The Signal Insight
When Grant Kvalheim stepped up to succeed Jim Belardi as Athene’s CEO this week, he took the reins of an insurance industry phenomenon. The retirement annuities business Belardi co-founded in 2009 has grown to become the largest seller of fixed annuities in the US, with more than 12% of the market.
Its growth has been powered by the asset origination prowess of Apollo Global Management, the private equity group led by Marc Rowan, which took full control of Athene in 2022. Pension plans that transferred their obligations to insurance companies like Athene have been targeted by class action attorneys, who allege that the latter’s private equity ownership carries risks.
But Kvalheim, who previously led Athene US operations and growth initiatives, still sees “significant growth” ahead for each of its business lines — even in pension risk transfers. He’s told investors his 2,000-person firm expects to increase its assets from $380 billion to about $600 billion by 2029.
He jokes that when he and Belardi came up with Athene’s “Driven to Do More” slogan, they considered an alternative: “Athene: We’re in a Hurry, OK?”
This interview has been condensed and edited for clarity.
In this article:
The View From Grant Kvalheim
Andrew Edgecliffe-Johnson: How has Athene managed to build such a large business so fast?
Grant Kvalheim: It’s a combination of a clear vision and the power of being aligned with Apollo, right from the start. It seems very obvious now, but it wasn’t at the time to anybody else, that if you are a retirement services company and you have long-dated, illiquid liabilities, you should have long-dated, illiquid assets and earn that premium. Because it’s not a bank. There’s never going to be a run on the bank. You can capture illiquidity premium. You can capture structuring premium if you have the expertise on the structured security side. And by having that extra margin on the asset side, you can have better products for the consumer. You can put some of that into the consumer, and you put some of it into profit.
[Marc Rowan also said,] “You guys should have a very conservative balance sheet, tons of excess capital, tons of liquidity, because … when markets dislocate, if you don’t have liquidity, you’ll be a forced seller. But if you have excess capital and excess liquidity, you can buy cheap assets and lock in excess profits for the next 10 years.”
You talk about Athene’s differentiation being driven by Apollo’s asset origination capabilities. To what extent is your job as CEO driven by what Marc Rowan needs?
No mistake, I work for Marc Rowan. I also report to Jim Belardi. Apollo owns us, and that’s a beautiful thing.
If we had been affiliated with a different asset manager, we would have done OK, but there’s no way we would have gotten as far as we have without Apollo. Apollo brings unique skills to the table. What Marc and Apollo saw early on was that asset origination was going to be a differentiator. Building the platforms we have, [other] people can do that, but we’ve got a decade head start.
Looking at these markets, is it a moment where you’re building firepower, waiting for dislocation? Or do you think you’re some way away from the next great opportunity?
We loved the dislocation after [President Donald Trump’s] declaration of “Liberation Day.” And for a brief [period] we played that — I think we invested close to $15 billion in that month alone as spreads were blowing out. Unfortunately, from our perspective, it didn’t last long enough, but that is an excellent example of what we mean by being poised to take advantage of market dislocations.
There’s a lot of wild stuff going on in the world. I mean, I don’t think anybody had “Israel-Iran war” on their scorecard [a few] weeks ago. And yet, markets are pretty benign. Spreads are tight. There is certainly the potential for dislocation. But I think right at the current moment, what we’re feeling is everything’s uncomfortably tight. There’s nothing that you would say is cheap from an asset perspective. And some of the asset types that we used to like to buy, we’ve stopped buying because we’ve just said, at these levels, they don’t make sense.
What do you look for when you’re hiring, particularly for senior leadership positions?
Athene is known for always pushing hard, trying to do more, trying to do better. And I think one of the challenges is, as you succeed, maintaining that same passion for continuing to excel and exceed.
We look for people with talent and experience, but importantly, we want people that fit in our culture. I’ve worked at organizations where you make a decision and people aren’t wholehearted about executing it. And then if it doesn’t work out, you’re never quite clear if it didn’t work out because people didn’t really go for it. And what I love about Athene is the senior team respects each other. We trust each other, and I think the success of any organization, fundamentally, is premised on trust. And when we go off and do something, we make relatively quick decisions. Not hasty — we gather the information, we sit down, we decide, and we execute. We don’t look back. Nobody comes around a week later and says, ‘Hey, can we talk about that again?’ That’s just not in the culture. We decide, we get on with it.
Notable
- Apollo, Blackstone, and KKR long followed similar financial models. Now they’re creating very different structures that could determine how they fare in tumultuous markets, the Financial Times reports.
- Lawsuits largely evaporated Athene’s pension-risk transfer business last year. But a boom in funding-agreement notes more than filled the gap, The Wall Street Journal reports.