Brookfield Q3 net income drops

Brookfield Wealth’s third quarter net income dropped 15.5% to $65 million as the re/insurer endured interest rate and equity market volatility period. 

The Bermuda-based company, formerly Brookfield Re, said total revenues jumped to $2.7 billion from $1.5 billion, driven by net investment income rising to $1.28 billion from $525 million while net investment gains rose to $304 million compared to a $10 million loss. Net premiums increased to $1.3 billion from $1 billion.  

However, benefits and claims increased to $1.23 billion from $870 billion while interest sensitive contract benefits soared from $89 billion to $557 billion. 

Increase in revenues and claims also reflect the acquisitions of life re/insurer American Equity Life and property and casualty reinsurer Argo in the results. 

The company recorded a loss of $45 million before an income tax recovery of $110 million. 

Chief executive officer Sachin Shah said: “We generated strong returns in the quarter, led by $5 billion of investment redeployment at accretive risk-adjusted yields. Our investment capabilities combined with our strong retail annuities platform position us well for future growth.”

The company said it originated approximately $4 billion in proprietary investment strategies during the quarter at returns in excess of 8%, while generating $4 billion of annuity sales, bringing year to date total to $12 billion. 

It said it had also reinsured a portion of its life insurance business, “locking in a strong return and releasing a significant amount of capital to support future growth across our business”. 

It also entered its first UK reinsurance transaction, reinsuring £1.08 billion ($1.4 billion) of pension liabilities. The transaction, through subsidiary American National Insurance Company, is expected to close before the end of the year, 

Management said its recognised 370 million and $947 million of distributable operating earnings  for the three and nine months ended September 30, 2024, compared to $182 million and $487 million in the prior year periods.

“ The increase in earnings for the current period reflects contributions from our recent acquisitions, notably the first full quarter of ownership of AEL,” management said. “Additionally, our results reflect strong annuity sales and higher spread earnings on our existing business, driven by higher net investment income resulting from progress made in repositioning assets into higher yielding investment strategies.”

It added: “We recorded net income of $65 million and $671 million for the three and nine months ended September 30, 2024, compared to net income of $77 million and $344 million in the prior year periods. 

“Net income in the current period is the result of strong operating performance and contributions from our DOE, as well as unrealised mark-to-market gains on equity securities, partially offset by unfavourable movements on reserves due to interest rate and equity market volatility in the quarter.”

The company said it has $31 billion of cash and short-term liquid investments across its investment portfolios, and another $21 billion of long-term liquid investments. 

“These liquid assets will support the ongoing rotation of our investment portfolio into higher yielding investment strategies, while ensuring we have sufficient liquidity coverage for our liabilities in the case of any stress events impacting the broader market,” management said. 

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