Apollo executives attributed the year-over-year growth primarily to $81 billion in gross inflows from its asset management business and $71 billion in gross inflows from its retirement services business — Apollo’s $331 billion Athene Holdings insurance company — as well as mark-to-market appreciation. Both were offset by $59 billion in outflows from “normal course activity” at Athene and $23 billion in realizations, Apollo reported.
Apollo’s asset management business is already offering two collective investment trusts designed for defined contribution plans and that is without legislative changes, Rowan said.
“(We) continue to believe that target-based funds, managed accounts and other forms of retirement solutions will offer a robust future in the absence of legislative change,” Rowan said. “And with legislative change, this could be one of the true drivers of our industry, not just our business going forward.”
Everywhere in the world where private market assets were “added to retirement solutions the results are not just a little bit better, they're 50% to 100% better,” he said. “I believe we are at the very, very beginning, approaching a $12 trillion market, admittedly in the current environment, with some handcuffs on.”
He said the entire industry is focused on redefining fiduciary duty in relation to giving participants advice.
“Simply being told as a trustee that your job is to produce the best net returns, not the lowest fee, I believe would go a very, very long way to solving this in a way that would be overwhelmingly positive for our business,” Rowan said.
He said another area in which Apollo executives expect “substantial change” is the regulatory apparatus around retirement and insurance.
Apollo reported that nearly 60% of its $751 billion in AUM as of Dec. 31 was from perpetual capital, most of which is Athene but also includes $52 billion European insurance company Athora and $63 billion in AUM in other vehicles that include its business development companies. Apollo had $447 billion in total perpetual capital as of Dec. 31.
Athene’s AUM is up 19% from Sept. 30 and up 40% from Dec. 31, 2023.
“If you work in a department of Treasury called the FIO (Federal Insurance Office), you probably are looking over your shoulder,” Rowan said.
There were about eight lawsuits by retirees in 2024 against companies that have completed pension buyout transactions with Athene Holdings and/or its subsidiaries, alleging a violation of fiduciary duties by the companies. Neither Apollo nor Athene was named as a defendant in any of the lawsuits.
Created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the FIO has responsibility for monitoring the insurance industry for gaps in regulation that could contribute to a systemic crisis in the insurance industry or the U.S. financial system and the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income people have access to affordable non-health insurance products, according to the FIO’s website.
“We have allowed the European system to crowd out the U.S. system because we have not protected it,” Rowan said. “We have not been playing Team America in capital markets. And America first also applies to its capital formation tools.”
Rowan also warned about being “asleep at the regulatory switch with $150 billion of reserve” moving offshore to the Cayman Islands, which has “a fraction of the capital of the U.S. or the Bermuda system, putting the system at risk.”
In its annual report on the insurance industry, the FIO said the increasing shift of reinsurance business to Bermuda, Barbados, the Cayman Islands and other jurisdictions in recent years “may be heightening credit risk for the life sector, as growing amounts of U.S. life insurance liabilities are supported by offshore capital.” The FIO added that these reinsurance deals are part of some life insurers' efforts to derisk their balance sheets.
“I believe the FIO will be under tremendous pressure,” Rowan said. “I also believe the state-based regulatory system, which we believe in ... they have a choice of evolving to address this issue in Cayman or risk someone stepping in and usurping their authority.”
Rowan added that this is a “hot-button issue” in his industry and in Washington, and “is just common sense."
“But in general, incredibly enthusiastic about what is happening on the regulatory front,” Rowan said.
Apollo’s GAAP net income was $4.5 billion for the fourth quarter, compared with $787 million for the third quarter and $2.7 billion for the year-earlier quarter.
