Brookfield Re more than doubles net income
Brookfield Re, which closed its purchase of Bermuda-based Argo Group late last year, saw its net income more than double to $453 milion in the fourth quarter while annual net income also rose.
The Bermuda-based life and P&C re/insurer said net income in the fourth quarter increased from $181 million while its annual net income rose from $501 million to $797 million as its underwriting income improved and investment income surged.
The company said its originated $8 billion in annuity sales, including approximately $5 billion for its retail annuity platform, $2 billion of flow reinsurance premiums from existing reinsurance treaties and $1.5 billion of pension risk transfer (“PRT”) premiums across its North American PRT platform.
The acquisition of Argo Group for approximately $1.1 billion "further diversified its operations and added a foundational piece to its US property and casualty operations. the addition of its investment portfolio also boosted investment results.
Sachin Shah, Brookfield Re CEO, said: “Our strong results for 2023 reflect the continued growth of our annuity sales platform, our broadening credit origination capabilities, and the repositioning of recently acquired assets that have contributed to increased investment returns.
"As we enter 2024, we continue to focus on scaling our business in a disciplined manner, focusing on our competitive advantages to grow our core business lines and delivering strong risk-adjusted returns.”
The company also said it expects to close its previously announced agreement to acquire American Equity Life, which it expects to contribute more than $50 billion of incremental insurance assets.
And it said it deployed approximately $5 billion into proprietary investment strategies at returns in excess of 9%, increasing its gross portfolio wide yield to 5.6%.
"The increase in earnings for the current periods reflects higher spread earnings on existing business driven by higher net investment income given the significant progress made over the last year repositioning assets into higher yielding investment strategies," the company said. "Distributable operating earnings further benefited from over $8 billion of new annuity business written during the year, as well DOE contribution from our recently closed Argo Group transaction and a full year of contribution from American National, which was acquired in May 2022."
Management said it had approximately $27 billion of liquidity which it expected to be bolstered by additional cash and short-term liquid securities at AEL following the closing of its pending acquisition, "facilitating the rotation into higher yielding investment strategies while maintaining sufficient liquidity coverage for stress scenarios".
For the fourth quarter, net premiums and other policy revenue soared to $1.432 billion from $836 billion while investment income rose to $621 million from $418 million.
Net investment gains were $274 million, up from $121 million.
Benefits and claims also rose to $1.194 billion compared to $750 million, while costs of acquiring policies rose to $172 million from $15 million and operating expenses rose to $248 million from $178 million.
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