# Apollo Global Management, Inc. (APO): Business, Risks and Management Discussion, Q2 Fiscal 2026

This narrative draws on Apollo's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0001858681-26-000013), its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (accession 0001858681-26-000040), and the Forms 8-K it filed through October 5, 2026. Apollo's fiscal year is the calendar year.

## Business

*From the FY2025 10-K, accession 0001858681-26-000013, unless noted.*

Apollo is a global alternative asset manager and retirement services provider. It earns its money in two main ways. First, it charges fees to manage credit and equity funds and accounts for pension plans, sovereign wealth funds, endowments, insurers and, more and more, individual investors. Second, through its insurance subsidiary Athene, it earns a spread: Athene issues annuities, funding agreements and pension group annuities, invests the proceeds mostly in investment-grade credit, and keeps the difference between what the assets earn and what it credits to policyholders. Apollo had $938.4 billion of assets under management (AUM) at December 31, 2025, and $1.05 trillion at June 30, 2026 (10-Q, accession 0001858681-26-000040). It reports three segments, and management measures each one with its own non-GAAP earnings line:

- **Asset Management** (measured by Fee Related Earnings, or FRE). Credit is the largest strategy at $749.2 billion of AUM. It covers direct origination ($302.1 billion), asset-backed finance ($282.7 billion), opportunistic credit ($50.0 billion) and multi-credit ($40.9 billion). Equity had $189.2 billion of AUM: corporate private equity including secondaries ($78.8 billion), hybrid value ($17.7 billion), the perpetual Apollo Aligned Alternatives vehicle (AAA, $25.6 billion) and real estate equity ($47.9 billion). The segment earns management fees, capital solutions fees (for originating, structuring and syndicating financings) and recurring fee-related performance fees. Of total AUM, $535.6 billion is perpetual capital, meaning nearly 60% of total AUM and over 70% of fee-generating AUM. Apollo's traditional private equity funds have produced a 39% gross and 24% net IRR since inception. Large in-house clients include Athene ($392.2 billion of AUM managed or advised) and Athora, a European life and pension consolidator in which Apollo and Athene are minority investors ($57.2 billion).
- **Retirement Services** (measured by Spread Related Earnings, or SRE). Athene is based in West Des Moines, Iowa, and holds most of its capital in Bermuda reinsurance subsidiaries. It sources long-duration liabilities through four channels:
  - retail annuities, sold through 41 independent marketing organizations, 18 banks and 163 broker-dealers representing about 152,000 agents;
  - flow reinsurance;
  - institutional business: funding agreements under its FABN and FABR programs and with the Federal Home Loan Bank, guaranteed investment contracts, pension group annuities, and group fixed indexed annuities for 401(k)-style plans through its Vitera platform;
  - acquisitions and block reinsurance.

  Two sidecar vehicles, ACRA 1 and ACRA 2, add third-party capital. Athene owns 37% of the economics of each, and Apollo-managed ADIP funds own the other 63%. Athene's net invested assets were $292.4 billion at year-end 2025, with 97.3% of its available-for-sale portfolio rated NAIC 1 or 2 and about 5% of the portfolio in alternatives. Athene estimated $8.6 billion of deployable capital. Its main insurance subsidiaries are rated A+ or A1 by all four agencies that rate them.
- **Principal Investing** (measured by Principal Investing Income, or PII). This segment holds realized performance fees (carried interest) and realized income on Apollo's balance-sheet investments, net of the profit-sharing compensation paid on them and certain corporate costs. Because it depends on exits, it is the most volatile of the three segments.

Origination ties the model together. Apollo originated $309 billion of assets in 2025. Core credit accounted for about 45% of that and a network of 16 owned or affiliated origination platforms for about 40%. These platforms span corporate credit, asset-backed finance, real estate and infrastructure. The assets feed both Athene's balance sheet and third-party funds. The September 2, 2025 all-stock acquisition of Bridge Investment Group added a U.S. residential and industrial real estate manager and property-management fees. Apollo issued 9.4 million shares for Bridge, for total consideration of $1,357 million (10-Q note 3). At year-end 2025 Apollo had about 6,140 employees, including 2,010 supporting Retirement Services and 600 at Bridge. In February 2024 the Iowa Insurance Division designated Apollo an internationally active insurance group, with Athene as head of the group.

