{"id":33452,"date":"2025-07-10T06:06:37","date_gmt":"2025-07-10T06:06:37","guid":{"rendered":"https:\/\/financialrush.com\/?p=33452"},"modified":"2025-07-10T06:06:37","modified_gmt":"2025-07-10T06:06:37","slug":"the-apollo-backed-insurer-on-a-european-expansion-drive","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=33452","title":{"rendered":"The Apollo-backed insurer on a European expansion drive"},"content":{"rendered":"

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Apollo has used its in-house insurer Athene to remake US private capital, using billions of dollars from retirees to feed its asset management machine. But now it is another Apollo-backed insurer, Athora, that is on the march in Europe, with a \u00a35.7bn acquisition that heralds the private equity giant\u2019s arrival into the continent\u2019s largest retirement market.<\/p>\n

The biggest UK deal of the year so far relates to the obscure but lucrative insurance<\/a> niche of pension risk transfers or bulk annuities. Over the next decade, British companies are expected to offload about \u00a3500bn of retirement obligations and the assets backing them to insurers via pension risk transfer agreements as they wind down defined benefit pension schemes. <\/p>\n

The business has boomed as higher interest rates closed schemes\u2019 deficits, making sales to insurers more attractive and spawning a market dominated in the UK by Goldman Sachs\u2019 former unit Rothesay, London-listed insurer Legal & General, and the Pension Insurance Corporation (PIC), which Athora agreed to buy last week<\/a>. <\/p>\n

Buying PIC will hand Athora a fifth of the UK bulk annuity market in one fell swoop, a route that Apollo\u2019s US private capital rivals KKR and Carlyle had each explored before Athora struck its deal. <\/p>\n

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Apollo has used its in-house insurer Athene to remake US private capital<\/span> \u00a9 Kristoffer Tripplaar\/Alamy <\/span><\/figcaption><\/figure>\n

\u201cApollo\u2019s arrival in the UK shows retirement groups and the assets backing them will stay private for longer, if not forever,\u201d Abid Hussain of Panmure Liberum said. The Athora acquisition of PIC follows a move by Canadian private capital firm Brookfield last year to cash in on the bonanza by building its own bulk annuities business Blumont from scratch. <\/p>\n

\u201cUK insurers are struggling to keep pace with the sophistication of US private capital firms,\u201d Hussain said. <\/p>\n

But the PIC acquisition also speaks to how Apollo<\/a> is having to adapt the strategy that has tripled its share price over the past five years, uniting private capital and retirement services under one roof, to overcome European resistance to the industry. <\/p>\n

\u201cOriginally, when Apollo divided up the world, the UK was Athene\u2019s jurisdiction, not Athora\u2019s,\u201d one insurance analyst said. But Apollo appeared to have redrawn the map after concluding that Athora\u2019s \u201cnatural hunting ground [of continental Europe] is closed to them\u201d.<\/p>\n

Apollo chief executive Marc Rowan pioneered a widely imitated<\/a> model of managing life insurance assets for \u201cspread\u201d earnings \u2014 buying liabilities at a discount and investing them in higher-yielding assets such as private credit. <\/p>\n

The model gives Apollo a large base of \u201cpermanent capital\u201d that constantly refreshes with new annuities sold \u2014 in contrast with its traditional private equity funds, which require new fundraising every few years.<\/p>\n

But rather than using Athene to enter the UK market as previously appeared to be Apollo\u2019s plan, the private capital firm is making its debut in the UK bulk annuity market through an entity in which it only has a minority ownership stake. <\/p>\n

Insurers\u2019 links to private capital giants have come under scrutiny on both sides of the Atlantic from regulators and retirees concerned that they may be taking on too much investment risk.<\/p>\n

\"The<\/picture>
\u2018UK insurers are struggling to keep pace with the sophistication of US private capital firms,\u2019 said Abid Hussain of Panmure Liberum <\/span> \u00a9 Charlie Bibby\/FT<\/span><\/figcaption><\/figure>\n

The opposition stems from financial difficulties with private equity-backed insurers, not least problems at 777 Partners last year and the collapse in 2023 of Italian life insurer Eurovita. <\/p>\n

