Brookfield Reinsurance (NYSE, TSX: BNRE, BNRE.A), soon to be
renamed ‘Brookfield Wealth Solutions,’ today announced financial
results for the quarter ended June 30, 2024.
Sachin Shah, CEO, stated, “We delivered strong
operating results during the second quarter. With the closing of
American Equity Life our asset base has doubled, our annuity sales
are growing and we are well positioned for our next stage of
growth.”
UnauditedAs of and for the periods ended June 30(US$ millions,
except per share amounts) |
Three Months Ended |
|
Six Months Ended |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
Total assets |
$ |
130,533 |
|
$ |
47,994 |
|
$ |
130,533 |
|
$ |
47,994 |
Adjusted equity1 |
|
11,384 |
|
|
5,047 |
|
|
11,384 |
|
|
5,047 |
Distributable operating
earnings1 |
|
298 |
|
|
160 |
|
|
577 |
|
|
305 |
Net income |
|
269 |
|
|
360 |
|
|
606 |
|
|
267 |
Net income per each class A and A-1 share |
$ |
0.08 |
|
$ |
0.07 |
|
$ |
0.16 |
|
$ |
0.14 |
- See Non-GAAP and
Performance Measures on page 7 and a reconciliation from net income
and reconciliation from equity on page 6.
Highlights
- Completed the acquisition
of American Equity Investment Life Holding Company (“AEL”) on May
2, 2024, and have since redeployed more than $3 billion of assets
into Brookfield strategies
- Across our full portfolio,
originated approximately $5 billion in proprietary investment
strategies during the quarter at returns in excess of
8.5%
- Generated $3 billion of
retail annuity sales, including approximately $1.3 billion of sales
at AEL during our two months of ownership
- Closed 25 pension risk
transfer transactions, representing over $450 million in premiums
in the quarter
Operating Update
We recognized $298 million and $577 million
of distributable operating earnings (“DOE”) for the three and six
months ended June 30, 2024, compared to $160 million and $305
million in the prior year periods. The increase in earnings for the
current period reflect contributions from our recent acquisitions,
notably two months of ownership of AEL and a full period of Argo
Group, which closed in late 2023. Additionally, our results reflect
strong annuity sales and other premium growth from underwriting
actions taken over the last twelve months. Lastly, we have
benefitted from higher spread earnings on our existing business,
driven by higher net investment income resulting from the progress
made repositioning assets into higher yielding investment
strategies.
We recorded net income of $269 million and $606
million for the three and six months ended June 30, 2024,
compared to net income of $360 million and $267 million in the
prior year periods. Net income in the current period is the result
of strong operating performance and contributions from our DOE
partially offset by transaction related costs associated with the
acquisition of AEL. Additionally, the prior year period included
unrealized mark to market gains on our investments and insurance
reserves.
Today, we are in a strong liquidity position
across the portfolio, with over $25 billion of cash and short-term
liquid investments across our investment portfolios, and another
$22 billion of long-term liquid investments. These liquid assets
will facilitate the ongoing rotation of our investment portfolio
into higher yielding investment strategies, while also continuing
to ensure we have sufficient liquidity coverage for our liabilities
in the case of any stress events across the broader market.
Update on Capital Structure and Name
Change
At a meeting on July 22, 2024, our company’s
shareholders approved bye-law amendments designed to simplify and
enhance our capital structure, including a re-designation of our
class A-1 exchangeable non-voting shares into class A shares of our
company and related changes to the terms of the class A shares that
will result in no shareholder having the power to vote more than
9.9% of the class A shares, regardless of economic ownership. The
third amended and restated bye-laws will become effective on August
9, 2024, with the re-designation occurring on August 29, 2024.
Holders of our company’s class A-1 shares do not need to take any
action with respect to the re-designation. Once the re-designation
is implemented, all previously held class A-1 shares will
automatically be re-designated as class A shares and your holdings
will be updated accordingly.
Shareholders also approved a resolution
authorizing the change of our name from “Brookfield Reinsurance” to
“Brookfield Wealth Solutions”. We expect that the name change will
be effected on or about Friday, September 6, 2024 and that our
class A will begin trading on the New York Stock Exchange and
Toronto Stock Exchange under the symbol “BNT” at market open as of
such date.
Regular Distribution Declaration
The Board declared a quarterly distribution of
$0.08 per class A shares, class A-1 shares and class B shares,
payable on September 27, 2024 to shareholders of record as at the
close of business on September 12, 2024. This distribution is
identical in amount per share and has the same payment date as the
quarterly distribution announced today by Brookfield Corporation on
the Brookfield Class A Shares. The re-designation will have no
impact on the payment of the quarterly distribution, and investors
who currently hold class A-1 shares do not need to take any action
in order to receive the quarterly distribution.
