BROOKFIELD, NEWS,
| Unaudited As at and for the periods ended (US$ millions, except per share amounts) | Three Months Ended | Nine Months Ended | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Equity | $ | 1,278 | $ | 67 | $ | 1,278 | $ | 67 | |||||||
| Excess capital | 997 | — | 997 | — | |||||||||||
| Net reserve capital | 281 | 67 | 281 | 67 | |||||||||||
| Funds from operations (“FFO”)1 | 3 | 1 | 9 | — | |||||||||||
| Net (loss) income | (6 | ) | 1 | (1 | ) | — | |||||||||
| Net income per class A & class B share2 | $ | 0.13 | n/a | $ | 0.13 | n/a | |||||||||
| Net (loss) income per class C share2 | $ | (0.42 | ) | n/a | $ | (0.42 | ) | n/a | |||||||
- See Basis of Presentation on page 7 and a reconciliation from net income (loss) on page 6.
- For the period from
June 28, 2021 toSeptember 30, 2021 .
Highlights
- After the quarter, we closed our previously announced transaction with
American Equity Investment Life Insurance Company (“AEILIC”), to reinsure up to$10 billion of long-dated annuities - We closed our first large-block reinsurance transaction in September, reinsuring approximately
$2 billion of deferred annuities - Our pension risk transfer business had its most active quarter to date, closing 11 transactions, representing over
$600 million of premiums
Operating Highlights
During the quarter, we entered into an agreement to reinsure
Our Canadian pension risk transfer (“PRT”) business successfully closed on eleven transactions, capturing over 20% of the Canadian market in the quarter. As of
Following the close of our reinsurance transaction with AEILIC in early October, BAM Re has approximately
We recognized
The net loss of
Update on Growth Initiatives
In early October, we closed our previously-announced transaction to reinsure up to
Today, we hold an approximate 9.8% equity interest in AEILIC’s parent company,
We announced our bid to acquire 100% of
Once the
Board Appointments
Brookfield Reinsurance announced today the appointment of
Regular Distribution Declaration
The Board declared a quarterly return of capital distribution of
Brookfield Asset Management Operating Results
An investment in the class A exchangeable shares of Brookfield Reinsurance is intended to be, as nearly as practicable, functionally and economically, equivalent to an investment in the Class A Shares of Brookfield. A summary of Brookfield’s 2021 third quarter operating results is provided below:
| Unaudited For the periods ended (US$ millions, except per share amounts) | Three Months Ended | Last Twelve Months Ended | ||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income | $ | 2,722 | $ | 542 | $ | 10,742 | $ | 530 | ||||
| Net income attributable to common shareholders | $ | 797 | $ | 172 | $ | 3,491 | $ | 69 | ||||
| Net income per Brookfield share | 0.47 | 0.10 | 2.13 | (0.02 | ) | |||||||
| Funds from operations | $ | 1,408 | $ | 1,039 | $ | 7,925 | $ | 4,288 | ||||
| Per Brookfield share | 0.85 | 0.65 | 4.97 | 2.70 | ||||||||
| Distributable earnings | $ | 1,242 | $ | 890 | $ | 6,613 | $ | 3,375 | ||||
Given the economic equivalence, we expect that the market price of the Brookfield Reinsurance Class A shares will be impacted significantly by the market price of Brookfield’s 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 bam.brookfield.com.
CONSOLIDATED BALANCE SHEETS
| Unaudited (US$ millions) | ||||||||
| 2021 | 2020 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 406 | $ | 35 | ||||
| Investments | 2,269 | 1,193 | ||||||
| Reinsurance funds withheld | 1,650 | — | ||||||
| Reinsurance assets | 157 | 190 | ||||||
| Equity accounted investments | 339 | — | ||||||
| Accounts receivable and other | 20 | 13 | ||||||
| Deferred tax asset | 19 | — | ||||||
| Derivative assets | 7 | 7 | ||||||
| Property and equipment | 3 | 2 | ||||||
| Total assets | $ | 4,870 | $ | 1,440 | ||||
| Liabilities and Equity | ||||||||
| Accounts payable and others | $ | 23 | $ | 6 | ||||
| Insurance reserves | 3,472 | 1,339 | ||||||
| Deferred revenue | 85 | — | ||||||
| Funds withheld liabilities | 12 | 12 | ||||||
| Total liabilities | $ | 3,592 | $ | 1,357 | ||||
| Equity | ||||||||
| Class A exchangeable and Class B | $ | 539 | $ | — | ||||
| Class C | 739 | 83 | ||||||
| Total Equity | $ | 1,278 | $ | 83 | ||||
| Total Liabilities and Equity | $ | 4,870 | $ | 1,440 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS
| Unaudited For the periods ended (US$ millions, except per share amounts) | Three Months Ended | Nine Months Ended | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net premiums | $ | 2,230 | $ | 103 | $ | 2,281 | $ | 134 | |||||||
| Net investment income, including funds withheld | 42 | 11 | 19 | 47 | |||||||||||
| Equity accounted loss | (6 | ) | — | (6 | ) | — | |||||||||
| Total revenues | 2,266 | 114 | 2,294 | 181 | |||||||||||
| Benefits paid on insurance contracts | |||||||||||||||
| Gross | 81 | 15 | 119 | 44 | |||||||||||
| Ceded | (3 | ) | (6 | ) | (15 | ) | (18 | ) | |||||||
| Change in insurance reserves | |||||||||||||||
| Gross | 2,167 | 102 | 2,134 | 144 | |||||||||||
| Ceded | 15 | — | 34 | 7 | |||||||||||
| Other reinsurance expenses | 2 | — | 2 | — | |||||||||||
| Operating expenses | 12 | 2 | 22 | 4 | |||||||||||
| Total benefits and expenses | 2,274 | 113 | 2,296 | 181 | |||||||||||
| Net (loss) income before income taxes | (8 | ) | 1 | (2 | ) | — | |||||||||
| Income tax recovery | 2 | — | 1 | — | |||||||||||
| Net (loss) income for the period | $ | (6 | ) | $ | 1 | $ | (1 | ) | $ | — | |||||
| Attributable to: | |||||||||||||||
| Brookfield Asset Management Inc.1 | $ | — | $ | 1 | $ | 5 | $ | — | |||||||
| Class A exchangeable & class B shareholders2 | 1 | — | 1 | — | |||||||||||
| Class C shareholder2 | (7 | ) | — | (7 | ) | — | |||||||||
| $ | (6 | ) | $ | 1 | $ | (1 | ) | $ | — | ||||||
| Net income per class A & class B share2 | $ | 0.13 | n/a | $ | 0.13 | n/a | |||||||||
| Net income (loss) per class C share2 | $ | (0.42 | ) | n/a | $ | (0.42 | ) | n/a | |||||||
- For the periods prior to
June 28, 2021 . - For the period from
June 28, 2021 toSeptember 30, 2021 .
SUMMARIZED FINANCIAL RESULTS
RECONCILIATION OF NET (LOSS) INCOME TO FUNDS FROM OPERATIONS
| Unaudited For the periods ended US$ millions | Three Months Ended | Nine Months Ended | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net (loss) income | $ | (6 | ) | $ | 1 | $ | (1 | ) | $ | — | |||||
| Deferred tax recovery | (2 | ) | — | (1 | ) | — | |||||||||
| Depreciation expense | — | — | — | — | |||||||||||
| Transaction costs | 5 | — | 5 | — | |||||||||||
| Equity accounted loss | 6 | — | 6 | — | |||||||||||
| Total FFO1 | $ | 3 | $ | 1 | $ | 9 | $ | — | |||||||
RECONCILIATION OF TOTAL EQUITY TO EXCESS CAPITAL AND NET RESERVE CAPITAL
| Unaudited As at US$ millions | Three Months Ended | Nine Months Ended | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Equity | $ | 1,278 | $ | 67 | $ | 1,278 | $ | 67 | |||||||
| Less: | |||||||||||||||
| Investments held outside of regulated insurance agreements | |||||||||||||||
| Cash on deposit with related parties | (245 | ) | — | (245 | ) | — | |||||||||
| Equity accounted investments | (339 | ) | — | (339 | ) | — | |||||||||
| Common shares | (181 | ) | — | (181 | ) | — | |||||||||
| Other fixed income securities | (195 | ) | — | (195 | ) | — | |||||||||
| Deferred tax asset | (19 | ) | — | (19 | ) | — | |||||||||
| Other | (18 | ) | — | (18 | ) | — | |||||||||
| Excess capital1 | (997 | ) | — | (997 | ) | — | |||||||||
| Net reserve capital1 | $ | 281 | $ | 67 | $ | 281 | $ | 67 | |||||||
- Non-IFRS measure - see Basis of Presentation on page 7.
Additional Information
Brookfield Reinsurance was established on
The statements contained herein are based primarily on information that has been extracted from our financial statements for the quarter ended
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.
For more information, please visit our website at bamr.brookfield.com or contact:
| Communications & Media: Tel: (212) 618-3469 Email: [email protected] | Investor Relations: Tel: (416) 956-5141 Email: [email protected] |
Basis of Presentation
This news release and accompanying financial statements are based on IFRS, as issued by the IASB, unless otherwise noted.
We make reference to Funds from Operations (“FFO”). We define FFO as net income excluding the impact of depreciation and amortization, deferred income taxes, income from equity accounted investments, breakage and transaction costs. FFO is a measure of operating performance We use FFO to assess our operating results. We also make reference to
We provide additional information on key terms and non-IFRS measures in our filings available at bamr.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
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 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
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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