What is the lawsuit against Athene?

Posted on: 10 Aug 2024

Introduction

Athene Holding Ltd., a prominent retirement services company, has become a focal point in several high-profile lawsuits related to pension risk transfers (PRTs). These legal actions, initiated primarily by retirees and plan participants, allege that companies breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by selecting Athene as the annuity provider for their pension obligations. The lawsuits claim that Athene, owned by private equity firm Apollo Global Management, is a riskier choice compared to traditional insurers due to its complex structure and offshore reinsurance practices. This comprehensive guide explores the nature of these lawsuits, key cases, legal arguments, current status, and their potential impact on the retirement industry. A detailed FAQ section addresses common questions to help readers navigate this complex issue.

Who is Athene Holding Ltd.?

Athene Holding Ltd. is a leading retirement services company with over $380 billion in total assets as of March 31, 2025. Operating in the United States, Bermuda, Canada, and Japan, Athene specializes in issuing, reinsuring, and acquiring retirement savings products, including fixed annuities, fixed indexed annuities, registered index-linked annuities, and group annuities. Founded in 2009 during the financial crisis, Athene capitalized on the exit of other insurers from the retirement market, acquiring significant blocks of liabilities, such as Aviva USA in 2013. The company is owned by Apollo Global Management and boasts strong financial ratings (A+ from S&P, Fitch, AM Best, and A1 from Moody’s), indicating robust financial stability. Despite its financial strength, Athene’s private equity ownership and offshore operations have drawn scrutiny in recent lawsuits.

What is a Pension Risk Transfer (PRT)?

A pension risk transfer (PRT) is a financial transaction where a company transfers its defined benefit pension plan obligations to an insurance company, typically in exchange for a lump sum payment. The insurer then assumes responsibility for paying pension benefits to retirees. PRTs help companies reduce the financial and administrative burdens of managing pension plans, which can be costly due to market volatility and longevity risks. However, PRTs shift pensioners from federal ERISA protections to state-regulated insurance markets, raising concerns about the safety of the chosen insurer.

The Lawsuits Against Athene

The lawsuits involving Athene center on PRTs conducted by major companies, including AT&T, Lockheed Martin, General Electric, Weyerhaeuser, and others. These legal actions, often filed as class-action lawsuits, allege that the companies breached their fiduciary duties under ERISA by selecting Athene as the annuity provider. The plaintiffs argue that Athene is not the "safest available" insurer, as required by ERISA, due to its private equity ownership and offshore reinsurance structure. Notably, Athene itself is not named as a defendant; the lawsuits target the companies and their independent fiduciaries, such as State Street Global Advisors, for their decision to choose Athene.

Key Cases

Below is a summary of the most significant lawsuits related to Athene PRTs:

Company	PRT Amount	Year	Allegations	Court Status
Lockheed Martin	$9.2 billion	2021–2022	Breached fiduciary duty by selecting Athene, a "risky" provider.	Motion to dismiss denied by U.S. District Court for Maryland; case ongoing.
AT&T	$8.05 billion	2023	Breached fiduciary duty and conflicts of interest in selecting Athene.	Consolidated lawsuits ongoing in U.S. District Court for Massachusetts.
Weyerhaeuser	$1.5 billion	2019	Breached fiduciary duty and conflicts of interest in selecting Athene.	Pending in U.S. District Court for Western District of Washington.
General Electric	$1.7 billion	2020	Breached fiduciary duty by selecting Athene over safer alternatives.	Ongoing in federal court.
Alcoa Corp.	Not specified	2018–2022	Breached fiduciary duty by selecting Athene.	Dismissed by U.S. District Court for D.C. for lack of standing.
ATI Inc.	$1.5 billion	2023	Breached fiduciary duty by transferring pension obligations to Athene.	Ongoing in federal court.

Lockheed Martin Corp.

Details: Four retirees filed a lawsuit against Lockheed Martin, alleging that the company’s $9.2 billion PRT with Athene in 2021 and 2022 violated ERISA. The plaintiffs claimed that Athene’s private equity ownership and offshore reinsurance made it a riskier choice, potentially kindizing pensioners’ financial security.
Court Ruling: The U.S. District Court for the District of Maryland denied Lockheed Martin’s motion to dismiss, allowing the case to proceed to the discovery phase. This ruling contrasts with a similar case against Alcoa, which was dismissed for lack of standing.
Source: PLANSPONSOR

AT&T Inc.

Details: Two separate lawsuits were filed against AT&T for its $8.05 billion PRT with Athene in 2023, covering 96,000 plan participants. The plaintiffs, represented by firms like Schlichter Bogard LLP and Libby Hoopes Brooks & Mulvey PC, alleged that AT&T and State Street Global Advisors breached fiduciary duties and engaged in conflicts of interest by choosing Athene. They claimed the transfer stripped pensioners of ERISA protections.
Status: The lawsuits were consolidated and are ongoing in the U.S. District Court for the District of Massachusetts.
Source: PLANSPONSOR

Weyerhaeuser Co.

Details: Five retirees sued Weyerhaeuser for its $1.5 billion PRT with Athene in 2019, alleging breaches of fiduciary duty and conflicts of interest. The lawsuit, filed by Schlichter Bogard LLP, claimed that Weyerhaeuser failed to prudently monitor State Street, which recommended Athene.
Status: The case is pending in the U.S. District Court for the Western District of Washington.
Source: BenefitsPRO

General Electric Co.

