Free Essay: What I've Learned About the Companies

Apollo is one of the world’s largest alternative investment companies. It manages capital for hundreds of fund investors present in various countries. These include the most complicated institutional capital allocations, sovereign wealth funds, capital funds, charitable foundations, endowments from universities, family offices, and financial institutions that rely on Apollo to provide differentiated long-term investment platforms. Its core business functions rotate around credit, private equity, real assets, and public vehicles (“Apollo,” 2020).

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The American Financial Group, on the other hand, enables businesses and individuals to manage their financial risk by availing insurance products that meet their specific and consistently changing exposures to financial risk. The company has an Annuity Group that provides fixed-indexed and fixed annuities for the financial institutions, education, and retail markets. It also has a Specialty P&C Group that provides specialized commercial products for businesses (“American Financial Group,” 2020).

Investing and Financing Activities

Financing and investing activities serve the common purpose of bringing money to an organization (Ingram, 2020). The two largest investing and financing activities for Apollo include private equity and credit investment. However, the company also takes part in real asset investments and public vehicles (“Apollo,” 2020). The two largest investing and financing activities for AMF include property and casualty insurance (P&C) and the sale of traditional fixed and fixed-indexed annuities. They originate from its insurance operations and other affiliate services that include the Mid-continent group, the Republic indemnity, and the American custom (“American Financial Group,” 2020).

Compare and Contrast the Investing and Financial Activities

Differences exist in the investing and financial activities of the companies. Apollo’s investing vehicles are speculative while AFG’s investments are fixed. The private equity offered by Apollo relies on opportunistic build-ups and buyouts, distressed investments, and corporate carve-outs that often go against what other investors are doing. It relies on industry specialization and its ability to embrace complexity and adapt quickly to capitalize on market dislocations. However, the Property & Casualty Operations for the AFG focus on specialized commercial products and services for businesses whose values are not yet predetermined and hence not speculative. Apollo’s investments and financial activities focus on a value-driven approach to credit investing the way it does to real assets and private equity. This enables the company to meet the investor’s return requirements by establishing a balance between their risk appetite and their need for liquidity. However, AFG’s investment and financial activities focus on risk management. This enables the company to manage the financial risks for individuals and businesses via insurance services and products that meet their specific needs.

However, despite the differences, there are also similarities in both companies’ investment and financing activities. The investment platforms in both cases are prone to external and internal risk factors that may affect their revenue generation. Apollo’s private equity investments ensure that they provide flexible capital structures to provide downside protection. The flexible investment model ensures success in the investments by enabling the business to adapt to the changing market environments. The case is the same for AFG investments. The insurance products and services offered by the company are prone to specific and ever-changing risk exposures. They also utilize various ways to generate revenues for their shareholders. Apollo takes on some rigorous approaches to credit investing with its real assets and private investing. It utilizes diverse strategies to generate a range of returns that would enable the investments to meet the investors’ return requirements while risking their need for liquidity and risk appetite. This is equivalent to AFG which provides a range of financial resources that include traditional fixed, variable-indexed, and fixed-indexed annuities for the retail, broker-dealer, financial institutions, and registered advisor markets. All these help to increase the company’s revenues.

The Rationale of the Investing and Financing Strategies

Apollo’s investing and financing strategies are well-integrated and incorporate the use of real assets, credit, and private equity. These strategies are effective as they provide a value-driven approach for the company. With its experience in real estate principal investing, the strategies enable Apollo to capture every level of capital structure and span the market cycles. This allows the company to invest in various market cycles and sub-markets, and traditional and niche asset classes. Its thesis-driven strategies are useful in the identification and analysis of demographic trends, disruptive forces, and pockets of distress or market dislocations.

The American Financial Group capitalizes on Annuity Operations and Property & Casualty Operations for its investment and financing activities. These strategies play a vital role in running the company’s insurance operations which form the core of its business operations. The strategies are effective in providing the consumers with a wide range of financial resources, and specialized commercial products and services for businesses. They enable the company to meet its objective of enabling its clients to manage the financial risks via their insurance products and services which are tailored to meet any specific and constantly changing exposures to risk. The strategies aid in the allocation of capital to insurance operations that the management believes would provide unique opportunities and competitive advantage.

References

“American Financial Group” (2020). About the American Financial Group. Afginc.com. https://www.afginc.com/investors

“Apollo” (2020). About Apollo. Apollo.com https://www.apollo.com/about-apollo

Ingram, D. (2020). Financing and investing activities of a business entity. Chron.com. https://smallbusiness.chron.com/financing-investing-activities-business-entity-1884.html