Q4 2023 Apollo Global Management Inc Earnings Call

Operator: Good morning, and welcome to Apollo Global Management's fourth quarter and full year 2023 earnings conference call. During today's discussion, all callers will be placed in listen-only mode, and following management's prepared remarks, the conference call will be open to questions. Please limit yourself to one question and then rejoin the queue.

Good morning, and welcome to Apollo Global management's fourth quarter and full year 2023 earnings conference call.

During todays discussion all callers will be placed in listen only mode and following management's prepared remarks.

The conference call will be open for questions. Please.

Please limit yourself to one question and then rejoin the queue.

Operator: This conference call is being recorded. This 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. Apollo will be discussing certain non-GAAP measures on this call which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website.

This conference call is being recorded.

This 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.

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

These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website.

Operator: 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.

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.

I will now turn the call over to Noah Gunn <unk>.

Noah Gunn: Global head of Investor Relations. Please go ahead.

Noah Gunn: 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. And, in short, fourth quarter results rounded out an exceptionally strong year for both our asset management and retirement services business. Our two primary earnings streams, fee-related earnings and spread-related earnings, grew more than 25% to a record $4.9 billion. Combined with principal investing income, holdco, financing costs, and taxes, we reported record adjusted net income of $4.1 billion, or $6.74 per share for the full year. There is one change to highlight in our financial reporting included with this morning's results. Beginning this quarter, within Retirement Services, you'll see spread-related earnings, excluding notable items.

Noah Gunn: 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 and ensure fourth quarter results rounded out an exceptionally strong year for both our asset management and retirement services businesses. Our two primary earnings streams fee related.

Noah Gunn: Earnings and spread related earnings grew more than 25% to a record $4 $9 billion in 2023, combined with principal investing income holdco financing costs and taxes, we reported record adjusted net income of $4 1 billion or $6 74 per share for the full year.

Noah Gunn: One change to highlight in our financial reporting included with this morning's results beginning this quarter within retirement services, you'll see spread related earnings excluding notable items and further down the page we provide additional information highlighting the delta to arrive at our long term return expectation for things alternative investments. This information is it.

Noah Gunn: And further down the page, we provide additional information highlighting the delta to arrive at our long-term return expectation for Athene's Alternative Investment. This information is useful in order to understand how we think about Athene's earnings power on a multi-year basis, excluding quarterly market-to-market fluctuation. And importantly, this change has no impact on historically reported SRE or the magnitude of historically reported notable items.

Noah Gunn: Useful in order to understand how we think about things earnings power on a multiyear basis, excluding quarterly mark to market fluctuations and importantly, this change has no impact on historically reported sorry, or the magnitude of historically reported notable items. So joining me to discuss our strong results in more detail and outlook for the year ahead, our mark.

Noah Gunn: So joining me to discuss our strong results in more detail and our outlook for the year ahead are Mark Rowan, CEO, Scott Kleinman, co-president, and Martin Kelly, CFO. And with that, I'll hand it over to Mark. Thanks, Noah.

Mark: Oh, and CEO, Scott climb and co President and Martin Kelly, CFO and with that I'll hand, it over to Mark.

Mark: Thanks, Noah and it's my pleasure to actually walk through what was a very strong year, both in growth and execution.

Mark Rowan: And it's my pleasure to actually walk you through what was a very strong year, both in growth and execution. You had told me at the beginning of the year that we were going to grow 25% plus in FRE and 26% in SRE, uh... and that we would have to do that successfully. We would be doing a victory lap here, and I assure you we are in fact doing that. Those ranges, while I wish they were recurring every year, are not the normal expectation you should have. We've consistently guided all of our investors to what I believe and we believe is a long-term growth rate for FRE, which is 15% to 20% in a non-flagship year, and to low double-digit growth in SRE. 2023 was truly exceptional.

Speaker Change: You had told me at the beginning of the year that we were going to grow 25% plus in FRE and 26% and SRA.

Mark: And then we will do that successfully we would be doing a victory lap here and I assure you. We are in fact doing that victory lap.

Mark: Those ranges.

Mark: While I wish they were recurring every year or not the normal expectation you should have for the business. We've consistently guided all of our investors to what I believe and we believe is a long term growth rate in FRE, which is 15% to 20% in a non flagship here.

Mark: And to low double digit growth and SRV.

Mark: 123 was truly exceptional.

Mark Rowan: Recall that, particularly in our SRE segment in our retirement service, we are not a near-term profit maxim. 2023 was extraordinary. We ended the year holding more than $12 billion of cash. We also use the Very Strong Results. Thank you all for joining us today. While this costs us near-term SRE, it gives us flexibility to redeploy into very strong origination volumes, which you will hear about. In the third quarter, just, excuse me, in the fourth quarter, just to highlight how strong origination volumes were, we did north of $30 billion of redeployment. We hope to continue at that pace, and having a pile of cash and a treasury portfolio will allow us to continue to grow SRE in the low double digits, which is what we are doing. Away from earnings, margins were up over 200. AUM hit a record $651 billion, inflows were $160 billion, and Athena had record inflows. Even in inflows, Athene is not a near-term profit magnate.

Mark: Recall that particularly our Srs segment in our retirement services segment, we are not in near term profit maximize our <unk>.

Mark: 2023 was extraordinary.

Mark: We ended the year holding more than $12 billion of cash.

Mark: We also use the very strong results to begin the creation of a countercyclical portfolio, which had us for the first time in a long time make a significant move into treasuries.

This cost us near term sorry at.

Mark: It gives us flexibility to redeploy into very strong origination volumes, which you will hear about in the third quarter just excuse me in the fourth quarter just to highlight how strong originations volume volumes, where we did north of 30 billion of originations.

Mark: We hope to continue at that pace, and having a pile of cash and a treasury portfolio will allow us to continue to grow sorry.

Mark: Low double digits, which is what we seek to do.

Mark: Away from earnings margins were up over 200 basis points AUM.

Mark: Hit a record 651 billion inflows were 160 billion and Athene had record inflows of 66 billion.

Mark: Even in inflows Athene is not a near term profit maximizing this was an opportunity to really shape, the kind of business and the kind of distribution that athene wanted and we would expect to exceed this number in terms of originations organic originations for athene moving into 2024.

Mark Rowan: This was an opportu- really shaped the kind of business, kind of distribution that Athene wants, and we would expect to exceed, www.globalonenessproject.org Moving in. 2024 we see as a year of continued momentum, but we also see it taking shape slightly differently in, credit, we believe will dominate 2024, growth at Athene, and equity strategies other than. Martin will spend time in his remarks discussing the 24 Outlook I thought what I would do is take my time and provide a little bit of historical perspective and also a bit of a road map as to where we're going. We've just come back from our partners' retreat.

Mark: 2024, we see as a year of continued momentum, but we also see it taking shape slightly differently in 2023 credit. We believe we will dominate 2024 gross at Athene and equity strategies other than P.

Mark: Martin will spend time in his remarks discussing the 24 outlook and the finer details of Q4.

P. Martin: I thought what I would do is spend my time and provide a little bit of historical perspective, and also a bit of a roadmap as to where we're going.

P. Martin: We've just come back from our partners retreat, where all 201 Apollo partners get together and when we discuss the outlook.

Mark Rowan: We're all 201 Apollo partners, and we get together, and we discuss the outlook. I began those remarks by anchoring people in 2008. We were 44 billion. Fast forward, we've grown 14. That's faster than Apple's Revit.

P. Martin: And I began those remarks by anchoring people in history in 2008, we were 44 billion of AUM.

P. Martin: You fast forward, we've grown 14 times, that's faster than Apple's revenue.

Mark Rowan: That's faster than Microsoft's revenue. That's faster than... truly extraordinary. I'd like to think that was all as a result of management acumen and management, but we are the beneficiary. Macro Industry Factors drove not just us, but our entire... Dodd-Frank, substantial money printing, Research for Excess Return, and the Commoditization of Debt and Equity Markets Public Markets through Indexation and Correlation were the powerful tailwinds that drove our industry and allowed us to grow. Some of these factors are still present.

P. Martin: It's faster than Microsoft's revenue, that's faster than semiconductors.

P. Martin: Truly extraordinary.

P. Martin: I'd like to think that was all as a result of management acumen and management positioning, but we are the beneficiary.

P. Martin: A macro industry factors.

P. Martin: That drove not just us, but our entire industry.

P. Martin: Dodd Frank.

P. Martin: Substantial money printing.

P. Martin: The research for excess return.

P. Martin: Low rate environment, and the commoditization of debt and equity markets public markets through indexation in correlation where the powerful tailwind.

P. Martin: That drove our industry and allowed us to grow 14 times.

P. Martin: Some of these factors are still here.

Mark Rowan: But I have to say, the factors that are going to drive us going forward are different, and the factors that, in fact, got us here. As I think about the big drivers of our... First, I think there is a fundamental rethink going on as to the difference between public and private. Most of us have grown up in an investment world where private was risky, and the public was safe.

P. Martin: I have to say the factors that are going to drive us going forward are different than the factors that in fact got us to 2023.

P. Martin: As I think about the big drivers of our business.

P. Martin: First I think there is a fundamental rethink going on as to the difference between public and private.

P. Martin: Most of us have grown up in an investment world, where private was risky and public with safe, we had a private allocation in alternatives bucket illiquid allocation and it was generally a relatively small portion of an institution or an individual's total strategic asset allocation and with good reason private at least in the old.

Mark Rowan: We had a private allocation, an alternative bucket, a liquid allocation, and it was generally a relatively small portion of an institution or an individual. Total Strategic Asset Allocation. And with good reason.

Mark Rowan: Private, at least in the old days, was risky. Private Equity, Venture Capital, and Hedge Funds dominated the private sector. On the other hand, public was perceived as safe. Stocks and Bonds 6040 Portfolio. I believe we're moving to a world where public is both safe and risky. Private is safe, and the different.

P. Martin: Days less risky private equity venture capital and hedge funds have dominated the private bucket.

P. Martin: On the other hand public was perceived as safe.

P. Martin: Stocks and bonds 60 40 portfolio.

P. Martin: I believe we're moving to a world where public.

P. Martin: Is both safe and risky.

P. Martin: And private is safe and risky and the difference is only a matter of liquidity.

Mark Rowan: This is only a matter of time. I believe we are going to see substantial changes from institutions where they begin to think about private equity, not just in a traditional alternative context. Think about private equity as just another investor that has a little less liquidity, and the question they'll be asking is, am I being compensated? I think that is nothing but a positive for our industry and for our investors. The second is... This continued commoditization of the public market. We are

P. Martin: I believe we are going to see a substantial pivot from institutions, where they begin to think about private not just in a traditional alternatives context.

P. Martin: But they think about private as just another investment that has a little less liquidity in the question there'll be asking is am I being compensated for slightly less liquidity.

Speaker Change: I think that as nothing but a positive for our industry and for our firm.

Speaker Change: The second is.

Speaker Change: This continued commoditization of public market returns we are.

Mark Rowan: But so much of our equity market is dominated by a handful of companies that, with outsized valuations and outsized profits, really do drive the public. While that's going up, that feels great, that can just as easily go into Sophisticated Investors, institutional and individual, if they are seeking to separate them. Thank you for joining us, other than those.

Speaker Change: In an extreme of indexation and concentration and correlation not just between debt and equity markets, but so much of our equity market is dominated by a handful of companies that with outsize valuations and outsize p/e that really do drive the public indices, while that's going up that feels great.

