Athene Life Insurance Co.

Primary Credit Analysts: Robert N Roseman, New York (1) 212-438-7236; robert.roseman@standardandpoors.com Maftuna Azizova, Dallas (1) 214-765-5861; maftuna.azizova@standardandpoors.com Table Of Contents Rationale Overview Operating Guidelines Interest Rate Risk Capital Adequacy Test Liquidity Risk Explanation Of Certain Capital Charges WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 1

Rationale Standard & Poor's Ratings Services' ratings on Athene Life Insurance Co. (ALIC) reflect our view that given the company's restrictive governance, applied operating procedures and controls, and quality and experience of management it likely will fulfill its obligations relating to funding agreements (FAs) and other Operating Company Covered By This Report Financial Strength Rating Local Currency AA-/Stable/-- financial contracts. The company's operating guidelines confine its business scope; limit credit and interest rate risk; establish ongoing requirements to test risk-based capital, asset adequacy, and liquidity; and institute monitoring and contingency management by independent third parties. Our quantitative analysis was a critical factor supporting the rating. This analysis evaluated ALIC's ability to meet its financial obligations under a wind-down scenario after experiencing credit defaults, interest rates and spread movements, and stresses consistent with the assigned rating. The stressed rate and spread volatilities that the company continues to apply during its modeling are consistent with the principles in our criteria. (see Methodology And Assumptions For Market Value Securities, published Sept. 17, 2013, on RatingsDirect). ALIC's methods for determining stressed asset defaults were consistent with the principles in our criteria for evaluating collateralized debt obligations (CDOs). ALIC's procedures and controls, including independent monitoring, make its ability to fulfill obligations under FAs and other financial instruments less contingent than typical insurance companies' on prospective operating performance, market position, and other factors that drive our assessment of competitive position and business risk. Therefore, these factors were less critical in our analysis. Also critical to our analysis is our view that the return the FA investor would receive if ALIC fulfills its obligation under a mandatory redemption would be similar for comparable securities without such a feature. Because the investor would receive a formulaic value based on market-implied interest rates and a credit-spread level linked to our original rating on ALIC, we believe the investor would not be more economically disadvantaged than investors in comparable securities without the mandatory redemption feature. Another important ratings factor is our analysis of the company's liquidity tests and the credit quality of ALIC's liquidity providers that support cash and collateral needs. We evaluated the joint and several nature of ALIC's cash liquidity support agreement using the principles in our joint support criteria (see Joint-Support Criteria Update, published April 22, 2009), and consider it to be at least equivalent to support provided by an entity with a rating of 'AA-'. We view the relatively short wind-down period following an uncured test violation and the risk-mitigating market-value redemption feature very positively and as important considerations in our assigned rating. Because of the company's procedures and controls, we also believe a mandatory redemption would occur before any necessary WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 2

ratings action. We do not view the modified co-insurance agreement between ALIC and Athene Life Re Ltd. (ALRe; not rated) as enhancing ALIC's creditworthiness, although we give credit to the collateral already received from ALRe in our evaluation of ALIC's liquidity. We believe that the well-defined limits for both interest rate risk and credit risk--as well as the requirement to take risk-mitigation actions necessary to avoid a violation of the capital adequacy test--provide assurance that available capital will be sufficient to support the company's exposures. Because of ALIC's unique structure, the rating is not based on our general insurance criteria framework, but rather on the principles of credit ratings and other appropriate components of our insurance and structured finance rating criteria. Overview ALIC is a Delaware-domiciled stock life insurance company engaged only in the business of issuing U.S. dollar-denominated FAs and FA-backed notes and activities incidental to such businesses. ALIC is a wholly owned subsidiary of Athene Annuity & Life Assurance Co. ALIC's governance is restricted by a set of operating guidelines that clearly articulate the applied procedures and controls, which can't be modified without approval from an independent board member that acts in the interest of ALIC's policy holders. The largest source of the initial roughly $75 million in capital contributed to ALIC is Athene Holding Ltd., which was sponsored by an affiliate of Apollo Global Management LLC, a global asset manager. An independent third party, Gravitas Technology Services LLC (not rated), will monitor ALIC's compliance with the critical terms of the operating guidelines, obtain values on assets and hedge instruments, calculate interest rate and credit risk, and certify compliance with risk limits and several tests. ALIC has engaged an independent liquidation agent, Dock Street Capital Management LLC (not rated), to liquidate assets, terminate or novate hedge instruments, and pay off the funding agreements and liquidity lines in the event of a wind down. ALIC is required under its operating guidelines to comply with its defined interest-rate and credit-risk limits on an ongoing basis. In addition, it must comply with cash-flow and collateral liquidity tests, a capital-adequacy test, and an asset-sufficiency test, which the independent monitor conducts twice each month. If ALIC fails the tests or is in violation of the risk limits and does not remedy such for at least 30 consecutive days, beginning within 30 days following the reported breach, it must wind down. If a wind-down occurs, the collateralized FAs with the Federal Home Loan Bank of Indianapolis (FHLBI) and one legacy FA, if remaining, would be prepaid. The remaining FAs would be redeemed at a market-adjusted price using a formulaic value based on market-implied interest rates and a credit-spread level linked to our original rating on ALIC of 'AA-'. Such redemptions and terminations would occur over a maximum of 180 days, but as soon as the matched WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 3

