Apollo Global Management Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alex Blostein - Goldman Sachs - Analyst : So I was hoping you could start with the progress you guys are making on third-party fundraising, and particularly with respect to the insurance channel, Marc, as you mentioned earlier. A couple of specifics. Maybe you can give us an update on the flows you're seeing there year-to-date. I heard $100 billion in total AUM, but curious on those and the topic fee rates you're seeing in that channel. Just broadly, when you think about the addressable market there, what sort of change that sort of enables some of these insurance companies partner with you guys as a competitor in some way? And in terms of the liabilities that you're looking for in this channel, is this strictly in the annuity kind of rider channel or sort of broad insurance base?

Question: Craig Siegenthaler - Bank of America - Analyst : My question is on retirement outflows. So after a pickup last quarter, they improved back down to the 10% range annualized, kind of right in line with your target from the Athene presentation from August. But from the same disclosure, they're expected to decline again modestly in 4Q '24, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, APO.N - Q3 2024 Apollo Global Management Inc Earnings Call but we actually don't have any visibility into 2025. So I'm wondering if you could share with us how liability outflows are expected to trend in 2025. And for the full, is it generally in line with 2024 with some quarterly deviations?

Question: William Katz - TD Cowen - Analyst : Marc, I'm intrigued by two of your comments, just your notion of the retirement opportunity as well as the retail. I think I want to ask about retirement, but I'm going to ask about retail. In terms of the retail platform, you mentioned you're learning a lot. So I was wondering if you could maybe help us understand how you see the opportunity set evolving for the industry and Apollo's role in that? And then secondarily, a number of your peers have been sort of speaking to higher expenses to build out the wealth management footprint. Could you share with us where you are in terms of that expense cycle?

Question: Steven Chubak - Wolfe Research, LLC - Analyst : So I'm actually going to ask a question around the retirement opportunity. At Investor Day, Marc, you did make a compelling case for a rethink of the future state of target date fund allocations around the $15 trillion DC opportunity. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, APO.N - Q3 2024 Apollo Global Management Inc Earnings Call As we think about what is tangible on a near-term basis in terms of allocations and how that might evolve, the percentage that's in target date funds, it looks like less than half of DC assets are currently held in target day funds. The majority of those fund assets are held by folks in higher age cohorts. So I wanted to get your perspective on how you see that opportunity evolving over time? How much of that $15 trillion do you believe you can

Question: Michael Brown - Wells Fargo - Analyst : I guess building on that discussion, I wanted to ask about the equity sleeve in the CIT offering that you flagged, Marc. Do you have a pipeline of other opportunities building on our AAA platforms? And I guess, how do you see this expanding? Can it eventually move to wirehouses, for example, on kind of like model portfolio structures?

Question: Patrick Davitt - Autonomous Research LLP - Analyst : Going back to Bill's question, it sounds like, obviously, you're getting a lot of traction adding retail distribution. But on that, another manager is seemingly talking down near-term margin expectations primarily as a result of the ramp of payments directly to the distribution platforms. And we aren't really hearing that message from you or others for that matter. So is this a headwind we should expect to see more of? And in that vein, maybe expand on how you account for those and why it might be different than others are?

Question: Brennan Hawken - UBS - Analyst : Thanks for the adjusted metric of origination, it looks like largely mapped to the prior debt origination disclosure. But maybe can you speak to the equity that you added that's reflected now in the new number and where that's largely sourced from? And then also, you have 16 origination platforms, and I believe, historically, you guys have talked about rationalizing that footprint and reducing the number of platforms. So could you give us an update on those efforts and maybe updated expectations for how many platforms you expect and what impact that will have on the P&L?

Question: Brian Bedell - Deutsche Bank - Analyst : Maybe just back on the origination at $62 billion. You're obviously annualized, that's almost $250 million. And your goal is $275 million per annum over the next five years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, APO.N - Q3 2024 Apollo Global Management Inc Earnings Call So I just wanted to get some context on where this level could go, if there are any significant capacity constraints that would limit you from going materially higher than a $275 million run rate? And then as you distribute that, I think the template has been up 25% third party, 50% Athene and 25% syndication. How might any kind of overage of -- if you exceed your goals on $275 million and as you think about the allocation through the different parts of that of those businesses, how might those change if the origination exceeds those goals?

Question: Ken Worthington - JPMorgan - Analyst : Rates have backed up subsequent to the end of the quarter, how does the move impact the hedges that you called out last quarter? And to what extent are you using the higher rates to engage to further fix your floating assets? And is the move that we've seen in rates enough to impact spreads as we think about 4Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, APO.N - Q3 2024 Apollo Global Management Inc Earnings Call

Question: Benjamin Budish - Barclays - Analyst : I wanted to ask about the SRE guidance. If I just think back to last quarter, can you unpack a little bit what went sort of better than expected. When I look at least at street numbers, it looked like your cost of funds came in a little lower than expected. And then taking to Q4, your full year guidance is unchanged. So thinking about perhaps went better this quarter, is there some sort of reversal expected or any kind of timing differences? How do we be thinking about those different factors?

Question: Daniel Fannon - Jefferies - Analyst : So just a follow-up on that question. So are the changes to the alternative allocation for retirement services complete? I think you mentioned AAA now represents 8%. So therefore, getting to that 11% normalized return given AAA's performance. Is that what we should be expecting going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, APO.N - Q3 2024 Apollo Global Management Inc Earnings Call

Question: Michael Cyprys - Morgan Stanley - Analyst : I was hoping you could update us on the use of your site car vehicle. In the past, you guys had talked about ADP taking down about 40% to 45% or so of new funds over time. I think year-to-date, it's a bit less than that. Just curious if you could just update us on how you see that evolving over the next couple of years, what factors you consider in toggling ADP's contribution higher? And then in what scenario might you increase the dividend out of Athene relative to your guide consistent $750 million a year of dividends?