Brookfield unit hires former regulator to expand life-insurance business2 min read . Updated: 28 Oct 2021, 07:33 PM IST
- Michael McRaith says he would be involved in all aspects of the growth in the U.S. and internationally
Brookfield Asset Management Inc.’s insurance arm has hired a prominent former regulator to help the firm grow its U.S. life-insurance business through acquisitions and other transactions.
Michael McRaith has taken the post of vice chairman of Brookfield Asset Management Reinsurance Partners Ltd., the firm said. He previously served as the first director of the U.S. Treasury Department’s Federal Insurance Office following more than six years as Illinois’s top insurance regulator. Mr. McRaith most recently had been a managing director at Blackstone Group Inc., where he worked in its insurance business.
The Canadian investment giant Brookfield spun out Reinsurance Partners in June. Since last year, Brookfield has taken a stake in one annuities-specialty life insurer, American Equity Investment Life Holding Co., and has a pending $5 billion deal to acquire Texas insurance conglomerate American National Group Inc. Those deals are adding about $40 billion of assets to Reinsurance Partners.
“We are serious about building a very long-term business, about having a strong reputation in the marketplace and being very transparent and collaborative with regulators," Reinsurance Partners Chief Executive Sachin Shah said in an interview about Mr. McRaith’s role at the Bermuda-based insurance entity.
More asset-management, private-equity and other investment firms are acquiring U.S. life and annuity insurers—or buying stakes in them. Ultralow interest rates are driving the action. Conventional life insurers, which primarily invest policyholders’ premiums in plain-vanilla bonds, are retreating from products most hurt by low rates, including many types of annuities.
Many of the insurance-industry newcomers think their expertise with less-common investments, such as privately placed corporate debt and asset-backed securities, will give them an edge over more cautious insurers.
State insurance departments must approve all deals to weed out inexperienced buyers who wouldn’t be able to weather tough times. Over the past decade, they have frequently ordered extra consumer protections in approving transactions with the newcomers, such as requiring the buyers to hold higher levels of capital than customary.
Mr. McRaith said in an interview that he would be involved in all aspects of Reinsurance Partners’ growth in the U.S. and internationally, “in terms of identifying opportunities, executing on them, and working to exceed regulatory expectations."
Brookfield has told investors that insurance could eventually be a $100 billion to $200 billion business for Reinsurance Partners. Mr. Shah said the goal is achievable in five years.
So far, more than two dozen investment firms own or control 51 U.S. life-insurance companies out of just over 400, according to data from rating firm A.M. Best Co. The new owners’ insurers total more than $732 billion of assets as of June 30, Best said.
Brookfield Asset Management’s big real-estate, infrastructure and renewable-power arms—it manages more than $600 billion in assets altogether—help the insurance arm source debt investments that are ideal for life insurers to hold on their books, because they are generally long-term in nature and yield more than plain-vanilla corporate bonds.
The Federal Insurance Office was created under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act after the global financial crisis. The law broadened the federal government’s role in insurance regulation, though the industry remains primarily state regulated.
Mr. McRaith handled both national and global insurance matters as director of the office. He was a lawyer in private practice in Chicago before working in government.
This story has been published from a wire agency feed without modifications to the text
Never miss a story! Stay connected and informed with Mint. Download our App Now!!