Speaker Change: That can just as easily go in the other direction sophisticated investors institutional and individual understand this and if they are seeking to separate themselves from.

Speaker Change: From the beta of the public markets and look for Alpha they will need to look for other solutions.

Speaker Change: Are there than those in the public markets and through indexation.

Mark Rowan: Public Markets. High net worth and the entry of individual investors into private markets and alternatives. We are in the earliest, early days. This hasn't even started yet.

Speaker Change: High net worth and the entry of individual investors into the private markets and alternatives.

Speaker Change: We are in the earliest early days of this this hasn't even started this is a 65 trillion dollar market that ultimately has the potential for private markets investors, such as ourselves and our peer group to be as large if not larger than our institutional market.

Mark Rowan: This is a $65 trillion market that ultimately has... For private markets, investors such as ourselves and our peer group to be as large, if not larger than our institution. For us to get there, it's going to take education. We are evangelical because what the private investor..., for an Investor's Portfolio, well-substantiated academically and through financial analysis at the level of understanding. How Private Investments Can Be Incorporated into These Portfolios is very, very important. I look at the largest pool of investable capital anywhere in the world, some $12 trillion in 401k. These are the people in our country who need returns the most, and we force them to make a daily living.

Speaker Change: For us to get there it's going to take education, we are even jellicoe in this because what private investments can do for an investor's portfolio.

Speaker Change: Well substantiated academically and through financial records, but the level of understanding of how private investments can be incorporated into these portfolios is very very immature I look at the largest pool of investable capital anywhere in the world. Some trout 12 trillion dollars and 401K. These are the people in our country who need returns.

Speaker Change: The most and we force them to be daily liquid for 50 years.

Mark Rowan: Why? I don't know why, but we're beginning to see cracks even in the 401k model. Allocation to Private, which is different than an allocation. But again, I think this is a very powerful. That votes well for our firm and for our agency. Finally, we can't escape that we're all getting older. Thank you for joining us. Most markets have done a very poor job.

Speaker Change: Hi.

Speaker Change: I don't know why I don't think there's a good reason why and we're beginning to see cracks even in the 401K market of an allocation to private which is different than an allocation to risk.

Speaker Change: But again I think this is a very powerful trend that bodes well for our firm and for our industry.

Speaker Change: Finally.

Speaker Change: Can't escape that we're all getting older.

Speaker Change: Our society is getting older you are.

Speaker Change: Europe is getting older Japan is getting older Australians getting older most western markets are getting older.

Speaker Change: Most markets have done a very poor job.

Mark Rowan: The retirement Savings Crisis in the U.S. is particularly acute, and the numbers are good, and I believe there is a substantial role for firms such as ours to play. Buffeting Investor Savings and Allowing for allowing us to provide them guaranteed. In short, we find ourselves at $650 billion as a relatively small team of asset managers, surrounded by four massive, Market for Fixed Income Replacement. Think of this as a rotation.

Speaker Change: Of retirement savings and retirement savings crisis in the U S is particularly acute the numbers are well known and I believe there is a substantial role for firms such as ours to play in buffeting investor savings and allowing them to provide allowing us to provide them guaranteed lifetime income in.

Speaker Change: In short we find ourselves.

Speaker Change: At $650 billion is a relatively small entity in the scheme of asset management surrounded by four massive markets.

Speaker Change: The market for fixed income replacement think of this as a rotation.

Mark Rowan: Institutions and Individuals Normal Fixed Income Portfolio, private, as well as public, so-called private investors. The second is the high net worth, moving from the traditional 60-40 allocation into the private market. The third is rotations out of active management and into other products, and finally, retirement.

Speaker Change: Institutions and individuals normal fixed income portfolios into private as well as public so called private investment grade. The second is the high net worth market moving from traditional out 60, 40 allocation into private market allocation.

Speaker Change: The third is rotations out of active management and into other products.

Speaker Change: And finally, the retirement market.

Mark Rowan: Each of those markets offers us the opportunity to double our firm over a number of years. We just have to make sure that we are well-positioned. The sixteen-presidents of the Vienna Conference of Entrepreneurs will board Dr. Eric Campbell's launch panel today. The committee of the Vienna conference is assembled in the virtual experience space at Griezmann University.

Speaker Change: Each of those markets offers us the opportunity to double our firm over a number of years, we just have to make sure that we are well positioned.

Speaker Change: We make the investments today and accept that the tailwind that powered us to 'twenty. Two 'twenty three are not the same as the tailwind that are likely to power us going forward that the products that powered us to where we are are not exactly the same as the products that are going to power us going forward.

Mark Rowan: Now, the team will have their announcements humorously, which will be heard by many guests. The products that have gotten us to where we are are not exactly the same as the products that are going to power us going forward. Fundamentally, we need to embrace change. But I like the position that we're starting, starting from the only scaled player in private.

Speaker Change: Fundamentally we need to embrace change, but I like the position that we're starting from we're starting from the only scaled player in private I G.

Mark Rowan: The Leading Retirement Services Footprint, the largest hybrid ecosystem, all of which is fueled by. So what do we need to do and what should you be looking for? Milestones, for more information, around our industry and surroundings. By far the most important thing that we need, scale. As you know, we have been running at roughly $100 billion of annual revenue, $30 billion of which came in the fourth.

Speaker Change: A leading retirement services footprint.

Speaker Change: The largest hybrid ecosystem.

Speaker Change: All of which is fueled by origination.

Speaker Change: So what do we need to do and what should you be looking for as milestones for whether in fact, we are proceeding positively toward a path to take advantage of the opportunities that surround our industry and surround our firm.

Speaker Change: By far the most important thing that we need to do is scale our origination.

Speaker Change: As you know we had been running at roughly a $100 billion of annual origination.

Speaker Change: <unk> 30 billion of which came in the fourth quarter.

Mark Rowan: We need to rapidly move that up with a goal of somewhere between 200 and 250 billion. I've, as an alternative firm that provides excess return per unit. We can only grow as fast as we scale our capacity to create investments that, in fact, often, our clients access. If we grow too fast?

Speaker Change: We need to rapidly move that up with a goal of somewhere between 200 and $250 billion of origination five years from now as an alternative firms that provides excess return per unit of risk. We can only grow as fast as we scale our capacity to create investments that in fact offer.

Speaker Change: Our clients excess return per unit of risk, if we grow too fast.

Mark Rowan: Simply Seek to Gather Ask, Commoditizer, and ultimately, we will not like the result. So origination, probably first. Capital Formation. Not only do we need to continue to build out our high net worth coverage, but if we are going to serve..., fixed income replacement, the so-called private investment grade sale, the way things are sold, the client is actually completely different than the traditional client of an alternative. Building Out a Fixed Income Replacement Sales, http://TheBusinessProfessor.com necessary to scale this and not just pick around. Finally,

Speaker Change: Simply seek to gather assets, we will commoditize, our business and ultimately we will not like the results of that.

Speaker Change: So origination probably first and second.

Speaker Change: Capital formation not.

Speaker Change: And not only doing it could be to continue to build out our high net worth coverage, but if we are going to serve fixed income replacement so called private investment grade.

Speaker Change: The sale the way things are sold the client base is actually completely different than the traditional client base of an alternatives firm Bill.

Speaker Change: Building out a fixed income replacement sales force that speaks to clients in a language that they are used to speaking.

Speaker Change: Necessary ingredient to scale this and not just pick around the edges.

Speaker Change: Finally.

Mark Rowan: New products, product creation, are the heart of financial services. If I go back and look at the beginning of my 40-year career now... Levered Loans, High Yield Bonds, ETFs, Securitized Products either did not exist or in their, We take for granted these four products as completely products. We should not be naive to think that they are going to be the products. Clients and high net worth individuals are going to be the target, out of the public. I do not believe they are going to be able to do it, and your loft private partner.

Speaker Change: New products and product creation are the heart of financial services.

Speaker Change: [noise] back and look at the beginning of my 40 year career now.

Speaker Change: Levered loans high yield bonds, Etfs securitized product either did not exist or in their infancy. We take for granted these four products has completely mainstream and dominant products, but we should not be naive to think that they are going to be the products that dominate 15 years from now.

Speaker Change: Clients and high net worth individuals are going to move out of public equities.

Speaker Change: We do not believe they are going to move into 10 year loft private partnerships I believe theyre going to move into things that are more hybrid hybrid again at the midpoint between debt and equity.

Mark Rowan: I believe they are going to move into things that are more hybrid. Hybrid, again, tends to offer clients non-binary outcomes while still providing attractive. The product set here, while large for us, is immature for the entire industry, and I think you will see that this year. Introductions of New Products. Risk Rewards and Liquidity Requirements and Partnerships that our industry has not seen before. I know that we and our peer group are hard at work trying to meet the needs of our customers and, truthfully, could not be more excited about where we are. We are beginning to talk about our original five-year plan in hindsight. Martin and Scott will provide some context that we are well on our way and confident. The objective that we put out in our five... We are spending 2024 positioning ourselves to take advantage of the next... The growth will be there going forward, but it will not look like or feel like the growth of the past, which came differently. No less, I'm no less optimistic. Finally, we're looking forward to a full investment. With us, you know the definition of full means long.

Speaker Change: And as to offer clients nonbinary outcomes, while still providing attractive rates of return.

Speaker Change: The product set here, while large for us is immature for the entire industry and I think you will see this year.

Speaker Change: Introductions of new products with risk rewards and liquidity requirements and partnerships that our industry has not seen before.

Speaker Change: I know that we and our peer group are hard at work trying to meet the needs of our investors and I truly could not be more excited about where we sit in this ecosystem.

Speaker Change: We are beginning to talk about our original five year plan in hindsight, Martin and Scott will provide some context that we are well on our way and confident of meeting.

Speaker Change: The objectives that we put out in our five year plan. We are spending 2020 for positioning ourselves to take advantage of the next new trends.

Speaker Change: The growth will be there going forward, but it will not look like or feel like the growth of the past it.

Speaker Change: It will come differently, but none that I'm no less optimistic.

Speaker Change: Finally, we're looking forward to a full investor day, and with US you know the definition of full it means long in October of this year and Martin and Noah will provide you details with that I'll turn it over to Scott.

Mark Rowan: October of this year, and Martin and Noah will provide... With that, I'll turn it over to Scott. Thanks, Mark. Echoing Mark's sentiment, we entered 2023 focused squarely on executing the growth plan we set forth, and we achieved those goals. Both our asset management and retirement services business proved resilient and often opportunistic as we navigated an uncertain investing backdrop, a changing rate paradigm, and an evolving financial ecosystem. One thing that has stayed constant, though, is our commitment to delivering excess return per unit of risk for our clients.

Alex Scott: Thanks, Mark echoing Mark's sentiment, we entered 2023 focus squarely on executing the growth plan, we set forth and we achieve those goals.

Alex Scott: Both our asset management and retirement services business proved resilient and often opportunistic as we navigated an uncertain investing backdrop of changing rate paradigm in an evolving financial ecosystem.

Alex Scott: One thing that stayed constant though was our commitment to delivering excess return per unit of risk for our clients.

