Brookfield Re criticised for changes in US life insurer’s investment portfolio

A US trade union has criticised Bermuda-based reinsurer Brookfield Re for changes in the investment policy of a US life and annuity insurer which it took over last year.

Unite Here, which says it represents 300,000 hospitality workers across the US, said it had written to 1,100 agents of American National Life Insurance Group warning hem about a shift in investment strategy and urging them to write to their state regulators.

Brookfield Re bought American National in 2022 for $5.1 billion. It is in the process of closing the purchase of Bermuda-based property and casualty re/insurer Argo for $1.1 billion and has also agreed to buy American Equity Life for $4.3 billion.

Unite Here claimed that since Brookfield Re acquired American National in May 2022, “the insurer has placed its entire bond portfolio up for sale, has sold billions of dollars of “safer, easier-to sell securities,” and has reinvested primarily in complex and illiquid securities, including commercial real estate debt and private credit”.

“Many of these investments were purchased from other Brookfield affiliates,” Unite Here said in a press release. “The letter asserts that related-party transactions normally require disclosure, but most of these investments were listed as ‘unaffiliated’ in American National’s annual statement.”

Unite Here raised specific concerns about investments in Brookfield Property Partners, which Brookfield took private in 2021 after it took $2 billion in losses in 2020; and Canary Wharf Investment Holdings, a joint venture between Brookfield and the government of Qatar which owns Canary Wharf (pictured), which has come under scrutiny since a number of high profile tenants including HSBC recently announced plans to move.

“Current and future American National policyholders may not know that their insurance company has undergone such a dramatic shift in its investment strategy, or that their policies are now backed by investments in the ‘inherently risky’ private credit industry or the ‘office real estate apocalypse,’” the letter said.

The letter urged agents to contact their state regulators to request information, including whether regulators are aware of the extent of related-party real estate debt on American National’s investment schedules: “And as an agent putting your good name behind the products you sell, don’t you have a right to know whether regulators are monitoring the changes in American National’s investment portfolio, including the rise in related-party investments, and especially those classified in Schedule D as ‘unaffiliated’.”