assets were sold. The company's applied asset-adequacy test determines the net cash flows on the portfolio of assets, liabilities, and hedge instruments under stressed rate environments after applying credit losses calculated using our CDO evaluator (CDOE), and evaluates ALIC's ability to meet the debt service on FAs and other financial obligations. ALIC's capital-adequacy test determines the available capital based on a market-to-market approach--including its FAs and other funding liabilities based on the redemption or termination value--and compares it to the company's risk-based capital requirement. This requirement is determined by ALIC's exposure to interest rate and credit risk based on stressed volatilities that could be experienced during the maximum period of 8.5 months between a failed test or breached risk limit and the final wind down. The company applies several liquidity tests. The net cumulative outflow (NCO) test compares the largest cumulative outflow during a series of rolling 180-day periods one year forward to the aggregate of the bank cash liquidity lines and cash equivalents. A different cash-flow liquidity test measures the availability of bank liquidity support relative to negative cash balances for one year. The collateral liquidity test measures the availability of repurchase agreement lines, the bank credit facility and eligible collateral relative to requirements on collateralized FAs and relating to margins delivered to futures commission merchants (FCMs), and credit support annexes with OTC derivative counterparties for one year after testing the posting requirements by stressing the underlying risk drivers. The company will initially have access to cash liquidity from a credit facility with three banks: Barclays Bank PLC, Citigroup Global Markets Inc., and RBC Capital Markets LLC. The initial total amount available under this facility will be $75 million. ALIC will also maintain access to committed repurchase agreement facilities that provide for collateral-posting requirements relating to cleared and OTC derivatives and collateralized FAs. The required termination notice at least 8.5 months in advance by the providers of both types of liquidity support allows the company to maintain sufficient liquidity resources for the time it would take to complete a wind down. ALIC's operating guidelines establish clearly defined interest rate risk limits based on partial dollar values of a one-basis-point movement in interest rates (DV01s), and require it to neutralize the majority of its interest rate risk related to asset-liability mismatches using interest rate swaps. The company's exposure to systemic credit-spread volatility is largely a function of the movement between the proxy for ALIC's 'AA-' spread used in the redemption valuation formula and the spreads on its asset portfolio. But ALIC analyzes such risk with two methodologies. Its exposure to credit-spread volatility is limited by its asset-liability maturity matching requirements of no more than six months, and a limit on its overall spread DV01. The spread DV01 is the change in the value of the combined portfolio given a one-basis-point change in relevant spreads. The company also has risk limits for its exposure to negative convexity relating to mortgage-backed securities (MBS). Its measurement of such risk is consistent with our Methodology for Calculating The Convexity Risk In U.S. Insurance Risk-Based Capital Model, published April 27, 2011. The company is limited to investments in cash equivalents and option-free corporate securities with an assigned rating of at least 'BBB-' and agency MBS. ALIC also has minimum rating requirements for derivative counterparties, repurchase agreement counterparties, and liquidity providers that we believe are consistent with the assigned rating WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 4

(see Counterparty Risk Framework Methodology And Assumptions, published June 25, 2013). The credit-default risk related to ALIC's fixed-income portfolio is measured using our CDOE. CDOE establishes ratings-consistent credit-loss estimates based on a simulation credit value-at-risk (VaR) approach and largest obligor tests that apply deterministic stresses to credit concentrations (see Update To Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs, published Sept. 17, 2009; CDO Evaluator 6.0.1--Asset Correlation Framework, published Feb. 5, 2013; and Computing Portfolio Losses Using CDO Evaluator, published May 2, 2012). ALIC also uses CDOE as the basis for its internal limits on single obligor and sector-concentration limits. Risk related to counterparties is captured by stressing the volatility of the underlying risk driver where appropriate and excluding the full value of posted margins from ALIC's available capital calculation. Delaware insurance regulations limit dividends ALIC pays. The operating guidelines also prevent dividends that would cause the company to fail its capital adequacy, asset adequacy, or liquidity tests. Operating Guidelines ALIC's operating guidelines restrict its governance and clearly articulate its required procedures and controls. They establish processes that limit risk and business scope and delineate the roles and responsibilities of ALIC's management and the independent third parties. The operating guidelines also require the company's board to include one independent board member to act in the interest of ALIC's policyholders. The guidelines cannot be modified without unanimous board approval and a rating agency confirmation that such change will not have a detrimental effect on the assigned rating. The guidelines specify the requirements for testing and monitoring capital adequacy, liquidity, asset adequacy, and risk limits by the independent third party, as well as the contingent control of the company in the event of a wind down by the liquidation agent. The guidelines limit ALIC's business activities to issuing funding agreements that match specified criteria and activities related to managing such business. All the FAs, except those written to FHLBI and one legacy FA, must be noncollateralized and include a mandatory redemption feature at a market-implied price based on a specified formula that includes market spread and rate components. The FAs must be U.S. dollar-denominated and can be written on a fixed- or floating-rate basis with a maximum maturity of 10 years. No FAs can be written with a put or other option that is exercisable by the investors. The guidelines permit ALIC to write FAs to FHLBI. These must currently be collateralized with U.S. agency MBS. These FAs are cancelable upon short notice at the option of ALIC after paying a prepayment penalty based on the net present value of the difference between the remaining actual debt service and debt service based on the prevailing rate. (At the time the rating was assigned, ALIC had FAs in place with FHLBI and one other legacy FA.) The minimum ratings requirements for eligible counterparties on OTC and repurchase agreements and providers of liquidity are established in the guidelines, as are the investment guidelines and the interest rate and credit risk limits. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 5

Modified co-insurance agreement ALIC has entered into a modified co-insurance agreement (ModCo agreement) with ALRe, an unrated Bermuda reinsurer that is an affiliate of ALIC. Under the ModCo agreement, ALIC pays ALRe premiums equivalent to the statutory book-value return on the asset portfolio that supports the FAs and receives the principal and interest obligation on the FAs, a ceding commission, and certain expenses. In addition, ALRe may be required to provide collateral margins relating to collateralized funding agreements with the FHLBI. ALRe does not maintain an interest in the assets in the custodial account established under the co-insurance agreement. Furthermore, ALIC does not have to pay the premium or return collateral to ALRe if such actions would cause the company to fail the capital adequacy test, the liquidity tests, or the capital-adequacy test or to breach its risk limits. Furthermore, in a wind-down scenario, ALRe will receive premiums or other owed amounts only after obligations under FAs, repurchase agreements, liquidity draws, and derivative contracts are satisfied. Because ALRe is not rated, we analyzed ALIC's ability to fulfill its obligations without considering potential support from ALRe. Based on the indicated provisions, we viewed the Modco agreement as neutral in evaluating ALIC's creditworthiness. Service providers A custodian bank will hold the assets and provide reports of ALIC's security holdings and transactions directly to the independent monitor. The independent monitor and liquidation agent serve critical roles in ALIC's operating procedures and controls. The company has minimized operational risk relating to these parties by paying their fees one quarter in advance and identifying replacement parties. Furthermore, ALIC's contracts require that before either the independent monitor or the liquidation agent can resign, ALIC must locate a replacement. Gravitas Technology Services LLC will be the initial independent monitor of ALIC's compliance with the critical terms of the operating guidelines, obtain values on assets and hedge instruments; calculate interest rate risk; and certify compliance with the liquidity tests, the capital adequacy test, the asset adequacy test, and the risk limits; and create reports twice each month. Dock Street Capital Management LLC has been engaged as the initial independent agent to liquidate assets and hedge instruments and pay off the funding agreements and liquidity facilities in the event of a wind down. Legal structure ALIC is a Delaware-domiciled insurance company subject to the state's insurance regulators. To the extent provided by regulatory oversight, ALIC's assets and capital are insulated from the parent, Athene Annuity & Life Assurance Co. The Delaware Department of Insurance limits ordinary and extraordinary dividends, even though these are more fully limited under the operating guidelines. The fixed-income assets will be held in a modified co-insurance custodial account, but will remain under ALIC's legal control. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 6