Scott Kleinman: Investment performance across our product suite was strong, with particularly robust returns in certain yield and hybrid strategies. For example, our direct origination portfolio appreciated 20% over the full year, while our hybrid value portfolio, credit strategies, and accord funds all returned more than 15% in 2023. In our PE business, our flagship fund performance remains very solid, with Fund9 generating a gross IRR of 32% and 22% net life-to-date through year-end. Importantly, we've been able to generate these attractive returns while prioritizing senior secured investment grade credit quality and a purchase price matters investment philosophy.

Alex Scott: Investment performance across our product suite was strong with particularly robust returns and certain yielded hybrid strategies.

Alex Scott: For example, our direct origination portfolio appreciated 20% over the full year, while our hybrid value portfolio credit strategies at a court funds all returned more than 15% in 2023.

Alex Scott: Our <unk> business, our flagship fund performance remains very solid with four nine generating a gross IRR of 32% and 22% net life to date through year end.

Alex Scott: Importantly, we've been able to generate these attractive returns while prioritizing senior secured investment grade credit quality at a purchase price matters investment philosophy.

Scott Kleinman: Off the back of this strong investment performance, we're seeing growing demand for our investment solutions in the market. We raised $44 billion of third-party capital in 2023, an annual record when excluding flagship PE activity, reflecting the increasing breadth of our product suite. Athene's organic inflows continue to reach new heights, totaling $63 billion in 2023, driven by strong secular tailwinds and leading market share. Approximately $23 billion, or 35% of Athene's inflows, were supported by continued growth through third-party sidecar capital. Altogether, organic inflows totaled $107 billion across the platform during the year.

Alex Scott: Off the back of this strong investment performance, we're seeing growing demand for our investment solutions in the marketplace.

Alex Scott: We raised $44 billion of third party capital in 2023 and annual record when excluding flagship PE activity, reflecting the increasing breadth of our product suite.

Alex Scott: Teens organic inflows continue to reach new heights totaling $63 billion in 2023, driven by strong secular tailwind and leading market share.

Alex Scott: Approximately 23 billion or 35% of Athena inflows were supported by continued growth through third party sidecar capital.

Alex Scott: Altogether organic inflows totaled 107 billion across the platform during the year.

Scott Kleinman: As we look to 2024, we expect momentum across all avenues of capital formation to continue. In our third-party asset management business, we expect to raise a record $50 billion in capital, including annual fundraising records from both the institutional and global wealth channels. Coupled with the $70 billion of expected inflows from Athene, we expect to raise approximately $120 billion of capital this year organically, which would represent an increase of 20% on a comparable basis, excluding flagship. In a higher interest rate backdrop and with the lingering impacts of the denominator effect on traditional private equity allocations, institutional investor focus has shifted to asset classes that offer current income, inflation protection, and access to areas of secular growth, namely credit, infrastructure, and sustainability.

Alex Scott: As we look to 2024, we expect momentum across all avenues of capital formation to continue.

Alex Scott: And our third party asset management business, we expect to raise a record 50 billion of capital, including annual fund raising records from both the institutional and global wealth channels.

Alex Scott: Coupled with the 70 billion of expected inflows from a theme we expect to raise approximately $120 billion of capital this year organically, which would represent an increase of 20% on a comparable basis excluding flagship P.

Alex Scott: In a higher interest rate backdrop, and with the lingering impacts of the denominator effect on traditional private equity allocations institutional investor focus has pivoted to asset classes that offer current income inflation protection and access to areas of secular growth, namely credit infrastructure and sustainability.

Scott Kleinman: We believe we're well-positioned to capture this demand with our direct lending, asset-backed finance, opportunistic credit, and infrastructure equity strategies currently in the market, in addition to our first-time Clean Transition Equity Fund. We're also focused on building upon the success we had with third-party insurers last year, who entrusted us with $13 billion of capital, and view this as an important client segment as we continue to scale our third Overall, we've entered 2024 with a lot of momentum and expect a very strong first quarter for institutional fundraising. Turning to global wealth, we closed out a transformative year for the business by launching new products, expanding distribution, and educating the marketplace on the benefits of alternative assets. We raised over $8 billion of capital from this channel in 2023, up more than 30% from 2022 levels, and expect to grow off that base in 2024, despite not having a flagship private equity fund in the market. We believe our growing suite of semi-liquid perpetual products is important to that success, with a few to highlight in particular. We've seen steadily growing inflows for Apollo Debt Solutions, the non-traded BDC we manage, which totaled $875 million in the fourth quarter, in addition to approximately $345 million for January 1 subscription, a recent monthly record.

Alex Scott: We believe we're well positioned to capture this demand with our direct lending asset backed finance opportunistic credit and infrastructure equity strategies currently in the market. In addition to our first time clean transition equity funds.

Alex Scott: We're also focused on building upon the success, we've had with third party insurers last year, who entrusted us with $13 billion of capital and view. This as an important client segment as we continue to scale, our third party credit platform.

Alex Scott: Overall, we've entered 2024 with a lot of momentum and expect a very strong first quarter for institutional fund raises.

Alex Scott: Turning to global wealth, we closed out a transformative year for the business from launching new products, expanding distribution and educating the marketplace on the benefits of alternative assets.

Alex Scott: We raised over 8 billion of capital from this channel in 2023 up more than 30% from 2022 levels.

Alex Scott: Spect to grow off that base in 2024, despite not having a flagship private equity fund in the market.

Alex Scott: We believe our growing suite of semi liquid perpetual products is important to that success with a few a few to highlight in particular.

Alex Scott: We've seen steadily growing inflows for Apollo that solutions, the non traded BDC, we vantage, which totaled 875 million in the fourth quarter. In addition to approximately $345 million for January one subscriptions, our recent monthly record.

Scott Kleinman: These strong inflows follow industry-leading investment performance, with Class I shares delivering an approximate 16% net return for 2023, as well as expanding distribution, with ADS now live on five global wirehouse platforms and 60-plus selling agreements in place with independent advisors. Looking forward, we're focused on expanding our private credit offering from corporate direct lending to asset-backed finance, which we believe will provide global wealth investors with more fulsome and diversified access to our proprietary asset origination capabilities. Additionally, we're pleased with the growth we've seen in AAA, our innovative core equity replacement vehicle. Inflows from global wealth investors totaled $1.5 billion in 2023, weighted towards the second half of the year.

Alex Scott: These strong inflows follow industry, leading investment performance with class I shares delivering an approximate 16% net return for 2023 as well as expanding distribution with <unk> now live on five global wire house platforms, and 60, plus selling agreements in place with independent advisors.

Alex Scott: Looking forward, we're focused on expanding our private credit offering from corporate direct lending to asset.

Alex Scott: <unk> finance, which we believe will provide global wealth investors more fulsome and diversified access to our proprietary asset origination capabilities.

Alex Scott: Additionally, we're pleased with the growth we've seen in AAA, our innovative core equity replacement vehicle.

Alex Scott: Inflows from global wealth investors totaled $1 5 billion in 2023.

Alex Scott: The weighted towards the second half of the year.

Scott Kleinman: Looking ahead, we're focused on expanding shelf space to additional key distributors in the US and Europe, as well as launching additional points of access to reach different parts of the retail market. And lastly, Apollo Infrastructure Company was recently launched in November to capture growing demand for private infrastructure assets. We believe the company offers differentiated access to the full spectrum of our infrastructure platform, investing across sectors and the capital structure. Initial feedback from RIAs has been positive so far, and AIC is on track to expand distribution more broadly over the course of this year.

Alex Scott: Looking ahead, we're focused on expanding shelf space to additional key distributors in the U S and Europe as well as launching additional points of access to reach different parts of the retail market.

Alex Scott: And lastly, Apollo infrastructure company recently launched in November to capture growing demand for private infrastructure assets. We believe the company offers differentiated access to the full spectrum of our infra platform investing across sectors and the capital structure initial feedback from our Ace has been positive so far.

Alex Scott: <unk> is on track to expand distribution more broadly over the course of this year.

Scott Kleinman: Turning to investment activity, we had an active year of capital deployment totaling approximately $150 billion in 2023. Looking forward, we expect many of the same themes that informed our investment pipeline last year to remain pertinent in 2024, such as a shrinking global banking industry, Lack of public market liquidity, and a Need for Structured Financing Alternatives, among others.

Alex Scott: Turning to investment activity, we had an active year of capital deployment totaling approximately 150 billion in 2023.

Alex Scott: Looking forward, we expect many of the same themes that informed our investment pipeline last year. So we remain pertinent in 2024.

Alex Scott: Drinking global banking industry lack of public market liquidity and a need for structured financing alternatives among others.

Scott Kleinman: With $58 billion of dry powder at year end, we're well equipped to capitalize on this robust opportunity set. Relatedly, debt origination volume totaled almost $100 billion in 2023, as Mark said, including $30 billion in the fourth quarter alone. It's worth mentioning that about half of this volume in both the fourth quarter and full year originated from our ecosystem of 16 proprietary platforms. Over the next couple of years, we're focused on reaching our $150 billion debt target, an origination debt target that we first laid out at Investor Day. To reach that target, scaling our origination platform volume is essential and should encompass around 50% of that longer-term goal. We think we can achieve this platform volume goal by expanding our existing portfolio, especially through some of the larger platforms like Atlas and MidCap and mid-sized platforms like Wheels and Alliance. Importantly, growth and debt origination volume have helped fuel our capital solutions business. In 2023, more than 80% of capital solutions fees were debt-related, up from only 55% in 2021.

Alex Scott: With 58 billion of dry powder at year end, we're well equipped to capitalize on this robust opportunity set.

Alex Scott: Relatedly debt origination volume totaled almost 100 billion in 2023, as Mark said, including $30 billion in the fourth quarter alone.

Alex Scott: It's worth mentioning that about half of this volume in both the fourth quarter and full year originated from our ecosystem of 16 proprietary platforms.

Alex Scott: Over the next couple of years, we're focused on reaching our 150 billion debt target origination.

Alex Scott: Origination that target that we first laid out at Investor day.

Alex Scott: To reach that target scaling of our origination platform volume is essential and should encompass around 50% of that longer term goal. We think we can achieve this platform volume blow by scaling our existing portfolio, especially through some of the larger platforms like Atlas and mid cap and mid sized platforms like wheels of alliance.

Alex Scott: Importantly growth in debt origination volume has helped fuel our capital solutions business in 2023 more than 80% of capital solutions fees were debt related up from only 55% in 2021.

Martin Kelly: Our growing high-grade alpha business is one of the important contributors to this fee mix shift, which generated approximately $10 billion of volume over the full year. In the fourth quarter specifically, we announced three transactions with repeat borrowers, Air France, Concord, and Bonovia, showcasing the power of incumbency for large-scale, structured, investment-grade financing demand. So with that, I'll turn the call over to Martin to go through our finances. Great. Thank you, Scott. And good morning, everyone.

Alex Scott: We're growing high grade Alpha business is one of the important contributors to this fee mix shift, which generated approximately 10 billion of volume over the full year.

Alex Scott: In the fourth quarter, specifically, we announced three transactions with repeat borrowers.

Alex Scott: Air, France, Concord, <unk> showcasing the power of incumbency for large scale structured investment grade financing demand.

Alex Scott: So with that I'll turn the call over to Martin to go through our financials.

Martin Kelly: Great. Thank you Scott and good morning, everyone.

