial crisis, but the banking system in general guess.

Guess, what it worked banks.

Banks today in the U S markets are roughly 20% of that capital to consumers and businesses.

All of you investors now supply 80% of that capital to businesses.

Mark Rowan: They have no idea how much of their existing capital is going to need to be used to solve problems in their existing portfolio to get refinancing done. Purchase price matter and being disciplined over the past decade has left us with a very small number of situations that will require fixing. And therefore, we have been on offense, tremendous deployment with Scott will detail in our private equity business and in our hybrid business.

In addition, the changes that are are now proposed to occur following the debacle that SPD and first Republic and credit Suisse.

Will further lead to D banking when regulators asked banks in the U S to put up 15% more capital they are asking the banks to shrink or to shrink lines of business when Europe moves to Boswell from Basel III to Basel four they're asking banks to shrink. This is happening around the world D. Banking is not something that is a periodic it is that it's very early.

Mark Rowan: If you like something now in the equity business, given all the geopolitical implications, given the concerns over recession, given the high rate environment, given what is generally very difficult financing conditions, you really like it. On the margin deployment into the equity business, I think for all of 23 will prove for our industry to be very, very attractive.

Infancy. It does not mean that banking is a bad business. It does not mean, the four big banks don't have amazing businesses. They do.

But it means on the margin they will continue to play less and less as a percentage of the total and new investors will play more and more that tells me as investors that you will see over the next decade, a series of financial products that you've never seen before because they have historically been resident only on the balance sheets of large banks.

Mark Rowan: So what's really happening? Let me step back and give you my view at least on what I think is happening in markets and in private markets. And I'll start, I look at my career, which is now 39 years, and I think we've benefited from four tailwinds over this period of time. We've had rates generally going from high to low. We have printed a massive amount of money. We have borrowed forward future demands through fiscal stimulus and fiscal borrowing.

And they are on their way to U S investment product.

Mark Rowan: And we've had the benefit of gold. Globalization. It does not surprise me with those four tailwinds that risk assets, equities, growth, real estate, things like that, did really well. But I ask myself, are any of those four things true today? I think there's an argument as to whether they're headwinds or just the absence of tailwinds, but everything that I see tells me that we looking backward is not likely to be a good indication of what needs to be done going forward for investment success.

The third.

Focus on is this notion of indexation and correlation.

80% of volume today of trading as S&P, 560% of our markets our Etfs.

10 stocks make up nearly 35% of the S&P 500. These 10 stocks are responsible for 100% of year to date returns.

These 10 stocks have traded between 52% and 44 P E over the last few weeks.

Not many of you come in every day looking to buy 50 P stocks, yet we feel really comfortable with a massive portion of our country's retirement system assets and fiduciary asset in.

Mark Rowan: In particular, looking backward over the past ten years, which I view as an absolute aberration, will not be a good guide going forward, and the strategies that performed over the past period of time with these tailwinds are not going to perform in the new environments that we have.

50 P E stocks.

We have literally never had so much concentration in so few instruments since the nifty 50.

Going back and predates my career, but if one looks at the data from that period of time, a decade later investors lost nearly 90% of their money I'm not saying, that's what's happening here what I'm pointing out is we had this perception historically that public was safe and private was risky.

I ask.

Is that even the right framework to think about how market structure today is public safe and as private risky or are both public and private both risky and safe I do think that that is the conclusion, and that's where investors will move too.

Mark Rowan: I also think there have been fundamental changes that have happened to markets and market structure over the past years as well, the most significant of which happened in 2008. 2008, we came very close to an absolute debacle in our financial system, and the rules of how our financial markets work were fundamentally rewritten. We, not just Apollo, but all of us, we just didn't notice, because right after we changed the rules, we printed eight trillion dollars and everything went up into the right.

Let me dig in a little bit on private credit Pri.

Private credit is the flavor of the day in our industry.

You can look at press mentions you can look at all the articles you can look at what our colleagues and peers have had to say on their various calls private credit for US has been the mainstay of our business. We are nearly 500 billion in private credit.

Mark Rowan: Well, now that we are no longer doing that, now that rates are up, now that there are headwinds, we are starting to notice some of these changes, and I'll stick to three, and I'll talk about their implications. One is liquidity, public market liquidity. By some estimates, dealer capital, capital that facilitates trading is roughly ten percent today of what it was in 2008. Markets are three times their size. That tells me we have just less liquidity in public markets.

Way from the 2600 people, who work in Apollo asset management in the more than 2000 people who work at Athene.

There are 4000 people.

At Apollo, who do not carry an Apollo business card, who work at one of our 16 platforms that nowhere referenced where we will do a deep dive and their job every single day is to create credit create private credit, which I'll come to.

And that's what they comment into everyday we've assembled this over the last decade, plus for between six and $8 billion truthfully. Our ecosystem is second to none in this business.

Mark Rowan: We have already seen the first complete breakdown of functioning in market, which was UK LDI last year. It will not surprise me going forward to see liquidity challenged, public markets challenged, and investors beginning to understand that liquidity only exists on the way up, and does not exist on the way down. We should expect a more volatile, less liquid world in public markets. The second is the role of banks, not just in our economy, but in economies around the world.

As I mentioned I believe we are in the first inning or the infancy of private credit private credit as a secular trend and it follows the deep banking that I mentioned and it is not just a U S phenomenon and it is a worldwide phenomenon.

We have to date as a financial press and as an industry.

Talked about private credit as if it meant to be is it levered lending.

Mark Rowan: Dodd-Frank in theory was targeted at constraining the power of the four big banks in the US following the financial crisis, but the banking system in general. Guess what it worked? Banks today in the US markets are roughly 20 percent of debt capital to consumers and businesses. All of you investors now supply 80 percent of debt capital to businesses. In addition, the changes that are now proposed to occur following the debacle at SBB and first Republican Credit Suisse, will further lead to debanking.

Sometimes called direct lending was private credit.

Let me tell you. This is a fraction of a fraction of what the banking will produce.

This piece of the business of lending to buyouts sponsors.

Sometimes it's a very good business.

It is about to get Commoditized lots of capital is coming to this area. There are low barriers to entry and investors understand this they are moving toward firms that have established ecosystems that have long track records of risk and reward that we will not chase the hot dot in this market because yes, there will be a hot dog.

Mark Rowan: When regulators ask banks in the US to put up 15 percent more capital, they're asking the banks to shrink or to shrink lines of business. When you're up moves to Basel from Basel 3 to Basel 4, they're asking banks to shrink. This is happening around the world. Debanking is not something that is periodic, it is that it's very early infancy. It does not mean that banking is a bad business, it does not mean that four big banks don't have amazing businesses.

[noise] excuse me in this market as well.

When I talk about private credit.

I'm really talking about the secular change as a result of the banking.

I start with the notion that everything on a bank balance sheet is actually private credit.

What we've seen so far and what the press has focused on is levered lending, which as I said is a fraction of a fraction I.

Mark Rowan: They do, but it means on the margin they will continue to play less and less as a percentage of the total and you investors will play more and more. That tells me as investors that you will see over the next decade, a series of financial products that you've never seen before because they have historically been resident only on the balance sheets of large banks and they are on their way to you as investment product.

I think we're going to be talking about this for the next 10 years and the vast vast majority of what we're interested in private credit is actually investment grade.

The difference between where we are today and where I think we will be is all about education and nomenclature.

Investors are being asked really challenging questions. Today is a single a rated private security on alternative or fixed income.

Mark Rowan: 80% of volume today of trading is S&P 500, 60% of our markets are ETS, 10 stocks make up nearly 35% of the S&P 500. These 10 stocks are responsible for 100% of year-to-day returns. These 10 stocks have traded between 52 and 44 PE over the last few weeks. Not many of you come in every day looking to buy 50 PE stocks. Yet we feel really comfortable with a massive portion of our country's retirement system assets and fiduciary assets in 50 PE stocks.

Sometimes I can stop a CIO and a big fund for an hour with that question.

If it's an alternative because it is private and that's how they think about the world theyre not going to buy it because they need 15, and 20% rates of return out of their alternative bucket.

But if it is fixed income because it is rated the same as fixed income and it offers two to 300 basis points of excess return for the same risk.

Institutional investors family offices wealthy individuals.

Should be able to tolerate some degree of liquidity, if they're getting paid for it particularly if I go back to my secular themes of liquidity is not so good in the public market most of what's out there has been commoditized.

Mark Rowan: We have literally never had so much concentration in so few instruments since the nifty 50 going back and predates my career but if one looks at the data from that period of time, a decade later investors lost nearly 90% of their money. I'm not saying that's what's happening here.

I do think this is our future I do think we as a group will be talking about private credit and I expect the conversation to become much much more sophisticated.

Away from the business I, sometimes joke that we raise money, we invest money and we compensate people.

Mark Rowan: What I'm pointing out is we had this perception historically that public was safe and private was risky. I ask, is that even the right framework to think about how market structure today is public safe and is private risky or are both public and private both risky and safe? I do think that that is the conclusion and that's where investors will move to.

The raising of money the investing of money seems to be in very good shape I'm fortunate that Scott and Jim live and breathe. This every single day.

I I, therefore, we got to focus on compensating people and it's not just compensating people. It's also about the culture, but as I've said previously.

Mark Rowan: Let me dig in a little bit on private credit. Private credit is the flavor of the day in our industry. You can look at press mentions, you can look at all the articles, you can look at what our colleagues and peers have had to say on their various calls. Private credit for us has been the mainstay of our business. We are nearly 500 billion in private credit. This is a way from the 2600 people who work in Apollo asset management and the more than 2,000 people who work at a scene.