Credit risk Our evaluation of ALIC's exposure to credit default risk was an important part of our analysis. The company's main sources of credit default risk are its fixed-income security holdings, counterparties on OTC derivatives hedging contracts, FCMs on "cleared" derivatives, and counterparties on repurchase agreements and collateralized FAs with FHLBI where a collateral margin is posted. ALIC also has indirect credit risk exposure to liquidity providers because they can default on their obligation to provide such liquidity support. Based on our analysis, the procedures and policies ALIC applies to monitor and measure credit risk mitigate such exposure to a level consistent with the assigned rating and available capital. Credit risk limits: Assets ALIC's investment guidelines limit the company to holding cash equivalents, MBS issued by U.S. agencies with underlying prime collateral, and U.S. corporate bonds rated 'BBB-' or higher (see table 1). Table 1 Asset Type Limits Asset Type Limit (%) U.S. agency MBS with prime collateral 10 U.S. agency MBS LCF sequential Z-bonds 3 U.S. corporate and municipal bonds rated 'BBB-' 40 U.S. corporate and municipal bonds rated 'BBB-', 'BBB', or 'BBB+' 70 The company's short-term investment guidelines are consistent with the principles of our Global Investment Criteria For Temporary Investments in Transaction Accounts, published May 31, 2012 (see table 2). Table 2 Requirements For Cash And Cash Equivalents Asset type Maturing within 60 days Maturing after 60 but before 365 days Direct U.S. obligations or backed by full faith and credit of the U.S. Rated at least A-1 / 'AA-' Rated at least A-1+ or AA- Direct obligations of any state Rated at least A-1 / 'AA-' Rated at least A-1+ or AA- Money-market funds Rated 'AAAm' Rated 'AAAm' Asset type Maturing within 60 days Maturing after 60 but before 183 days Bankers acceptance; demand and time deposits; and CDs Rated at least A-1 / 'AA-' Rated at least A-1+ or AA- Commercial paper or other short-term obligations Rated at least A-1 Rated at least A-1+ Single obligor limits and sector limits are based the largest obligor test and the largest industry test included in CDOE. The CDOE determines ratings-consistent loss levels called scenario loss rates for fixed-income portfolios using a credit simulation VaR approach. ALIC also uses CDOE to determine losses using an alternative deterministic approach, where, depending on the rating of the assets, it is assumed in CDOE that a specific number of the largest obligors in the portfolio default with only 5% recovery (largest obligor test [LOT]; see table 3). WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 7

Table 3 Obligor Rating Versus Number Of Defaults Obligor Rating Category Number of Defaults AAA to CCC 1 AA to CCC 2 A to CCC 3 BBB to CCC 4 Similarly, ALIC uses the CDOE to apply a deterministic approach for evaluating concentrated industry defaults, which is called the largest industry test (see Update To Global Methodologies and Assumptions For Corporate Cash Flow And Synthetic CDOs, published Sept. 9, 2009). Following a ramp-up period ending one month after ALIC's first issuance of a new FA, ALIC is restricted from exposures to either single obligor or industry concentrations that would cause either the stressed losses under the LOT or the largest industry test to be greater than the scenario loss rate in the run-off scenario. The capital adequacy related to asset credit-default risk always includes these two concentration tests from the CDOE, even during the ramp-up period. Derivative counterparties ALIC requires counterparties on OTC derivative transactions to have a minimum credit rating of 'A-' and to be replaced within 60 days if they get downgraded below 'A-'. ALIC must also have two-way collateral-posting arrangements under credit-support annexes (CSAs) with a zero threshold with all counterparties on OTC derivative contracts, or the derivative transactions must be cleared on an exchange using a futures commission merchant. In our view, these requirements mitigate ALIC's exposure to counterparties to a level that is consistent with the assigned rating. (see Counterparty Risk Framework Methodology And Assumptions, published June 25, 2013). When ALIC has a net unrealized loss across its net transactions with an OTC derivative counterparty, ALIC's credit exposure to that counterparty is a function of the collateral margin, which is the amount posted in excess of the unrealized loss. In its capital adequacy test, ALIC reduces its available capital by the amount of such margin that is not provided by ALRe. It also must hold capital for potential detrimental volatility of any collateral amounts by applying a stressed movement to the underlying risk drivers of the derivatives portfolio with a specific counterparty. In effect, ALIC holds capital to cover a complete loss of the overcollateralization margin. Repurchase agreement counterparties ALIC requires repurchase agreement counterparties to have a minimum credit rating equivalent to 'A-' by Standard & Poor's, and the counterparty must be replaced within 60 days if it gets downgraded below 'A-'. ALIC will use repurchase agreements as both a source of collateral liquidity and a short-term investment vehicle. ALIC's credit exposure to repurchase-agreement counterparties is a function of the amount of the collateral margin posted in excess of the value of cash or securities received. Similar to exposure related to OTC derivative counterparties, in its capital adequacy test, ALIC reduces its available capital by an amount equivalent to the portion of such overcollateralization margin that is not provided by ALRe. ALIC holds capital for the potential increases in such margins based on a stressed movement to the underlying risk drivers. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 8