Martin Kelly: As demonstrated by our results, 2023 was a very successful year of growth and execution for Apollo. We delivered on the financial targets that we laid out more than a year ago despite operating in a vastly different macro environment. In the asset management business, we achieved our 25% FRE growth target through fee revenue growth of more than 20%, coupled with decelerating expense growth, which drove the 200 basis points of margin expense. In retirement services, we grew SRE by 26%.

Martin Kelly: So as is demonstrated by our results 2023 was a very successful year of growth and execution for polar.

Martin Kelly: We delivered on the financial targets that we laid out more than he set a year ago. Despite operating in a vastly different macro environment.

unknown: And the asset management business, we achieved a 25% FRE growth targets through fee revenue growth of more than 20%, coupled with decelerating expense growth, which drove the 200 basis points of margin expansion.

Alex Scott: In retirement services, we grew <unk> by 26%.

Martin Kelly: As Noah mentioned, you'll note a new presentation this quarter on page 10 of the earnings release, separate SRE excluding notable items, which this quarter is $748 million, or 141 basis points of net spread, from the difference between actual alts returns and the 11% long-term expectation, which this quarter is $132 million, or 25 basis points of net spread. This change in presentation reflects both where the industry is moving to and is being required to move to as a presentation format. Importantly, we still continue to manage the portfolio, expecting the same 11% long-term. On this basis, our net spread, excluding notable items for the year, was 144 basis points.

Alex Scott: As Noah mentioned, you'll note a new presentation. This quarter on page 10 of the earnings release to separate sorry, excluding notable items, which this quarter is $748 million or 141 basis points of net spread.

Alex Scott: From the difference between actual ultra tons, and the 11% long term expectation, which this quarter is $132 million or 25 basis points of that spread.

Alex Scott: This change in presentation reflects both where the industry is moving to and it's being required to move to as a presentation format.

Alex Scott: Importantly, we still continue to manage the portfolio expecting the same 11% longterm, which sounds.

Alex Scott: On this basis on that spread excluding notable items for the year was 144 basis points.

Martin Kelly: Considering our long-term expectations for alternative returns, our net spread would be an additional 21 basis points higher, and combined, 30 basis points higher in 2023 versus 2021. Assisted by higher rates, this increase was driven by record organic growth, favorable deployment backdrops, and higher floating rate income. With these strong results across the business, we expect to exceed our stated goal of doubling our total earnings to $5.5 billion by 2026. And we expect a mid-teens plus compound earnings growth trajectory over the next few years. Executing on our plan for 2024 is the next important milestone to achieving that target. Before I get into the forward look, I'd like to discuss a few puts and takes in our fourth-quarter results that will help form a better view of our run rate earnings power. On management fees, management fees declined modestly quarter over quarter due to fund 10 catch-up fees of approximately $25 million earned in the third quarter.

Alex Scott: Considering our long term expectations for alternatives for tons and that spread would be an additional 21 basis points fire and combined 30 basis points higher in 2023 versus 2022.

Alex Scott: Assisted by higher rates. This increase was driven by record organic growth.

Alex Scott: Favorable deployment backdrop of higher floating rate income.

Alex Scott: With these strong results across the business, we expect to exceed our stated goal of doubling our total earnings to $5 $5 billion by 2026, and we expect a mid teens plus compounded earnings growth trajectory over the next few years.

Alex Scott: Executing on our on our plan for 2024 is the next important milestone to achieving that target.

Alex Scott: Before I get into the forward look I'd like to discuss a few puts and takes in our fourth quarter results that will help form a better view of our run rate earnings power.

Alex Scott: On management fees.

Alex Scott: Management fees declined modestly quarter over quarter due to fund 10 catch up fees of approximately $25 million earned in the third quarter.

Martin Kelly: Athene's Alternatives portfolio returned 6.5% annualized in the fourth quarter, below our long-term expectation of 11%, with strong performance by these strategic origination platforms, partially offset by other investments held outside AAA. The operating tax rate benefited from large deductions related to employee stock compensation and a higher share price, as well as one-time benefits related to Athene's Redomicile and new corporate tax legislation in Bermuda in December. Going forward, we expect our effective tax rate to remain approximately 20% over the long term, subject to quarterly variability.

Alex Scott: As Angel alternatives portfolio returned $6, 5% annualized in the fourth quarter below our long term expectation of 11% with strong performance by these strategic origination platforms, partially offset by other investments held outside Tripoli.

Alex Scott: Our operating tax rate benefited from large deductions related to employee stock compensation due to our higher share price as well as one time benefits related to Athene re domicile.

Alex Scott: Our new corporate tax legislation in Bermuda in December.

Alex Scott: Going forward, we expect our effective tax rate to remain approximately 20% over the long term.

Alex Scott: Subject to quarter over quarterly variability.

Martin Kelly: And then lastly, Athenes Costa Funds in the third quarter included a 17 basis point benefit from two items that we previously adjusted out as notable items. Q4 also included the four-year cost of a new performance fee, which amounted to seven basis points of cost in Q4.

Alex Scott: And then lastly, the same cost of funds in the third quarter <unk>.

Alex Scott: <unk> included a 17 basis point benefit from two items that we previously adjusted out as notable items.

Alex Scott: Q4 also included the full year cost of a new performance fee, which amounted to seven basis points of cost in Q4.

Martin Kelly: Combining these items provides a more appropriate comparison of the quarter-over-quarter change in cost of funds, which, including these adjustments, was similar to the change in fixed income returns for the quarter. So turning to our FRE outlook, we expect 15-20% growth, as Mark communicated. I'll walk through the key building blocks, excluding the $45 million of cyclical catch-up fees we earned in 2023 related to our flagship PE Fundraise, Fund10. We expect low to mid-teens fee revenue growth in 2024, primarily driven by increasing management fees and fee-related performance. We expect management fee growth to be supported by the $120 billion of total organic inflows Scott highlighted, as well as solid levels of capital deployment, further supported by $46 billion of fee-eligible AUM not yet earning management fees. For Capital Solutions, we expect another strong year of fee revenue generation, currently similar to 2023. The revenue from this business has grown approximately 80% in two years and has already exceeded our five-year target. For expenses, we estimate our growth rate in total fee-related expenses will moderate this year to a low double digit.

Alex Scott: Combining these items provides a more appropriate comparison of quarter over quarter change in cost of funds, which including these adjustments was similar to the change in fixed income returns for the quarter.

Alex Scott: So turning to our FRE outlook, we expect 15% to 20% growth as Mark communicated.

Alex Scott: Walk through the key building blocks.

Alex Scott: Excluding the $45 billion of cyclical catch up fees, we earned in 2023 light.

Alex Scott: Related to our flagship Fundraise Fund Chen.

Alex Scott: We expect low to mid teens fee revenue growth in 2024, primarily driven by increasing management fees and fee related performance fees.

Alex Scott: We expect management fee growth to be supported by the $120 billion of total organic inflow as Scott highlighted as.

Alex Scott: As well as solid levels of capital deployment further supported by $46 billion of fee eligible AUM, not yet earning management fees.

Alex Scott: The capital solutions, we expect another strong year of fee revenue generation currently similar to 2023 levels.

Alex Scott: The revenue from this business has grown approximately 80% in two years and has already exceeded our five year targets.

Alex Scott: For expenses, we estimate our growth rate in total fee related expenses will moderate this year to a low double digit level.

Martin Kelly: We added approximately 350 people to our total headcount in 2023 at the asset manager, with approximately half of the net new hires located in North America and Europe and the other half in Mumbai. We expect very targeted headcount growth this year in our business with a continued focus on growing our India business. As the pace of growth in our headcount declines, we should experience a commencement-favorable slowdown in the pace of non-comp expense growth.

Alex Scott: We added approximately 350 people to our total head count in 2023 at the asset manager with.

Alex Scott: With approximately half of the net new hires located in North America, and Europe, and the other half in Mumbai.

Alex Scott: We expect very targeted head count growth this year in our business with a continued focus on growing our India team.

Alex Scott: As the pace of growth in our head count declines, we should experience a commensurate favorable slowdown in the pace of non comp expense growth.

Martin Kelly: Combining this expense outlook with a solid revenue growth picture, we expect to derive an additional 100 basis points improvement in our FRA margin to approximately 57 basis points this year on a path to 60% plus by 2021. Moving to retirement services, we expect to generate low double-digit growth in SRE this year based on a few underlying criteria. In terms of basis, the growth outlook is built upon the exclusion of any notables and assumes an 11% return on Athene's alternatives portfolio, in line with historical experience, while adjusting for the approximate $70 million of excess earnings we earned in 2023 on assets related to the ADIP buydowns and the venerable recapture, both as we previously communicated.

Alex Scott: Combining this expense outlook with a solid revenue growth picture, we expect to derive an additional 100 basis points improvement in our FRE margin to approximately 57 basis points. This year.

Alex Scott: On a path to 60% plus by 2026.

Alex Scott: Moving to retirement services, we expect to generate low double digit growth and SRT. This year based on a few underlying criteria.

Alex Scott: In terms of basis the growth outlook is built upon the exclusion of any notables and assumes an 11% return on all the things alternatives portfolio in line with historical experience.

Alex Scott: Adjusting for the approximate $70 million of excess earnings we earned in 2023 on assets related to the aided by downs and the Venerable recapture both as we previously communicated.

Martin Kelly: $70 billion of organic inflows funded with existing capital resources, including third-party sidecar capital. A net spread excluding any notable items and assuming an 11% return on all of between 160 and 165 basis points based on the current forward rate curve, which implies approximately five rate cuts by the end of 2025. As it relates to interest rates and sensitivity, Atheen has had a long-standing and intentional allocation to floating rate securities while remaining duration-matched. Holding Quotas have and will continue to serve a range of strategic purposes, including assisting with asset liability matching, and enabling offensive positioning within the asset portfolio during periods of market stress. Thank you for listening.

Alex Scott: $70 billion of organic inflows funded with existing capital resources, including third party sidecar capital.

Alex Scott: And that spread excluding any notable items and assuming an 11% return on all of between 160 and 165 basis points based on the current forward rate curve, which implies approximately five rate cuts by the end of 2024.

Alex Scott: As it relates to interest rates and sensitivity Athene has had a longstanding and intentional allocation to floating rate securities while remaining duration matched.

Alex Scott: Holding floaters has and will continue to serve a range of strategic purposes, including assisting with asset liability matching.

Alex Scott: <unk> offensive positioning within the asset portfolio during periods of market stress.

Alex Scott: In cushioning cushioning against any elevated surrenders.

Alex Scott: With the prospect of a fed easing cycle on the horizon, we have reduced the amount of net floating rate assets to $25 billion at year end.

Martin Kelly: With the prospect of a Fed easing cycle on the horizon, we have reduced the amount of net floating rate assets to $25 billion a year, and we expect it to further decline to $20 billion by the end of the first quarter. Turning to principal investing briefly, we expect our PII earning stream to be below our multi-year average target of $1 per share in 2024, with clear dependencies on both the public and private markets for monetizations and our. On capital allocation, our priorities remain unchanged. We're focused on investing in our existing capabilities to drive continued organic growth rather than making strategic investments. We also expect to continue immunizing employees.com regularly and to begin taking steps to reduce our share count to 600 million shares by the end of 2020. We've also announced an increase in the annual dividend by 7.5% to $1.85 per share, beginning in the first quarter of 2024. Thank you for watching.

Alex Scott: And we expect it to further decline to $20 billion by the end of the first quarter.

