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Brookfield Reinsurance has outlined its financial results for the quarter and fiscal year ending December 31, 2023.

Key achievements for 2023 included generating $8 billion in annuity sales, with significant contributions from the retail annuity platform, flow reinsurance premiums, and pension risk transfer (PRT) premiums on the North American PRT platform.

The acquisition of Argo Group for approximately $1.1 billion also marked a significant expansion of Brookfield’s US property and casualty (P&C) operations. Additionally, the impending acquisition of American Equity Life is expected to add over $50 billion in insurance assets to the company’s portfolio.

Investment strategies deployed throughout the year yielded returns above 9%, enhancing the gross yield across the portfolio to 5.6%. The company also noted a substantial increase in its equity base and market capitalization, achieved through a successful public exchange offer that did not dilute the holdings of Brookfield Corporation or Brookfield Reinsurance.

Brookfield Reinsurance financial results

Financial performance for the year showed distributable operating earnings (DOE) of $745 million, up from $388 million in the previous year, driven by increased net investment income and the impact of new annuity business. Net income also saw growth, with figures reaching $797 million for the year, compared to $501 million in the prior year, bolstered by DOE contributions and favorable market movements.

Brookfield Reinsurance also reported a strong liquidity position, with approximately $27 billion available across corporate and subsidiary investment portfolios. The forthcoming acquisition of American Equity Life is expected to further enhance liquidity, supporting the transition to higher-yielding investment strategies.

In a strategic move to bolster its balance sheet and market presence, Brookfield Reinsurance also completed a successful exchange offer in November 2023, increasing its publicly traded share base significantly. This initiative enhanced the company’s equity base and market capitalization.

The board has declared a quarterly distribution of $0.08 per share across various classes, aligning with the distribution schedule and amount of Brookfield Corporation. This distribution is slated for March 28, 2024, to shareholders on record as of March 13, 2024.

“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,” Brookfield Reinsurance CEO Sachin Shah said.

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PartnerRe and its subsidiaries have maintained its superior rating, bolstered by the group’s solid operating performance, highly favorable business profile, and effective enterprise risk management strategies, it was stated.

AM Best has maintained the Financial Strength Rating (FSR) of A+ and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” for the company and its operating subsidiaries. Additionally, the Long-Term ICR of “a-” (Excellent) for Pembroke, Bermuda- based firm, has also been affirmed. These ratings have been assigned a stable outlook, indicating a steady projection for the future.

The affirmation of these ratings by AM Best underscores PartnerRe’s robust balance sheet, described as the strongest by the rating agency.

The ratings come in the wake of solid performance and capital stability, even as the company transitions to a new ownership structure under Covéa Coopérations (Covéa Coop). It has announced the impending retirement of its president and CEO Jacques Bonneau, with Phillipe Meyenhofer stepping in as the new CEO and Jon Colello as the new president. Both Meyenhofer and Colello are currently serving in executive roles within PartnerRe.

The first three quarters of 2023 saw PartnerRe benefiting from lower catastrophe-related losses, enhanced investment returns, and favorable pricing dynamics in the property reinsurance market.

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The Fortegra Group, a multinational specialty insurer, has confirmed the withdrawal of its previously announced initial public offering.

Fortegra is a subsidiary of Tiptree Inc. In a news release, the insurer said that it was withdrawing the registration statement relating to its IPO due to “prevailing market conditions” and the “high value” placed on its growth prospects by Tiptree and Warburg Pincus.

“Tiptree and Warburg remain committed to supporting Fortegra as it continues to execute its growth strategy,” Fortegra said in the news release.

Tiptree originally announced plans to take Fortegra public late last year. Tiptree, which planned to retain majority ownership of the insurer, said in November that any proceeds from the IPO would be used to support Fortegra’s growth.

Fortegra is based in Florida and has 15 locations across the globe. Last month, the company announced the appointments of Eric Halter as senior vice president for business development and Bianca Hoshina as chief reinsurance buyer.

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As a 160-year-old company operating in every insurance market around the world, Swiss Re has a 360-degree vantage point of what’s happening in any specific sector or business line at any given time. In his three decades serving with the re/insurance behemoth in a variety of roles, Russell Higginbotham (pictured) has seen first-hand the amount and the quality of knowledge and data this provides – and it was with this in mind that Swiss Re’s Reinsurance Solutions division was established.

Now a year into his tenure as CEO of the division, he noted that its ultimate aim is to commercialize the organization’s risk knowledge assets and deliver them to other members of the re/insurance ecosystem and beyond, with clients including brokers, MGAs, governments and property fund managers. It’s an ambition that closely aligns with Swiss Re’s mission and purpose, he said, which is to make society as a whole more resilient.  

Utilizing data to bridge the global protection gap

At its core, insurance is an intangible proposition, based on a promise to pay and trust is at the heart of this offering. It’s much the same with data, especially as data becomes more widely available and accessible because if it’s not used ethically, then people will be less willing to share it and regulators will impose greater restrictions on its use.

“There’s this great opportunity to improve societal resilience, to close the global protection gap and to get more insurance into the hands of the right people in the right way,” Higginbotham said. “But as insurers and reinsurers, we have to make sure that we do that properly, otherwise that opportunity will become much more narrow. So I think it’s on us to almost self-regulate around that.”

Speed and efficiency – the twin demands of data

Speed is the first consideration, Higginbotham said, because people want things done faster. But while underwriting and issuing a policy in real-time sounds relatively straightforward, it simply doesn’t happen that way for a lot of products.

