Contrary to the industry's focus on capital raising, Apollo identifies the generation of high-quality investment opportunities ('origination') as the primary bottleneck to its growth. This mindset shifts their focus from fundraising to building and acquiring platforms that can source unique deals at scale.
Apollo entered the insurance market by identifying a post-GFC niche in guaranteed products (annuities), realizing it was essentially a spread-lending business they could master. This opportunistic move, not a preconceived plan, evolved into a half-trillion-dollar cornerstone of their firm.
The 2008 financial crisis created opportunities to buy discounted corporate debt, making Apollo realize that providing capital (credit) is fundamentally linked to providing equity in leveraged situations. This insight led them to build their now-massive integrated platform.
Early on, Apollo's culture was non-communicative, viewing information as power. As it grew into a public, global firm and entered the highly regulated insurance industry, this became untenable. The firm had to learn to articulate its strategy clearly to align employees and build trust with global regulators.
While competitors rush to offer semi-liquid private equity funds to wealth clients, Apollo has deliberately abstained. They believe the illiquid nature of PE assets creates a profound liquidity mismatch with redemption features, risking a poor client experience in a prolonged downturn.
To prevent silos, Apollo fosters a culture where employees spend time helping other teams, knowing the favor will be returned. This "flywheel" of mutual assistance is the core driver of their integrated model, cemented by firm-wide incentives like equity for all employees and bonuses tied to firm citizenship.
Instead of only celebrating wins and analyzing losses, Apollo's leadership instituted "near-miss reviews." They analyze successful investments that could have gone wrong "but for the skin of our teeth." This process uncovers hidden risks and flawed assumptions, strengthening the firm's underwriting for future deals.
Instead of taking more credit risk, Apollo leverages the long-term, stable nature of its insurance liabilities (8-9 years on average). This "secret asset" provides the flexibility to invest in complex or less liquid assets, capturing an "excess spread" unavailable to institutions like banks with short-term funding.
Apollo's foundational private equity strategy—seeking value, being contrarian, and investing flexibly across the capital structure—was not siloed. This single philosophy of maximizing return per unit of risk now guides every investment decision across their entire platform, including credit and insurance.
When high-yield bonds yielded only 4.5% in late 2021, Apollo abstained, viewing it as poor risk-return. Because they invest their own capital heavily alongside clients, they have the discipline to sit out popular but overpriced markets, even if it means forgoing AUM growth that competitors chased.
With half its AUM being its own captive insurance capital, Apollo's mindset shifts from a third-party manager to an owner-investor. This changes the client conversation from "here's a new product" to "here's what we're investing our own money in, join us." This deep alignment builds significant trust with LPs.