Brookfield set to launch new UK insurance entity to capture corporate pension deals

Brookfield, one of the world’s largest private capital groups, has applied to establish an insurance entity in the UK.

Brookfield, one of the world’s largest private capital groups, has applied to establish an insurance entity in the UK.

This move aims to capitalise on the significant number of British companies looking to offload their pension plans, according to the Financial Times.

The increase in interest rates over the past two years has significantly improved the health of corporate pension plans, enabling companies to transfer their liabilities and assets to insurers. According to consultancy LCP, approximately £40bn worth of such deals are expected this year, just shy of the 2023 record.

Sources close to the matter reported that Brookfield’s insurance business has filed with the Bank of England’s Prudential Regulation Authority to set up a new insurer.

Toronto-based Brookfield had considered entering the UK corporate pensions market through an established provider.

Last year, Brookfield, Apollo, and others considered bidding for Pension Insurance Corporation, a provider that acquires company pension plans through bulk-annuity deals, but the owner’s valuation was not feasible.

The firm is entering a challenging market dominated by large bulk annuity providers such as FTSE 100 insurers Phoenix Group and Legal & General.

The application process can take at least six months, potentially longer if regulators have questions about Brookfield’s investment approach in managing pension schemes.

The move by private capital groups into Britain’s corporate pension market aligns with a broader trend of these groups expanding into the global life insurance sector.

Brookfield’s insurance operation, a separate entity with its own balance sheet, was founded in 2020 and now controls more than $100bn in assets under management.

The firm also owns a majority stake in Oaktree Capital Management, a backer of UK life insurer Utmost, which is also planning to enter the market. Brookfield would not be the first private company to enter the market, as firms like PIC and Rothesay are already operating.

Pension consultants view the arrival of these new players as a means to absorb the forthcoming wave of corporate pension deals. Royal London, a mutually owned life insurer, recently announced its entry into the market.

Both Brookfield and the Bank of England declined to comment on the matter.

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