Alex Scott: Turning to principal investing briefly we expect our peak earnings stream to be below our multiyear average target of $1 per share in 2024 with clear dependencies on both the public and private markets for monetization and outcomes.

Alex Scott: On capital allocation, our priorities remain unchanged.

Alex Scott: We're focused on investing in our existing capabilities to drive continued organic growth rather than making strategic investments.

Alex Scott: We also expect to continue immunizing regular way employee stock comp grants and to begin taking steps to reduce our share count to 600 branches by the end of 2026.

Alex Scott: We've also announced an increase in the annual dividend by seven 5% to $1 85 per share beginning with the first quarter of 2024.

Alex Scott: Implying a dividend yield of one 8%.

Alex Scott: The above the average dividend yield of the S&P 500 of 1.5%.

Alex Scott: Finally, our GAAP earnings totaled $9 billion for the quarter and $5 $1 billion for the full year retaining our eligibility for S&P 500 index inclusion.

Martin Kelly: Finally, our gap earnings totaled $2.9 billion for the quarter and $5.1 billion for the full year, retaining our eligibility for the S&P 500 index. And with that, I'll turn the call back to the operator. 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 tone will indicate your line is in the question queue.

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

Speaker Change: 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.

Speaker Change: <unk> total indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.

William Raymond Katz: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask you to ask one question and then requeue for any additional questions. The first question today is coming from Bill Katz of TD Cowen. Please go ahead. Okay, thank you.

Speaker Change: We do ask you ask one question and then re queue for any additional questions.

Speaker Change: The first question today is coming from Bill Katz of TD Cowen. Please go ahead.

William Raymond Katz: Okay. Thank you good morning, everybody and thank you for taking the question.

William Raymond Katz: So mark a lot of really good big picture type of views as you sort of think through the new water here.

Mark Rowan: Good morning, everybody, and thank you for taking the question. So, Mark, a lot of really good big-picture type views as you sort of think through the new order here. One thing that sort of picked up on your comments was the fact that you thought that there could be an opening in the 401k market. I'm just sort of wondering if you could expand on that, and then maybe underneath that, can you talk a little bit about how you're sort of seeing the competitive landscape developing in the wealth management channel as everyone's sort of jockeying for position? Thank you.

William Raymond Katz: The one thing that sort of picked up on your comments was the fact that you thought that it could be an opening in the 401k market I was just sort of wondering if you could expand your views there and then maybe underneath that can you talk a little bit about how you're sort of seeing the competitive landscape developing in the wealth management channel as everyone sort of jockeying for position. Thank you.

Speaker Change: So you are absolutely correct, though I do see an opening in the 401K market. The 401k market is not limited by legal restriction. It is limited by our risk mentality as a result of a substantial litigation over a long period of time, but I think we're seeing a stabilization.

Mark Rowan: So, you are absolutely correct, though I do see an opening in the 401k market, because the 401k market is not limited by legal restrictions. It's limited by a risk mentality as a result of substantial litigation over a long period, but I think we're seeing a stabilization, particularly as the suite of private products is no longer all high fee, high carry, locked away in funds. You're watching the First Baby Step, as fiduciary managers in 401ks begin to mix in private into their heretofore public solution, simply to get better outcomes and better diversification The other thing we're seeing is a focus on guaranteed lifetime income or guaranteed income where annuities are going into target date funds for the same purpose. I believe we're going to see a continued migration.

Speaker Change: And particularly as the suite of private products is no longer all high fee high carry locked away in funds youre watching the first baby steps.

Speaker Change: As a fiduciary managers in 401K begin to mix in private.

Speaker Change: Into their here too for public solutions simply to get better outcomes and better diversification. The other thing. We're seeing is we're seeing a focus on guaranteed lifetime income or guaranteed income where annuities.

Speaker Change: Going into target date funds and.

Speaker Change: For the same purpose I believe we're going to see a continued migration.

Speaker Change: Don't have the number in front of me, but my memory is kind of plus $1 billion. This year.

Speaker Change: In 401, K and retire.

Speaker Change: Sherri retirement products.

Speaker Change: I think again, we're at the very beginning of this just like I feel we're at the very beginning of wealth and I'll pivot to wealth.

Mark Rowan: I don't have the number in front of me, but my memory is kind of plus a billion dollars in 401ks and Fiduciary Retirement Products. I think, again, we're at the very beginning of this, just like I feel we're at the very beginning of wealth, and I'll pivot to that. Much of what's happened in our industry, whether it is regulation, which has been a negative, or it has been the opening of the high net worth market, which has been a positive, has, for the most part, benefited the large multi-product companies to serve the wealth channel, to serve RIA channels, to serve a global market. This is not a small action.

Speaker Change: Much of what's happened in our industry, whether it is regulation, which has been a negative or it's been the opening of the high net worth market has been a positive has for the most part benefited the large multi product firms.

Speaker Change: To serve the wealth channel to serve RIAA channels to serve a global market.

Speaker Change: This is not a small exercise this is a 150 people in the field product infrastructure.

Speaker Change: It does not make sense to do for one product, but only if you are firmly committed and moving your business and you see a future of a multi product variety.

Speaker Change: So I think that there are a handful of firms.

Mark Rowan: This is 150 people in the field, product, and infrastructure. It does not make sense to do this for one product, but only if you are firmly committed to moving your business forward and see a future of multi-product variety. So, I think that there are a handful of firms who have a right to play in this market and have made the investment. It's not to, and I don't think it's more than that.

Speaker Change: Who have a right to play in this market and have made the investment it's not too.

Speaker Change: And I don't think it's more than 10.

Speaker Change: This market is growing.

Speaker Change: We are at it at the infancy of it and each of the firms is kind of coming at this in their own way.

Speaker Change: I think there are good and bad that is being done I'll just give you our way.

Mark Rowan: This market is growing. We are at the infancy of it, and each of the firms is kind of coming at this in their own way. I think there are good and bad things that are being done. I'll just give you our take.

Speaker Change: We are focused on taking in money from this market not as quickly as we can but as quickly as we can deploy.

Operator: We are focused on taking in money from this market, not as quickly as we can, but as quickly as we can, ultimately producing good returns, not having extreme volatility, thinking long and hard about whether we offer this market a binary outcome product. We want to position ourselves as the innovator in this marketplace rather than the larger player, and I think we've made good progress in doing it. We have a lot of work to do, but I remain very grateful. Thank you. The next question is coming from Glenn Schorr of Evercore. Please go ahead. Hi, thanks very much. Um, one small one and one big one, if I could. The small one is if you could dive into the...

Speaker Change: Ultimately producing good returns not having extreme volatility thinking long and hard about whether we offer this market binary outcome products.

Speaker Change: Is how we're going to approach it we want to position ourselves as the innovator in this marketplace rather than the largest in this marketplace and I think we've made good progress in doing it we have a lot of work to do but I remain very optimistic.

Speaker Change: Thank you. The next question is coming from Glenn Schorr of Evercore. Please go ahead.

Glenn Schorr: Hi, Thanks very much.

Glenn Schorr:

Glenn Schorr: One small one big one if I could the small one is is if you could dive into the.

Glenn Schorr: The Return Differential and Alternatives of your 11% over time versus what you've actually been experiencing lately. You talked about good performance on the origination platforms. When I look at your performance, across the board, ex-European principal finance, everything's really good.

Glenn Schorr: The return differential in alternatives of your 11% overtime versus what you've actually been experiencing lately you talked about good performance on the origination platforms. When I look at your performance.

Glenn Schorr: Ross The board ex European Principal finance everything is really good so I'm curious, what's falling short within the athene portfolio.

Mark Rowan: So I'm curious what's falling short within the Athene portfolio and then the bigger picture... Well, let me hit that quickly, and then I'll... We will not... You... I'll get you... You get your chance to ask the larger question, in violation of the operator's policy. But think of this...

Speaker Change: Then the bigger let me let me hit that quickly and then we will not get you get your chance to ask a larger question.

Glenn Schorr: <unk> of the operators policy.

Speaker Change: So the easiest way to see what a AAA, which represents all of the platforms and all the investments.

Mark Rowan: So, the easiest way to see it, AAA, which represents all the platforms and all the investments... basically, circa 10%. Not quite the 11 that we hoped for, but generally good direction, given that we are not focused on the kind of beta of the public markets and leverage tech and AI. The difference between that and Athene is a drag on certain insurance stakes.

Speaker Change: Basically was circa 10% this year.

Speaker Change: Not quite the 11 that we hoped for but.

Speaker Change: Generally good direction given that we are not focused on the kind of beta of the public markets and leveraged attack in AI and things like that the difference between that and the Athene performance is a drag on certain insurance Stakes. So it seen holds outside of AAA its investment in challenger.

Speaker Change: Investment in Catalina.

Speaker Change: <unk> and vulnerable we had less appreciation this year in those stakes versus the overall portfolio.

Mark Rowan: So seeing holds outside of AAA, it's investment in Challenger, it's investment in Catalina, it's investment in Venerable. We had less appreciation this year in those stakes versus the overall portfolio, and that's the difference bill. There's really no other. And then my violation, part B is:

Speaker Change: And that's that's the difference Bill there's really no other differences of note.

William Raymond Katz: Alright, cool and then my violation part B is.

Speaker Change: You said 200 to 250 billion I kind of remember 100 to 150 billion getting to 150 billion. I know you were at a 30 billion run rate and I know you bought Atlas.

Mark Rowan: You said $200 to $250 billion. I kind of remember $100 to $150 billion getting to $150 billion. I know you were at a $30 billion run rate. I know you bought Atlas.

Speaker Change: But but curious how you bridge bridge that extended and larger origination scale. So we when we set out our five year targets a little over two years ago.

Mark Rowan: But I'm curious how you bridge that extended and larger origination. So when we set out our five-year targets a little over two years ago, the five-year target was to get to 150. I've.

William Raymond Katz: The five year target was to get to $150 billion of origination.

Mark Rowan: I believe that we are, and that would be, quote, I believe that we are well on our way to achieving that target 30 billion of run rate, and really high quality run rate in the fourth quarter was very encouraging. The plans for this year also call for a continued tick up in origination volume. Origination is the lifeblood of our business. When we step back, and we start thinking about the next five, which would carry us five years from today, to power the business to where we want to be if we want to serve the fixed income replacement market. Essentially, if we want to go to institutions and offer them private investment grade in place of their current fixed income allocation. We need to originate this.

Speaker Change: I believe that we are and that would be quote 2026, I believe that we are well on our way to achieving that target $30 billion of run rate and really high quality run rate in the fourth quarter was very encouraging the plans for this year also call for continued pickup in origination volumes originations the lifeblood of our biz.

Speaker Change: When we step back and we start thinking about the next five years, which would carry us five years from today.

Speaker Change: To power the business to where we want to be if we want to serve the fixed income replacement market essentially if we want to go to institutions and offer them private investment grade in place of their current fixed income allocation.

Speaker Change: We need to originate more if.

Mark Rowan: If we want to play a role in allowing high net worth investors and institutional investors to pivot out of active management of equity, I believe they're going to pivot into hybrid, we need to originate more hybrid, and Fundamentally, if we're going to grow our business, we're going to do it in a way that's sustainable. And fundamentally, if we're going to grow our business, we're going to do it in a way that is limited. Not so much by the amount of capital raised. And I respect that capital raising is a very important part of this, and sometimes it's easy, and sometimes it's difficult, but in the long run, the firm that offers excess return, which all of the alternative... We are only as good as our capacity to generate investment. SEC. For more information on Best Buy, visit www.bestbuy.com. The Best Buy is a limited-time, $100,000 online shopping service designed for the entire world. It is available now at BestBuys.com.