Our North Star is to build the best partnership in financial services. If we can be the best place for our 200 partners to work, we will retain their judgment throughout their whole career. We will also send a message to our next generation of principles that partnership at Apollo.

What it's all about.

And then throughout the organization younger people entering our firm no matter how hard they are working and they are working hard and I think you you will have two amazing generation of mentors to teach you. The business. This is the ecosystem that we're trying to create.

Mark Rowan: There are 4,000 people at Apollo who do not carry an Apollo business card, who work at one of our 16 platforms that no reference where we will do a deep dive and their job every single day is to create credit, create private credit which I'll come to. And that's what they comment and do every day. We've assembled this over the last decade plus or between 6 and 8 billion dollars. Truthfully our ecosystem is second to none in this business.

We also were trying to do something for shareholders, we understand that shareholders value more highly those things that are highly predictable FRE and FRE and value less highly those things that are volatile P. I I just look at this year, where FRE and FRE are up nearly 30% each and P II reflecting market conditions.

Is down very significantly from what we would expect as a long run average.

Mark Rowan: As I mentioned, I believe we are in the first inning or the infancy of private credit. Private credit is a secular trend and it follows the debanking that I mentioned and it is not just a US phenomenon, it is a worldwide phenomenon. We have to date as a financial press and as an industry talked about private credit as if it meant to be, this is levered lending, sometimes called direct lending, was private credit.

Our goal overtime is to pay our people more P. I.

And less FRE and FRE.

And that is the trend we are on.

And at our Investor day, some two years ago, we laid out a trajectory of how we're doing.

Today, Martin will update you and tell you we are not only on that trajectory. We are now pivoting to actually exceed that trajectory.

What Martin will detail for you is not just a financial transaction, but also focused on the next generation of leadership.

Mark Rowan: [inaudible] of what debanking will produce. This piece of the business of lending to buy-out sponsors, sometimes is a very good business. It is about to get commoditized. Lots of capital is coming to this area. There are low barriers to entry, and investors understand this. They are moving toward firms that have established ecosystems, that have long track records of risk and reward, that will not chase the hot dot in this market, because yes, there will be a hot dot, excuse me, in this market as well.

We have and as Martin will detail decided.

Decided to fundamentally change the compensation for four of our next generation of leaders. These are not the only leaders who in my view are capable of the next generation, but therefore, who are very visible within our organization not nor David Sandberg, John Sito and granted waldheim.

All four of them have taken on increasing amounts of responsibility over the years. They now see not just that oversee their individual departments. They oversee massive pieces of our firm that are integrated and as such we have decided to compensate them substantially in stock that does not necessarily mean more it just means different.

Mark Rowan: When I talk about private credit, I'm really talking about the secular change as a result of debanking. I start with the notion that everything on a bank balance sheet is actually private credit. What we've seen so far and what the press has focused on is leverage lending, which, as I said, is a fraction of a fraction. I think we're going to be talking about this for the next 10 years, and the vast vast majority of what we're interested in private credit is actually investment grade.

What we've decided to do is to take the compensation of FRE and FRE N. P. II that they would've received and replace a very large portion of that with stock. So they are aligned with Jim and Scott and myself, but also with all of you.

This will create room for us to further give that pie that those four individuals' hold to others in our firm and our constant battle and our constant direction to keep more of the FRE and FRE for the house and less of the pie and that I believe is how it.

Mark Rowan: The difference between where we are today and where I think we will be is all about education and nomenclature. Investors are being asked really challenging questions today. Is a single-a rated private security an alternative or fixed income? Sometimes I can stop a CIO at a big fun for an hour with that question. If it's an alternative because it is private, and that's how they think about the world, they're not going to buy it because they need 15 and 20% rates of return out of their alternative bucket.

Should be employees.

Particularly our partners are well suited to understand.

And to bear the volatility up good and bad of P. I.

I believe this to be a good outcome for shareholders I view it as a good outcome for me personally and I know, Jim and Scott view it as a good outcome for them, having everyone aligned and being paid in the same way extraordinarily important.

Mark Rowan: But if it is fixed income because it is rated the same as fixed income, and it offers two to 300 basis points of excess return for the same risk, institutional investors, family offices, wealthy individuals should be able to tolerate some degree of a liquidity if they're getting paid for it, particularly if I go back to my secular themes of liquidity is not so good in the public market. Most of what's out there has been commoditized.

I will also tell you we are committed to immunizing the stocks that we intend to grant and Martin will detail that for you as well. So no. One has already tapping is watching telling me that my time is almost up.

Fundamentally we are on track to hit our five year plan Athene as you know has already exceeded its five year plan of the three big bets that we laid out capital solutions in two years has already hit its five year plan.

Mark Rowan: I do think this is our future. I do think we as a group will be talking about private credit, and I expect the conversation to become much, much more sophisticated.

Mark Rowan: Away from the business, I sometimes joke that we raise money, we invest money, and we compensate people. The raising of money, the investing of money seems to be in very good shape. I'm fortunate that Scott and Jim live and breathe this every single day. I therefore get to focus on compensating people, and it's not just compensating people, it's also about the culture. As I've said previously, our North Star is to build the best partnership in financial services.

Origination in global wealth are.

Are well on track to meet their five year plan. So fundamentally we're confident to meet or exceed the goals that we laid out in our first five year plan.

<unk>.

And it feels almost like it's time for the next update there are so many interesting things happening in asset management. So many interesting fundamental changes in market and so we are committed to hosting our next investor day.

Mark Rowan: If we can be the best place for our 200 partners to work, we will retain their judgment throughout their whole career. We'll also send a message to our next generation of principals that partnership at Apollo is what it's all about. And then throughout the organization, younger people entering our firm, no matter how hard they are working, and they are working hard and I thank you. You will have two amazing generations of mentors to teach you the business. This is the ecosystem that we're trying to create.

Later in 'twenty, four which Noah will detail to really talk about where we go from here.

With that ill remind you the goal that we're software after.

Deliver the targets that we've told you plus a little while maintaining our culture.

We are not seeking to be the biggest we're not seeking to be the fastest growing we're seeking to build something that is sustainable over a very long period of time without I'm going to turn it over to Scott.

Thanks Mark.

Like many in the industry. The current market backdrop marked by higher interest rates heightened volatility and economic uncertainty is where we thrive.

Mark Rowan: We also are trying to do something for shareholders. We understand that shareholders value more highly those things that are highly predictable, and SRE. And value less highly, those things that are volatile, PII. Just look at this year where FRE and SRE are up nearly 30% each, and PII, reflecting market conditions, is down very significantly for what we would expect as a long run average. Our goal over time is to pay our people more PII and less FRE and SRE, and that is the trend we are on.

Good for our core investing businesses, where we are asset selectors with a value orientation not momentum or volume traders. It's also good for athene business were higher for longer rates drive more volume and better profitability.

And it can be good for our capital solutions business, where companies can access creative financing solutions when traditional sources of capital are less plentiful.

This is the true power of our aligned asset management and retirement services business model, which should only increase as we continue executing on our growth objectives.

Mark Rowan: At our investor day some two years ago, we laid out a trajectory of how we're doing. Today, Martin will update you and tell you we are not only on that trajectory, we are now pivoting to actually exceed that trajectory. What Martin will detail for you is not just a financial transaction, but also focused on the next generation of leadership. We have, as Martin will detail, decided to fundamentally change the compensation for four of our next generation of leaders.

As you've heard us say before the foundation of our business is providing excess return per unit of risk and this is evident in our strong investment performance in.

And the yield business, our corporate credit structured credit and direct origination strategies, all appreciated between three and 4% in the quarter and between 12 and 17% over the last 12 months.

Mark Rowan: These are not the only leaders who, in my view, are capable of the next generation, but they're four who are very visible within our organization, Matt Nord, David Sandberg, John Zido, and Grant Kvalheim. All four of them have taken on increasing amounts of responsibility over the years. They now see not just that oversee their individual departments, they oversee massive pieces of our firm that are integrated. As such, we've decided to compensate them substantially in stock.

We've seen particularly strong performance in certain underlying strategies, including Apollo debt solutions, which posted a total net return of 16, 5% for class one shares over the last 12 months.

Performance in our hybrid value franchise also remains robust with the portfolio appreciating 4% in the third quarter and 11% year to date.

And then private equity our flagship strategy appreciated 3% in the third quarter and 16% over the last 12 months, including 22% LTM for fun nine specifically as the underlying portfolio companies continue to generate healthy earnings growth and are actively managing inflation by achieving greater operational efficiencies.

Mark Rowan: That does not necessarily mean more, it just means different. What we've decided to do is to take the compensation of FRE and SRE and PII that they would have received and replace a very large portion of that with stock, so they are aligned with Jim and Scott and myself, but also with all of you. This will create room for us to further give that PII that those four individuals hold to others in our firm, in our constant battle and our constant direction, to keep more of the FRE and SRE for the House, and less of the PII, and that, I believe, is how it should be.

The portfolio is well diversified and has an average purchase multiple of slightly over six times offering significant downside protection should economic conditions worsen.

In terms of investing activity, we remained active during the quarter, putting 36 billion of capital to work across the platform.

Investing activity across the yield platform accounted for the vast majority of capital deployment in the quarter as we continue to capitalize on two primary interrelated themes globally banking and lack of public market liquidity.

Mark Rowan: Employees, particularly our partners, are well-suited to understand PII and to bear the volatility. Up good and bad of PII, I believe this to be a good outcome for shareholders. I view it as a good outcome for me personally, and I know Jim and Scott view it as a good outcome for them, having everyone aligned and being paid in the same way, extraordinarily important. I will also tell you we are committed to immunizing the stock that we intend to grant, and Martin will detail that for you as well.

Our ability to provide scaled capital solutions with flexibility uncertainty has made us a lender of choice in today's backdrop.