Collateralized funding agreements Credit exposure on the collateralized funding agreements ALIC enters into with the FHLBI will be a function of the amount of the collateral margin posted in excess of the value of cash received. ALRe must post such excess margin to ALIC under its modified co-insurance agreement. ALIC reduces its available capital by any portion of the margin not provided by ALRe and holds capital for the potential stressed volatility of the entire margin. Measuring asset credit risk ALIC's capital for credit-default risk related to its fixed-income asset portfolio is determined based on the 'AA-' rating equivalent scenario loss rate from our CDOE, in consideration of the LOT and the largest industry default test as described above. The company applies our standard default probabilities, correlations, and other assumptions and considers credit losses based on both a one-year term and the final term of its FA liabilities. The term applied in its capital adequacy test is based on the term that produces the largest loss when combined with one of the two scenarios used for measuring potential losses relating to systemic credit spread movements. Because the credit concentration limits in the operating guidelines don't apply during the ramp-up that ends 30 days from the issuance of the first new FA, we expect the LOT and largest industry default test to affect asset credit default capital only during this period. Managing credit risk The company can buy CDS protection for specific reference names included in its asset portfolio, but it is prohibited from assuming additional credit exposure by writing CDS or other credit derivatives. Interest Rate Risk Our evaluation of ALIC's exposure to interest rate risk was an important part of our analysis. ALIC's operating guidelines define processes and methodologies ALIC and the independent monitor use to measure each critical component of interest rate risk, including mismatch or delta risk, exposure to credit-spread risk, and negative convexity. Interest rate risk limits ALIC's guidelines establish clearly defined limits for interest rate delta risk and credit-spread volatility risk for the portion of the assets, liabilities, and hedges that relates directly to the FAs (i.e., excludes investments and hedges relating to capital). Limits on negative convexity are applied based on the market value of negatively convex assets. The delta-risk limits and spread-risk limits are based on net partial DV01s values and spread DV01s, respectively. Exposure to risk from credit-spread volatility is limited based on the requirement that ALIC maintain the weighted average life of the assets within six months of the weighted average life of the FA liabilities. Because the company is limited to U.S. dollar-denominated assets and liabilities, it is not exposed to foreign exchange risk. Although some of the risk limits only apply to the matched portfolio, the total portfolio is included in the required capital adequacy test. In addition, the company has an overarching requirement to limit interest rate risk and credit risk exposure to levels WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 9

that allow it to pass its required capital adequacy test, which assures sufficient available capital remains to support the company's risk between measurement dates. Measuring interest rate risk The operating guidelines require the company to manage its exposure to interest rate risk by using interest rate swaps to convert its fixed-rate assets and liabilities into floating-rate instruments, which minimizes ALIC's exposure to absolute rate movements along the yield curve. In the event of a wind down, ALIC is required to maintain such hedges until the related asset and liability are concurrently liquidated to ensure the interest rate risk profile remains intact. Once the assets and liabilities are "swapped back" to floating, the company's residual exposure to interest-rate risk is largely related to credit-spread volatility and the negative convexity related to its holdings of MBS. MBS can comprise up to 10% of the asset portfolio, but all other assets must be either option free or have a make-whole provision if callable. MBS may comprise a larger portion of the portfolio during the ramp-up period, but we do not expect ALIC to increase the dollar magnitude of its MBS holding until collateralized FHLBI FAs comprise less than 10% of total FAs. Derivatives are limited to OTC and "cleared derivatives" that the company uses exclusively for hedging purposes. ALIC's exposure to movements in credit spreads if the company were to "run off" its portfolio is largely a function of movements in spreads along the yield curve where the underlying "cash positions" on the assets and FAs are not matched, without considering the interest rate swaps. ALIC's formula for the fair value of its FAs on a redemption date includes a proxy for 'AA' corporate spread levels. Therefore, ALIC's exposure to credit-spread movements in a wind-down scenario is a function of the movements in the proxy 'AA' spreads relative to the movements on the spreads on its assets that could occur during an 8.5-month period, which is the maximum time that can occur between a measurement date and final wind-down. If the assets supporting FAs are of longer duration than the liabilities, ALIC is exposed to widening asset spreads relative to the proxy FA spread in this scenario, and vice-versa if the durations are shorter. ALIC measures its potential exposure to credit-spread movements for both of these scenarios and incorporates it in its formula for required capital. ALIC also measures its exposure to interest rates using partial DV01s, which provides the company with its net exposure to a one-basis-point movement in interest rates at each point along the curve, considering assets, liabilities, and hedge instruments. The company measures its exposure to negative convexity related to options embedded in its MBS portfolio by comparing the modeled change in the market value of this segment of the portfolio for applied two-way stressed shifts to what is implied by the partial DV01 values, given the same shifts. We view its technique as largely consistent with the principles embedded in our criteria for determining negative convexity at insurance companies (see Methodology For Calculating The Convexity Risk in U.S. Insurance Risk Based Capital Model, published April 27, 2011). The applied interest rate risk metrics described here form the basis for ALIC's required capital charges. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 10

Capital Adequacy Test ALIC's capital adequacy test was a critical factor in our analysis. We determined that its test measures capital based on stresses that are consistent with the assigned rating. ALIC and the independent monitor apply the capital adequacy test twice each month by determining the risk-based capital that ALIC is required to hold and comparing it to ALIC's available capital using a marked-to-market approach. ALIC passes the capital adequacy test if the available capital is greater than the required capital. The capital adequacy test is designed to ensure a sufficient capital buffer for ALIC to absorb losses related to stressed movements in interest rates, credit spreads, and other risks during an 8.5-month period. The test also verifies that the company has enough capital to support losses related to stressed credit defaults on the fixed-income portfolio to the term of the longest FA. Eight and one-half months is the maximum time that could elapse between a breach of the capital test and a required redemption or termination of the FAs. Although we expect part of the buffer to be gone if the capital requirements are breached, the required capital is calculated to absorb potential losses and capital deterioration between the preceding measurement date and the redemption date. The redemption will actually occur as quickly as assets can be liquidated. An important consideration in our rating is the company's requirement to limit its risk at all times so that it does not fail the capital adequacy test, which obligates ALIC to limit exposure between measurement dates. Available capital The capital adequacy test requires ALIC to determine the available capital on each measurement date using a market-value approach. The net difference between the value of assets and liabilities is considered available capital. The assets and interest rate derivatives are valued based on prevailing market data. The non-collateralized FA liabilities are valued using the aggregate fair value formula(s) applied in the event of a mandatory redemption. The value of the FHLBI contracts includes early-termination penalties. The cash or invested assets resulting from draws on repurchase agreements and the liquidity agreements, if any, are included as assets, and the repayment obligations are included as liabilities. The aggregate value of overcollateralization (i.e., the amount in excess of net market value) posted in relation to OTC derivatives, cleared derivatives, repurchase agreements, and the value of ALIC's holding in FHLBI preferred stock are subtracted from the net difference. The portion of collateral that ALIC posts on FHLBI FAs in excess of the liability value plus prepayment penalties is also subtracted from the aggregate assets. To the extent that ALRe provides collateral to ALIC, these subtractions from capital relating to collateral posting will be reduced up to the amount of overcollateralization provided to FHLBI and other counterparties. The formula is such that ALIC's capital will not be increased by any amount of collateral provided by ALRe that exceeds the overcollateralization requirements, if any. Assets received as collateral from counterparties on repurchase agreements and derivative transactions are excluded from the available capital calculation (i.e., they are not included as an asset). In effect, the available capital is a measurement of the amount of funds that would remain if ALIC were to liquidate the WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 11