Speaker Change: If we want to play a role in allowing high net worth investors and institutional investors to pivot out of active management of equity I believe theyre going to pivot into hybrid we need to originate more hybrid.

Speaker Change: And fundamentally if we're going to grow our business.

Speaker Change: It is limited.

Speaker Change: Not so much by the amount of capital raised and I respect that capital raising is a very important part of this and sometimes it's easy and sometimes it's difficult but in the long run.

Speaker Change: Firm that offers excess return, which all of the alternatives firms do we are only as good as our capacity to generate investments that produce excess return per unit of risk. It is the lifeblood of our business and.

Speaker Change: And we are.

Speaker Change: Very focused on moving past the 150 billion original five year goal and ramping that too is close to $250 billion, which I believe is a realistic target going out you know more to come in October of this year at Investor day, but this is job one and two for our firm to sustained growth.

Speaker Change: And truly for every firm Bill.

Speaker Change: Thank you. The next question is coming from Alex <unk> with Goldman Sachs. Please go ahead.

Alex Scott: Thanks, Good morning, So mark just to build on that you talked about origination being the lifeblood of the business fairly consistently for four quite quite some time now which all makes sense.

Alex Blostein: The Best Buy is a limited-time, $100,000 online shopping service designed for the entire world. It is the lifeblood of our And we are very focused on moving past the $150 billion original five-year goal and ramping that to as close to $250 billion, which I believe is a realistic target going forward. More to come in October of this year at Invesco. This is job one and two for our firm and truly for everyone. Thank you. The next question is coming from Alex Blostein of Goldman Sachs. Please go ahead. Thanks, Good morning.

Alex Scott: As you look to grow this business further scale and accelerated your nation origination capabilities.

Alex Scott: What sort of needs to happen for you guys to get to those numbers or is it more coverage is it more boots on the ground is it more capital, which I guess some of that will come in through AAA is it more product or is it more acquisition of origination platforms. So im just trying to kind of again think about what's within your control to really accelerate this growth further.

Alex Scott: Some of it is more boots on the ground and building out what we call high grade off our high grade solution.

Mark Rowan: So Mark, just to build on that, you talked about origination being the lifeblood of the business fairly consistently for quite some time now, which all makes sense. As you look to grow this business further, scale, and accelerate origination capabilities, what sort of needs to happen for you guys to get to those numbers? Is it more coverage?

Alex Scott: And that's been as Scott highlighted a very good business in a very unique product for us and one quite frankly that doesn't make a lot of sense across asset management unless you are both an agent and a principal we we built this business to power Athene. We then decided for good and valid reasons that we should be fully diversified so we.

Alex Scott: Began to power a third party insurers because after all we want 25% of everything in 100% of nothing and now we also discover that institutions as they are evaluating how to improve their performance and their traditionally public only investment grade bond portfolio are willing to begin to move towards private so long as it is at the same rating.

Mark Rowan: Is it more boots on the ground? Is it more capital? I guess some of that will come in through AAA. Is it more product?

Mark Rowan: Is it more acquisition of origination platforms? So I'm just trying to kind of, again, think about what's within your control to really accelerate this growth further. So some of it is more boots on the ground and building out what we call high-grade alpha or high-grade. And that's been, as Scott highlighted, a very good business and a very unique product for us. And one, quite frankly, that doesn't make a lot of sense across asset management unless you are both an agent and a... We built this business to power it. But we then decided, for good and valid reasons, that we should be fully diversified, so we began to power third-party insurers, because, after all, we want 25% of everything. And now we also discover that institutions, as they are evaluating how to improve their performance in their traditionally public-only investment-grade bond portfolio, are willing to begin to move toward private so long as, This is happening with extraordinary speed in the conversation, in the consulting world, and with innovators, and I believe it's going to continue. In terms of where the volume comes from, yes, there will be more people with more coverage, but for us, We have 16 origination plans, but only a couple of them are at scale.

Speaker Change: This is happening with extraordinary speed in the conversation in the consulting world and with the innovators and I believe it's going to continue to happen in terms of where the volume comes from yes, there will be more people with more coverage, but for us we.

Speaker Change: We have 16 origination platforms.

Speaker Change: Only a couple of them are at scale. This is about growing the origination platforms.

Speaker Change: We are focused and I don't think we need a 17. So although that may result that but that is not the goal we are not short opportunity.

Speaker Change: It's now about focus.

Speaker Change: And execution.

Speaker Change: And simply delivering I mean, even at $20 billion origination platform of 'twenty, two which had mid cap.

Speaker Change: It still has lots of room to grow mid cap is way to U S.

Speaker Change: Just building out their European business, adding products. They have the capacity to double that business Atlas has the capacity to double their business Alliance.

Speaker Change: More than double their business.

Speaker Change: We have to think we have to actually scale, what we have and execute.

Speaker Change: And we're doing it in a very supportive environment.

Speaker Change: Recall that we are the beneficiary of regulatory choice around the globe, where regulators have decided that they prefer more of the investment kept more of the debt capital markets to come from the investor marketplace than from the banking system.

Speaker Change: That does not mean, the banking system doesn't play a vital role or that it will shrink it simply means that credit growth, which typically follows GDP.

Mark Rowan: This is about growing the original. We are focused, and I don't think we need a 17th, although that may result, but that is not the goal. We are not short. It's now about focus and execution. Simply Deliver.

Speaker Change: I believe that much of that growth is going to occur in the investment marketplace. Some of that will incur in pure beta products investment grade bonds and high yield bonds that we are just not all that interested in but we're talking about a massively large market.

Mark Rowan: Even a $20 billion Origination Platform, or 22, which is a nitty-gritty number, still has lots of room to grow. Mid-cap is way too US, just building out their Europe, adding products. They have the capacity to... Atlas has the capacity. Lion. Lion. Lion. Lion. Lion, more than double.

Speaker Change: Where we are even at our size a small participant so I do the following math, Alex and it's helpful. We have a $500 billion private credit business today.

Speaker Change: Somewhere between 150 and $200 billion of that is beda.

Speaker Change: For us to double our credit business.

Speaker Change: We have to double 300 billion.

Mark Rowan: We have to think, we have to actually scale what we have, and we're doing it in a very supportive environment. Recall that we are the beneficiary of regulatory choice around the globe where regulators have decided that they prefer more of the debt capital and Markets to come from the Investor Market and from the bank. That does not mean the banking system doesn't play a vital role or that it will shrink. It simply means that credit growth, which typically follows GDP, I believe that much of that growth is going to occur in the investment marketplace. Some of that will occur in pure beta products, investment-grade bonds, and high-yield bonds that we are just not all that interested in. But we're talking about a massively large universe where we are, even at our size, a small part.

Speaker Change: I like our chances of doing that over the next five years.

Speaker Change: Does the beta comes for free.

Speaker Change: The only thing I'd add there is.

Speaker Change: Other 50% not coming for our platforms comes from the Apollo system.

Speaker Change: We've put enormous time and energy.

Speaker Change: Over the last 12 to 18 months are really driving the origination linking our various business units.

Speaker Change: To be able to drive the sourcing capabilities to provide more debt origination from all of the relationships we have across the variety of our businesses our equity businesses, our hybrid businesses, our infra businesses.

Speaker Change: We're seeing we're seeing that start to really come into effect. So we're only in the early innings of fully tapping that from an origination capability. So just a lot of momentum.

Mark Rowan: So I do the following math, Alex, and it's helpful. We have $500 billion in private credit. Somewhere between 150 and 200 billion of that.

Speaker Change: All around for from all the different sources of origination.

Speaker Change: Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.

Mark Rowan: For us to double our credit, we have to double it. I like our chances of doing that over as soon as the beta comes out. Now, the only thing I'd add there is, you know, the other 50% not coming from our platforms comes from the Apollo system. We've put enormous time and energy over the last 12, 18 months really driving the origination, linking our various business units to be able to drive the sourcing capabilities, to provide more debt origination from all the relationships we have across, you know, the variety of our businesses, our equity businesses, our hybrid businesses, our infra businesses. And we're seeing that start to really, you know, come into effect. So we're only in, you know, the early innings of fully tapping that from an origination capability. So there is just a lot of momentum all around from all the different sources of origination.

Patrick Davitt: Hey, good morning, everyone.

Patrick Davitt: My question is on the retirement services growth guide run rating at 88 billion in <unk>, but guiding to 71 billion for 2024. So is that disconnect. Some restriction from available capital or are you just being conservative in the growth could actually continue to track from that higher <unk> run rate. Thank you.

Patrick Davitt: I think youre hearing from us in a week or two on the fixed income call you will hear from Jim Boulardii.

Patrick Davitt: And if you look back in history. The team the team sitting in New York is a little more conservative than the team sitting out in Manhattan Beach.

Patrick Davitt: But I want to caution. This is not just about volume we can generate all the volume that we want and I'm going to and encourage you to really look into how people are generating volume.

Patrick Davitt: Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead. Hey, good morning, everyone.

Patrick Davitt: When you buy a secondary block of business you are buying something that's degraded from its surrender charge point of view.

Patrick Davitt: I'm not sure that's good business.

Mark Rowan: My question is on the retirement services growth guide, run rating at $80 billion in 4Q but guiding to $70 billion for 2024. So does that disconnect some restriction from available capital? Or are you just being conservative, and the growth could actually continue to track from that higher 4Q run rate? Thank you.

Patrick Davitt: I'm not sure I can invest against that I'm not sure I like the potential risk of that business.

Speaker Change: So we can do a victory lap by growing but that's not the growth I want we can also do a victory lap by growing three year market.

Speaker Change: That's gonna feel great this year and next year and the following year, but all I'm doing is setting up a cliff that is ultimately going to fall off and I may not like the three year micro market three years from now.

Mark Rowan: I think you'll hear from us in a week or two on the fixed income call. You'll hear from Jim Bilardi, and if you look back in history, the team sitting in New York is a little more conservative than the team sitting out in Manhattan. But I want to caution you, this is not just about... We can generate all the volume. And I'm going to encourage you to really look into how people are. When you buy a secondary block of business, you're buying something that's degraded from a surrender charge point of view. I'm not sure that it's good.

Speaker Change: We are focused on high grading the business that we do I would rather do $70 billion of.

Speaker Change: <unk> business that I really like that.

Speaker Change: Then 80 or $85 billion of business.

Speaker Change: And I think while it is while many of you are are learning this business.

Speaker Change: We've been living in this business for 15 years and the headlines are just not are not what they seem.

Speaker Change: And this gets also into the guidance on FRE.

Speaker Change: We had an unbelievable 2023, gimbal Rd and team <unk> and team.

Mark Rowan: I'm not sure I can invest in that. I'm not sure I like the potential risk of that. So we can do a victory lap by growing, but that's not the growth I want. We can also do a victory lap by growing the three-year market. That's going to feel great this year and next year and the following year, but all I'm doing is setting up a cliff that is ultimately going to fall off, and I may not like the three-year MIGA market. We are focused on high-grading the business. I would rather do $70 billion of business that I really like than $80 or $85 billion of business. And I think while it is, while many of you are learning this. We've been living in this business for 15 years, and the headlines are just not what they used to be, And this gets also into the guidance on SRE. We had an unbelievable. Jim Bilardi and his team, Grant Kvalhaman.