After rising interest rates prompted policyholders to surrender savings contracts early, Eurovita\u2019s UK-based owner Cinven stumped up less than half of the capital regulators asked it to inject into the business.\u00a0People familiar with the matter said Athora later sought to acquire German life insurer Viridium, but the group was ultimately sold to a consortium that included Allianz.<\/p>\n

\u201cThe most common question I get is: \u2018Do you have private equity fund capital?\u2019 We have none,\u201d said Athora chief executive Mike Wells, who previously served as chief executive of London-listed insurer Prudential.<\/p>\n

Wells draws a distinction between Apollo\u2019s private capital funds and its retirement services businesses, which it owns outright. The difference in ownership structure meant there was \u201cno expectation\u201d Athora would exit the PIC investment in less than five years or be pushed to liquidate, Wells told the Financial Times. <\/p>\n

While Athora was backed by \u201ca firm that has private equity expertise\u201d, Wells said, \u201cthere\u2019s none of the sorts of pressures that a PE-backed insurer would have\u201d.<\/p>\n

Athora was originally a Bermuda-based holding company for Athene\u2019s European operations, carved out of the larger US insurer in 2018. Apollo co-founder Leon Black pitched it as \u201cAthene-like, but it\u2019s European\u201d: a \u201cpermanent capital\u201d vehicle to support the group\u2019s less liquid lending.<\/p>\n

Since then, however, the models have diverged. Apollo brought Athene, which it created in 2009 but maintained as an affiliate, in-house in 2021 through an $11bn all-share deal. At Athora, Apollo has kept its distance. It and Athene have retained a combined 25 per cent stake and just shy of half the seats on the board. A subsidiary of the Abu Dhabi Investment Authority, a frequent co-investor with Apollo, holds 19 per cent of Athora\u2019s shares.<\/p>\n

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Apollo has said private capital firms have been the main force behind recapitalising the struggling life insurance sector in the past decade, and Athora itself has raised \u20ac6.75bn in equity capital from an investor mix, including sovereign wealth funds and pensions. It has bought life insurance \u201cblocks\u201d from blue-chip European insurers such as Generali, and now runs the largest pension risk transfer business in the Netherlands.<\/p>\n

But acquisitions in Europe have proved \u201cpolitically very difficult\u201d, Rowan told investors last October. Rowan said the continent\u2019s market for retirement products offering guaranteed income had \u201cvirtually shut down,\u201d as some jurisdictions had been \u201chostile to private markets\u201d.<\/p>\n

Athora struggled to make big acquisitions in Europe despite the fact that Apollo had made an effort to \u201clook and act like an insurance company\u201d, the insurance analyst said. Buying PIC could signal a shift in approach.<\/p>\n

Using Athora to buy PIC rather than Athene means the US private capital group will forgo the full insurance spread it retains through deals with Athene. Instead, it would collect a fee for managing some \u2014 though not all \u2014 of PIC\u2019s assets, Wells said. Apollo currently manages about a third of Athora\u2019s assets.<\/p>\n

Whether or not the PIC acquisition ends up being a good deal for Athora may ultimately depend on how much risk it is able to shift offshore through so-called funded reinsurance. UK regulators are more open to the strategy than European ones, but the practice is under scrutiny by the country\u2019s Prudential Regulation Authority.<\/p>\n

In the US, meanwhile, Athene\u2019s pension risk transfer dealmaking has been on ice since companies that sold it their pensions were hit with lawsuits from trustees concerned about investment risks. None of the lawsuits have yet succeeded. <\/p>\n

Apollo executives have argued that European regulators will have to soften their opposition to private capital groups\u2019 retirement product roll-ups sooner or later, since the continent\u2019s ageing population needs access to the private investments it specialises in. Life insurance and retirement products have long-term liabilities, which can pair well with illiquid loans that take years to pay back. <\/p>\n

The challenge will be for the two Americans \u2014 Wells and Todd Solash \u2014 tasked with leading Athora\u2019s charge to prove they can squeeze more value from the UK\u2019s life insurance market than its previous private equity owners, in a market that is already highly competitive. <\/p>\n