company on the measurement date. Available capital equals the sum of the following: Market value of investment assets and cash equivalents; Cash from bank liquidity or repurchase agreement line and other sources; Unrealized gains on derivative instruments (hedges); Less FHLBI preferred stock. Less the sum of the following: Fair value of noncollateralized FAs (i.e., redemption value); Par amount plus accrued interest on FHLBI and legacy FA; Prepayment penalties on FHLBI FAs; Overcollateralization posted on FHLBI FAs less allocated collateral provided by ALRe; Overcollateralization posted to hedge counterparties less allocated collateral provided by ALRe; Initial margin posted to FCMs; Overcollateralization posted to FCMs less allocated collateral provided by ALRe; Overcollateralization posted on repurchase agreements less allocated collateral provided by ALRe; Unrealized losses on derivatives (as an absolute value); Principal plus accrued interest owed on bank liquidity lines; Principal plus accrued interest owed on repo liquidity lines. Required capital Required capital is intended to be the amount of capital needed to absorb the losses ALIC could experience during an 8.5-month period related to stressed adverse movements in interest rates and credit spreads. This required capital is also meant to ensure the company has capital to support losses relating to stressed credit defaults on the fixed-income portfolio out to the term of the FAs. Required capital is also intended to absorb portions of losses relating to counterparties and FCMs on derivative transactions and operational risk. The required capital is based on an aggregation of the following separately calculated component charges, which are calculated based on the combined portfolio of assets, liabilities, and derivatives instruments, including capital investments: Interest rate delta risk charge; Interest rate gamma risk charge; Credit spread volatility and asset default risk charge; Operational risk charge; FHLBI prepayment penalty charge; FHLBI asset mark-to-market risk charge ; OTC hedge counterparty overcollateralization volatility risk charge; OTC hedge counterparty credit risk charge; Repurchase agreement overcollateralization volatility risk charge; Cleared hedge overcollateralization volatility risk charge; Cleared hedge FCM credit risk charge. In summary, ALIC's interest rate delta risk, interest rate gamma risk, and credit spread volatility risk capital charges WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 12

are based on calculations that capture the named specified components of interest risk based on their actual measured sensitivity exposure and stressed volatilities that could be experienced during an 8.5-month period. ALIC determines the applied volatilities based on the higher of volatility calculated using a stressed standard deviation approach and an approach based on observed historical 8.5-month movements stressed by a multiplier. The calculations ALIC applies to determine required capital related to interest rate and spread movements effectively "stack" or add these stressed exposures. This is a conservative approach because it ignores the negative correlation that typically exists between risk-free rates and credit spreads. ALIC's calculation of capital for convexity risk is consistent with our convexity model (see Methodology For Calculating The Convexity Risk in U.S. Insurance Risk Based Capital Model, published April 27, 2011). The asset default risk capital charge is calculated in consideration of exposure to spread volatility using the CDOE. The operational risk capital charge is determined by applying a 10-basis-point charge to the principal amount of the FAs. The FHLBI prepayment penalty charge captures the potential volatility of the market-based prepayment penalty ALIC would incur if it terminated the FA early. It is based on applying stresses to the market-risk drivers included in the prepayment formula. The FHLBI asset mark-to-market charge captures the risk related to detrimental market-value movements in the posted collateral and is calculated based on stressed interest rate and spread movements applied to the posted collateral. Because overcollateralization posted to FHLBI and not provided by ALRe is detrimental to ALIC's available capital, decreases in the market value of the collateral will decrease capital. This charge provides a cushion for such. The OTC hedge counterparty overcollateralization volatility risk charge captures the potential volatility of the required amount of collateral posted on CSAs with OTC hedge counterparties as the market value of the underlying derivative transactions changes. The charge is calculated by applying stressed movements to the risk drivers of the underlying net derivative position with each counterparty separately. The OTC hedge counterparty credit risk charge captures part of the potential credit risk if an OTC derivative counterparty fails, and is based on the minimum transfer amount in the CSA, because this is the maximum amount of the exposure that would not be collateralized. The potential loss on the actual overcollateralization posted is subtracted from capital. The repurchase agreement overcollateralization volatility risk charge captures the risk related to the overcollateralization margins provided on repurchase agreements used to obtain collateral posted on cleared derivative transactions. The charge is calculated by applying stressed movements to the underlying risk drivers that affect the market value of the cleared hedge instruments to determine the potential movement in the overcollateralization on the repurchase agreements. This calculation is done separately with each FCM. The cleared hedge overcollateralization volatility risk charge captures the potential volatility of the required amount of collateral posted to FCMs on cleared derivatives as the market value of the underlying derivative transactions changes. The charge is calculated by applying stressed movements to the risk drivers of the underlying net derivative position with each FCM separately. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 13

