Brookfield, operating through its affiliate Brookfield Reinsurance, is considering entering the expanding UK pension insurance sector and is open to potential acquisitions to support its expansion plans, according to sources familiar with the matter.
The company is actively exploring the market for potential deals in the bulk annuities space. Companies such as Just Group and Pension Insurance Corporation are among the potential acquisition targets.
Bulk annuities involve companies transferring pension plan liabilities to insurers. It’s important to note that these deliberations are in their early stages, and there is no guarantee that Brookfield will proceed with this move or pursue a transaction.
Brookfield separated its reinsurance division in 2021 as a separately listed entity, while the unit still receives administration and management services from its former parent.
Both Brookfield, Just Group, and Pension Insurance Corporation have chosen not to comment on this matter.
This move aligns with a broader trend where investment firms like Brookfield and Apollo Global Management have increasingly entered the life insurance and annuities sector, seeking long-term capital for investment.
Private investors currently oversee over $900 billion in life and annuity assets in Western Europe and North America. Should this proceed, it would represent Brookfield’s first investment outside of North America via its reinsurance arm. In light of this, the company appointed Shashank Bhalla, a former investment banker, as head of reinsurance in Europe this year to oversee these efforts.
Bulk annuities have seen a surge in popularity in the UK, with approximately £30 billion of pension liabilities transferred to the insurance industry in the past year, according to Aon.
Notable players in the UK’s bulk annuities market include Aviva, Legal & General, Phoenix Group, Rothesay Life, and M&G.
The Bank of England has expressed concerns about the rapid growth of the bulk annuities market, urging insurers not to engage in excessive new business in the short term.
The UK market represents a significant opportunity for Brookfield, with £1.3 trillion in defined benefit pension schemes in the UK private sector as of September 2022.
