Brookfield Asset Management today announced financial results for the quarter ended September 30, 2020.
Bruce Flatt, CEO of Brookfield, stated, “Our third quarter results reflect the strength of both our operating businesses and our asset management franchise. We generated record operating FFO in the quarter, and over the last twelve months earned a record $2.8 billion of cash available for distribution and/or reinvestment, underlining the stability and continued growth of our cash flows. With over $75 billion of capital for deployment, our business is stronger than it has ever been.”
BAM Reinsurance
We intend to distribute, in the first half of 2021, a special dividend in the form of a newly created “paired” entity, Brookfield Asset Management Reinsurance Partners (“BAM Reinsurance”). We expect this special dividend to be approximately $500 million, or approximately 33 cents per share of BAM. BAM Reinsurance is the entity through which Brookfield will conduct its reinsurance and other related activities for the benefit of all shareholders of both entities.
BAM Reinsurance will be a paired share to Brookfield Asset Management Inc. and will aim to replicate the success of the structure used by us to create Brookfield Renewable Corporation and Brookfield Infrastructure Corporation. BAM Reinsurance will allow us to grow our reinsurance business in the most efficient fashion, and also provide flexibility to Brookfield’s shareholders in how they can own their interests in Brookfield. The attributes of these shares should be more attractive to some groups of shareholders.
As with our other paired entities, the Class A shares of BAM Reinsurance will be structured with the intention of being economically equivalent to the Class A shares of BAM. Each share of BAM Reinsurance will have the same dividend as a BAM share and shares of BAM Reinsurance will be exchangeable into shares of Brookfield at the shareholder’s option. Our infrastructure, renewable, and property partnerships successfully implemented this type of structure, pairing entities with shares having economic equivalency with their associated publicly traded units. In a similar manner, BAM Reinsurance will offer Brookfield shareholders an alternative security through which to hold their interests in the business and are expected to trade substantially at the same price as shares of Brookfield.
In order to launch BAM Reinsurance, Brookfield intends to pay a special dividend in the form of a fraction of a share of BAM Reinsurance for a given number of Class A shares of Brookfield. Details will be provided at the time of the declaration of the dividend, but from a corporate perspective, the transaction will be analogous to a stock split as it will not result in any underlying change to aggregate cash flows or net asset value, except for the adjustment for the number of shares outstanding and owned by all shareholders.
“BAM Reinsurance is intended to provide our shareholders with a choice of holding either shares of Brookfield or the new shares of BAM Reinsurance, depending on what is most attractive to them based on their own circumstances,” stated Nick Goodman, Chief Financial Officer of Brookfield. “The very positive market reception, including in the case of the most recent listing of Brookfield Renewable Corporation, has encouraged us to offer a similar structure for our own shareholders, enhancing shareholders’ ability to meet their own financial planning objectives, while also facilitating the growth of our overall organization.”
The special dividend will require the filing of a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission and a preliminary prospectus with the Canadian securities regulatory authorities. BAM Reinsurance also intends to apply to list its class A shares in the United States on the NYSE and in Canada on the TSX. Subject to the receipt of all regulatory approvals, Brookfield anticipates completing the special distribution in the first half of 2021.
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