The cleared hedge FCM credit risk charge captures the risk related to minimum transferred amounts for cleared derivatives. Because capital investments are included in the determination of required capital and there is no liability that offsets the market-value sensitivity of such, the company essentially is required to hold capital against the full impact of spread and rate volatility for these investments in its model. Liquidity Risk The evaluation of liquidity risk was a critical part of our analysis of ALIC. We view liquidity risk as ALIC's inability either to meet cash-flow requirements or to satisfy collateral-posting obligations under its CSAs related to OTC derivative contracts, collateralized funding agreements with FHLBI, and margins on "cleared" derivatives. Based on our analysis, the procedures and policies ALIC uses to monitor and measure cash flow and collateral needs in consideration of its committed cash liquidity resources, repurchase agreement lines, and asset portfolio mitigate liquidity risk to a level consistent with the assigned rating. Also, the company's liquidity evaluations assume that it could take as long as six months to liquidate its investment-grade corporate securities, which we believe is consistent with the assigned rating. Because ALIC's operating guidelines limit eligible collateral on CSAs to investment-grade corporate bonds, U.S. agency MBS, and other securities that comprise most of its investment portfolio, we don't view posting obligations under CSAs as a large source of liquidity risk. Furthermore, the operating guidelines require that proceeds from assets that mature before the FAs they are matched to must be invested in cash equivalents, which further reduces their liquidity exposure. The source of the agency MBS collateral that ALIC posts to FHLBI is largely its fixed-income holdings in MBS. But the company can also receive collateral from ALRe and in some situations may obtain a small portion of this collateral from its repurchase agreement lines. Because the investment guidelines limit ALIC to holding no more than 10% agency MBS following the ramp-up period described in the Measuring Interest Rate Risk section, and ALIC is restricted to contracts with the FHLBI of no more than 100% of its MBS holdings, we do not expect the FHLBI contracts to be larger than about 10% of ALICs FA portfolio following the ramp-up period. The company's liquidity modeling considers stressed collateral requirements based on the actual size of these FAs. Cash liquidity support ALIC's operating guidelines require it to maintain a committed credit facility with one or more lenders with a minimum combined commitment of $75 million, but larger amounts may be required based on its liquidity models. Either all of the lenders under the credit facility must be rated no less than 'AA-' or there must be three lenders all rated at least 'A-' and one with an assigned a rating of at least 'AA-'; and each lender must agree to fulfill half of the commitment of one defaulting bank. ALIC must replace a downgraded bank that causes it to violate these ratings requirements within 60 days. The lenders have to give 260 days' notice before terminating support so that the resources are available during the WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 14

wind-down period if they can't be replaced. Based on the principles in our Joint Support Criteria and the ratings requirements for lenders in their operating guidelines, we view the case in which three lenders provide liquidity support as equivalent to an 'AA-' rating after assuming "high correlation." Our view considers the fact that the lenders are in the same industry, which affects their default correlation. Furthermore, since we viewed the liquidity support providers as a direct limited support obligation under the principles of our Counterparties Risk Framework Methodology and Assumptions Criteria (published June 25, 2013), the ratings on the liquidity providers were sufficient to support the assigned rating on ALIC. Collateral liquidity support ALIC will maintain committed facilities to enter into repurchase agreements with one or more financial institutions that will provide cash or U.S. Treasury or other securities in exchange for eligible collateral. Eligible collateral includes the corporate securities that comprise most of the company's investment portfolio. This facility may be used only to satisfy any collateral-posting obligations, but likely will be used to obtain cash and collateral posted to FCMs related to derivative transactions "cleared" on exchanges. The lenders must give 260 days' notice before terminating the support so that the resources are available during the wind-down period if they can't be replaced. Liquidity tests ALIC and the independent manager will apply three separate tests twice each month to measure the company's potential liquidity needs relative to its available liquidity resources: a net cumulative outflow test, a cash liquidity test, and a collateral liquidity test. The liquidity tests are designed to provide enough notification of a pending liquidity shortfall that ALIC will have sufficient liquidity to wind down if there is a breach of these tests. NCO test The NCO test is a measure of cash-flow liquidity risk. The test is applied by first determining the combined cash inflows and outflows related to the matched portfolio of fixed-income assets, liabilities, and hedge instruments. ALIC then determines the largest NCO (negative balance) occurring during a series of 180-day or shorter periods starting from the measurement date out to 365 days. ALIC then compares this to its available liquidity resources. The test is passed if the aggregate of the available bank cash liquidity lines and cash equivalents is greater than the largest NCO during any of the tested periods. Repurchase lines are not assumed to be available to meet cash-flow liquidity needs under this test. This test assumes the company does not sell its assets prior to maturity, even when the asset is longer than the liability. In addition, because required collateral delivered on FHLBI FAs is limited to certain eligible security types (cash, U.S Treasury securities, agency MBS), the liquidity test requires that the deficiency between the stressed market value of the FHLBI collateral and the required amount be posted (equal to par amount of liabilities plus overcollateralization plus prepayment penalties), if any, be added to the maximum NCO. Cash liquidity test The cash liquidity test is a separate measure of cash-flow liquidity risk. Under this test the company models the combined cash inflows and outflows relating to its total portfolio of fixed-income assets, liabilities, and hedge instruments out 365 days. In the test, the company assumes fixed-income assets other than cash equivalents won't be sold prior to maturity, and cash inflows from assets are invested in cash equivalents until the corresponding liability WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 15