With that said, we're picking our spots and remaining highly disciplined in our underwriting criteria given the potential economic pressures of interest rates remaining higher for longer this.

This is the playbook, we've used time and time again strong defense during times of uncertainty leading to effective offence during periods of dislocation.

For our hybrid business the pipeline of deployment opportunities is also expanding.

Mark Rowan: So, NOAA is already tapping his watch and telling me that my time is almost up. Fundamentally, we are on track to hit our five-year plan. A theme, as you know, has already exceeded its five-year plan, of the three big bets that we laid out capital solutions in two years has already hit its five-year plan. A resignation and global wealth are well on track to meet their five-year plan. So, fundamentally, we're confident to meet or exceed the goals that we laid out in our first five-year plan.

Sponsors and corporates alike are seeking structured financing alternatives to access liquidity and refinance capital structures, which is driving heightened demand. This.

This trend is especially evident within our hybrid value strategy, where the deployment pace in our second vintage has been strong as well as our S. Three business, where we've invested more than $1 billion of capital into equity and hybrid solutions. So far this year.

And then private equity we remain very busy with capital deployment activity, reaching $11 billion over the last 12 months.

Mark Rowan: And it feels almost like it's time for the next update. There are so many interesting things happening, and asset management. So many interesting fundamental changes in market, and so we are committed to hosting our next investor day later in 24, which Noah will detail, to really talk about where we go from here. With that, it reminds you the goal that we're after, deliver the targets that we've told you plus a little while maintaining our culture. We are not seeking to be the biggest, we're not seeking to be the fastest growing, we're seeking to build something that is sustainable over a very long period of time.

With reductions in broad market valuations, we're seeing a wider opportunity set that fits our strategy, particularly in take privates and carve out transactions.

Scott Kleinman: With that, I'm going to turn it over to Scott.

Scott Kleinman: Thanks, Mark. Unlike many in the industry, the current market backdrop, marked by higher interest rates, heightened volatility and economic uncertainty is where we thrive. It's good for our core investing businesses where we are assets selectors with a value orientation, not momentum or volume traders. It's also good for a themes business where higher for longer rates drive more volume and better profitability. And it can be good for our capital solutions business where companies can access creative financing solutions when traditional sources of capital are less plentiful.

Scott Kleinman: This is the true power of our aligned asset management and retirement services business model, which should only increase as we continue executing on our growth objectives. As you've heard us say before, the foundation of our business is providing excess return per unit of risk. And this is evident in our strong investment performance. In the yield business, our corporate credit, structured credit and direct origination strategies all appreciated between 3 and 4% in the quarter and between 12 and 17% over the last 12 months.

Neutral third party capital raised in the third quarter <unk>.

Including capital for direct origination and multi credit side cars and for Triple a.

We also expect a whole closes for our inaugural equity secondaries and clean transition equity funds over the next couple of quarters, which are too exciting areas of expansion within our equity business.

Scott Kleinman: We've seen particularly strong performance in certain underlying strategies, including Apollo debt solutions, which posted a total net return of 16 and a half percent for class 1 shares over the last 12 months. Performance in our hybrid value franchise also remains robust, with the portfolio appreciating 4% in the third quarter and 11% year to date. And in private equity, our flagship strategy appreciated 3% in the third quarter and 16% over the last 12 months, including 22% LTM for fun nine specifically, as the underlying portfolio companies continue to generate healthy earnings growth and are actively managing inflation by achieving greater operational efficiencies.

And of course, an important component of our capital raising efforts this year and going forward is everything we're building in global wealth.

This area continues to be a steady march for us as we rollout product expand distribution invest in technology and continue to educate the marketplace.

We believe all these components of led to a differentiated platform offering for several reasons.

First excess return as I mentioned earlier, our primary goal is to drive excess return per unit of risk for our clients through.

Through our tailored product suite individual investors get to this same sourcing and underwriting resources as our institutional clients and our own balance.

Second customization individual investors consume product in a different way to meet this need we've taken institutional like offerings and adjusted them infrastructures for the retail market and in some cases design products, specifically with the individual investor in mind.

Scott Kleinman: The portfolio is well diversified and has an average purchase multiple of slightly over six times, offering significant downside protection should economic conditions worsen. In terms of investing activity, we remained active during the quarter, putting 36 billion of capital to work across the platform. Investing activity across the yield platform accounted for the vast majority of capital deployment in the quarter, as we continue to capitalize on two primary interrelated themes, global debanking and lack of public market liquidity.

We offer seven families of perpetual products today for both U S and non U S global wealth investors and have a handful more in the pipeline.

Third education, we believe the benefits that alternatives bring to a diversified portfolio are still widely misunderstood by retail investors and are often equated with high risk high fee products.

Scott Kleinman: Our ability to provide scaled capital solutions with flexibility and certainty has made us a lender of choice in today's backdrop. With that said, we're picking our spots and remaining highly disciplined in our underwriting criteria, given the potential economic pressures of interest rates remaining higher for longer. This is the playbook we've used time and time again. Strong defense during times of uncertainty, leading to a effective offense during periods of dislocation. For our hybrid business, the pipeline of deployment opportunities is also expanding.

To combat this miss characterization, we've leaned in on education through Apollo Academy, which recently crossed the one year Mark and has more than 10000 financial professionals registered as members.

And lastly commitment as a leadership team we've made an internal and external commitments of this initiative, which is translated into a couple of important benefits, including allocation of resources, both organically and via M&A and with speed to market that allowed us that has allowed us to grow as quickly as we have.

Scott Kleinman: Sponsors and corporates alike are seeking structured financing alternatives to access liquidity and refinance capital structures, which is driving heightened demand. This trend is especially evident within our hybrid value strategy, where the deployment pace in our second vintage has been strong, as well as our S3 business, where we've invested more than a billion dollars of capital into equity and hybrid solutions so far. And in private equity, we remain very busy with capital deployment activity reaching $11 billion over the last 12 months.

Despite all the progress we've made thus far it's still early days and we see a long runway of growth ahead of us and what we view as a massive addressable market.

Given our emerging growth prospects relative to more mature wealth platforms, we feel confident in our ability to drive this continued growth even if faced with a more challenging retail market backdrop.

Turning to a theme organic inflows totalled $13 billion in the third quarter, bringing year to date inflows to 44 billion. We tell the annuity sales drove half the quarterly activity with businesses that were under that bit with business that was underwritten two very strong returns.

Scott Kleinman: With reductions in broad market valuations, we're seeing a wider opportunity set that fits our strategy, particularly in take privates and carve out transactions. As a leading franchise with a longstanding track record, we remain confident in our ability to source financing, deploy capital, and appropriately capitalize during challenging market environments. Which was recently showcased by the sizable closings of Univar and Arconic in August. Moving to our capital raising results, we generated 33 billion of total inflows in the quarter, primarily comprised of the 13 billion of inflows from a theme and very strong third party fundraising of 14 billion.

Volume has been increasing in that channel to begin the fourth quarter with approximately two and a half billion of annuity sold in October.

And flow reinsurance Athene is continuing to see a steady build in volumes driven by new distribution partnerships in Japan in the U S as well as strong volumes from existing counterparts.

We expect we expect slow reinsurance inflows to exceed 10 billion this year, implying healthy inflows again next quarter.

For pension group annuities, despite the low and activity in the third quarter, we see a solid pipeline of opportunities, including one deal that already closed in October.

Scott Kleinman: Investor preferences have shifted in favor of credit over the past year, and we've been capturing this demand through our full product suite, spanning corporate credit through total return and Apollo debt solutions, go anywhere opportunistic credit through Accord and Accord Plus, and our newly launched asset back finance franchise. All of these are important to our growth objectives in the yield business over the next 12 months and beyond, which will position us with even more dry power for what we expect to be, an attractive credit investing backdrop.

It's worth noting that this business now is generated $50 billion of cumulative volume since athene entered the channel in 2017, leading the industry during that time frame.

Based on the momentum we see across the themes business, we remain on pays to generate 60 billion plus a total inflows this year.

So with that I'll turn the call over to Martin to go through our financial results. Thanks.

Thanks, Scott and good morning, everyone.

So it's Marc previewed we reported another very strong quarter of results as we continue to execute against the financial targets, we laid out at the beginning of this year.

Scott Kleinman: Additionally, we spent a lot of time and resources positioning ourselves for the next wave of growth in our asset management business, which we've discussed is concentrated in six complementary areas where we believe we have a competitive edge. Fundraising for these initiatives accounted for more than 25% of total third party capital raised in the third quarter, including capital for direct origination and multi credit side cars and for AAA. We also expect to hold closes for our inaugural equity secondaries and clean transition equity funds over the next couple of quarters, which are two exciting areas of expansion within our equity business.

Markets have changed quite significantly since then locked by even higher interest rates and increased economic uncertainty yet.

Yet we remain confident throughout 2023 in meeting or exceeding our initial financial targets for the year is further evidenced today.

With these results we believe that we're beginning to gain recognition for the predictability consistency and differentiated gross earnings profile and could buyouts through primary earning streams FRE and SRA.

Scott Kleinman: And of course, an important component of our capital raising efforts this year and going forward is everything we're building in global wealth. This area continues to be a steady march for us as we roll out product, expand distribution, invest in technology and continue to educate the marketplace. We believe all these components have led to a differentiated platform offering for several reasons. First, access return. As I mentioned earlier, our primary goal is to drive access return per unit of risk for our clients through our tailored products, we individual investors get to the same sourcing and underwriting resources as our institutional clients and our own balance.

I'll address five topics in my remarks today.

One earnings growth and not working or asset management business to the financial impact of the compensation Awards were announced today three.

