Enmity Erupts Between Former Private Equity Partners Over Lucrative Insurance Units

Enmity Erupts Between Former Private Equity Partners Over Lucrative Insurance Units

INSURANCE JOURNAL

By Sonali Basak and Heather Perlberg 

Nearly a decade ago, Imran Siddiqui helped engineer a shrewd maneuver for buyout mogul Leon Black’s Apollo Global Management LLC, one
that’s yielded many millions for the firm.

Then Siddiqui and Apollo parted ways — and the sparks are still flying. Money, betrayal, revenge: this breakup story has it all. Apollo has
accused Siddiqui of stealing trade secrets. Siddiqui has accused Apollo of scaring off his investors. The two sides have multiple lawsuits
pending.

The issue centers on the business that has become Apollo’s cash cow, Athene Holding Ltd. The legal tussle has emphasized just how lucrative
the insurance affiliate became for Apollo, and why Athene became the envy of the industry. Indeed, Apollo rivals Blackstone Group LP and
Carlyle Group LP have since built up their own bets on insurance.

The bigger question is who ultimately bears the costs — and the risks — of this sort of insurance play. The Apollo-Athene strategy has been to
extract fees upon fees associated with annuities, which are typically sold to ordinary Americans. Rivals have criticized the payouts as exorbitant
and opaque: Apollo vehicles can reap as much as 70 basis points on the most hard-to-manage investments. But investors have benefited as well,
with the stock prices of both companies rising in the last few years.

About 25 percent of Apollo’s overall value is derived by Athene, according to Devin Ryan, an analyst for JMP Securities LLC in New York.

“That’s how important Athene is,” Ryan said. “And in the bigger picture, there’s still a tremendous growth opportunity given the size of the
insurance market and where Apollo is looking to go with the entity.”
Siddiqui’s partnership with Apollo began happily enough. He arrived there in 2008 after stints at Oakhill Capital Partners and Goldman Sachs
Group Inc. with an idea to build an insurance company and then collect fees from managing its funds.

Read full article here