Brookfield Merges Insurance Unit as Flatt’s Overhaul Takes Hold

Brookfield Corp. is merging its shares with those of its insurance business as the firm pushes ahead with plans to transform itself into an investment-led insurer.

The merger of the parent company and the insurance business will improve Brookfield Corp.’s overall capital structure and give it access to the combined group’s asset base to pursue growth, Chief Executive Officer Bruce Flatt said in a letter accompanying its first-quarter earnings statement on Thursday.

The asset manager’s distributable earnings before realizations rose to $1.4 billion in the first quarter, a 7% increase from the prior year, according to the statement. Profits from the wealth business, which includes insurance, were $430 million — unchanged from a year ago — while its property group’s fell to $120 million during the quarter, down from $215 million.

The change with the insurance unit is the latest move in Brookfield’s plan to simplify its corporate structure. The firm earlier combined Brookfield Business Partners and its sister entity, Brookfield Business Corporation, into a single publicly traded vehicle, eliminating the dual-listed structure.

“This combination is expected to allow us to fully utilize our permanent capital base — an incremental approximately $145 billion of cash, equities, real estate, and other investments — to support the growth of our insurance operations,” Flatt said in the letter.

Brookfield has raised $67 billion since the start of the year, including $23 billion for investment strategies and $44 billion of insurance capital. After the acquisition of pension-risk-transfer company Just Group, Brookfield’s insurance assets grew to $180 billion.

Brookfield said that it also plans to adopt US generally accepted accounting principles starting from the first quarter of 2027, to “allow greater comparability to peers,” according to the statement.

On the broader macroeconomic environment, Flatt said that while markets generally become focused on such developments as geopolitics, inflation and recession risk, those events are also “the most observable and widely discussed aspects of investing — and therefore tend to attract disproportionate attention relative to their long-term impact.”

Simplified Structure

The “dominance” of index investing and shareholder support have reinforced the firm’s view that simpler structures with larger market capitalizations are now the most effective way to position these businesses, Flatt said in the letter. Brookfield will approach both boards for approval in the next two months.

Flatt stepped down from his role as Chief Executive Officer of Brookfield Asset Management earlier this year as he turns his attention to transform the parent company into an investment-led insurer.

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