Three earnings growth in at work in our assignments services business for credit performance Sans portfolio and five capital allocation priorities.

Starting with our asset management business or 7% increase in quarterly FRE continued to be driven by solid revenue growth and expense discipline, yes.

Year to date FRE revenues are higher by 25% against the 21% increase in FRE expenses.

Scott Kleinman: Second, customization. Individual investors consume product in a different way. To meet this need, we've taken institutional like offerings and adjusted them into structures for the retail market. And in some cases, design products specifically with the individual investor in mind. We offer seven families of perpetual products today for both U.S, and non-U.S, global wealth investors and have a handful more in the pipeline. Third, education. We believe the benefits that alternatives bring to a diversified portfolio are still widely misunderstood by retail investors and are often equated with high risk, high fee products.

R Capital solutions business achieves a new high in the third quarter amid a robust year of growth.

We're very pleased with the expansion of this business, which is on track Tomatoes, five year revenue plan and just two years.

We'll spend some time during a platform origination presentation on November 14 discussing the breath of this business and it's important to a fixed income replacement strategy.

Specific to fund 10 in the quarter management fee growth of 5% included a $24 million catch up to fund 10 and.

In its final close.

With fund 10 fees in the quarter thing $14 million higher than the prior quarter, considering catch ups and boats quarters.

Scott Kleinman: To combat this mischaracterization, we've leaned in on education through Apollo Academy, which recently crossed the one-year mark and has more than 10,000 financial professionals registered as members. And lastly, commitment. As a leadership team, we've made an internal and external commitment to this initiative, which is translated into a couple of important benefits, including allocation of resources, both organically and via M&A, and with speed to market that allowed us, that has allowed us to grow as quickly as we have.

I'll focus on scaling the asset management business is evident in a compensation costs, which were flat in the quarter and up 14% on a year to date basis.

Underpinning this is a moderation in our headcount growth and an emphasis on building outside oxime in India, which recently crossed 500 employees or close to 20% of our total head count.

Noncompensation costs are in their last year of sizeable growth, reflecting a step up in our investments and global real estate technology and product distribution.

Scott Kleinman: Despite all the progress we've made thus far, it's still early days and we see a long runway of growth ahead of us. And what we view as a massive addressable market. Given our emerging growth prospects relative to more mature wealth platforms, we feel confident in our ability to drive this continued growth, even if faced with a more challenging retail market backdrop. Turning to a theme, organic inflows total $13 billion in the third quarter, bringing a year-to-date inflow to $44 billion.

Combined this is driven strong positive operating leverage resulting in more than 150 basis points of margin expansion yet today.

As the prior year period.

Based on our visibility into the fourth quarter, we remain confident in achieving 25% growth in 2023 as previously communicated.

Scott Kleinman: We tell annuity sales drove half the quarterly activity with businesses that business that was underwritten to very strong returns. Volume has been increasing in that channel to begin the fourth quarter with approximately $2.5 billion of annuity sold in October. In flow reinsurance, Athena is continuing to see a steady build in volumes driven by new distribution partnerships in Japan and the U.S., as well as strong volumes from existing counterparts. We expect flow reinsurance inflows to exceed $10 billion this year, implying healthy inflows again next quarter.

Looking ahead to 2024, we expect FRE growth between 15, and 20% consistent with our F requires expectations and a year without a flagship fee fund raise.

The outcome is somewhat dependent on the environment with current expectations around the middle of that range.

This outlook is guided by a strong fundraising outlook.

I'll hold are holding more than $45 billion of Uninvested capital with management treat potential.

Our current plan to repeat the very successful year in capital solutions in 2023.

And low double digit expense growth.

Scott Kleinman: For pension group annuities, despite the low and activity in the third quarter, we see a solid pipeline of opportunities, including one deal that already closed in October. It's worth noting that this business now has generated $50 billion of cumulative volume since Athena entered the channel in 2017, leading the industry during that timeframe. Based on the momentum we see across Athena's business, we remain on pace to generate $60 billion plus of total inflows this year.

We we anticipate a further approximate 100 basis point improvement in our FRE much in the next year as a result.

The compensation awards, we announced today amount to approximately $550 million of awards value at ground equating to approximately 1% of our share count.

And include two components.

One for senior late is the exchange of the majority of existing unexpected future compensation in the form of FRE essary carry in stock for newly issued vested stock.

Scott Kleinman: With that, I'll turn the call over to Martin to go through our financial results. Thanks, Scott, and good morning, everyone. As Mark previewed, we reported another very strong quarter of results as we continue to execute against the financial targets we laid out at the beginning of this year. Markets have changed quite significantly since then, marked by even higher interest rates and increased economic uncertainty. Yet, we've remained confident throughout 2023 in meeting or exceeding our initial financial targets for the year, as further evidence today.

And to the reallocation of those savings and the expected issuance of a modest amount of additional carry two other employees and a further exchange for every in stock.

This exchange and reallocation is accretive in value and we expect will create an opportunity for further reduction in our referee compensation ratio.

Which we currently believe will be around 23% by 2026 before further relocations.

Scott Kleinman: With these results, we believe that we're beginning to gain recognition for the predictability, consistency, and differentiated growth of our earnings profile, anchored by our two primary earnings streams, FRE and SRE. I'll address five topics in my remarks today. One, earnings growth and outlook in our asset management, business, two, the financial impact of the compensation awards we announced today, three, earnings growth and outlook in our time and services business, four, credit performance in a things portfolio, and five, capital allocation priorities.

We'll also create a reduction in stock that we expect would have otherwise been issued.

And we will increase our cycle average compensation ratio, so unexpected range of 65% to 75%.

Outcomes that we believe are well aligned with shareholders as Mark described.

Turning to our retirement services business, we generated esarey of $873 million in the third quarter or 168 basis points of net spread.

This included some offsite offsetting items that when adjusted for resulted in normalized SRA paying roughly in line at $879 million.

Scott Kleinman: Starting with our asset management business, our 7% increase in quarterly FRE continued to be driven by solid revenue growth and expense discipline. Year-to-date FRE revenues are higher by 25% against the 21% increase in FRE expenses. Our capital solutions business achieves a new high in the third quarter amid a robust year of growth. We're very pleased with the expansion of this business which is on track to meet its five year revenue plan in just two years.

In terms of balance sheet growth net invested assets ended the quarter at $208 billion down $6 billion versus the second quarter, reflecting the buy-down by eight two of $7 billion.

Organic and flows from the <unk>.

From the first half of the year.

And the 3 billion dollar transaction with venerable more than offsetting positive net flows within the quarter.

[noise] invested assets attributable to third party investors in Asia, now exceed $50 billion, representing 20% of of things total invested assets.

Scott Kleinman: We'll spend some time during our platform origination presentation on November 14 discussing the breadth of this business and it's important to our fixed income replacement strategy. Specific to fund 10 in the quarter, management fee growth of 5% included a $24 million catch-up for fund 10 and its final close. With fund 10 fees in the quarter paying $14 million higher than the prior quarter considering catch-ups in both quarters. Our focus on scaling the asset management business is evident in our compensation costs which were flat in the quarter and up 14% on a year-to-date basis.

As third party capital eight of has multiple benefits, including validating obtains business model, providing capital support driving greater profitability on business retained and enhancing Agm's overall group capital efficiency.

We expect to close out 2023, with a normalized SRV growth rate exceeding 30%, reflecting our expectations for strong organic inflows in the fourth quarter of lower core out outflow right.

Gross participation in a normalised net spread of of approximately 165 basis points in the fourth quarter.

Scott Kleinman: Underpinning this is a moderation in our head count growth and an emphasis on building our team in India which recently crossed 500 employees or close to 20% of our total head count. Our non-compensation costs are in the last year of sizable growth reflecting a step up in our investments in global real-estate technology and product distribution. Combined this has driven strong positive operating leverage resulting in more than 150 basis points of margin expansion year-to-date versus the prior year period.

As you are aware from comments, we made when we issued the mandatory convertible preferred stock in August.

And as evidenced by our retirement services business exceeding its five year earnings targets in two years.

We have benefited both from meaningfully higher volume growth growth and asset returns.

It is imprudent to budget, a continuation of that growth rate, having said that we continue to expect low double digit normalized SRA growth in 2024 after adjusting for the Ada Buy-down and Venerable recapture.

Scott Kleinman: Based on our visibility into the fourth quarter we remain confident in achieving 25% FRE growth in 2023 as previously communicated. Looking ahead to 2024 we expect FRE growth between 15 and 20% consistent with our FRE growth expectations in a year without a flagship PE fund race. The outcome is somewhat dependent on the environment with current expectations around the middle of that range. This outlook is guided by a strong fundraising outlook. Our holding more than $45 billion of uninvested capital with management fee potential.

Driven by one continued scaling of asset growth due to an abundance of organic growth opportunities across a full business channels cumulatively, we expect that to be at least $70 billion in 2024.

Two funding this growth was with existing capital resources, including third party at a capital.

And three on spreads <unk>.

Expected no normalised net spreads of around 165 basis points for the year, assuming the current foreign Cove.

As a reminder, higher rates benefit floating right assets and achievable on our on our underlying capital.

Scott Kleinman: Our current plan to repeat the very successful year in capital solutions in 2023 and low double digit expense growth. We anticipate a further approximate 100 basis point improvement in our FRE margin next year as a result. The compensation awards we announced today amount to approximately $550 million of award value at grant, according to approximately 1% of our share count and include two components. One for senior leaders the exchange of the majority of existing and expected future compensation in the form of FRE, SRE, Carry and Stock for newly issued vested stock, and two, the reallocation of those savings and the expected issuance of a modest amount of additional carry to other employees in a further exchange for every and stock.