Speaker Change: I hope, they're listening they should be doing victory laps.

Speaker Change: We actually did what we say we do we were not a current period profit maximize we ended the year north of $12 billion of cash we ended the year with a sizable treasury portfolio, which we almost never have.

Speaker Change: And we essentially high graded the portfolio and built liquidity.

Speaker Change: Because we had.

Speaker Change: Already grown 25%.

Speaker Change: We have the opportunity should Apollo now the pressures on Apollo continue at the 30 plus billion run rate from origination to actually do what we want to do which is deploy into investment grade and yield private credit that locks in on a matched basis high.

Speaker Change: Hi spread.

Speaker Change: That will cushion a big chunk of what people would normally expect a falloff from rates. The other thing that happens in a rates up rates down in a rates up we tend to go we tend to get a full benefit of that.

Mark Rowan: I hope they're listening. They should be doing better. We actually did what we say we do. We were not a current period profit. We ended the year north of $12 billion. We ended the year with a sizable treasury portfolio, which we almost never have. And we essentially high-graded the portfolio and built, because we had already grown 25. We have the opportunity, should Apollo, now the pressure's on Apollo, continue at the 30-plus billion run rate of original... to actually do what we want to do, which is deploy into investment grade and yield private credit that locks in on a match. High spread.

Speaker Change: But recall that when rates are up everything that we own is worth less we lose flexibility in the portfolio.

Speaker Change: In our rates down.

Speaker Change: Everything that we own is in gain position.

Speaker Change: We have massive flexibility in the portfolio, we have the ability to rotate out of investment grade corporates.

Speaker Change: And into originated private investment grade.

Speaker Change: The pressure is not on gimbal already and grant the.

Speaker Change: The pressures on us we have to originate more of what they need and recall that they don't want to 100% of what we originate they want 25% of everything so for us to really scale their business.

Mark Rowan: That will cushion a big chunk of what people would normally expect to fall off from rates. The other thing that happens in an interest rate up, rates down, in an interest rate up, we tend to go, we tend to get a full benefit. But recall that when rates are up, everything that we own is worth less. We lose flexibility in the portfolio. You know, rates are down.

Speaker Change: And scale, our third party business comes back to origination we need to originate more.

Speaker Change: Thank you. The next question is coming from Michael Brown of <unk>. Please go ahead.

Michael Carrier: Okay, great. Thank you for taking my question.

Michael Carrier: So the mantra for 2024, no new toys.

Mark Rowan: Everything that we own is in gain. We have massive flexibility in the world. We have the ability to rotate out of investment-grade corporates and into originated private investment grades. The pressure is not on Jim Belardi and Graham.

Michael Carrier: How can we expect the capital allegation allocation to progress over the next two or three years and then specifically in 2020 for any way to maybe put some guide rails around how the share buybacks could be utilized this year.

Mark Rowan: The pressure is on us. We have to originate more of what they need and recall that they don't want 100% of what we originate. They want 25% of everything. So for us to really scale their business, and Scale Our Third Party Business, it comes back to origination. We need to

Michael Carrier: Michael.

Mark Rowan: It's Martin all of them, so I addressed some of this.

Mark Rowan: In my comments I think the the priorities in terms of allocation for us.

Michael Carrier: To grow ethane and the benefit of growing athene, including with the use.

Michael Carrier: Thank you. The next question is coming from Michael Brown of KBW. Please go ahead.

Mark Rowan: Aveda.

Speaker Change:

Speaker Change: Numerous in the earnings leverage from AR is really beneficial.

Speaker Change: And some of which we outlined at the at the origination day last October.

Martin Kelly: Okay, great. Thank you for taking my question. So the mantra for 2024, no new toys, how can we expect the capital allocation to progress over the next two or three years and then specifically in 2024? Any way to maybe put some guide rails around how the share buybacks could be utilized this year? Michael, it's Martin.

Mark Rowan: It also grows AAA right. So so so that's that has a compounding impact on on.

Speaker Change: On earnings.

Speaker Change: We want to where we are as I mentioned, we don't see a lot of scope to invest.

Speaker Change: In growing the business Inorganically.

Michael Carrier: So that should be modest and very and very targeted.

Martin Kelly: So I addressed some of this in my comments. I think the priorities in terms of allocation for us are to grow Athene, and the benefits of growing Athene, including with the use of ADEP, are numerous, and the earnings leverage from that is really beneficial, and some of which we outlined at the origination day last October. It also goes AAA.

Michael Carrier: We want to make sure that we're at least immunizing employee stock issuance and so that's that's built into the plans.

Martin Kelly: And then the ability to to immunize stock and reduce the share count on a real basis as independent on realizations really that's that's the that's the delta.

Martin Kelly: And so.

Martin Kelly: As as realizations pick up we'll have more flexibility to do that.

Martin Kelly: So that has a compounding impact on earnings. We want to, as I mentioned, we don't see a lot of scope to invest in growing the business inorganically, and so that should be modest and very sort of targeted. We want to make sure that we're at least immunizing employee stock issuance, and so that's built into the plan. And then the ability to immunize stock and reduce the share count on a real basis is independent of realizations. Really, that's the delta.

Speaker Change: And that really depends on what the markets are.

Mark Rowan: What receptivity there isn't the markets for exits, particularly in our private equity business. So that's that's how we sort of connected altogether.

Speaker Change: Whichever way you look at it the returns the marginal return on a dollar of capital whether you are buying back stock or whether you are investing in a thin are both attractive so they're both good choices.

Martin Kelly: As realizations pick up, we'll have more flexibility to do that, and that really depends on what the markets... You know, what receptivity there is in the markets for exits, particularly in our private equity. So that's how we sort of connect it all together. Whichever way you look at it, the returns, the marginal return on a dollar of capital, whether you're buying back stock or whether you're investing in a thing, are both attractive. So they're both good choices.

Martin Kelly: But that's that's how we that's how we try to balance it but I would think in terms of timeframe think of it as a three year plan, but but we need more sort of near term realizations to be lending into that so it's a more back ended in front of them.

Martin Kelly: Thank you. The next question is coming from Brennan Hawken of UBS. Please go ahead.

Speaker Change: Good morning, Thanks for taking my question Martin I'd like to maybe trying to square your comments around the cost of funds in the fourth quarter and some of the adjustments.

Brennan Hawkin: But that's how we try to balance it. But, in terms of time, I would think of it as a three-year plan, but we need more sort of near-term realizations to be leaning into that. So more back-end than front-end. Thank you. The next question is coming from Brennan Hawkin of UPS. Please go ahead. Good morning.

Brennan Hawkin: Flag to slide 12 is the the one piece.

Brennan Hawkin: It's not one of the notable items the impact of the new performance fee.

Brennan Hawkin: And.

Mark Rowan: Thanks for taking my question. Martin, I'd like to maybe try and square your comments around the cost of funds in the fourth quarter and some of the adjustments you flagged on slide 12, it is the one piece. That's not one of the notable items, the impact of the new performance fee, and given that performance fees are something I think you guys would be collecting on a regular basis, why is it that we should be adjusting that out? Can you please just maybe help us understand that impact a little bit better? So this is Mark. I'm going to give a conceptual overview, and then Martin will address the audience. If you look at history in our portrait... And this is not the history of one year, but you look over, say, where have the vast majority lost their way?

Brennan Hawkin: Given the performance fees or something I think you guys would be collecting.

Mark Rowan: On a regular basis why is it that we should be adjusting that out can you. Please just maybe help us understand that impact a little bit more so.

Mark Rowan: So this is mark I'm going to give a conceptual and then Martin will address the specifics if you look at history and our portfolio and this is not history of one year, but you look over 15 years and you say, we're having the vast majority of losses come from in the investment portfolio they've come from the.

Mark Rowan: Corporate E book, the thing that everyone thinks is safe.

Mark Rowan: And.

Speaker Change: If we are if you think of that as like most investors a lot of that is waived in based on rating and diversification and industry classifications.

Martin Kelly: Investment Portfolio. Corporate IG book, The Thing That Everyone Thinks, and If we're. If you think of that as like most investors, a lot of that is waived in based on rating and diversification and industry. That no longer suffices. The vaccine has decided that it makes more sense.... to Bonus, people who are managing portfolios for Net of Specific Losses and Net of Specific Impairments, which now include Corporate IG Bond. What we saw was 100% of the charge for the change took place in one quarter, as opposed to being spread over four quarters. Ultimately, the belief is, and the reason this was done, is that this, on a net basis, should be a positive for a theme, but in the quarter it was taken. We're just calling it out so you know exactly why.

Martin Kelly: That no longer suffices.

Martin Kelly: Athene has decided that it makes more sense.

Martin Kelly: Two bonus.

Martin Kelly: The people who are managing portfolios for them.

Martin Kelly: Net of specific losses, and net of specific impairments, which now include the.

Martin Kelly: Corporate bond book.

Mark Rowan: What we saw was it 100% of the charge for the change took place in one quarter.

Martin Kelly: As opposed to spread over four quarters ultimately.

Martin Kelly: And our belief is and the reason this was done is that on a net basis should be a positive for athene, but in the quarter. It was taken.

Martin Kelly: We're just calling it out so you know exactly why it was taken.

Martin Kelly: I think Mike I think.

Martin Kelly: I think I think I would only connect it back to originations. Right? So it's a tool to incentivize appropriate originations on a risk adjusted, after credit loss basis, and the math is pretty simple, the full charge of seven bibs was taken in one quarter, but think of it as an equivalent dollar amount, performance-dependent, taken over the course of the year, and if you adjust for that and the notables, Q3, and look at the change in sort of top line fixed income, income, and cost They're right on top of each other in a quarter of a quarter.

Martin Kelly: Yes.

Martin Kelly: I would only add I would also connected back to origination right. So it's a it's a tool to incentivize appropriate originations on a risk adjusted asset credit loss basis.

Martin Kelly: And the math is pretty simple, it's the full charge of seven bps was taken in one quarter, but think of it as an equivalent dollar amount.

Martin Kelly: Performance dependent taking over over the course of the year and if you adjust for that.

Martin Kelly: The notables from from Q3.

Martin Kelly: And look at the change in sort of top line fixed income income and cost of funds, they're right on top of each other on a quarter over quarter basis.

Ben Budish: Thank you. The next question is coming from Ben Budish of Barclays. Please go ahead.

Martin Kelly: Thank you. The next question is coming from Ben <unk> of Barclays. Please go ahead.

Scott Kleinman: Hi, good morning, and thanks for taking the question. I was wondering if you could give an update on ADIB specifically and then maybe speak a little bit more generally about sidecars. You identified them, I think, last year as one of your strategic priorities going forward, so maybe a little more color on how you expect that opportunity to evolve and what we should see this year. Thank you.

Ben Budish: Hi, good morning, and thanks for taking my question I was wondering if you could give an update on <unk>, specifically and then maybe speak a little bit more generally about sidecar as you identified I think last year was one of your kind of strategic priorities going forward. So maybe a little more color on how you expect that opportunity to evolve and what we should see this year. Thank you.