matures, as is required under the operating guidelines. The available bank cash liquidity lines are applied to satisfy negative cash balances or cash collateral requirements during the modeled period. The test is passed if the cash balance is never negative, including the bank liquidity facilities. Collateral liquidity test The collateral liquidity test measures collateral liquidity risk. The test measures ALIC's collateral-posting requirements relating to its collateralized FAs, CSAs, and "cleared" derivatives out 365 days and compares them to its available repurchase agreement lines, eligible collateral, and bank cash liquidity lines. Under the test, the company models the posting requirements out 365 days after applying adverse movements to the underlying risk drivers that affect exposure on the OTC and cleared derivatives, including rates and spreads. The OTC and cleared derivatives are stressed by individual FCM and counterparties to allow offsets. The test is passed if sufficient collateral is available to meet the posting obligations during the 365 days. Asset adequacy test ALIC will also perform an asset adequacy test twice each month to determine if the assets and OTC derivatives create sufficient cash flow to satisfy its obligations under FAs, derivative instruments, and liquidity lines if the FAs are held to term and the entire portfolio is in run-off. The methodology used in the test is similar to ALIC's regulatory cash-flow testing. The test is run under three separate interest-rate scenarios that all must pass. Credit-loss distribution scenarios for the assets are incorporated in the test, based on CDOE using our standard assumptions, and stressed to the 'AA-' rating level. In its test, ALIC considers the assets backing the liabilities sufficient to support the liabilities. A scenario is considered "passed" if the cumulative value of the surplus at the end of each month during the entire period is positive. An uncured failure of the asset adequacy test would result in a wind-down and a mandatory redemption. Wind down mandatory redemption If ALIC fails its capital adequacy test, one of the three liquidity tests, or asset adequacy test, and the failure is not cured within 30 days or does not remain cured for 30 consecutive days following a cure of such failure, the company would commence a wind-down. Likewise, if the defined risk limits are breached on the measurement date and the breach is not remedied within 15 days and does not remain cured for 15 consecutive days following such cure, a wind-down would also commence. The wind-down feature is intended to cause the liquidation agent to liquidate ALIC's assets and hedge instruments and redeem or terminate its funding agreements while sufficient capital and liquidity resources remain to satisfy the market-adjusted value on the FAs, or in the case of the FHLBI, the termination values, including penalties. The applied tests are designed to measure capital and liquidity including the period that can elapse between the last measurement date when the tests were passed and when a wind-down commences. The renewal periods on the liquidity support agreements are designed to a make certain such liquidity would always be available during a wind-down period in case such contracts are not renewed. The independent monitor applies the tests twice each month. Following an uncured test failure on a measurement date, a maximum of 60 days could elapse before the liquidation agent would be required to commence the wind-down WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 16

process. Once the wind-down process commences it would take a maximum of 180 days to redeem or terminate the FAs, but this would occur as quickly as the assets could be liquidated. If a wind-down occurs, the liquidation agent would follow procedures in the operating guidelines. The fixed-income assets would be liquidated and the derivatives contracts would be novated. The hedges must be novated almost concurrently following the sale of the matched asset or matched liability, which limits interest rate risk. The FAs must be redeemed or terminated almost concurrently following the sale of the matched asset which reduces spread risk. Explanation Of Certain Capital Charges Interest rate delta capital charge ALIC measures interest rate delta risk by determining the exposure to changes in rates along the term structure of interest rates excluding second-order price movements and changes in credit spreads. The required capital for interest rate delta risk is based on whichever of two methods produces the larger charge. Under the first method, the charge is determined by calculating stressed loss exposure based on a multiple of the annualized standard deviation of losses if historical daily interest rate movements are applied to ALIC's existing interest rate delta exposure. The implied historical daily losses are calculated by taking the sum of the products of ALIC's net partial DV01 values at 11 separate points along the yield curve on the measurement date and the absolute daily historical interest rate movements corresponding to each point. (Partial DV01s are the exposure in dollars that market/model values have to a one-basis-point increase in interest rates along the yield curve while keeping other points constant.) The net partial DV01 values are based on the combined exposure from ALIC's assets, liabilities, and derivative instruments. The standard deviations of the sum of these products are calculated separately using the data observed during the preceding 2.5-, five-, and 10-year periods. The largest of these standard deviations is annualized and stressed by multiplying it by a Z-score that is consistent with a 99.91% confidence level, which becomes the charge using the first method. The second method uses a historic simulation, multiplying the net partial DV01 exposures calculated for the portfolio on the measurement date by the series of absolute rate movements for the corresponding points along the yield curve for the series of 8.5-month or shorter time periods using daily time steps since 1977. The maximum loss determined by the sum of these products is then multiplied by 1.5 to determine the charge using the second method. Credit spread and asset default risk capital charge ALIC determines the required capital for risk related to credit-spread volatility and asset defaults by considering the two risks in unison. The company determines the combined capital charge by calculating the loss exposure related to asset defaults by using CDOE based on both a one-year term and the full term of the liabilities. This takes into consideration the potential stressed loss exposure to credit-spread movements consistent with the scenario being analyzed. The required capital charge for credit-spread and asset default risk is based on the higher of the combined charges for credit default and credit-spread risk calculated in the two separate time-frame scenarios. The two risks are considered in unison because the potential loss exposure to these risks depends on which scenario is WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 17

being considered; certain combinations of risk scenarios are mutually exclusive. More specifically, in a scenario where ALIC goes into wind-down, the company's capital would need to support the full impact of the asset spreads widening during the 8.5-month period relative to the proxy liability spread and rates used to determine the prepayment penalty on FAs with FHLBI. But it would not need to support credit default risk beyond this period because assets would have been liquidated. Conversely, if the portfolio runs off during the full term of the liabilities, ALIC's asset portfolio would be exposed to credit default risk during this entire time. But the company's exposure to credit-spread movements is limited to the impact of the systemic spread volatility exposure remaining at or near the maturity date of each liability. Credit spread and asset default risk capital charge in a wind-down scenario The company calculates required capital for credit default and credit spread volatility risk for the wind-down time frame scenario as follows: The first step is to determine the systemic credit-spread volatility charge during the wind-down period. The company determines the spread DV01s (the change in implied market value given a one-basis point increase in relevant spreads) for the asset and liability portfolios separately. The spread DV01s for FAs are based on changes using the proxy market valuation formulas in the contracts or, in the case of FHLBI contracts, zero. If the company has purchased CDS protection on an asset with identical reference names, asset spread DV01s are adjusted by offsetting CDS spread DV01s if the CDS contract term is at least 8.5 months. The company then determines the corresponding historically observed daily spread movements for the proxy 'AA' index applied in the liability valuation formula as well as for the asset portfolio. The proxy daily spread movements for the asset portfolio are determined based on the historically observed volatility of proxy indices to which assets are mapped based on type, term to maturity, and rating. The credit spread volatility charge is the higher of loss exposures for systemic credit spread risk as calculated based on a VaR and a deterministic approach, which are calculated as follows: The loss exposures for systemic credit-spread risk using the VaR approach are calculated as follows: The implied market-value loss based on stressed spread movements is determined by taking the annualized standard deviation of the sum of the daily asset spread exposure and the daily liability spread exposure described below, multiplied by a Z-score of 3.107, which is consistent with a 99.91% confidence level. The stressed market-value loss is calculated based on daily movements observed during the past 2.5, five, and 10 years and since 1996. The applied exposure is based on the period that produces the largest loss. The daily asset spread exposure is the aggregate of the product of the individual asset spread DV01s on the measurement date and daily absolute movements in proxy asset spreads. The daily liability spread exposure is the aggregate of the product of the liability spread DV01s expressed as a negative number on the measurement date and daily absolute movements in 'AA' proxy spreads for the specified period. The loss exposures for systemic credit-spread risk using the deterministic approach are calculated as follows: The implied market-value loss based on stressed historical spread movements is determined by taking the product of 1.5 and the absolute value of the most negative of the sum of the daily historical asset spread exposure and the daily historical liability spread exposure, described below, observed using a series of 8.5-month or shorter periods created WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 18