<unk> supports every dollar of liability growth with approximately eight to 10 cents of capital, which we invest alongside the dollars of cash taken in from policyholders.

So while a thing continues to underwrite your business to historical targets of around 115 basis points or better at the product level beyond the margin SRA spread is much higher in the current environment closer to 170 basis points you would've died.

As it relates to credit quality things portfolio continues to be in a very strong position.

Scott Kleinman: This exchange in reallocation is a creative and value and we expect we'll create an opportunity for a further reduction in our referee compensation ratio which we currently believe will be around 23% by 2026 before further reallocations. It will also create a reduction in stock that we expect would have otherwise been issued and will increase our cycle average PII compensation ratio to an expected range of 65 to 75%. Outcomes that we believe are well aligned with shareholders as Mark described.

Total impairments over the last 12 months have amounted to justify this ain't basis points close to a <unk> long term average.

<unk> investment portfolio is concentrated in high quality senior secured acids with an approximate 95% allocation to fixed income of which 95% or so is rated investment grade.

It is noteworthy that things credit losses have been disproportionately disproportionately concentrated and investment grade corporate bonds purchase in the market.

As opposed to private investment grade credits that we originated underscoring our confidence in the credit quality of originated Clinton.

We believe that a plane has the most transparent financial disclosure amongst its peers and in line with that philosophy of Fame began publishing historical credit losses in the fixed income investor presentation last quarter, which will be updated in conjunction with our next call next week on November 9th.

As it relates to capital allocation. The construct we laid out two years ago and are invested a remains largely in touch with delays in exiting private equity investments impacting the timing, but not the expected quantum of Kerry to be generated.

Scott Kleinman: Turning to our retirement services business, we generated SRE of $873.9 in the third quarter or 168 basis points of net spread. This included some off-setting items that went adjusted for resulted in normalized SRE being roughly in line at $879.9. In terms of balance sheet growth, net invested assets ended the quarter at $208.00 down $6.00 versus the second quarter, reflecting the buy down by 8.00 to $7.00 of organic inflows from the first half of the year and the $3 billion transaction with betterable.

Meanwhile, a thing has been maintaining it's consistent dividend up to the holding company and a significantly more attractive growth backdrop amid rising rates.

To support this will increase participation from item.

And issued the mandatory convertible preferred stock in August the proceeds of which were downstream tour thing.

At the same time, the sheer number of organic growth opportunities at the asset manager and.

In a targeted 20% return on group capital by growing a thing has resulted in late will need to invest in the business through M&A.

Scott Kleinman: More than off-setting positive net flows within the quarter. Invested assets attributable to third-party investors in ADA now exceed $50 billion, representing 20% of a Thane's total invested assets. A third-party capital, ADA has multiple benefits including validating a Thane's business model, providing capital support, driving greater profitability on business retained, and enhancing AGM's overall group capital efficiency. We expect to close out 2023 with a normalized SRE growth rate exceeding 30%, reflecting our expectations for strong organic inflows in the fourth quarter, a lower core outflow rate, aid of growth participation, and a normalized net spread of approximately 165 basis points in the fourth quarter.

Balancing all these dynamics, we expect to continue immunizing, all regular way equity based compensation when it's issued.

And we expect to immunize, both the dilutive impacts of the mandatory convertible preferred and the vested sucks. The vested stock awards, we announced today over the next few years as capital is available targeting a share count of 600 million shares outstanding.

We anticipate additional capacity within our current five year plan, but back ended to consider opportunistic for share repurchase in addition to.

And with that I'll turn the call back to the operator for Q&A.

Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time a confirmation tunnel indicate your line is another question Q you May press start to if you would think chamber of your question for the account.

Scott Kleinman: As you are aware from comments we made when we issued the mandatory convertible for preferred stock in August and as evidenced by our retirement services business exceeding its five-year earnings target in two years, we have benefited both from meaningfully higher volume growth and asset returns. It is important to budget the continuation of that growth rate, having said that we continue to expect low double-digit normalized SRE growth in 2024, after adjusting for the aid of buy-down and venerable recapture.

Our first question today, it's coming from Patrick debit Autonomous research. Please go ahead.

Hi, Good morning, everyone I know early days, but could you address your view of the potential risks to your business from the new D. O L rule published yesterday and within that remind us if at all how dependent Athena is on distributors that might be charging a quota coin.

Scott Kleinman: Driven by one, continued scaling of asset growth due to an abundance of organic growth opportunities across our four business channels, humanically we expect that to be at least $70 billion in 2024. Two, funding this growth with existing capital resources including third-party aid of capital. And three, on spreads, expected normalized net spreads of around 165 basis points for the year, assuming the current forward curve. And as a reminder, higher rates benefit afloating rate assets and achievable return on our underlying capital.

Junk fees that they were talking about thank you.

Okay. Thanks, Patrick it's Mark. So this what came out yesterday is not much different than what the industry start seven years ago seven years ago, we and the rest of the industry prepared.

And actually made changes extensive changes to how products and fees and features weren't disclosed.

Until I truthfully not much new in terms of your question on exposure of the business about 10% of our business is.

Is through wholesalers.

Scott Kleinman: The theme supports every dollar of liability growth with approximately 8 to 10 cents of capital, which we invest alongside the dollars of cash taken in from policy holders. So while a thing continues to underwrite new business to historical targets of around 115 basis points or better at the product level, beyond the margin, SRE spread is much higher in the current environment closer to 170 basis points year to date. The theme portfolio continues to be in a very strong position.

Another 10%.

Is also two accounts, but it's through banks that would have a very easy time adjusting to this because they essentially already charged that way anyway.

So Ah specifically roughly 10 per cent of the business is focused.

And not really worked up about it. This is where we were prepared to be seven years ago, and I think we're still a ways away from the final rule here anyway.

Thank you. The next question is coming from Glenn sure of Evercore ISI. Please go ahead.

Scott Kleinman: Total impairments over the last 12 months have amounted to just 13 basis points, close to a theme's long term average. The theme's investment portfolio is concentrated in fight quality senior secured assets with an approximate 95% allocation to fixed income of which 95% also is rated investment grade. It's noteworthy that the theme's credit losses have been disproportionately disproportionately concentrated in investment grade corporate bonds purchased in the market, as opposed to private investment grade credit that we originate underscoring our confidence in the in the credit quality of originated credit.

Hi, Thanks, very much [noise].

I Wonder if we could just revisit too thinks that you said you you gave us a good guidance or thought process on next year. So that the $70 billion for next year I'm I'm curious if you could talk about that shift that we saw in the corner inflows into.

A scene, where low cause the shift over to Egypt.

What should we expect of that 70 billion <unk>.

Next year should we should we even be focused on it because I I think in line with this deal well question I think there's this notion that the retail flows are are quote higher quality and some of the other funding agreements are are are stop gaps, but I wonder if you could talk to the quality of the four channels and.

Scott Kleinman: We believe that a theme has the most transparent financial disclosure amongst its peers and in line with that philosophy of theme began publishing historical credit losses in their fixed income investor presentation last quarter. Which will be updated in conjunction with our next call next week on November 9. As it relates to capital allocation, the construct we laid out two years ago and our invested a remains largely intact with delays in exiting private equity investments impacting the timing but not the expected quantum of carry to be generated.

If you'd debunk any of that and how we should think about that shift going forward Glen Larson, we've been watching this for the last 14 years <unk>.

Fundamentally there is no difference in the quality of any of these four channels, we run a business around cost of funds, sometimes various channels are attractive sometimes other channels are attractive.

Scott Kleinman: Meanwhile, a theme has been maintaining its consistent dividend up to the holding company in a significantly more attractive growth backdrop amid rising rates. To support this with increased participation from Adib and issued the mandatory convertible provoked stock in August, the proceeds of which were downstream to a theme. At the same time, the sheer number of organic growth opportunities at the asset manager and a targeted 20% return on group capital by growing a theme has resulted in little need to invest in the business through M&A.

What we're seeing.

Is there is a fundamental demand not just in the U S, but everywhere in the world for guaranteed income.

People need retirement solutions so.

You look at the vast pools of capital in the U S. For instance, in 401k, where there's you know.

Eight to 10 trillion dollars <unk>.

We force people, who need returns the most to be daily liquid for 50 years.

What we're doing as a country makes little sense and consumers know that.

Scott Kleinman: Balancing all these dynamics, we expect to continue immunizing all regular way equity based compensation when it's issued. And we expect to immunize both the dilutive impacts of the mandatory convertible preferred and the vested stocks, the vested stock awards we announced today over the next few years as capital is available targeting a share count of 600 land shares outstanding. We anticipate additional capacity within our current five-year plan but back ended to consider opportunistic for shared repurchase in addition to.

And so what they've done as soon as they have access to their funds increasingly they are in higher rate environments seeking out guaranteed lifetime income the demand, we're seeing on annuities either directly or through reinsurance is fundamental.

Reinsurance again, no different to US then direct business other than it tends to be in markets, where in market segments, we don't serve hors dancer yet.

So I don't see you there isn't any difference one way or the other in the way. These things go as it relates to the broader question. We have a choice we have a choice of the capital intensity of our business. If we want to be more capital intensive we put up eight to 10 cents of every dollar.

Scott Kleinman: And with that, I'll turn the call back to the operator for Q&A. Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tunnel indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

And we retain 100 per cent of the business. If we do that SRV grows faster because we're retaining more business and it grows faster because we tend to earn 15%.

Unknown Executive: Our first question today is coming from Patrick David of Autonomous Research. Please go ahead.

You're in and you're out on the capital that we put up <unk>.

Mark Rowan: Hey, good morning, everyone. I know early days, but could you address your view of the potential risks to your business from the new DOL rule published yesterday? And within that, remind us if at all how dependent Athena is on distributors that might be charging the quote-unquote junk fees they're talking about. Thank you.