Scott Kleinman: Sure, so ADIPTU fundraising is going quite well. We expect to wrap it up this summer in the, you know, four to five billion dollar range. So providing Athene with the sidecar capital necessary for the next probably two years. So, you know, feeling really good about that. Part of what we're doing is just a big education campaign, right?

Speaker Change: Sure so aided to fund raising going going quite well, we expect to wrap it up wrap it up this summer in the four $4 billion to $5 billion range.

Scott Kleinman: So providing athene.

Scott Kleinman: Sidecar capital necessary for the next probably two years or so.

Scott Kleinman: Feeling really good about that.

Scott Kleinman: Part of what we're doing is just a big education campaign right. This is not necessarily an intuitive product to investors.

Mark Rowan: This is not necessarily an intuitive product to investors, but once folks start to understand it, it's a pretty exciting product. The color I would give this, and this is as you evaluate entry into this. The reason we are successful raising sidecars, and people buy into the business pro rata and actually pay both Athene and Apollo fees for the privilege of doing retirement. The reason this works.

Mark Rowan: But once folks start to understand it's a pretty.

Mark Rowan: It's a pretty exciting product.

Mark Rowan: Colorado given this and this is as you evaluate.

Mark Rowan: Entering into this business.

Mark Rowan: The reason, we are successful raising side cars and people buy into the business pro rata with Athene and actually pay both athene and Apollo fees for the privilege of doing retirement services business.

Mark Rowan: The reason this works is.

Mark Rowan: They, the investors, have seen us stick to a mantra of high cash on... The ability to produce north of 15% cash on cash returns growth in book value over that period of time, and to step away from the market and step away from kinds of transactions that would give us growth but are not fundamentally good transactions is why we're trusting. People will discover very quickly that this business, done poorly, is very capital intensive. This business, done well, is great. So I just step back to the big economics. It costs roughly $0.08 of capital for every dollar of growth.

Mark Rowan: They the investors have seen us over a very long period of time.

Mark Rowan: Stick to our mantra of high cash on cash returns.

Mark Rowan: The ability to produce north of 15% cash on cash returns growth in book value.

Mark Rowan: Over that period of time and to step away from the market and to step away from kinds of transactions that while would give us growth, but are not fundamentally good transactions.

Mark Rowan: Why we're trusted with this capital.

Mark Rowan: People will discover very quickly.

Mark Rowan: This business.

Mark Rowan: Done poorly is very capital intensive this.

Mark Rowan: This business done well.

Mark Rowan: He is a great business. So I just step back to the big economics. It costs roughly eight tenths of capital for every dollar of growth. If you fund all eight cents yourself you can do the math as to how big you get and how much capital you need roughly two thirds of that <unk> is funded by third parties.

Mark Rowan: You can do the math as to how big you get and how much capital you get; roughly two-thirds of that age is funded by third parties, who pay us a fee for the privilege. It offers excess return per unit of risk, and they are aligned with us, and they know that we will be good stewards of their time. The firms that do not produce high rates of return and do not make funding will not be trusted with sidecar. That will be the.

Mark Rowan: Who for pay us a fee for the privilege of funding.

Mark Rowan: Because it offers excess return per unit of risk and they are aligned with us and they know that we will be good stewards of their capital.

Mark Rowan: It firms do not produce high rates of return and did not make finally, good strategic choices.

Mark Rowan: We will not be trusted with side cars.

Mark Rowan: And that will be the difference between success and failure.

Michael J. Cyprys: Thank you. The next question is coming from Michael Cyprys of Morgan Stanley. Please go ahead. Hi, good morning.

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

Mark Rowan: Thanks for taking the question. I wanted to ask more broadly about the retail annuities market with aging demographics and the need for income. I was hoping you could speak to the market growth that you expect from annuities over the next five to 10 years. And what sort of enhancements might you be able to make to the product set and overall customer experience to perhaps unlock some additional growth and expand the customer base? So the product set for a new one is if you look over a long period of time, has not evolved.

Michael J. Cyprys: Hi, good morning, Thanks for taking the question I wanted to ask more broadly on the retail annuities market with aging demographics and the need for income I was hoping you could speak to the market growth that you expect from annuities over the next five to 10 years, and what sort of enhancements might you be able to make the product set and overall customer experience to perhaps unlock some additional growth and expanding.

Mark Rowan: The customer side.

Mark Rowan: So the product set for annuities, if you look over a long period of time has not evolved all that much.

Mark Rowan: We entered the market, for real, a decade ago, and the changes that we made to the product. In the context of our industry, they were very substantial, but in the context of financial services, not all. We stripped down many of the unused... Sliders, and we added them to Race, simplified the product, and simplified the administration of the product.

Mark Rowan: We entered the market.

Mark Rowan: Real a decade ago.

Mark Rowan: And the changes that we made to the product in the context of our industry, we're very substantial but in the context of financial services not all that substantial we stripped down many of the unused.

Mark Rowan: Spiders.

Mark Rowan: And we added it to rate.

Mark Rowan: And simplified the product and simplified the administration of the product and it turns out consumers prefer more to less.

Mark Rowan: It turns out that consumers prefer more. That has allowed us, along with Capital and Good Asset Availability, to move from a new entrant to the market to the largest ever year of annuity sales. 3. I think we will continue to see modest changes around the traditional product, custom in, because the product, as you know, is not as straightforward. You get a set rate. You actually get a percentage of a market's index performance subject to a floor, and investors like that mix of upside.

Mark Rowan: That has allowed us along with capital.

Mark Rowan: And good asset availability to move from a new entrant to the market to the largest ever year of annuity sales in 2023, and our leading market position.

Mark Rowan: I think we will continue to see modest changes around the traditional product in terms of custom indices and because the product as you know is not a straightforward you get a set rate you actually get a percentage of our markets index performance subject to a floor.

Mark Rowan: And investors like that mix of upside and downside.

Mark Rowan: The holy grail of this, in my opinion, is both simplification and a much simpler promise of guaranteed life, currently an annuity, has firms taking one, statute, when you move to Guaranteed Lifetime, taking both investment risk and long-term. We have elected to date not to take substantial amounts of either our portfolio or our risk. But like any market, there is the opportunity to work with others who are on the other side of the launch to hedge out that. Right now, the cost of hedging that out would not allow for the distribution of a product that neutralized longevity in a commercial sale but in a fiduciary. One that is not through a channel that is commission payable, one could, in fact, offer guaranteed lifetime income and have the cost of a longevity hedge borne by... I think you will see a number of firms in our industry trial that this year.

Mark Rowan: The Holy Grail of this business in my opinion is both simplification.

Mark Rowan: And a much simpler promise of guaranteed lifetime income.

Mark Rowan: Currently an annuity.

Mark Rowan: As firms, taking one significant risk that's investment risk.

Mark Rowan: When you move to guaranteed lifetime income.

Mark Rowan: You were taking both investment risk and longevity risk.

Mark Rowan: We have elected to date not to take substantial amounts of longevity risk in our portfolio, but like any marketplace.

Mark Rowan: There is the opportunity.

Mark Rowan: To work with market participants who are on the other side of the longevity bet.

Mark Rowan: To hedge out that risk.

Mark Rowan: Right now the cost of hedging that out would not allow for the distribution of our product that neutralized longevity risk.

Mark Rowan: Commercial commercial sale, but in a fiduciary sale one if that is not through a channel that is commission payable one could in fact offer guaranteed lifetime income and half the cost of a longevity hedge borne by commission.

Mark Rowan: I think you will see a number of firms in our industry trial that this year.

Mark Rowan: I think if we as an industry are successful in doing so, we will have a different market that is potentially very large, long-term, but leaves us as an industry participant focused on the risk we want to take, which is investing, rather than. The other is, we think of this mostly in the U.S. You're up, I believe, is going to step back and evaluate how they have focused on. There's been a 40% drop in the availability of guarantees across Europe, primarily linked to regulatory.

Mark Rowan: I think if we as an industry are successful in doing that I think we will open a different market.

Mark Rowan: And in a market that is potentially very large and very attractive that provides long term capital.

Mark Rowan: But leaves us as an industry participant focused on the risk we want to take.

Mark Rowan: Which is investment risk rather than being in the longevity risk business.

Mark Rowan: The other is we think of this mostly in the U S context.

Mark Rowan: Europe I believe is going to step back and evaluate how they have focused on this industry, there's been a 40% drop in the availability of guaranteed income.

Mark Rowan: In European markets, primarily linked toward regulatory change this.

Mark Rowan: This problem is also in Australia, the most successful retirement market in the world in terms of superannuation. We spend a lot of time thinking about accumulation, but very little time thinking about decay. If you're interested, there's a Treasury paper that's out talking about that in Hong Kong. This is Elsewhere in the World. So the ability to take what we've done in the and adjust for the local flavor and local is one significant growth area; growth in indices and custom indices is another area.

Mark Rowan: This problem is also in Australia. The most successful retirement market in the world in terms of superannuation, they've spent a lot of time thinking about accumulation, but very little time thinking about the accumulation.

Mark Rowan: If you're interested in there's a treasury paper that's out talking about this.

Mark Rowan: This is in Hong Kong. This is elsewhere in the world. So the ability to take what we've done in the U S and adjust for the local flavor and local regulation.

Mark Rowan: Is one significant growth area growth in indices in the custom indices another area and finally really cracking the code on guaranteed lifetime income, which is in its very early days is a is a further potential growth area.

Mark Rowan: And finally, really. Cracking the Code on Guaranteed Lifetime Income, which is in its very early days, is a further, Thank you. The next question is coming from Phineas O'Shea of Wells Fargo Securities. Please go ahead. Actually, my apologies. It looks like we have reached our allotted time for questions. I'll turn it back to Mr. Noah Gunn for closing comments.

Phineas O'Shea: Thank you. The next question is coming from Finian O'shea of Wells Fargo Securities. Please go ahead.

Mark Rowan: Actually I apologize it looks like we have.

Noah Gunn: <unk> reached our allotted time for questions I'll turn it back to Mr. <unk> for closing comments.

Noah Gunn: Great. Thanks for your help this morning, Donna, and thanks to everyone for your interest in time this morning. If you have any questions or clarifications about anything discussed on today's call or our results, please feel free to reach out to us, and we look forward to speaking with you again next quarter. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines at this time and enjoy the rest of your day.

Noah Gunn: Great. Thanks for your help this morning, Donna and thanks to everyone for your interest and time. This morning, if you have any questions or clarifications.

Noah Gunn: About anything discussed on today's call. Our results. Please feel free to reach out to us and we look forward to speaking with you again next quarter.

Noah Gunn: Okay.

Noah Gunn: Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines at this time and enjoy the rest of your day.

Noah Gunn: Yeah.

Operator: I'm just trying to tell you how it felt. My body was a boat. Could you see that sailor? Make it feel like it's a 1960s Hollywood trailer. Classic like cars, classic like Elizabeth Taylor.

Noah Gunn: [music].

Operator: Could you torment me? I need a giver, not a taker. I could love you if I really wanted to. You could be, be my glass of wine. I'm steady, let me exhale, I'm in ecstasy. But baby, but baby, but baby, would you? Would you make it all right?

Operator: Because I look at the 19 sixties Hollywood today live.

Operator: I think like call it like a discipline.

Operator: Two women.

Operator: Yes.

Operator: Sure.

Operator: [music] okay.

Speaker Change: Thank you.

Operator: Sure.

Speaker Change: All right.