Fitch Ratings has assigned insurer financial strength (IFS) ratings of 'A+' to Athene Holdings’ (Athene) recently formed captives Athene Co-Invest Reinsurance Affiliate 2A and Athene Co-Invest Reinsurance Affiliate 2B. The two captives are collectively named ACRA 2.
The rating outlook is stable.
Fitch considered ACRA 2 to be a core captive of insurance company Athene Holdings. This is driven by Athene’s strong willingness and ability to support the entities. Fitch has assigned the IFS rating of Athene's insurance operating subsidiaries to ACRA 2.
ACRA 2 will derive 100 per cent of its business from Athene through reinsurance from its existing operating subsidiaries, including Athene Life Re.
50 per cent of the economic interest is owned by third-party investors through non-voting shares held by the Apollo/Athene Dedicated Investment Program II (ADIP II). Fitch expects that Athene will eventually sell additional economic interest to ADIP II such that its ownership is approximately 33 to 37 per cent.
Fitch says: “Athene's ability to voluntarily recapture business ceded to ACRA 2, should ACRA 2's capital fall below certain defined thresholds, [is] critical to its ability to provide support. This support mechanism does not require approval of ADIP II if defined capital conditions are met. Under [the rating’s] criteria, the ability to provide support decreases if it is contingent on approvals of minority capital contributors.”