Really good option.

We have as you know made a business decision that on the margin we tend to fund around a third between 30 and 40% depending on the mix of business and the regulatory source of the business.

Every new deal, which means that we put up 30% to 40% of that 8% to 10%.

Glenn Shore: Okay, thanks Patrick, it's Mark. So this, what came out yesterday is not much different than what the industry saw seven years ago. Seven years ago, we and the rest of the industry prepared and actually made changes, extensive changes to how products and fees and features were disclosed. And so truthfully, not much new. In terms of your question on exposure of the business, about 10% of our business is through wholesale sellers. Another 10% is also to accounts, but it's through banks that would have a very easy time adjusting to this because they essentially already charge that way anyway.

Glenn Shore: So a specifically roughly 10% of the business is focused and not really worked up about it. This is where we were prepared to be seven years ago. And I think we're still a ways away from a final rule here anyway. Thank you.

And that will alter the SRA growth rate I think what we've said to you over the long term is that we expect the retirement services business to be a low mid double digit rate of return grower at every quarter gimbal already ground for him and team are embarrassing us.

And this year as you know it's up 30 per cent. What we're seeing this year is what Martin detailed not only are we seeing fundamental demand for guaranteed income, which is driven by secular trends like you and I are getting older.

But we're also seeing widening spread.

We are reluctant to budget.

Increased spread of 160 175 basis points, which is 30 to 50 basis points above what athene has done historically.

But.

If we continue to see the scale of the banking in.

In the investment grade segment of the market.

I think we will continue to put up spread but that's.

Mark Rowan: The next question is coming from Glenn Shore of Evercore ISI. Please go ahead. Hi, thanks very much. I wonder if we could just revisit two things that you said. You gave us good guidance or thought process on next year. So the family billion for next year. I'm curious if you could talk about that shift that we saw in the quarter inflows into a theme we're low because the shift over to ADIB.

The kinds of spreads we are but that's not how we budget and that's not how we telegraph, where we think we're going we think the prudent thing is to budget.

The way, we have historically and let the performance speak for itself.

Thank you. The next question is coming from Michael Brown of K P. W. Please go ahead.

Hi, good morning, So I appreciate the commentary on on the net.

Then it spreads was it within a fee and I guess, one thing I'm trying to think through is the <unk>.

Mark Rowan: What should we expect of that 70 billion next year? Should we and should we even be focused on it? Because I think in line with this DOL question, I think there's this notion that the retail flows are our quote higher quality and some of the other funding agreements are our stopgaps.

Higher short term rates of that meaningful tailwind for the arrange on the on the floating right asset side.

<unk>.

Perhaps get closer to the end of the offense <unk> hiking campaigns are you thinking about taking any actions are to reduce got that down.

Downside risk if short term rates do start to come down. Thank you.

Mark Rowan: But I wonder if you could talk to the quality of the four channels and if you debunk any of that and how we should think about that shift going forward. So we've been watching this for the last 14 years. Fundamentally, there is no difference in the quality of any of these four channels. We run a business around cost of funds. Sometimes various channels are attractive. Sometimes other channels are attractive. What we're seeing is there is a fundamental demand, not just in the US, but everywhere in the world for guaranteed income.

So we are plus minus.

$30 billion of net floating right assets.

If you look at the growth of the business over the next two or three years and you consider the mix of our liabilities, we will want to be two or three years from now $30 billion of net floating right assets <unk>.

Having said that we probably are relative to our liability position.

10 to 15 billion excess floating right assets over what we would want to or consider a long term prudent position.

Mark Rowan: People need retirement solutions. If you look at the vast pools of capital in the US, for instance in 401k where there's eight to ten trillion dollars, we force people who need returns the most to be daily liquid for 50 years. What we're doing as a country makes little sense and consumers know that. And so what they've done as soon as they have access to their funds, increasingly they are in higher rate environments seeking out guaranteed lifetime income.

Uhm.

You should expect that we will take action over the near term to reduce the short term mismatch, reflecting that and that's factored into everything that we have discussed with you today.

Thank you. The next question is coming from Alex blow steam of Goldman Sachs. Please go ahead.

Thanks, Good morning, I was hoping we could dig in a little bit more into some of the retail products, you mentioned, which would seem to have a pretty good momentum here on the corner in particular triple a I know the product it's a bit complicated so maybe give us sort of a breakdown of composition across various channels and sort of fee paying 81 between.

Mark Rowan: The demand we're seeing on annuities either directly or through reinsurance is fundamental. Reinsurance, again, no different to us than direct business other than it tends to be in markets or in market segments. We don't serve or don't serve yet. So I don't see there is any difference one way or the other in the way, of these things go. As it relates to the broader question, we have a choice. We have a choice of the capital intensity of our business.

A third party and a theme as well as how the kind of gross sales conversations aren't holding on that side of the channel. Thanks.

Sure sure so on the Triple a side, we've been actually very pleased that how how sales are progressing there.

So we had our our our best best quarter yet.

Mark Rowan: If we want to be more capital intensive, we put up 8 to 10 cents of every dollar and we retain 100% of the business. If we do that, SRE grows faster because we're retaining more business and it grows faster because we tend to earn 15% year in and year out on the capital that we put up. Really good option. We have, as you know, made a business decision that on the margin, we tend to fund around a third between 30 and 40%, depending on the mix of business and the regulatory source of the business of every new deal, which means that we put up 30 to 40% percent of that 8 to 10% and that will alter the SRE growth rate.

A little over $700 million in the last quarter.

For AAA. So you know week by week month by month, we are getting AAA onto.

More more so selling platforms more sales agreements.

So you know progress progress is good there on the retail side. We expect we expect this to continue to continue to grow up as you know the retail business is all about <unk>.

Getting onto more platforms more bankers more.

More selling agreements and for not only triple a but all our products 80 80 S. Airs. This is how we are progressing. This is why in my prepared comments I just talked about you know we're in we're finishing up year or two of our global World focus and we just see so much more <unk>.

Mark Rowan: I think what we've said to you over the long term is that we expect the retirement services business to be a low-mid double digit rate of return grower. At every quarter, Jim Bellardi, Grant Kvalheim and Team are embarrassing us and this year, as you know, it's up 30%. What we're seeing this year is what Martin detailed. Not only are we seeing fundamental demand for guaranteed income which is driven by secular trends like you and I getting older.

Is it a momentum as we get these selling agreements signed up and place product by product.

Area by area or region by region.

Huge opportunity huge opportunity, so really positive momentum across all the products, we haven't market right now like like I said earlier, we have seven product families.

Mark Rowan: But we're also seeing widening spread. We are reluctant to budget, increased spread of 160, 175 basis points, which is 30 to 50 basis points above what a thing has done historically. But if we continue to see the scale of debanking in the investment grade segments of the market, I think we will continue to put up spread. We said that that's the kinds of spreads we are, but that's not how we budget and that's not how we telegraph where we think we're going. We think the prudent thing is to budget the way we have historically and let the performance speak for itself.

Out there right now we have a few more coming in 2024.

We're at that point, we feel like we will have a fairly complete lineup across the asset classes.

And so yeah, good progress so I'm just gonna.

I'll leave you with the following Alex what we're trying to do here is similar to what we're doing in the rest of the business as you know I I've said publicly certainly for high net worth families family offices, I think they will be 50% plus alternatives over the next five years, and we're seeing that kind of uptake interaction.

The difference between where we are and where I think we're going to be his only education. When we say we're on a platform one of the big private banks.

Mark Rowan: Thank you. The next question is coming from Michael Brown of KPW. Please go ahead. Hi, good morning. So I appreciate the commentary on the net, the net spreads with it within a theme. I guess one thing I was trying to think through is, you know, the higher short term rates have been a meaningful tail end for the earnings on the floating rate aspect side. As we, as we perhaps get close to the end of the feds, great hiking campaigns.

It may be five or 10% of the financial advisors. This is an education.

<unk> activity with more and more converts every day and so if you take triple a I know your premise of your question is a complex product I'll I'll make it an easier product you can buy the S&P 500 at a 50 P E.

Or you could buy roughly the same historical return at a much higher Sharpe ratio and give up liquidity that is the choice, we're actually seeing investors make.

Mark Rowan: Are you thinking about taking any actions there to reduce that downside risk if short term rates do start to come down? Thank you. So we are plus minus 30 billion of net floating rate assets. If you look at the growth of the business over the next two or three years and you consider the mix of our liabilities, we will want to be two, three years from now, 30 billion of net floating rate assets.

And while private markets or something that many on this call and we are very familiar with the vast majority of investors thinking back over the 40 years.

They've been doing just fine on and the S&P in the 30 year Treasury M.

And my point of starting where I started is I don't think with the absence of Tailwinds people are gonna get the same performance I don't think what I'm, saying is all that controversial. We're now just in a period of education where people consider.

Mark Rowan: Having said that, we probably are relative to our liability position 10 to 15 billion excess floating rate assets over what we would want to or consider a long term prudent position. You should expect that we will take action, and action over the near term to reduce the short term mismatch, reflecting that, and that's factored into everything that we've discussed with you today. Thank you.

What what is the market looked like how do I invest without tailwinds, what does it mean that public markets are less liquid on the way down what does it mean to have D banking, but what does it mean to have indexation in concentration I believe when you look forward an asset management more generally over the next five years.

I think you're going to see at an asset management industry that is continuing to grow and it's passive strategies.

Alexander Blostein: The next question is coming from Alex Blostein of Goldman Sachs.