Brookfield Corporation Operating
Results
An investment in Class A shares of our company
is intended to be, as nearly as practicable, functionally and
economically, equivalent to an investment in the Brookfield Class A
Shares. A summary of Brookfield Corporation’s second quarter
operating results is provided below:
UnauditedAs of and for the periods ended June 30(US$ millions,
except per share amounts) |
Three Months Ended |
|
Last Twelve Months Ended |
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
2023 |
Net income attributable to Brookfield shareholders1 |
$ |
43 |
|
|
$ |
81 |
|
$ |
1,074 |
|
$ |
308 |
Net income (loss) of
consolidated business2 |
|
(285 |
) |
|
|
1,512 |
|
|
3,403 |
|
|
2,696 |
Distributable earnings before
realizations1,3,4 |
|
1,113 |
|
|
|
1,013 |
|
|
4,379 |
|
|
4,078 |
– Per Brookfield share1,3,4 |
|
0.71 |
|
|
|
0.64 |
|
|
2.77 |
|
|
2.56 |
Distributable earnings1,3 |
|
2,127 |
|
|
|
1,187 |
|
|
5,805 |
|
|
5,205 |
– Per Brookfield share1,3 |
|
1.35 |
|
|
|
0.75 |
|
|
3.67 |
|
|
3.26 |
-
Excludes amounts attributable to non-controlling interests.
-
Consolidated basis – includes amounts attributable to
non-controlling interests.
-
See Reconciliation of Net Income to Distributable Earnings on page
5 and Non-IFRS and Performance Measures section on page 8 of
Brookfield Corporation’s press release dated August 8, 2024.
-
Distributable earnings before realizations, including per share
amounts, for the twelve months ended June 30, 2023 were adjusted
for the special distribution of 25% of Brookfield’s asset
management business on December 9, 2022. Prior to the adjustment,
distributable earnings before realizations were $4.3 billion
for the twelve months ended June 30, 2023.
Brookfield Corporation net income above is
presented under IFRS. Given the economic equivalence, we expect
that the market price of the Class A Shares of our company will be
impacted significantly by the market price of the Brookfield Class
A Shares and the business performance of Brookfield as a whole. In
addition to carefully considering the disclosure made in this news
release in its entirety, shareholders are strongly encouraged to
carefully review Brookfield’s letter to shareholders, supplemental
information and its other continuous disclosure filings. Investors,
analysts and other interested parties can access Brookfield
Corporation’s disclosure on its website under the Reports &
Filings section at bn.brookfield.com.
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
Unaudited |
|
|
June 30 |
|
|
December 31 |
(US$ millions) |
|
|
|
2024 |
|
|
|
2023 |
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
14,335 |
|
|
$ |
4,308 |
Investments |
|
|
|
85,117 |
|
|
|
39,838 |
Reinsurance recoverables and
deposit assets |
|
|
|
10,275 |
|
|
|
3,388 |
Reinsurance funds
withheld |
|
|
|
1,573 |
|
|
|
7,248 |
Accrued investment income |
|
|
|
781 |
|
|
|
280 |
|
|
|
|
112,081 |
|
|
|
55,062 |
|
|
|
|
|
|
|
Premiums due and other
receivables |
|
|
|
725 |
|
|
|
711 |
Deferred policy acquisition
costs |
|
|
|
10,539 |
|
|
|
2,468 |
Deferred tax asset |
|
|
|
700 |
|
|
|
432 |
Other assets |
|
|
|
5,222 |
|
|
|
1,781 |
Separate account assets |
|
|
|
1,266 |
|
|
|
1,189 |
Total assets |
|
|
|
130,533 |
|
|
|
61,643 |
