Brookfield Finance Inc. 4.50% P Q1 FY2025 earnings call

• Business Performance: Started the year strongly with Distributable Earnings before realizations up 30% to $1.3 billion ($0.82 per share) for the quarter. Asset management had strong earnings growth, operating businesses were resilient with stable cash flows. Wealth Solutions had a strong quarter, launching in the UK with a regulatory license. - Macroenvironment: Began the year with positive economic momentum, though trade policy caused market volatility; businesses insulated due to essential services and contracted/regulated income streams. Deglobalization, digitalization, and decarbonization drive the investment pipeline, with $20 billion committed to acquiring businesses. - Real Estate: Benefited from high demand for premium assets, 95% occupancy, 3% same-store net operating income growth, and significant office leasing activity, including 1.3 million square feet in New York. - Capital Allocation: Reinvested $3 billion, returned over $700 million to shareholders via dividends and share repurchases ($850 million repurchased in Q1), and maintained a conservatively capitalized balance sheet with $165 billion of deployable capital. - Wealth Solutions Update: Over $140 billion in assets, $1.7 billion in annualized earnings, and statutory capital over $16 billion. Scaling US annuity business, expanding distribution channels, and expanding internationally in the UK, expecting to write $25 billion of annuities in 2025.

Asset Management: Distributions of $684 million ($0.43 per share) in the quarter, $2.7 billion ($1.71 per share) over the last 12 months. Fee-bearing capital reached $549 billion at quarter end, a 20% increase over the last 12 months, and fee-related earnings grew 26% to a record $698 million. Wealth Solutions: Distributable operating earnings were $430 million ($0.27 per share) in the quarter, $1.5 billion ($0.95 per share) over the last 12 months. Originated $4 billion of retail and institutional annuities, with statutory capital exceeding $16 billion and ROE in line with the 15% target. Operating Businesses: Distributable earnings were $426 million ($0.27 per share) in the quarter, $1.7 billion ($1.08 per share) over the last 12 months. Real estate saw 3% growth in same-store net operating income, 95% occupancy, and signed nearly 9 million square feet of office and retail leases. North American residential sold five master plan communities, realized $189 million of carried interest, and had accumulated unrealized carried interest of $11.6 billion.

• Distributable Earnings before realizations were $1.3 billion in Q1, a 30% increase. - Expect to continue disciplined investing while adapting to the evolving global economy. - Wealth Solutions anticipates writing $25 billion of combined retail and institutional annuities in 2025. - Plan to recognize substantial carried interest into earnings over the next few years.

• Volatility in capital markets due to trade policy. - Uncertainty in the current environment may impact transaction activity. - Risks associated with forward-looking statements, where actual results may differ materially from predictions.

Q: Elaborate on Brookfield's perspective on broad reindustrialization in the US and the Intel deal template A: Bruce Flatt states that reindustrialization is ongoing, with supply chains reorienting globally, and Brookfield has the capital, scale, and expertise to capitalize on related investment opportunities.

Q: Characteristics of funding agreements compared to annuities and pension risk transfer deals A: Sachin Shah explains funding agreements are a hybrid, with finite terms, fixed rates, no lapse risk, issued by insurance subsidiaries, and holders can't demand early repayment.

Q: Wealth Solutions' expectation of $25 billion of business in 2025 and the ramp from Q1 A: Sachin Shah notes Q1 is typically slower, but year expectations remain due to quarterly patterns. Progression in UK pension deals, expanding distribution channels, and product growth in the US annuity market will drive the ramp.

Q: Monetization pipeline and carry generation outlook A: Nick Goodman says the monetization pipeline is active, with the bulk of sales from funds, and expects carried interest to step up meaningfully next year.

Q: Benefit of additional size/scale in Wealth Solutions A: Sachin Shah states the current business is valuable, not likely to pursue M&A at high valuations, but will focus on organic growth and opportunistic deals when appropriate