Details: Three former participants of the GE Pension Plan sued GE for its $1.7 billion PRT with Athene in 2020, claiming the company prioritized cost savings over pensioner safety.
Status: The lawsuit is ongoing in federal court.
Source: PLANADVISER

Alcoa Corp.

Details: A lawsuit against Alcoa for its PRTs with Athene between 2018 and 2022 was dismissed by the U.S. District Court for the District of Columbia. The court ruled that plaintiffs lacked standing because they continued to receive their pension benefits, indicating no concrete injury.
Source: PSCA

Other Notable Cases

ATI Inc.: Five retirees sued ATI for transferring $1.5 billion in pension obligations to Athene in 2023, alleging breaches of fiduciary duty. The case is ongoing.
Verizon Communications Inc.: Although not involving Athene, a lawsuit against Verizon for its PRT with Prudential raises similar concerns about annuity provider safety, potentially setting a precedent for Athene-related cases.

Other Lawsuits Involving Athene

Beyond PRTs, Athene has faced other legal actions:

New York Settlement (2020): Athene paid a $45 million fine to settle charges that its Athene Annuity & Life unit conducted 14 unlicensed PRT transactions in New York, covering tens of thousands of policyholders. Reuters
Accordia Life Settlement (2021): A class-action lawsuit against Accordia Life and Annuity Co. (related to Athene) alleged that policy lapses occurred due to improper handling during a conversion period. The settlement benefited policyholders from Athene and related entities. Top Class Actions
Breach of Contract (2023): Wrophas Meeks, M.D., filed a $4 million lawsuit against Athene Annuity and Life Company, alleging wrongful termination of a life insurance policy without proper notice. Madison-St. Clair Record
Shareholder Lawsuit (2019): Apollo Global Management, Athene’s parent, secured a temporary injunction against a lawsuit by the Central Laborers’ Pension Fund, which accused Apollo of imposing excessive fees on Athene. Insurance Business America

Legal Arguments

Plaintiffs’ Arguments

Athene’s Risk Profile: Plaintiffs argue that Athene’s private equity ownership by Apollo and its offshore reinsurance structure (often referred to as the "Bermuda Triangle" strategy) make it riskier than traditional insurers. They cite historical examples like the 1991 Executive Life Insurance bankruptcy to highlight potential risks.
ERISA Violations: Under ERISA, fiduciaries must act solely in the interests of plan participants. Plaintiffs claim that companies prioritized cost savings over safety by choosing Athene.
Loss of Protections: PRTs transfer pensioners from ERISA’s federal protections to state-regulated insurance markets, which plaintiffs argue offer weaker safeguards against insolvency.

Defendants’ Arguments

Prudent Selection Process: Companies and fiduciaries assert they conducted thorough evaluations, selecting Athene based on its financial strength and ability to meet obligations.
Lack of Standing: Defendants argue that plaintiffs lack standing because they continue to receive their pension benefits, indicating no concrete injury.
Athene’s Reliability: Athene’s A+ ratings and substantial capital reserves are cited as evidence of its safety as an annuity provider.

Court Rulings and Current Status

The lawsuits have resulted in split decisions:

Dismissals: The Alcoa case was dismissed for lack of standing, as plaintiffs could not demonstrate actual harm since they were still receiving benefits.
Ongoing Cases: Lawsuits against Lockheed Martin, AT&T, Weyerhaeuser, and others are proceeding, with courts allowing discovery to explore the fiduciary processes and potential risks.
Key Issue: The central question is whether plaintiffs have standing to sue when they are receiving their benefits. Courts are divided, with some requiring evidence of harm and others recognizing potential future risks as sufficient.

Implications for the Retirement Industry

These lawsuits could reshape the PRT industry:

Increased Scrutiny: Companies may face stricter requirements to justify their choice of annuity providers, potentially increasing due diligence costs.
Regulatory Changes: The U.S. Department of Labor may issue updated guidance on PRTs, clarifying what constitutes a "safest available" provider.
Industry Impact: A plaintiff victory could deter PRTs or push companies toward traditional insurers, while a defendant win could validate PRTs as a legitimate strategy.

The American Council of Life Insurers (ACLI) defends PRTs, arguing they provide financial security and allow companies to focus on core operations. However, the Pension Rights Center warns of a potential "nationwide catastrophe" if PRTs are not properly regulated.

Conclusion

The lawsuits involving Athene highlight a critical debate in the retirement industry about the safety and oversight of pension risk transfers. While plaintiffs argue that Athene’s structure poses risks to pensioners, Athene and the sued companies emphasize its financial strength and prudent selection processes. With courts issuing split rulings, the outcomes remain uncertain but could significantly influence how companies approach PRTs and how regulators define fiduciary responsibilities. For retirees and plan participants, staying inform

Faq

What is Athene Holding Ltd.?

Athene is a retirement services company specializing in annuities and PRTs, owned by Apollo Global Management, with strong financial ratings from major agencies.

What is a pension risk transfer (PRT)?

A PRT is when a company transfers its pension obligations to an insurer, which then pays retirees’ benefits, reducing the company’s financial burden.

Why are companies being sued over PRTs with Athene?

Lawsuits allege that companies breached ERISA fiduciary duties by choosing Athene, claimed to be riskier due to its private equity ownership and offshore structure.

What is ERISA, and how does it apply?

ERISA is a federal law ensuring retirement plans are managed in participants’ best interests. The lawsuits claim companies violated ERISA by not selecting the safest annuity provider.

Is Athene a defendant in these lawsuits?

No, Athene is not a defendant. The lawsuits target companies like AT&T and Lockheed Martin and their fiduciaries for choosing Athene.