Company: APO
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0001858681-25-000034
Chunk: 117

Company: Apollo Global Management, Inc.
Filing Date: 2025-02-24
Form: 10-K
Item: Item 8
Chunk 117
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ed in the Audit

Our audit procedures related to the valuation models and significant unobservable inputs utilized by the Company to estimate the fair value of investments in certain structured Level 3 asset-backed securities included the following, among others:

•We involved senior, more experienced audit team members in the performance of our audit procedures.

•We tested the design and operating effectiveness of controls over management’s determination of the fair value of these securities.

•With the assistance of our fair value specialists, we:

–Evaluated the valuation models and unobservable inputs used by the Company to estimate fair value for a sample of these securities.

–Developed independent fair value estimates and compared our estimates to the Company’s estimates for a sample of these securities.

•On a sample basis, we evaluated the Company’s historical ability to accurately estimate the fair value of these securities by comparing previous estimates of fair value to market transactions with third parties adjusted for changes in market conditions. 

Certain Assumptions Used in the Valuation of Market Risk Benefits and Interest Sensitive Contract Liabilities - Refer to Note 2, Summary of Significant Accounting Policies, Note 7, Fair Value, and Note 11, Long-duration Contracts

Critical Audit Matter Description

The Company determines estimated valuations of Market Risk Benefits and Interest Sensitive Contract Liabilities, which include embedded derivatives. The Company’s valuations are based on actuarial methodologies and include significant unobservable inputs associated with underlying economic and future policyholder behavior assumptions.

Significant judgment is applied by the Company in determining these assumptions. Specifically, the future policyholder behavior assumptions related to lapses and the use of benefit riders, as well as the assumptions for the future equity option costs or option budget and risk margin involve significant unobservable inputs and may materially impact the estimated valuation of Market Risk Benefits and Interest Sensitive Contract Liabilities, which include embedded derivatives.

Given the significant judgement involved with determining these economic and policyholder behavior assumptions, auditing these estimates requires a high degree of auditor judgment and an increased extent of effort, including the involvement of our fair value and actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to these economic and policyholder behavior assumptions determined by the Company included the following, among others:

•We involved senior, more experienced audit team members, including fair value and actuarial specialists, to plan and perform audit procedures.

•We tested the design and operating effectiveness of controls over management’s development of these assumptions, including those controls over the underlying data.

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•With the assistance of