Alongside the demand for speed is the appetite for increased efficiency, he said, as firms want to make more accurate decisions, based on better data optimization. That supports them looking across their books of business and understanding in detail how they are performing, where the issues are and where the opportunities lie. Having this more granular clarity on their business is what supports growth because it unlocks more insights into new areas for growth, whether that’s a market, a geography or a product.

“With better quality data, you’re then able to build a strategy around that with greater understanding and confidence,” he said. “Ultimately, all of these things make insurance more accessible, more affordable, and more profitable in combination. It’s about trying to find the right balance for growth – people need to be able to see products that they want and products that they can afford, and insurance companies have to be able to provide that. So, it all comes together quite neatly.”

Understanding the connection between digital advancement and resilience

The link between digital advancement and general resilience is clear from the outcome of using the right data in the right way, Higginbotham said, however, it’s not just about the data itself but also the interpretation of that data to allow companies to understand and price risk more accurately and more efficiently. Because, as an insurer or reinsurer, you have to charge for uncertainty because without knowing how a risk will perform, you need to build safety margins into your pricing and allocate more capital to that risk.

“So, ultimately, you have to be more conservative around that risk because of uncertainty,” he said. “But if you take elements of the uncertainty away, to increase accuracy and understanding, it builds a much stronger foundation for solutions development, because you can do it with confidence. Essentially, if you know how your car’s going to perform, you can go faster. That’s what data gives you the potential to do.”

How is the insurance market responding to this offering?

Assessing how the market is responding to this opportunity, he noted that reinsurers and insurers have been on a data enrichment journey for some years now. The pandemic accelerated interest in this area, he said, because companies had to find different ways to conduct their business and support their customers. What might previously have been labeled as ‘innovation’ or  ‘competitive advantage’ simply became table stakes for swathes of the market, because to be without these capabilities was suddenly a competitive disadvantage.

“Naturally, there is always going to be more to do,” he said. “But the fundamental challenge, which hasn’t changed, is that not enough people and businesses have insurance cover. Either they don’t have it at all or they don’t have the right cover, or they don’t have the right amount. And the environment we all live and work in is increasingly uncertain and we all have to make sure that insurance is there to play its role in societal resilience.

“Ultimately, the role of insurance is to provide a safety net when all the other forms of mitigation that you have don’t work. That hasn’t changed, rather I think the advent of data and technology just allows that to continue to happen. And I believe that the insurance industry is fully embracing that now because it has to. If you want to be competitive in the future you have to be operating on that level or you’re going to find yourself becoming increasingly uncompetitive.”

Insurers and reinsurers, such as Swiss Re and Munich Re, could find themselves in hot water due to record sea-surface temperatures, according to a report from Bloomberg Intelligence (BI).

 These rising temperatures, coupled with a weakening El Niño, pose a significant threat of increased catastrophe claims, potentially outstripping recent price adjustments.

“El Niño didn’t drive above-average cyclone activity in the West Pacific in 2023, contrary to expectations. The region endured 17 named storms (including Dora which crossed the East Pacific dateline). The only year to have had fewer named storms since 1951 was 2010, with 15,” said Charles Graham, senior industry analyst at BI.

“Twelve of the storms became typhoons, including eight major typhoons. Mawar (the first category 5 typhoon of the season) passed close to Guam. Doksuri (the most destructive West Pacific storm in 2023) came close to the Philippines as a category 4 cyclone, before causing heavy rain and flooding in Taiwan and eastern China. Hong Kong still experienced record rainfall and flooding in September and October 2023 in the aftermath of super typhoon Saola, tropical cyclone Haikui and severe typhoon Koinu.”

According to BI, global sea-surface temperatures from April to December reached historic highs since records began in 1850, with the North Atlantic particularly affected by a severe marine heatwave mid-year. The heatwave extended through the Mediterranean basin in July, intensifying over the summer months. The tropical Pacific also experienced elevated temperatures, correlating with the strengthening of El Niño.

These record sea-surface temperatures resulted in above average levels of storm formation in the Atlantic, Eastern North Pacific, and Indian Ocean, leading to hail and flooding in many regions. Meanwhile, the impact on the United States was mitigated by wind shear. Despite the elevated number of named storms—20 in total, the fourth highest since 1950—only Hurricane Idalia made landfall in the US, striking as a category 3 hurricane near Keaton Beach, Florida.

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SCOR has launched a new offshore renewable energy consortium, increasing its deployable capacity to over US$180 million.

According to a Press release, the new consortium, built in partnership with Acrisure Re, indicates its commitment to providing the solutions required to help clients in navigating the energy transition and, at the same, in supporting community and government efforts in decarbonizing economies. Investment in offshore renewable energy has surged, with a strong pipeline of new projects signaling continuous increase in demand.

“Offshore renewable projects will serve as pivotal contributors to global endeavors aimed at furnishing clean, affordable, and dependable energy. It is imperative for our industry to intensify efforts in facilitating such advancements. This consortium epitomizes Lloyd’s market’s commitment to collaboration and provision of vital lead capacity to an expanding market,” said Oliver Paine (pictured), offshore global segment leader at SCOR.

Marie Biggas, chief underwriting officer and active underwriter of SCOR Syndicate and SCOR UK, agreed.

“Sustainability is at the core of our business strategy,” she said. “It’s through the combination of creativity and technical expertise that we continue to be a leader in this space in order to support our partners in meeting their ESG ambitions. It truly is a testament to the reputation and vision of Ollie and his team that this consortium has come to fruition.”

Rebekah Clement, corporate affairs director, Lloyd’s, praised the new consortium.

“This consortium is a great example of how Lloyd’s is collaborating to insure the transition – combining the expertise, foresight and innovation our market is known for to protect the investments and progress being made to build a more sustainable future,” she said.

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