Brookfield Re looking at UK annuity market, says Reuters

Bermuda-based Brookfield Reinsurance is considering entering the UK’s annuity insurance market and is “open to an acquisition”, Reuters news agency has reported.

Reuters said sources indicated that possible targets could include companies like Just Group and Pension Insurance Corporation.  

Bulk annuities are a form of insurance whereby a company's pension plan offloads liabilities to an insurer.
Citing anonymous sources, Reuters said deliberations were at an early stage and there was no certainty that any move or transaction would take place.  

Brookfield spun off its reinsurance arm in 2021 as a separately listed entity. However, the unit contracts administration and management services from its former parent.

Brookfield invests assets originated by Brookfield Reinsurance in North America as part of the services agreement.

Brookfield, Just Group and Pension Insurance Corporation declined to comment.

Reuters said the move is part of a broader trend where deal houses such as Brookfield and Apollo Global Management through its Life reinsurance subsidiaries, including Athene, have in recent years pushed into the life insurance and annuities industry in search of long-term capital to invest.

Brookfield Re expects to have more than $100 billion in assets once its purchases of American Equity Investment Life and P/C re/insurer Argo Group close, chief executive officer Sachin Shah said in August.

It bought US life re/insurer American National one year ago.

Private investors now oversee more than $900 billion of life and annuity assets in Western Europe and North America, according to a 2022 report by McKinsey & Co.

For Brookfield, a UK deal would mark its first investment outside of North America through its reinsurance arm.

This year it hired former investment banker Shashank Bhalla as head of reinsurance in Europe to oversee efforts, one of the people said.

The Bank of England has voiced concerns about the fast growth of the bulk annuities market, urging insurers not to "over-indulge in new business in the short run".

Britain represents a significant market for Brookfield to invest in, with 1.3 trillion pounds of defined benefit pension schemes in the UK private sector at the end of September 2022.