Thank you for this. You clearly know the mechanics and I appreciate the good faith.

You're right that no company targets 100% of CAL. That's my point. The entire industry calibrates to 350-400% of a denominator built on risk charges so small they barely register. 400% of 0.35% is still 1.4% of the asset base. The ratio is not the issue. The unit is.

Iowa does participate in a regulatory college with the BMA. But "line of sight" and "enforcement power in receivership" are different things. The capital maintenance agreement is a contract between affiliates. In an orderly environment, contracts hold. In a disorderly one, they get renegotiated, challenged, or subordinated. Ask PHL Variable's policyholders how the corporate structure worked out. The states chosen to be the overseers are done so because they are friendly — much like Delaware LLCs.

Your ModCo description may be accurate. I don't dispute it. But you are describing how the system works when it is working. My letter is about what happens when it doesn't. The settlement mechanism assumes the counterparty has liquidity. In a systemic event involving correlated losses across affiliated entities, that assumption fails first. Contracts are broken all the time as some skilled lawyer carves an out. Again, the corporate structure is the clue. I see no reason to have this segmentation unless they structured it to have legal protections for Athene and by extension Apollo.

Frankly, PE should not be able to own insurers and take fees on that captive capital if it is non-recourse. Banks would never be allowed to do this.

On leverage — ACRA's third-party sidecar investors have no statutory obligation to AAIA. Between the teacher's annuity and the capital that supposedly backs it are three layers of contract, each with its own exit rights and jurisdictional protections. "Committed on paper" and "available in a crisis" are different statements.

And I want to be direct. Athene has no equity holders besides Apollo. It is not an independent insurer. It is a wholly owned profit center for an asset management firm that earns fees on both sides. When the interests of the fee-earner and the annuitant diverge, there is no independent board, no outside shareholder, no countervailing force. The trust you are asking policyholders to place is not in a regulated insurer with independent governance. It is in the Bermudese legal system. In insolvency there are always fights. A retired teacher who bought safety should not need a lawyer arguing her case in a foreign jurisdiction to access the capital that was supposed to back her contract. Nor should the taxpayer foot what is a massive legal bill at the very least.

On Bermuda disclosure — glad the BMA is requiring US-equivalent filings in 2026. But the reform proves the gap existed. A trillion dollars sat offshore with 8-page filings for years. There shouldn’t be offshore arrangements to insure US-domiciled citizens. Easy fix. That money should be in our system. Some regulations are hard to enforce, but this — much like property tax — is easy to enforce. The reason they are in the Burmudas is the problem.

What your comment does not address is the structural question. 602 examiners for $9.3 trillion. $114 billion bypassing independent review through the filing-exempt rule. A rating agency under SEC investigation. A capital charge cliff that multiplies by 11x on a single downgrade. And a paywall between the public and the filings.

You know this industry. I suspect if you looked past Athene — which I said is top decile — at companies ranked 50th, 100th, 200th, you'd share some of my concern.

I appreciate the engagement. This is the conversation I was hoping to start.