## Risk factors

*From Item 1A of the FY2025 10-K, accession 0001858681-26-000013. The Q2 2026 10-Q reports no material changes.*

- **Macro and interest-rate exposure.** Tariffs, uneven inflation, divergent central-bank policy and geopolitical conflict affect portfolio-company valuations, exits, financing costs and fund performance. Athene's fixed-income assets and annuity liabilities are rate-sensitive. Apollo estimated that an immediate 100 basis point parallel rise in rates would reduce Athene's point-in-time pre-tax income by $4.2 billion, net of offsets, at year-end 2025, and by $4.9 billion at June 30, 2026 (Item 7A of the 10-K; Item 3 of the 10-Q).
- **Lumpy earnings.** Performance fees and transaction fees vary widely from quarter to quarter. Results depend heavily on large funds such as Fund IX, Fund X and AAA, and carried interest already received can be clawed back if a fund underperforms over its life.
- **Valuation judgment.** At year-end 2025, 64% of the value of fund investments was set by models rather than market quotes (69% at June 30, 2026). Lower realized values would cut performance fees, could trigger reversals, and could hurt fundraising.
- **Push into individual investors.** Products for wealth clients bring suitability, disclosure and distribution-oversight risk, as well as regulatory scrutiny. They also let investors redeem periodically, and limiting redemptions when requests run high could damage Apollo's reputation.
- **Competition and AI.** Apollo competes with asset managers, insurers and banks for capital and assets. AI could disrupt the firm's own business models, hit software and related portfolio companies, and lower demand for digital infrastructure assets, where some strategies have significant exposure.
- **Illiquidity and reliance on financing.** Fund and Athene assets are often illiquid. Forced sales to meet withdrawals or collateral calls could crystallize losses. Funds also depend on subscription lines, NAV facilities and acquisition leverage.
- **Dependence on fund investors.** Investors push back on fees. A simple majority of unaffiliated investors can liquidate most funds. Key-person and change-of-control clauses can end investment periods. Perpetual capital can still be withdrawn or terminated in some circumstances.
- **Retirement-services risks.** A ratings downgrade would hurt annuity sales and raise funding and collateral costs. Statutory capital can swing with NAIC risk-based-capital reforms (including treatment of asset-backed securities and residual tranches) and with revised Bermuda Monetary Authority rules. Repurchase agreements and derivative and reinsurance counterparties create liquidity and credit exposure. The portfolio is concentrated in Athora, nonbank lenders, financial services and real estate, including commercial mortgage loans and CMBS on office and retail properties.
- **Conflicts of interest.** Apollo runs its asset-management business without permanent information barriers. Its affiliated broker-dealers and origination platforms earn fees from the funds it manages. It also allocates deals among funds, Athene and its own balance sheet. These conflicts invite regulatory and litigation risk.
- **Regulation and litigation.** Apollo is regulated as an investment adviser, broker-dealer and insurance group across the U.S., Bermuda, the EU and the U.K. Guaranty associations can assess Athene for the obligations of failed insurers. Since March 2024, ERISA class actions have been filed against companies that moved pension obligations to Athene. Athene is not a defendant, but the suits make negative allegations about it, and Apollo says negative public perception has already hurt Athene's ability to attract and keep pension group annuity customers.
- **Tax.** Apollo faces risk from changing Pillar Two global minimum-tax rules, Bermuda's 15% corporate income tax, the U.S. base erosion and anti-abuse tax (BEAT) on reinsurance payments, and possible U.S. taxation of its non-U.S. subsidiaries.
- **Technology and cyber.** Apollo depends heavily on a concentrated group of third-party vendors. Breaches, data misuse, AI-related failures and digital-asset activities could cause losses and regulatory penalties.
- **Owning the stock.** The share price may be volatile, dividends are at the board's discretion and depend on payouts from the operating subsidiaries, and the Delaware Court of Chancery is the exclusive forum for certain stockholder claims.

## Management's discussion: fiscal 2025

*From Item 7 of the FY2025 10-K, accession 0001858681-26-000013.*

On a GAAP basis, total revenues rose 22.7% to $32.05 billion, but net income attributable to Apollo fell 23.7% to $3.49 billion ($3.40 billion to common stockholders). Pre-tax income fell 10.2% to $6.68 billion. The decline breaks down as follows:

- Retirement Services expenses rose $5.5 billion, more than its $5.1 billion revenue gain.
- Asset Management other income swung $386 million to a $83 million loss.

Below the pre-tax line, the tax provision rose to $1,276 million as the effective rate climbed to 19.1% from 14.3%.

Management's operating measures grew: Segment Income rose to $6,227 million from $5,558 million, and Adjusted Net Income (ANI) to $5,195 million from $4,565 million.