Scott Kleinman: Please go ahead. Thanks, good morning. I was hoping we could dig in a little bit more into some of the retail products you mentioned, which seemed to have pretty good momentum here in the quarter. In particular, AAA, I know the product is a bit complicated, so maybe give us sort of a breakdown of composition across various channels and sort of if you paying AOM between kind of third party and Athene, as well as how the kind of gross sales conversations are unfolding on that side of the channel.

I think you will see boutiques, who offer access to uncorrelated returns or at least non market correlated returns such as ourselves and others grow I think the tougher part of our industry, which you're already seeing is active management harder and harder for active managers to produce good returns certainly and fixed income.

I question, whether there is any alpha left and publicly traded fixed income markets and given indexation in concentration I think it's very very difficult in equity markets. So I like where we sit I like our hand of cards.

Scott Kleinman: Thanks. Sure, sure. So on the AAA side, we've been actually very pleased at how sales are progressing there. So we had our best quarter yet, a little over $700 million in the last quarter for AAA. So week by week, month by month, we are getting AAA onto more selling platforms, more sales agreements. So progress is good there on the retail side. We expect this to continue to grow up. As you know, the retail business is all about getting onto more platforms, more bankers, more selling agreements.

It does not mean again, we're going to be the biggest are the fastest growing in the retail market, we want to be thought of as prudent and creative growing our footprint every quarter, but not spiking it taking too much money at a point in time to chase a hot strategy just makes no sense it ultimately produce.

<unk> is concentration risk with some of our peers have seen by taking too much money at any point in time slow and steady constant build is what we're seeking to do.

Thank you. The next question is coming from Michael Cyprus Morgan Stanley. Please go ahead.

Hey, good morning, and thanks for taking my question I just wanted to circle back to your commentary Mark on on the D. O. L proposed rule I was hoping you might be able to just elaborate a little bit on what aspects of the rule you find most troublesome for the business and then what specific actions to products and features can be taken to address the role and then I think.

Scott Kleinman: And for not only AAA, but all our products, ADS, this is how we are progressing. This is why in my prepared comments, I just talked about we're finishing up year two of our global wealth focus. And we just see so much more positive momentum as we get these selling agreements, you know, signed up in place, you know, product by product, you know, area by area region by region. Just huge opportunity, huge opportunity.

You mentioned about 10% of the business may be most impacted I think it was on the host wholesale channel, but one of our other levers that you might be able to Paul Paul such as maybe altering the distribution strategy. It may be even thinking about going to Iraq, because it doesn't change the overall demand side to your earlier point that retail investors still have a day.

Scott Kleinman: So really positive momentum across all the products we have in market right now, like I said earlier, we have seven product families out there right now. We have a few more coming in 2024, where we're at that point, we feel like we'll have a fairly complete lineup across the asset classes. And so yeah, good progress.

<unk> for for income.

It starts with an investor demand for guaranteed lifetime income or guaranteed income is going up and I think investors will ultimately seek out places to do that.

Historically.

Products like annuities have been very complicated because they offer a variety of options and other things and therefore, they have had more of a complex cell. Therefore, the you have needed advice and that advice has therefore, a more extensive distribution than something you can buy off the shelf.

Mark Rowan: So I'm just going to leave you with this following sense, Alex, what we're trying to do here is similar to what we're doing in the rest of the business. As you know, I've said publicly, certainly for high net worth families, family offices, I think they will be 50% plus alternatives over the next five years. And we're seeing that kind of uptake interaction. The difference between where we are and where I think we're going to be is only education.

Uhm I remain skeptical on direct distribution, but I also see the proliferation of distribution increasingly financial products like guaranteed income are being sold through the banking system are being sold through our eyes and if you're focusing on the specific issue. These are not issues of disclosure, they're actually not issues of product feed.

Mark Rowan: When we say we're on a platform, one of the big private banks, it may be five or 10% of the financial advisors. This is an education and evangelical activity with more and more converts every day. And so if you take AAA, I know your premise for question as a complex product, I'll make it an easier product. You can buy the S&P 500 out of 50. CPE, or you could buy roughly the same historical return at a much higher sharp ratio and give up liquidity.

<unk>, we and many and our industry have already made the changes going back seven years, because that was just best practice I think there will be more pressure on the fee that clearly is what it's at and we can have both sides of that I'm not gonna say, it's good or bad, but I've watched in other.

Places around the world where in the focus has been on fee take Australia, you have the biggest or the best retirement system anywhere in the world 3.5 trillion $428 million.

Mark Rowan: That is the choice we're actually seeing investors make. And while private markets are something that many on this call and we are very familiar with, the vast majority of investors, thinking back over the 40 years, they've been doing just fine, owning the S&P and the 30-year treasury. And my point to starting where I started is is I don't think with the absence of tailwinds, people are going to get the same performance.

Population well they have a big problem, there and they actually legislating out all the fees. So now there's no advice no. One provides advice and so at 65 when people get their big lump sum distribution from the superannuation product.

I don't know what to do with it and people are dying with between 35 and 40% of their retirement income intact. The government doesn't like that because there's been no advice on what I'll call Decumulation, how do you set yourself up to live through however, long you're going to live givens increasing lifespan.

Mark Rowan: I don't think what I'm saying is all that controversial. We're now just in a period of education where people consider, what does a market look like? How do I invest without tailwinds? What does it mean that public markets are less liquid on the way down? What does it mean to have debanking? And what does it mean to have indexation and concentration? I believe when you look forward at asset management more generally over the next five years, I think you're going to see an asset management industry that is continuing to grow in its passive strategies.

Eventually I believe we're going to come to a sensible place that may be lower fee and distribution truthfully doesn't bother me in the slightest bit small piece of the business I don't think this is going to result in fundamental changes in distribution I think it may change how product is priced.

And that's okay.

Mark Rowan: I think you will see boutiques who offer access to uncorrelated returns or at least non-market correlated returns such as ourselves and others grow. I think the tougher part of our industry, which you're already seeing is active management. Harder and harder for active managers to produce good returns, certainly in fixed income. I question whether there's any alpha left and publicly traded 16-come markets and given indexation and concentration, I think it's very, very difficult in equity markets.

Thank you. The next question is coming from Brian <unk> update your bank. Please go ahead.

Alright, great. Thanks, Good morning folks. Thanks for taking my question, maybe just a zoom in Martin on the <unk> 15 to 20 per cent next year for the higher end of that are getting close to the higher end of that.

Uhm would it be capital markets or capital solutions fees is the biggest swing factor and then if you could just comment on you know the the trajectory of that <unk>.

Mark Rowan: So I like where we sit. I like our hand of cards. It does not mean, again, we're going to be the biggest or the fastest growing. In the retail market, we want to be thought of as prudent and creative, growing our footprint every quarter, but not spiking it. Taking too much money at a point in time to chase a hot strategy just makes no sense. It ultimately produces concentration risk with some of our peers have seen by taking too much money at a point in time.

No. It definitely is certainly much better again this year than last year and I think maybe you could just confirm it take your guidance for flat solutions fees baked into that 15 to 20 per cent. So maybe the trajectory of that what drivers would you know would.

We would increase the solutions fees, it a little bit faster.

Great Brian So so what I've said is sort of current best estimates, obviously and so we're focused on all the fundraising initiatives Scott raised.

Mark Rowan: Slow and steady, constant build is what we're seeking to do. Thank you.

Mark Rowan: The next question is coming from Michael Cypress with Morgan Stanley. Please go ahead. Thank you, Morgan. Thanks for taking the question. I just wanted to circle back to your commentary, Mark, on the DOL proposed role. I was hoping you might be able to just elaborate a little bit on what aspects of the role you find most troublesome for the business. And then what specific actions to products and features can be taken to address the role?

The putting money to work and.

In a environment, which we think is.

Conducive to our investing orientation.

And then continuing to build out the.

The capital solutions business and so.

Any way bite assumption around each of the three of them any of them could be a plus or minus two to.

To the Guy and so I gave.

Mark Rowan: And then I think you mentioned about 10% of the business may be most impacted. I think it was on the wholesale channel. But what are other levers that you might be able to pull, such as maybe altering the distribution strategy and maybe even thinking about going direct? Because it doesn't change the overall demand side to your earlier point that retail investors still have the demand for income. So look, it starts with investor demand for guaranteed lifetime income or guaranteed income is going up.

So, we'll we'll talk more about capital solutions on the 14th that's one of the.

That's one of the objectives of the day to connect that back to the origination strategy.

And on a fixed income origination and distribution.

Focus, but yeah <unk> <unk> in the comments I made we are assuming it's flat is there upsides potentially but it's we're we're really really happy with the the growth of the business of five year plan into his his.

Mark Rowan: And I think investors will ultimately seek out places to do that. Historically, products like annuities have been very complicated because they offer a variety of options, and other things, and therefore, they have had more of a complex cell, therefore, that you have needed advice, and that advice has, therefore, a more expensive distribution than something you can buy off the shelf. I remain skeptical on direct distribution, but I also see the proliferation of distribution, increasingly financial products like guaranteed income are being sold through the banking system are being sold through RIAs, and if you focus in on the specific issue, these are not issues of disclosure, they're actually not issues of product features.

Is is pretty heroic and so we're focused on building up that business phone.

Further and repeating the success with us. So it was it was a primary emphasis on credit.

And then and then building it out to other so coinvest overtime.

Thank you. The next question is coming from Brendan how can a few P. S. Please go ahead.

Pardon please make sure your phone is not on mute.

Thank you. Thanks for taking my question appreciate it I'm sorry, if this is a bit remedial, but cost of funds came down quarter over quarter <unk>.

Don't know of another company in financial services, where cost of funds came down so could you maybe speak to what drove the lower cost of funds, whether or not there was any one time items and how sustainable that is.

