Brookfield Re plans to enter UK market

Bermuda-based Brookfield Re has applied to set up an insurance company in the UK, the Financial Times has reported. 

Brookfield, which has closed $3 billion of purchases in the last 18 months with the acquisitions of two US life insurers and property casualty re/insurer Argo, is aiming to cash in on the wave of British companies offloading their pension plans, the newspaper said. 

"Higher interest rates have radically improved the health of corporate pension plans, paving the way for companies to offload the liabilities and assets of the schemes to insurers," the story said. "Around £40 billion worth of such deals are expected this year, just short of a record set in 2023, according to consultancy LCP."

Brookfield Re has filed paperwork with the Bank of England’s Prudential Regulation Authority to set up a new insurer, according to people familiar with the matter. 

The Canadian group had considered entering the UK corporate pensions market, which is responsible for the retirement savings of millions of Britons, through buying an established provider.

Brookfield, Apollo - which owns life re/insurer Athene - and others considered a bid last year for Pension Insurance Corporation, one provider that takes on the company pension plans through so-called bulk annuity deals, but buyers baulked at the valuation its owners were seeking, according to people familiar with the matter. 

"Establishing an insurance business from scratch is likely to be a more challenging way to muscle in on a market dominated by big bulk annuity providers such FTSE 100 insurers Phoenix Group and Legal & General," the FT said. "The application process can take six months if all runs smoothly, but longer if regulators had questions over the investment approach Brookfield would take in managing any pension schemes it takes on."

Brookfield and the Bank of England declined to comment.

Brookfield Re chief executive officer Sachin Shah said in May that Brookfield planned to enter the UK market, adding it “should be in a position by the end of the year where we’re actually bidding on transactions”, and would “start small and eventually migrate into the larger transactions”.

Brookfield also owns a majority stake in Oaktree Capital Management, which backs Utmost, a UK life insurer that is also planning to enter the market, according to a person familiar with the matter. Utmost declined to comment.

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