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
|
Policy and contract
claims |
|
|
|
7,397 |
|
|
|
7,288 |
Future policy benefits |
|
|
|
10,920 |
|
|
|
9,813 |
Policyholders’ account
balances |
|
|
|
80,489 |
|
|
|
24,939 |
Deposit liabilities |
|
|
|
1,546 |
|
|
|
1,577 |
Market risk benefits |
|
|
|
3,276 |
|
|
|
89 |
Unearned premium reserve |
|
|
|
2,037 |
|
|
|
2,056 |
|
|
|
|
105,665 |
|
|
|
45,762 |
|
|
|
|
|
|
|
Other policyholder funds |
|
|
|
343 |
|
|
|
335 |
Due to related parties |
|
|
|
734 |
|
|
|
564 |
Notes payable |
|
|
|
657 |
|
|
|
174 |
Corporate borrowings |
|
|
|
1,615 |
|
|
|
1,706 |
Subsidiary borrowings |
|
|
|
2,846 |
|
|
|
1,863 |
Funds withheld for reinsurance
liabilities |
|
|
|
3,526 |
|
|
|
83 |
Other liabilities |
|
|
|
2,115 |
|
|
|
1,118 |
Separate account
liabilities |
|
|
|
1,266 |
|
|
|
1,189 |
|
|
|
|
|
|
|
Junior preferred shares |
|
|
|
2,751 |
|
|
|
2,694 |
Non-controlling interest |
848 |
|
|
|
146 |
|
Class A, class A-1 and class
B |
1,591 |
|
|
|
1,591 |
|
Class
C |
6,576 |
|
|
9,015 |
|
4,418 |
|
6,155 |
Total liabilities and equity |
|
|
$ |
130,533 |
|
|
$ |
61,643 |
CONSOLIDATED STATEMENTS OF
OPERATIONS
UnauditedFor the periods ended June 30US$ millions |
Three Months Ended |
|
Six Months Ended |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net premiums and other policy revenue |
$ |
1,716 |
|
|
$ |
1,202 |
|
|
$ |
3,359 |
|
|
$ |
2,099 |
|
Net investment income,
including funds withheld |
|
1,162 |
|
|
|
517 |
|
|
|
1,832 |
|
|
|
975 |
|
Net
investment gains (losses), including funds withheld |
|
24 |
|
|
|
255 |
|
|
|
196 |
|
|
|
75 |
|
Total revenues |
|
2,902 |
|
|
|
1,974 |
|
|
|
5,387 |
|
|
|
3,149 |
|
|
|
|
|
|
|
|
|
Benefits and claims paid on
insurance contracts |
|
(1,515 |
) |
|
|
(1,133 |
) |
|
|
(2,929 |
) |
|
|
(1,875 |
) |
Interest sensitive contract
benefits |
|
(422 |
) |
|
|
(156 |
) |
|
|
(607 |
) |
|
|
(243 |
) |
Amortization of deferred
policy acquisition costs |
|
(276 |
) |
|
|
(185 |
) |
|
|
(501 |
) |
|
|
(332 |
) |
Changes in fair value of
insurance-related derivatives and embedded derivatives |
|
13 |
|
|
|
30 |
|
|
|
57 |
|
|
|
(39 |
) |
Changes in fair value of
market risk benefits |
|
(168 |
) |
|
|
14 |
|
|
|
(199 |
) |
|
|
8 |
|
Other reinsurance
expenses |
|
(7 |
) |
|
|
30 |
|
|
|
(14 |
) |
|
|
36 |
|
Operating expenses |
|
(461 |
) |
|
|
(141 |
) |
|
|
(694 |
) |
|
|
(315 |
) |
Interest expense |
|
(95 |
) |
|
|
(60 |
) |
|
|
(167 |
) |
|
|
(120 |
) |
Total benefits and expenses |
|
(2,931 |
) |
|
|
(1,601 |
) |
|
|
(5,054 |
) |
|
|
(2,880 |
) |
Net income before income taxes |
|
(29 |
) |
|
|
373 |
|
|
|
333 |
|
|
|
269 |
|
Income
tax recovery (expense) |
|
298 |
|
|
|
(13 |
) |
|
|
273 |
|
|
|
(2 |
) |
Net income for the period |
$ |
269 |
|
|
$ |
360 |
|
|
$ |
606 |
|
|
$ |
267 |
|
|
|
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
|
|
|
Class A, class A-1 and class B
shareholders1 |
$ |
3 |
|
|
$ |
1 |
|
|
$ |
6 |
|
|
$ |
2 |
|
Class C shareholder |
|
261 |
|
|
|
362 |
|
|
|
593 |
|
|
|
263 |
|
Non-controlling interest |
|
5 |
|
|
|
(3 |
) |
|
|
7 |
|
|
|
2 |
|
|
$ |
269 |
|
|
$ |
360 |
|
|
$ |
606 |
|
|
$ |
267 |
|
- Class A and A-1
shares receive distributions at the same amount per share as the
cash dividends paid on each Brookfield Class A Share.
