According to Financial Times News, Apollo Global just posted $1.7 billion in overall profits with its Athene insurance unit generating $871 million in spread profits—the highest quarterly figure in two years. The investment group originated a massive $75 billion in new loans last quarter alone, bringing their 12-month lending total to $273 billion. These better-than-expected results come despite investor fears about falling interest rates hurting their private credit business. And get this—they’ve now hedged $9 billion of interest rate exposure to protect against further yield declines.
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The insurance bet that changed everything
Here’s the thing about Apollo—they’re not just your typical private equity firm anymore. CEO Marc Rowan’s decision to merge with Athene, the insurer he actually created back in 2009, transformed their entire business model. Basically, they’re using “sleepy” annuity money from insurance policies to fund “higher octane” private loans. It’s a brilliant move when you think about it—they get this massive, stable pool of capital that doesn’t come with the same redemption risks as traditional fund investors.
But there’s a catch. This strategy means about half their earnings now come from spread income rather than management fees. And when rates started falling, investors got nervous. The stock’s down 25% this year, lagging rivals like Blackstone that don’t own insurers. They even had to lower their spread earnings growth forecast from 10% to just 5% this year. Ouch.
When in doubt, lend more
So how did they still crush expectations? Volume. Pure, massive, overwhelming volume. While the profitability on each loan might be lower, they’re originating so much new debt that it more than makes up for the margin compression. $75 billion in one quarter? That’s insane growth—40% higher than their pace just a year ago.
They’re lending to everyone from Intel to EDF, and they’re actually competing with banks like Citigroup in corporate lending volumes. Think about that for a second—a private equity firm is becoming one of the world’s largest lenders outside the banking system. That’s the real story here. They’re building a financial intermediary powerhouse that operates with way less regulation than traditional banks.
Redefining what a private equity firm can be
Look, what Apollo’s doing is fundamentally changing the game. They raised $23 billion in new money for Athene last quarter alone, split between retail annuities and funding agreements. Those inflows helped push their assets under management past $900 billion and boosted fee earnings by 22%. They’re creating this virtuous cycle where insurance premiums fund more loans, which generates more spread income, which attracts more insurance business.
The question is whether this model can withstand prolonged rate declines. They’ve hedged $9 billion, but that only goes so far. Still, with $273 billion lent in the past year and ambitions to exceed their five-year targets early, Apollo seems determined to prove that volume really can solve most problems. Even if margins get squeezed, there’s always another billion-dollar loan waiting to be made.
