Brookfield: Private capital giant files to create UK insurer amid pensions deal boom

Canadian private capital giant Brookfield has reportedly applied to establish an insurance company in the UK as it looks to grab a slice of Britain’s booming pension insurance market.

Brookfield’s insurance arm, Brookfield Reinsurance, has filed paperwork with the Bank of England’s Prudential Regulation Authority to set up a new insurer, the Financial Times reported. 

The application process is understood to typically take six months but could take longer if the regulator raises questions over Brookfield’s potential investment strategy.

Brookfield and the Bank of England declined to comment.

Higher interest rates have boosted the health of corporate pension plans and triggered a surge in demand for insurance of these schemes, known as bulk annuities.

Last October, Toronto-based Brookfield was said to be weighing potential deals to access the UK bulk annuities market, and considered making a bid for Pension Insurance Corporation.

Sachin Shah, chief executive of Brookfield Reinsurance, signalled in May that the business planned to enter the UK market and start “bidding on transactions” by the end of the year. The unit, created in 2020 and based in Bermuda, has more than $100bn (£78bn) in assets under management.

Analysts expect the UK bulk annuity market to approach record levels this year, after dealmaking came in at an all-time high for 2023. Around £40bn worth of these deals is expected in 2024, according to consultancy LCP.

Brookfield’s entry would add to growing competition in the space. Mutual life insurer Royal London said in March it was entering the market, which is currently dominated by FTSE 100 giants Phoenix Group and Legal & General.

Private capital firms argue their knowledge of alternative investments can help them find better yielding but appropriate assets for pension plans to own.

Brookfield already has a majority stake in Oaktree Capital Management, which backs Utmost, a UK insurer that the FT also reported is planning to enter the bulk annuities market. Utmost declined to comment.

Reuters reported in March that Utmost was looking for staff to build up a bulk annuities division, citing three job advertisements posted by the company.