SUMMARIZED FINANCIAL
RESULTS
RECONCILIATION OF NET INCOME TO
DISTRIBUTABLE OPERATING EARNINGS
UnauditedFor the periods ended June 30US$ millions |
Three Months Ended |
|
Six Months Ended |
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
$ |
269 |
|
|
$ |
360 |
|
|
$ |
606 |
|
|
$ |
267 |
|
Unrealized net investment
gains, including funds withheld |
|
(24 |
) |
|
|
(255 |
) |
|
|
(196 |
) |
|
|
(75 |
) |
Mark-to-market on insurance contracts and other net assets |
|
225 |
|
|
|
34 |
|
|
|
290 |
|
|
|
96 |
|
|
|
470 |
|
|
|
139 |
|
|
|
700 |
|
|
|
288 |
|
Deferred income tax (recovery)
expense |
|
(343 |
) |
|
|
11 |
|
|
|
(328 |
) |
|
|
(2 |
) |
Transaction costs |
|
137 |
|
|
|
5 |
|
|
|
149 |
|
|
|
9 |
|
Depreciation |
|
34 |
|
|
|
5 |
|
|
|
56 |
|
|
|
10 |
|
Distributable operating
earnings1 |
$ |
298 |
|
|
$ |
160 |
|
|
$ |
577 |
|
|
$ |
305 |
|
RECONCILIATION OF EQUITY TO ADJUSTED
EQUITY
UnauditedAs of June 30US$ millions |
|
2024 |
|
|
|
2023 |
Equity |
$ |
9,015 |
|
|
$ |
1,911 |
Add: |
|
|
|
Accumulated other comprehensive (income) loss |
|
(382 |
) |
|
|
501 |
Junior preferred shares |
|
2,751 |
|
|
|
2,635 |
Adjusted equity1 |
$ |
11,384 |
|
|
$ |
5,047 |
- Non-GAAP measure -
see Non-GAAP and Performance Measures on page 7.
Additional Information
Brookfield Reinsurance was established on
December 10, 2020 by Brookfield and on June 28, 2021 Brookfield
completed the spin-off of the company, which was effected by way of
a special dividend, to holders of Brookfield's Class A and B
Shares. The statements contained herein are based primarily on
information that has been extracted from our financial statements
for the quarter ended June 30, 2024, which have been prepared
using generally accepted accounting principles in the United States
of America (“US GAAP” or “GAAP”).
Brookfield Reinsurance’s Board of Directors have
reviewed and approved this document, including the summarized
unaudited consolidated financial statements prior to its
release.
Information on our distributions can be found on
our website under Stock & Distributions/Distribution
History.
Brookfield Reinsurance Ltd.
(NYSE, TSX: BNRE, BNRE.A) is a leading wealth solutions provider,
focused on securing the financial futures of individuals and
institutions through a range of wealth protection and retirement
services, and tailored capital solutions. Each class A exchangeable
limited voting share and each class A-1 exchangeable non-voting
share of Brookfield Reinsurance are exchangeable on a one-for-one
basis with a class A limited voting share of Brookfield Corporation
(NYSE, TSX: BN). For more information, please visit our website at
bnre.brookfield.com or contact:
Communications & Media:Kerrie McHugh Tel:
(212) 618-3469Email: kerrie.mchugh@brookfield.com |
|
Investor Relations: Rachel SchneiderTel: (416)
369-3358 Email: rachel.schneider@brookfield.com |
Non-GAAP and Performance
Measures
This news release and accompanying financial
statements are based on US GAAP, unless otherwise noted.
We make reference to Distributable operating
earnings. We define distributable operating earnings as net income
excluding the impact of depreciation and amortization, deferred
income taxes, and breakage and transaction costs, as well as
certain investment and insurance reserve gains and losses,
including gains and losses related to asset and liability matching
strategies, non-operating adjustments related to changes in cash
flow assumptions for future policy benefits, and change in market
risk benefits, and is inclusive of returns on equity invested in
certain variable interest entities and our share of adjusted
earnings from our investments in certain associates. Distributable
operating earnings is a measure of operating performance. We use
distributable operating earnings to assess our operating results.
We also make reference to Adjusted equity. Adjusted equity
represents the total economic equity of our Company through its
Class A, A-1, B and C shares, excluding Accumulated other
comprehensive income, and the Junior preferred shares issued by our
Company. We use adjusted equity to assess our return on our
equity.
We provide additional information on key terms
and non-GAAP measures in our filings available at
bnre.brookfield.com.
Notice to Readers
Brookfield Reinsurance is not making any offer
or invitation of any kind by communication of this news release and
under no circumstance is it to be construed as a prospectus or an
advertisement.
