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Brookfield to set up new annuity reinsurer in Bermuda

Bruce Flatt: chief executive officer of Brookfield Asset Management (Photograph by Patrick Fallon/Bloomberg)

Brookfield Asset Management is to set up a new Bermudian-based annuity reinsurance company.

BAM Reinsurance will take responsibility for up to $10 billion worth of annuity policies originally written by American Equity Investment Life Insurance.

The Toronto-based giant, which manages about $575 billion in assets, aims to use insurance premiums generated as capital for its growing lending business.

According to the Financial Times, Bruce Flatt, Brookfield’s chief executive officer, told shareholders yesterday: “The simple story is that we will receive up to $10 billion of cash, invest those funds and, if we can out-earn the rates we pay on the liabilities, we will do very well.”

BAM Reinsurance will be listed in New York and Toronto. It will initially be owned by existing BAM shareholders, who will receive shares in the new company in the first half of next year.

Brookfield agreed last month to buy one-fifth of Iowa-based AEL.

In its third-quarter earnings statement yesterday, Brookfield said its shareholders would receive a special dividend in the form of a newly created “paired” entity, Brookfield Asset Management Reinsurance Partners.

“Paired” means that even though BAM Reinsurance will be owned by a separate group of shareholders, its shares are deemed to be “economically equivalent to the class A shares of BAM”, the company added.

“We expect this special dividend to be approximately $500 million, or approximately 33 cents per share of BAM,” Brookfield stated.

“BAM Reinsurance is the entity through which Brookfield will conduct its reinsurance and other related activities for the benefit of all shareholders of both entities.”

Brookfield did not respond by press time to The Royal Gazette’s questions about whether the new reinsurance company would be establishing a physical presence and employees in Bermuda.

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Published November 13, 2020 at 1:00 pm (Updated November 13, 2020 at 2:25 am)

Brookfield to set up new annuity reinsurer in Bermuda

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