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Portfolio > Alternative Investments > Private Equity

CEO says private equity ‘mixed bag’ for insurance

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(Bloomberg) — Athene Holding Ltd., the insurer tied to Apollo Global Management LLC, said it’s sensitive to the risks of private-equity firms buying insurers and that the trend could be a “mixed bag” for an industry with decades-long obligations to policyholders.

“I share those concerns,” Athene Chief Executive Officer Jim Belardi said Wednesday at a conference in New York held by Standard & Poor’s. “But I think prudent equity capital, that’s in it for the long term and pays attention to risk management — from whatever source — I think it’s a very good thing, and we’re a big proponent of that.”

Belardi is seeking to assure regulators and investors of Athene’s prospects as he prepares the insurer for an eventual public offering. New York Department of Financial Services Superintendent Benjamin Lawsky in 2013 required Athene to implement heightened capital standards at the Aviva Plc business that it was buying.

“The risk we’re concerned about at DFS is whether these private-equity firms are more short-term focused, when this is a business that’s all about the long haul,” Lawsky said in a speech that year. “Their focus is on maximizing their immediate financial returns, rather than ensuring that promised retirement benefits are there at the end of the day for policyholders.”

Belardi said that private-equity firms could help bolster insurers’ finances at times when other investors are unwilling to take the risks. Athene and Guggenheim Partners LLC were among firms that bet on the life-and-annuity industry in recent years as some of the more established insurers retreated after being burned in the financial crisis.

Athene’s largest shareholder is AP Alternative Assets LP, a publicly traded vehicle which was established by Leon Black’s New York-based Apollo Global Management, a private-equity firm. Belardi described Athene’s backers as a source of permanent capital.

“There’s no fuse on the capital,” he said. “Both Apollo and Athene are in this space for the long term.”


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