using daily time steps since 1996. In other words, the company considers the largest loss relating to spread movements that would have occurred during the interim of each 8.5-month time frame on the spread proxies since 1996 based on its current exposure. The daily historical asset spread exposure is the aggregate of the product of the individual asset spread DV01s expressed as a negative number on the measurement date and absolute movements in the mapped proxy asset spreads observed during the period. The daily historical liability spread exposure is the aggregate of the product of the liability spread DV01s expressed as a positive number on the measurement date and the absolute movements in 'AA' proxy spreads to which liabilities are mapped by tenor observed during the period. The next step is to determine credit default loss exposure in the wind-down time frame scenario, which is done using the latest version of CDOE assuming all the assets have a term to maturity of one year while continuing to apply the LOTs described earlier. The credit spread and asset default risk capital charge in the wind-down scenario used for comparison is the sum of the applied credit spread volatility charge and the credit default loss exposure in the wind-down time-frame scenario. Credit spread and asset default risk capital charge in run-off scenario In the scenario where ALIC's credit spread and asset default risk capital requirement is calculated in "run off," the assets in the portfolio are assumed to be held for the term of the liabilities or until they mature. In determining the capital requirements, the company evaluates exposure to credit default risk during this entire period and captures the sensitivity to adverse movement in systemic spreads based on the full term of the assets and liabilities. In this scenario, ALIC's exposure to market-value losses from systemic credit spread movements is limited to losses during the periods when there is a mismatch between the actual assets and liabilities without consideration of the interest rate swaps. If residual assets remain at the term of the liabilities that created funding for such asset(s) at any time during the run-off period (i.e., assets are longer than liabilities), the company is exposed to the risk of asset spreads widening relative to the residual interest rate swaps used to hedge. Conversely, in time periods when the assets are shorter than the liabilities, it is detrimental for ALIC if asset spreads tighten. In its calculation for required capital for the run-off scenario, ALIC's goal is to capture the stressed change in the market value of the portfolio (losses) that could occur due to the negative effects of stressed movements in systemic credit spreads during a one-year period. In this scenario, the sensitivity to spread movements is based on the net spread DV01 of the combined portfolio of assets and liabilities based on the portfolio's remaining term to maturity. Although the application of stressed one-year movements in systemic spreads may not capture possible spread movements during the run-off period, the implied market valuation process in ALIC's twice monthly calculation of available capital reflects the impact of realized cumulative movements in spreads. In effect, the company's available capital is tested to determine whether it can support the additional one-year stress on spreads based on exposure sensitivity using the remaining term of the portfolio plus the impact of spreads that is already reflected in its market-implied valuation of available capital. Because its capital adequacy test is based on the higher of the combined charges in either the wind-down or run-off WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 19

scenarios, and the applied volatility includes the time between measurement periods, ALIC would have sufficient capital to absorb adverse spread movements during the wind-down period. In other words, on the prior measurement date either the capital required in the wind-down period was used in this calculation or the capital required for the run-off scenario was larger than the capital required for the wind-down period. In either case, sufficient capital exists to cover stressed losses during a wind-down. The company calculates required capital for the combined credit default and credit spread volatility risk for the "run off" time-frame scenario as follows: ALIC determines systemic credit-spread volatility charges for the run-off scenario. ALIC first determines the net spread DV01 for the combined portfolio of assets and liabilities. Net spread DV01 is the sum of asset spread DV01s expressed as a negative number and liability spread DV01s expressed as a positive number. The company then calculates the proxy movements in spreads for the asset portfolio based on the observed movements since 1996 in spreads of proxy indices to which the assets are mapped based on type, term to maturity, and rating. The daily observed spread movements are weighted based on the market value of individual asset holdings to determine a singular daily proxy spread movement. ALIC assumes that the volatility of spreads in the larger portfolio provides a proxy for the residual assets or reinvestment assets. The credit spread volatility charge in the run-off scenario is the higher of loss exposures for systemic credit spread risk calculated using a VaR and a deterministic approach, as follows: The VaR approach is based on the product of the annualized standard deviation of daily changes in weighted asset spreads and the net spread DV01s multiplied by a Z-score of 3.107, which is consistent with 99.91% confidence level. The applied annualized standard deviation is based on the largest value, as calculated using proxy spread movement data during the past 2.5, 5 and 10 years and since 1996. The deterministic approach is based on the product of 1.5 and the absolute value of the most negative product of the net spread DV01 and spread movement observed using a series of 8.5-month or shorter time periods created using daily time steps since 1996, in a technique similar to the one applied in the wind-down scenario. Credit loss exposure during the run-off time frame scenario is determined using CDOE assuming the assets have a term to maturity based on the shorter of the actual maturity of the individual assets and the term to maturity of the longest liability while continuing to apply the LOTs. The credit spread and asset default risk capital charge in the run-off scenario used for comparison is the sum of the larger of the two systemic credit spread volatility charges based on the two approaches and the credit default loss exposure in the run-off time-frame scenario. Ratings Detail (As Of February 27, 2014) Operating Company Covered By This Report Athene Life Insurance Company Financial Strength Rating Local Currency Domicile AA-/Stable/-- Delaware *Unless otherwise noted, all ratings in this report are global scale ratings. Standard & Poor's credit ratings on the global scale are comparable across countries. Standard & Poor's credit ratings on a national scale are relative to obligors or obligations within that specific country. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT FEBRUARY 27, 2014 20

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