Brookfield Reinsurance Announces Strong Second Quarter Results and Declares Regular Quarterly Distribution

BROOKFIELD, NEWS, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Brookfield Reinsurance (, TSX: BNRE) today announced financial results for the quarter ended June 30, 2023.

Sachin Shah, CEO of Brookfield Reinsurance, stated, “The strength of our second quarter results are underpinned by significant investment portfolio redeployment and the execution of strategic initiatives post the acquisition of American National one year ago. Following the close of our announced transactions, our total insurance assets will be over $100 billion, representing an important milestone in the continued growth of a diversified insurance business of scale.”

1. As at January 1, 2023, Brookfield Reinsurance converted its accounting framework from IFRS to US GAAP. The conversion is applied retrospectively and prior period figures have been restated where applicable.
2. See Non-GAAP and Performance Measures on page 7 and a reconciliation from net income and reconciliation from equity on page 6.
3. Class A and Class B shares receive distributions at the same amount per share as the cash dividends paid on each Brookfield Class A Share. Following the spin-off of Brookfield’s Asset Management business in December 2022, combined, Brookfield Corporation’s quarterly distribution of $0.07 per share and Brookfield Asset Management’s quarterly dividend of $0.32 per share (equivalent to $0.08 per Class A share held prior to the special distribution), would equate to $0.15 per Class A share held prior to the special distribution; representing a 7% increase from the prior year distribution.
   

Second Quarter Highlights

• Announced a definitive agreement to acquire American Equity Investment Life Holding Company (“AEL”) in a transaction valuing the company at $4.3 billion
• Originated over $3 billion of annuity sales, including $650 million of flow business within our existing reinsurance treaties
• Closed over 25 pension risk transfer (“PRT”) transactions, representing approximately $530 million in premiums
• Deployed approximately $1.5 billion at returns in excess of 8%, increasing our gross portfolio wide yield to over 5.5%
  

Update on Growth Initiatives

Subsequent to quarter-end, we announced a definitive agreement to acquire AEL, in which we currently hold a ~20% interest. Following the completion of the transaction, together with our existing, complementary annuity platform in American National, Brookfield Reinsurance will have the foundation to become a leading U.S. annuity originator. Through product and distribution synergies, we expect to increase new business origination to over $10 billion of policies in aggregate annually. The transaction is subject to customary closing conditions, including receipt of regulatory approvals.

Our previously announced acquisition of Argo Group, a leading U.S. specialty property and casualty (“P&C”) platform, remains on track to close in the second half of 2023. Upon closing of the Argo Group and AEL transactions, we will have deployed approximately $10 billion of capital within Brookfield Reinsurance since its inception, and our total insurance assets are expected to exceed $100 billion. By leveraging Brookfield’s investment capabilities, these assets will be redeployed at attractive risk-adjusted returns, driving increasing spread earnings and delivering significant returns to our shareholders.

Operating Update

We recognized $160 million and $305 million of Distributable operating earnings (“DOE”) for the three and six months ended June 30, 2023, respectively, compared to $46 million and $59 million in the prior year periods.

Results in the period were driven by contributions from American National, which we acquired in May 2022, as well as higher net investment income from reinsurance treaties closed in late 2021. We have made significant progress over the last twelve months in redeploying these assets into higher yielding investment strategies sourced through Brookfield and Oaktree.

We recorded net income of $360 million (2022 - net income of $25 million) for the three months ended June 30, 2023, as a result of a unrealized mark-to-market gains on our investments and insurance reserves. Net income also continues to benefit from the repositioning of assets across our insurance accounts into higher yielding investments, as noted above.

Today, we have approximately $1 billion of corporate liquidity, with an additional $22 billion of cash and liquid assets within our insurance portfolios. Amidst a volatile market backdrop in the first half of 2023, we continue to find opportunities to deploy capital for deep value and fund our strong pipeline of investments. Our strong liquidity positions us well to support the redeployment of our investment portfolios, while also remaining well capitalized to meet the needs of our policyholders and clients.

Details of the Upcoming Annual General and Special Meeting of Brookfield Reinsurance Shareholders

Brookfield Reinsurance will hold its upcoming annual general and special meeting of shareholders on August 17, 2023 at 10:00 a.m. (Eastern Daylight Time) in a virtual only format whereby Brookfield Reinsurance Shareholders may attend and participate in the meeting via live webcast.

A management information circular containing the specific details of the meeting and the matters to be presented and voted on was mailed to all Brookfield Reinsurance Shareholders of record as of market close on June 30, 2023.

Regular Distribution Declaration

The Board declared a quarterly distribution of $0.07 per Class A and B share, payable on September 29, 2023 to shareholders of record as at the close of business on September 14, 2023. This distribution is identical in amount per share and has the same payment date as the quarterly distribution announced today by Brookfield Corporation (“Brookfield”) on its Class A limited voting shares (“Brookfield Class A Shares”).

Brookfield Corporation Operating Results

An investment in Class A Shares of our company is intended to be, as nearly as practicable, functionally and economically, equivalent to an investment in the Brookfield Class A Shares. A summary of Brookfield’s second quarter and last twelve months operating results is provided below:

1. Distributable earnings before realizations, including per share amounts, for the three months ended June 30, 2022 and the twelve months ended June 30, 2023 and 2022 were adjusted for the special distribution of 25% of Brookfield’s asset management business on December 9, 2022.

Brookfield Corporation net income above is presented under IFRS. Given the economic equivalence, we expect that the market price of the Class A Shares of our company will be impacted significantly by the market price of the Brookfield Class A Shares and the business performance of Brookfield as a whole. In addition to carefully considering the disclosure made in this news release in its entirety, shareholders are strongly encouraged to carefully review Brookfield’s letter to shareholders, supplemental information and its other continuous disclosure filings. Investors, analysts and other interested parties can access Brookfield’s disclosure on Brookfield’s website under the Reports & Filings section at bn.brookfield.com.

CONSOLIDATED BALANCE SHEETS

1. December 31, 2022 figures reflect adjustments related to the conversion of accounting framework from IFRS to US GAAP and the adoption of Long Duration Targeted Improvements issued by the FASB, effective January 1, 2023, applied retrospectively.

CONSOLIDATED STATEMENTS OF OPERATIONS