Apollo’s second-quarter earnings surge 75% on upbeat annuities business

By Chibuike Oguh

NEW YORK (Reuters) – Apollo Global Management (NYSE:) Inc said on Thursday its second-quarter adjusted net income jumped 75% year-on-year, underpinned by strong growth in earnings from its retirement services business and management fees.

Adjusted net income rose to $1 billion, up from $576 million a year earlier. That translated to an adjusted net income per share of $1.70, which exceeded the average analyst forecast of $1.65, according to Refinitiv data.

Spread-related earnings, which encompasses the income Apollo generates from investing the capital of annuities provider Athene in mostly investment-grade debt products, surged 76% to nearly $800 million buoyed by higher interest rates and increased inflow from retirees.

Fee-related earnings rose by nearly 30% to a quarterly record of $442 million, driven by growth in management fees as Apollo accumulated more assets. Its income from asset sales were flat at just $20 million as the firm avoided cashing out its private equity investments amid the continued slump in deal making activity.

Unlike Apollo, peers Blackstone (NYSE:) Inc and Carlyle Group (NASDAQ:) Inc had reported that their second-quarter distributable earnings slumped 39% and 26%, respectively, due to a slowdown in asset sales.

Apollo’s private-equity funds appreciated by 2.1%, corporate credit funds rose 2.6%, while its debt and equity funds gained 4%. By contrast, Blackstone’s corporate private-equity funds appreciated by 3.5% while Carlyle’s corporate private-equity rose 1%.

Under generally accepted accounting principles (GAAP), Apollo said its net income was nearly $600 million, versus a loss of $1.6 billion a year, supported mostly by higher investment income and premiums from Athene.

Total assets under management reached $617 billion, up about 3% from the prior quarter, driven by fundraising and asset appreciation. Unspent capital stood at $56 billion.

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