Mark Rowan: We, and many in our industry, have already made the changes going back seven years because that was just best practice. I think there will be more pressure on the fee, that clearly is what it's at, and we can have both sides of that. I'm not going to say it's good or bad, but I've watched in other places around the world where the focus has been on fee, take Australia, you have the biggest or the best retirement system anywhere in the world, 3.5 trillion for 28 million of population.

Yeah. We had so you you need to look at the at the normalized that spread that's why that's why we try to focus on.

The net of the two there was a.

A benefit and cost of funds for the quarter that we'd we'd telegraphed last quarter.

Mark Rowan: Well, they have a big problem there, they actually legislated out all the fees, so now there's no advice, no one provides advice, and so at 65 when people get their big lump sum distribution from the superannuation product, they don't know what to do with it, and people are dying with between 35 and 40% of their retirement income intact. The government doesn't like that because there's been no advice on what I'll call decumulation.

Right into the Venerable.

Reinsurance transaction and so that that impacted cost of funds, which we then normalize out and then that spread.

So so I would look at the 165 basis points as the Guy had his own.

Current current best for you and that takes account of.

Things like that the Acura buy-down during the quarter, which are sort of episodic, but no record.

Mark Rowan: How do you set yourself up to live through, however long you're going to live, given the increasing lifespan? Eventually, I believe we're going to come to a sensible place that may be lower fee and distribution. Truthfully, it doesn't bother me in the slightest bit. Small piece of the business, I don't think this is going to result in fundamental changes in distribution. I think it may change how product is priced, and that's okay.

But I'm gonna use this to make a point, which I've made previously.

Michael Cypress: Thank you.

When you when you originate new product you originate product that is protected by surrender charge market value adjustment or in the case of PRT is fully locked in.

You should therefore be willing to have a higher cost of funds for fully protected product because you can invest against it. It gives you longevity. It gives you certainty.

We have four different channels and we look at each of the four channels on a regular basis and we try to keep our cost of funds low because if we know if we have a low cost of funds. If we're not good investors, we can earn spread and if we're good investors we can earn a lot of spread what's.

Brian Bedell: The next question is coming from Brian Bedell of Deutsche Bank, please go ahead. Great, thanks for the morning folks, thanks for taking my question. Maybe just to zoom in Martin on the FRE guidance, 15 to 20% next year, for the higher end of that or getting close to the higher end of that, would it be capital markets or capital solutions, fees is the biggest swing factor? And then if you could just comment on the trajectory of that, definitely certainly much better again this year than last year.

What's happened in our market.

Is you now have a number of entities who have seen what we have built in our late to the game the way they intend to get into this business. We're trying to get into the business is to buy back books of business.

Buying a backlog of business with degraded surrender charge integrated market value adjustments in a low rate environment may.

Brian Bedell: And I think you're maybe just confirming that your guidance was for flat solutions, fees baked into that 15 to 20%. So maybe the trajectory of what drivers would increase the solutions fees a little bit faster. Great, Brian, so what I said is our current best estimate, obviously. And so we're focused on all the fundraising initiatives that Scott raised, the money to work in a environment we think is conducive to our investing orientation.

May be sensible because in a low rate environment. The contract rate is above the right in the market. Therefore, you expect the book to behave predictably.

But in the market. We're in right now for someone to buy a secondary book of business and pay for a cost of funds in excess of that of retail.

Kind of tells you all you need to know about the quality of the business that people are buying and I encourage you to push as hard on cost of funds across the board. It ultimately simplifies what is a very complex business.

Where in the spread business, having low cost of funds is really important.

Thank you. The next question is coming from <unk> Barclays. Please go ahead.

Brian Bedell: And then continuing to build out the capital solutions, and the organization's business. We made a assumption around each of the three of them. Any of them could be a plus or a minus to the guidance I gave. We'll talk more about capital solutions on the 14th. That's one of the objectives of the day to connect that back to the origination strategy and our fixed income origination and distribution focus. But, yeah, in the comments I made, we are assuming it's flat.

Hi, good morning, and thanks for taking my question I wanted to ask about the ultra returned to the theme business. It's been below the sort of normalize 11 per cent for silver quarters anything in particular to call out there I know, we always spent some time trying to triangulate what it might look like and there's there's many kind of components to that and any color on sort of the key drivers over the past year.

A year or so and what do you think might get that back to sort of been normalised expectation going forward. Thanks.

Right [laughter].

[laughter] I'm sure they'd be the you know as as you know the old portfolio is made up of.

Brian Bedell: Is there upside, you know, potentially, but we're really, really happy with the growth of the business. A five-year plan in two years is pretty heroic. And so we're focused on building out that business further and repeating the success we've had. So with the primary emphasis on credit and then building it out to other to co-invest over time.

150 different positions about half of which relates to our.

Origination platforms.

About a third of the remaining quarter is about funds in other in other I would say hybrid type products and then the last quarter would be other bespoke and direct investments overall, we still look at that portfolio is being.

Brennan Hawken: Thank you. The next question is coming from Brennan Hawken of UBS.

Martin Kelly: Please go ahead. Brennan, please make sure your phone is not on mute. Thank you. Thanks for taking my question. Appreciate it. Sorry if this is a bit remedial, but cost of funds came down quarter of a quarter. I don't know of another company and financial services where cost of funds came down.

<unk>.

<unk>, 12% plus.

The last couple of quarters, you know given the environment, there's been a little bit of a slower appreciation as you've just seen in the in the broader market, but really no fundamental concerns are about what's in that B b as we've always said that portfolio will sort of delivery you.

Martin Kelly: So could you maybe speak to what drove the lower cost of funds, whether or not there was any one time items and how expandable that is? Yeah, we had so you need to look at the at the normalized net spread. That's why that's why we try to focus on the net of the two. There was a benefit in cost of funds for the quarter that we telegraphed last quarter related to the venerable re-insurance transaction.

Eight eight in a in a really bad year 18 in a really good year and 12 to 15 expected and we see we see nothing deviating from that.

Martin Kelly: And so that that impact cost of funds, which we then normalized out in the net spread. So I would look at the 165 basis points as the guide is our current best view and it takes account of things like that, the acrobat down during the quarter, which are sort of episodic, but not recurring. But I'm going to use this to make a point which I've made previously when you when you originate new product, you originate product that is protected by surrender charge market value adjustment or in the case of PRT is fully locked in.

Thank you this brings us to the end of the question and answer session I will turn it back over to Mister <unk> for closing comments.

Great. Thanks for your help this morning, Donna and thanks again, everyone for joining the call.

Just a couple of reminders, we would encourage you to participate in a things fixed income investor call next Thursday November 9th and then our origination deep dive that we mentioned on November 14th if you have any questions regarding anything discussed on today's call as usual please feel free to reach out to us. Thank you for your time.

Ladies and gentlemen. This concludes today's events you might disconnect. Your lines are locked after webcast at this time and enjoy the rest of your day.

<unk> what is it.

[music], Nevada, Nevada.

Martin Kelly: You should therefore be willing to have a higher cost of funds for fully protected product because you can invest against it, it gives you longevity, it gives you certainty. We have four different channels and we look at each of the four channels on a regular basis and we try to keep our cost of funds low because if we know if we have a low cost of funds, if we're not good investors, we can earn spread and if we're good investors, we can earn a lot of spread.

Not really.

So no problem.

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Martin Kelly: What's happened in our market is you now have a number of entities who have seen what we have built and are late to the game. The way they intend to get into this business or trying to get into the business is to buy back books of business, buying a back book of business with degraded surrender charge and degraded markets, and Market Value Adjustments. In a low-rate environment, maybe sensible because in a low-rate environment the contract rate is above the rate in the market therefore you expect the book to behave predictably.

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Martin Kelly: But in the market we're in right now, for someone to buy a secondary book of business and pay for a cost of funds in excess of that of retail, kind of tells you all you need to know about the quality of the business that people are buying. And I encourage you to push as hard on cost of funds across the board. It ultimately simplifies what is a very complex business. We're in the spread business. Having low cost of funds is really important.

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Ben Budish: Thank you.

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Martin Kelly: The next question is coming from Ben Budish of Barclays.

You also got it.

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Unknown Executive: Please go ahead. Hi, good morning and thanks for taking the question. I wanted to ask about the all's return to the Athene business. It's been below the sort of normalized 11% for several quarters. Anything in particular to call out there, I know we always spend some time trying to triangulate what it might look like. And there's many kind of components to that. And any color on sort of the key drivers over the past year or so. And what do you think might get that back to sort of the normalized expectation going forward?

No Guy now.

Martin Kelly: Thanks. Sure, as you know, the all portfolio is made up of 150 different positions about half of which relates to our, you know, origination platforms about a third of the remaining quarter is about funds and other and other, I would say, hybrid-y type products. And then the last quarter would be other bespoke and direct investments. Overall, we still look at that portfolio as being, you know, call it 12% plus, you know, the last couple quarters, you know, given the environment, there's been a little bit of slower appreciation.

Martin Kelly: As you've just seen in the broader market, but really no fundamental concerns there about what's in that. The, as we've always said, you know, that portfolio will sort of deliver you, you know, eight in a really bad year, 18 in a really good year and, you know, 12 to 15, you know, expected. And we see, we see nothing deviating from that.

Unknown Executive: Thank you.

Noah Gunn: This brings us to the end of the question and the intercession. I will turn it back over to Mr. Gunn for closing comments. Great. Thanks for your help this morning, Donna. And thanks again, everyone for joining the call. Just a couple of reminders. We would encourage you to participate in a seems fixed income investor call next Thursday, November 9th, and then our origination deep dive that we mentioned on November 14th. If you have any questions regarding anything discussed on today's call as usual, please feel free to reach out to us. Thank you for your time.

Unknown Executive: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or lock off the webcast at this time and enjoy the rest of your day.