Athene Holding Ltd has reported net income available to AHL common shareholders for the second quarter of $1.382 billion, or $6.97 per diluted Class A common share, compared to $824 million, or $4.19 per diluted share for the second quarter 2020.

The Bermuda-based financial services company specialising in retirement solutions, said the increase from the prior year quarter was driven by higher adjusted operating income and a favourable change in the net fair value of fixed indexed annuity derivatives, partially offset by an unfavourable change in fair value of reinsurance assets driven by less favourable credit spread tightening compared to the prior year.

Adjusted operating income available to common shareholders for the second quarter was $1 billion, or $5.04 per adjusted operating common share, compared to $490 million, or $2.49 per adjusted operating common share for the second quarter a year ago. The increase from the prior year quarter was primarily driven by higher income from alternative investments, the company said.

Adjusted operating income available to common shareholders excluding notables and AOG for the second quarter was $572 million, or $2.88 per adjusted operating common share, compared to $98 million, or 50 cents per adjusted operating common share for the second quarter 2020. The increase from the prior year quarter was primarily driven by the aforementioned strength of income from alternative investments and strong growth in net invested assets.

In the second quarter, Athene said it generated gross organic inflows of $7.6 billion, its third highest quarter of organic inflows, representing an increase of nine per cent year-over-year.

The company said strong organic inflows reflected the advantage of Athene's diversified funding channels, with particular strength on the institutional side of the business in funding agreements and pension risk transfer.

Organic inflows for second quarter were underwritten in excess of target returns despite the low interest rate environment, reflecting Athene's ability to originate new business with low funding costs and generate alpha within its investment portfolio, it said.

Athene said it generated retail inflows of $1.7 billion, a decrease of two per cent year-over-year despite increasing competition for traditional fixed annuity/MYGA business. Second quarter inflows saw continued momentum from fixed indexed annuity sales from 1Q'21, the company said.

In the second quarter, Athene said it generated flow reinsurance inflows of $279 million, reflecting the current competitive market environment issuing traditional fixed annuities at target returns. This represents a decrease of 88 per cent year-over-year, from the near-record quarterly inflows in the prior year quarter amid the onset of unusual pandemic-driven market dynamics.

Athene said it completed two pension risk transfer transactions totaling $1.5 billion, representing a six fold increase from the prior year quarter and continuing a strong pace of year-to-date activity. Subsequent to June 30, Athene has closed two additional transactions totalling $5.9 billion.

The company said it generated $4.1 billion of funding agreement activity in the second quarter, the strongest quarterly inflow result for this channel to date, representing a 55 per cent increase year-over-year and 26 per cent increase quarter-over-quarter. The strong issuance activity was driven by seven transactions across three different currencies, including an inaugural SOFR-linked issuance.

Athene said it generated net organic inflows of $2 billion in the second quarter. This was driven by the gross organic inflows of $7.6 billion, less $1.7 billion of inflows attributable to third party investors in Athene Co-Invest Reinsurance Affiliate related to PRT and funding agreement activity, as well as net outflows of $3.9 billion, which were slightly elevated due to larger blocks of business lapsing upon reaching their five-year anniversary during the quarter.

The company's net annualised organic growth rate for the second quarter was five per cent versus 11 per cent in the prior year quarter.

Jim Belardi, chief executive officer of Athene, said: "In the second quarter, we once again demonstrated excellent management of both sides of the balance sheet, with strong organic growth, asset outperformance, and a significant gain on our investment in Apollo combining to drive a second consecutive quarter of record adjusted operating income. This is a truly impressive outcome, which resulted in a 32 per cent year-over-year increase in our adjusted book value per share."

He added: "As we draw closer to the completion of our merger with Apollo, which remains on track for January, I am more confident than ever that Athene's best days are ahead. It is increasingly apparent that our track record of consistent excellence over the past 12 years is compounding to drive significant momentum at scale, and I believe that this will accelerate upon fully aligning our business through the merger."