- **Asset Management.** FRE rose 22.5% to $2,528 million on higher management fees, capital solutions fees and fee-related performance fees, partly offset by higher compensation and other expenses. On a GAAP basis the segment's management fees rose $479 million to $2.4 billion. The gain came mainly from Atlas, Bridge funds, Apollo Debt Solutions, S3 Equity and Hybrid Solutions and AIOF III, offset by fee step-downs at Fund IX and the end of Fund VIII's fee period. Advisory and transaction fees rose $380 million to $1.2 billion. Three items hurt other income: an impairment on an equity investment that went public below its carrying value, a decline in the value of the Global Business Travel Group stake, and the expense of donating common stock to the Apollo donor-advised fund.
- **AUM.** Total AUM rose 25.0% to $938.4 billion. Net flows were $168.0 billion: $108.0 billion in credit, including $42.0 billion from growth in retirement-services client assets, $41.0 billion of subscriptions and $9.3 billion from Redding Ridge's acquisition of Irradiant Partners. Equity added $60.0 billion, including $34.2 billion from Bridge. Market gains added $41.2 billion and realizations took out $21.9 billion. Fee-generating AUM rose 24.7% to $709.1 billion, and dry powder reached $73 billion.
- **Retirement Services.** SRE rose 4.2% to $3,361 million. Net investment earnings grew $2.6 billion, driven by $39.1 billion of growth in average net invested assets and higher alternative income (a 10.01% return). Cost of funds rose $2.4 billion and absorbed most of that gain. Net investment spread narrowed 17 basis points to 1.61%, with cost of funds up 40 basis points to 3.69% and the net investment earned rate up 22 basis points to 5.25%. GAAP net investment income rose to $19.2 billion on net flows of $47.9 billion. Premiums of $2.6 billion included $1.3 billion from a whole life block reinsurance transaction.
- **Principal Investing.** PII rose 24.7% to $338 million. Realized performance fees rose $277 million, led by Fund X, HVF II and Accord+, but principal investing compensation rose $228 million to $892 million.
- **Balance sheet.** At year-end 2025, Apollo had $18.3 billion of unrestricted cash and $5.1 billion of undrawn credit and liquidity facilities. Asset Management debt was $5.5 billion and Athene's long-term debt $7.8 billion. Athene's estimated U.S., Bermuda and consolidated risk-based capital ratios were 436%, 454% and 441%. Fund VIII's remaining value was 87% of unreturned capital, below its 115% escrow threshold, so its carried interest was held in escrow.
- **Bermuda tax change.** OECD guidance issued January 5, 2026 exempts U.S.-parented groups from key Pillar Two taxes. Apollo therefore revoked ACRA's election into Bermuda's corporate income tax in January 2026 and said it would record a full valuation allowance against its $1.7 billion of net Bermuda deferred tax assets in the first quarter of 2026. Management expects the change to help its tax position over the longer term.

## Current quarter: Q2 fiscal 2026

*From the 10-Q for the quarter ended June 30, 2026 (accession 0001858681-26-000040) and the Q2 2026 earnings release furnished on Form 8-K (accession 0001858681-26-000036).*

**Results.** Net income to common stockholders was $1,336 million ($2.18 basic, $2.15 diluted) against $605 million a year earlier. Year to date it was a $594 million loss, because the first quarter carried the $1.7 billion Bermuda deferred-tax write-off and lost $1,930 million. Total revenues were $11.15 billion against $6.81 billion. Retirement Services investment-related gains of $3.0 billion included gains on index-annuity hedges and a $673 million gain when AP Grange called its asset-backed debt. The quarter's tax provision was $396 million, a 15.9% effective rate.

**Segment earnings.** ANI was $1,314 million ($2.11 per share) against $1,179 million, and $2,522 million for the first half.

- **Asset Management.** FRE was a record $785 million, up 25%. Management fees rose 23% to $1,001 million, helped by Athora's acquisition of Pension Insurance Corporation (PIC), Bridge, institutional and wealth fundraising, and Athene's growth. Capital solutions fees reached a record $277 million, up 28%, and the FRE margin was 58.5%.
- **Retirement Services.** SRE was a record $877 million, up 7%. Net investment spread fell 11 basis points to 1.47% as cost of funds rose to 3.83%. The alternative portfolio returned 9.04%, which management said was $76 million short of its long-term expectation of 11%.
- **Principal Investing.** PII fell to $16 million. Realized performance fees dropped to $130 million because exits from flagship private equity and hybrid funds are, in management's words, "prudently delayed."