This news release contains “forward-looking
information” within the meaning of Canadian provincial securities
laws and “forward-looking statements” within the meaning of
Canadian provincial securities laws and “forward-looking
statements” within the meaning of the U.S. Securities Act of 1933,
the U.S. Securities Exchange Act of 1934, and “safe harbor”
provisions of the United States Private Securities Litigation
Reform Act of 1995 and in any applicable Canadian securities
regulations. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or
conditions, include statements which reflect management’s
expectations regarding the operations, business, financial
condition, expected financial results, performance, prospects,
opportunities, priorities, targets, goals, ongoing objectives,
strategies and outlook of Brookfield Reinsurance, Brookfield
Corporation and their respective subsidiaries, as well as the
outlook for North American and international economies for the
current fiscal year and subsequent periods. Particularly,
statements regarding the AEL transaction, and benefits thereof,
future capital markets initiatives, including statements relating
to the redeployment of capital into higher yielding investments and
Brookfield Reinsurance’s balance sheet initiatives constitute
forward-looking statements. In some cases, forward-looking
statements can be identified by the use of forward-looking
terminology such as “expects,” “anticipates,” “plans,” “believes,”
“estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts”
or negative versions thereof and other similar expressions, or
future or conditional verbs such as “may,” “will,” “should,”
“would” and “could.” In particular, the forward-looking statements
contained in this news release include statements referring to the
future state of the economy or the securities market and expected
future deployment of capital and financial earnings. Although we
believe that our anticipated future results, performance or
achievements expressed or implied by the forward-looking statements
and information are based upon reasonable assumptions and
expectations, the reader should not place undue reliance on
forward-looking statements and information because they involve
known and unknown risks, uncertainties and other factors, many of
which are beyond our control, which may cause the actual results,
performance or achievements of Brookfield Reinsurance or Brookfield
Corporation to differ materially from anticipated future results,
performance or achievement expressed or implied by such
forward-looking statements and information.
Factors that could cause actual results to
differ materially from those contemplated or implied by
forward-looking statements include, but are not limited to: (i)
investment returns that are lower than target; (ii) the impact or
unanticipated impact of general economic, political and market
factors in the countries in which we do business including as a
result of COVID-19 and the related global economic shutdown; (iii)
the behavior of financial markets, including fluctuations in
interest and foreign exchange rates; (iv) global equity and capital
markets and the availability of equity and debt financing and
refinancing within these markets; (v) strategic actions including
dispositions; the ability to complete and effectively integrate
acquisitions into existing operations and the ability to attain
expected benefits; (vi) changes in accounting policies and methods
used to report financial condition (including uncertainties
associated with critical accounting assumptions and estimates);
(vii) the ability to appropriately manage human capital; (viii) the
effect of applying future accounting changes; (ix) business
competition; (x) operational and reputational risks; (xi)
technological change; (xii) changes in government regulation and
legislation within the countries in which we operate; (xiii)
governmental investigations; (xiv) litigation; (xv) changes in tax
laws; (xvi) ability to collect amounts owed; (xvii) catastrophic
events, such as earthquakes, hurricanes and epidemics/pandemics;
(xviii) the possible impact of international conflicts and other
developments including terrorist acts and cyberterrorism; (xix) the
introduction, withdrawal, success and timing of business
initiatives and strategies; (xx) the failure of effective
disclosure controls and procedures and internal controls over
financial reporting and other risks; (xxi) health, safety and
environmental risks; (xxii) the maintenance of adequate insurance
coverage; (xxiii) the existence of information barriers between
certain businesses within our asset management operations; (xxiv)
risks specific to our business segments including our real estate,
renewable power, infrastructure, private equity, and other
alternatives, including credits; and (xxv) factors detailed from
time to time in our documents filed with the securities regulators
in Canada and the United States.
We caution that the foregoing list of important
factors that may affect future results is not exhaustive and other
factors could also adversely affect its results. Readers are urged
to consider the foregoing risks, as well as other uncertainties,
factors and assumptions carefully in evaluating the forward-looking
information and are cautioned not to place undue reliance on such
forward-looking information. Except as required by law, Brookfield
Reinsurance undertakes no obligation to publicly update or revise
any forward-looking statements or information, whether written or
oral, that may be as a result of new information, future events or
otherwise.
Past performance is not indicative nor a
guarantee of future results. There can be no assurance that
comparable results will be achieved in the future, that future
investments will be similar to the historic investments discussed
herein (because of economic conditions, the availability of
investment opportunities or otherwise), that targeted returns,
diversification or asset allocations will be met or that an
investment strategy or investment objectives will be achieved.
Certain of the information contained herein is
based on or derived from information provided by independent
third-party sources. While Brookfield Reinsurance believes that
such information is accurate as of the date it was produced and
that the sources from which such information has been obtained are
reliable, Brookfield Reinsurance does not make any representation
or warranty, express or implied, with respect to the accuracy,
reasonableness or completeness of any of the information or the
assumptions on which such information is based, contained herein,
including but not limited to, information obtained from third
parties.
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