The insurance arm of Brookfield Asset Management Inc. has hired a former leading regulator to help the company grow its life insurance business in the United States through acquisitions and other transactions.
Michael McRaith has taken on the role of vice chairman of Brookfield Asset Management Reinsurance Partners Ltd., the company said. Previously, he was the first director of the Federal Insurance Office of the US Treasury Department after more than six years as the principal insurance regulator of Illinois. Mr. McRaith was until recently Managing Director of Blackstone Group Inc., where he worked in his insurance business.
Canadian investment giant Brookfield created Reinsurance Partners in June. Since last year, Brookfield has taken a stake in annuity-focused life insurer American Equity Investment Life Holding Co., and has an outstanding $ 5 billion deal to acquire Texas insurance conglomerate American National. Group Inc. These agreements add approximately $ 40 billion in assets to reinsurance partners.
“We really want to build a business for the very long term, have a strong reputation in the market and be very transparent and collaborative with regulators,” said Reinsurance Partners Managing Director Sachin Shah in an interview on the role of Mr. McRaith in Bermuda. based insurance entity.
More and more asset management, private equity, and other investment firms are acquiring – or investing in, U.S. life and annuity insurers. Ultra-low interest rates are driving the action. Conventional life insurers, which primarily invest policyholders’ premiums in ordinary bonds, are pulling out of products most affected by low rates, including many types of annuities.
Many new entrants to the insurance industry believe their expertise in less common investments, such as corporate debt and asset-backed securities, will give them an edge over more cautious insurers.
State insurance departments must approve all transactions to weed out inexperienced buyers who might not be able to weather tough times. Over the past decade, they have frequently ordered additional consumer protections when approving transactions with newcomers, such as requiring buyers to hold higher levels of capital than usual.
Mr. McRaith said in an interview that he would be involved in all aspects of Reinsurance Partners’ growth in the United States and internationally, “in terms of identifying opportunities, implementing and exceeding challenges. regulatory expectations “.
Brookfield told investors that insurance could potentially represent $ 100 billion to $ 200 billion in 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 out of just over 400 U.S. life insurance companies, according to data from rating firm AM Best Co. total more than $ 732 billion in assets as of June 30. , Best said.
Brookfield Asset Management’s large real estate, infrastructure and renewable energy branches (it manages over $ 600 billion in total assets) help the insurance industry find debt investments that are ideal for life insurers to keep on their books because they are usually long term. term in nature and earn more than ordinary corporate bonds.
The Federal Insurance Office was created under the Dodd-Frank Wall Street Act of 2010 on consumer reform and protection after the global financial crisis. The law expanded the role of the federal government in insurance regulation, although the industry remains primarily regulated by the state.
Mr. McRaith has dealt with both national and global insurance matters as the office manager. He was a lawyer in private practice in Chicago before working for the government.
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