**Growth.** Total AUM reached $1.05 trillion, up $20.9 billion in the quarter and 25% from a year earlier. Fee-generating AUM was $858.0 billion. Record organic inflows of $60 billion comprised $38 billion in Asset Management and $22 billion at Athene. Origination was $74 billion and gross capital deployment $111 billion, and dry powder hit a record $82 billion. AUM managed for Athora rose to $120.9 billion from $57.2 billion at year-end after Athora completed the PIC acquisition in the first quarter, which brought $65.3 billion of inorganic inflows.

**Notable transactions in the period:**

- **Athora / PIC.** Athene helped finance Athora's acquisition of the U.K. insurer PIC. It converted its preferred equity in Athora into common equity, bought more common equity and bought Athora debt securities, lifting its total investment in Athora to $3,191 million from $1,487 million.
- **ARI loan portfolio.** On April 24, 2026, Athene bought a commercial mortgage loan portfolio from Apollo Commercial Real Estate Finance (ARI) for $8.7 billion. The deal moved $7.8 billion out of AUM credited to ARI.
- **AP Grange (Intel).** The vehicle prepaid its investment-grade asset-backed debt. Athene booked a $673 million GAAP gain and a $458 million non-operating gain net of ACRA's non-controlling interests. The prepayment removed $5.0 billion from AUM.
- **Broadcom / Anthropic.** Apollo-managed funds and affiliates, including Athene, entered a $35 billion capital solution with Broadcom Inc. to fund compute infrastructure for Anthropic, PBC beginning in mid-2026. Athene Holding Ltd. guarantees 15% of an Apollo-managed fund's purchase obligation under the deal, with a third party reimbursing 35% of any amount paid. Apollo views payment under the guarantee as not probable.
- **Financing.** On June 26, 2026, Athene replaced its credit facility with a $1.75 billion facility maturing in 2031 and its liquidity facility with a new $2.6 billion facility. Asset Management debt was $5.9 billion at quarter-end.
- **Capital return.** A new $4.0 billion buyback authorization took effect February 9, 2026. After 781,696 shares were repurchased in the quarter, $3.03 billion of capacity remained.

**Outlook and conditions.** Management did not give numeric earnings guidance. It noted heavy scrutiny of private credit and higher redemption requests across the industry's perpetual non-traded BDCs, which have slowed growth in those products, while describing the long-term opportunity as compelling. It also cited inflation of 3.5%, rising Treasury yields, and stress in software and AI-related credit that it considers concentrated rather than systemic. Athene's net floating-rate asset position was $2.3 billion, or 1% of net invested assets. Apollo had $25.4 billion of unrestricted cash and $5.6 billion of available facilities.

**Litigation.** Two shareholder class actions filed in March and April 2026, now consolidated in the Southern District of New York, challenge statements made in 2021 and 2022 that Apollo never did business with Jeffrey Epstein. The alleged class period runs from May 10, 2021 to February 21, 2026. A Delaware derivative suit challenging $570 million of payments to the former managing partners is stayed pending mediation. A motion to dismiss a class action over the 2022 stockholders agreement is pending. German tax authorities have issued assessments on historical reorganizations of fund entities. Apollo says a final assessment could be material and that it will contest it.

## Subsequent events

*Events after June 30, 2026, from the 10-Q (accession 0001858681-26-000040) and the Forms 8-K indicated.*

Neither the 10-Q's subsequent-events note nor the Forms 8-K filed from July 1 through October 5, 2026 disclose any acquisition or divestiture. The material post-quarter events, including one debt issuance, were:

- **July 31, 2026:** The mandatory convertible preferred stock converted at 0.5074 common shares per preferred share. Apollo issued 14,587,300 common shares after June 30, and no preferred shares remain (10-Q note 14).
- **August 4, 2026:** The board declared a $0.5625 per-share quarterly dividend, payable August 31, 2026 (10-Q note 19).
- **August 7, 2026:** Athene Holding Ltd. issued $1.0 billion of 6.150% Senior Notes due August 15, 2036. Interest is payable semi-annually, starting February 15, 2027 (10-Q note 12).
- **October 5, 2026:** Apollo estimated Q3 alternative net investment income at about $375 million, a 10% annualized return. That is above the second quarter's 9% but still below management's 11% long-term expectation. Q3 results are scheduled for November 3, 2026 (8-K, accession 0001858681-26-000054).