Brookfield Corporation Class A Limited Voting Shares

Hello, and welcome to the Brookfield Corporation first quarter 2023 conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. I would now like to hand the conference over to our first speaker, Ms. Angela Yulo, Vice President. Please go ahead.

Thank you, Operator, and good morning. Welcome to Brookfield Corporation's first quarter 2023 conference call. On the call today are Bruce Flatt, our Chief Executive Officer, Nick Goodman, President of Brookfield Corporation, and Brian Kingston, Chief Executive Officer of our real estate business. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. And finally, Brian will give an update on our real estate business. After our formal comments, we'll turn the call over to the operator and take analyst questions. In order to accommodate all those who want to ask questions, we ask that you refrain from asking more than two questions. I would like to remind you that in today's comments, including in responding to questions and in discussing new initiatives and their financial and operating performance, we may make forward-looking statements, including forward-looking statements within the meaning of applicable Canadian and U.S. securities law. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks, and future events and results may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U.S., and the information available on our website. And with that, I'll turn the call over to Bruce.

Thank you, Angela, and welcome to everyone on the call. Results for the quarter were very strong. Distributable earnings before realizations were $945 million in the quarter and $4.3 billion for the last 12 months, up 15% and 24% respectively on a comparable basis year over year when you take into account the distribution of 25% of the manager back in December. We continue to see strong performance in our asset management business and our insurance business continues to build scale with earnings benefiting from an attractive investment backdrop. Earnings from our operating businesses are also strong, underlining the quality of our assets and companies growing nearly 25% on a comparable basis over the last 12 months across our renewal power and transition infrastructure and private equity businesses. And in contrast to what you may be reading in the headlines, our real estate business continues to demonstrate its quality and resilience. Brian Kingston will spend more time on this in his remarks. Focusing first on the market environment, one of the fastest rate hiking cycles in history appears to have achieved its primary objective, with inflation currently in the process of abating. While for much of the world it remains above where many central banks want it, it is tracking lower, reducing the risk of rates going much higher than today's levels. Despite overall boring rates being lowish in a historical context, rates rising so quickly has had some unintended consequences, as we are all seeing in the U.S. regional banking sector. While the immediate actions taken by governments and central banks appear to have isolated these issues and prevented a broader crisis of confidence, recent events have led to a further tightening of financial conditions, making capital scarcer and more expensive for many. The strength of our franchise is and always will be underpinned by a significant capital base that is conservatively capitalized with high levels of liquidity and access to many different sources of capital. That has always been the great differentiator of our business, and in the current market, this advantage is even more pronounced. We have the scale and flexibility to navigate our existing portfolio through tougher, tighter credit conditions and liquidity and access to capital to focus on growth when many others cannot. Bottom line, this will allow us to merge from all of this once again much stronger. As we look ahead, we see a number of opportunities to put our vast resources to work. On our call yesterday for Brookfield Asset Management, we talked about the opportunities to accelerate growth for our asset management franchise. highlighting the great opportunities we see in distressed debt, private credit more broadly, and an opportunity to acquire great businesses at fair prices in the public market today. While those opportunities help our manager to accelerate its growth, and we at Brookfield Corporation have committed large sums of our balance sheet capital to each, I'll focus my remarks today on a couple of opportunities we are seeing in the rest of our business. First, insurance growth. Our insurance business is benefiting from the same tailwinds we are seeing in private credit, and we continue to invest our existing assets at yields well in excess of the cost of our liabilities. On a strategic level, we are also seeing opportunities on the M&A front to meaningfully add to the size and scope of the business. Today, our insurance business oversees $45 billion of assets and generates approximately $700 million net of annualized distributable earnings. We have excess capital that we plan to use to further drive transactions, such as the recently announced acquisition of Argo Group. We expect to close that transaction by the end of the year, adding a further $4 billion of insurance assets to the portfolio. We're excited by the prospects of continuing to grow this business while staying disciplined to earn excellent returns on capital while doing so. Second, we expect to find opportunity not just in the debt markets related to real estate, but also selectively inquiring portfolios of assets. Brian will provide a more detailed update on our real estate business, but I'll say just that it is worth emphasizing that the real estate business that we have built over the last 40 years is focused on owning the highest quality assets in all categories. On top of this, and maybe most importantly, our vast capital resources and highly diversified global business always allows us to emerge from a downturn in a more dominant and powerful position. Said very specifically, single industry participants just do not have the resources that we have and therefore the opportunities come to us. So while others in this environment possibly are having to be more defensive, We are looking ahead to what could be a significant opportunity to acquire great real estate at fractions of long-term intrinsic value, where some do not have the staying power. We are currently raising our fifth real estate flagship fund, and when combined with our large capital resources at Brookfield Corporation, we have significant firepower to potentially acquire some exceptional real estate. Third, and not least, buybacks. Given the trading levels of our shares, which we believe represents a significant discount to the intrinsic value of the business, we are continuing to allocate capital to buybacks of our Class A shares in the open market. We acquired close to $300 million in the first quarter and will continue to opportunistically do so when we see such a large discount to intrinsic value. It may also interest you that we and me as individuals continue to buy more Brookfield Corporation shares and have acquired over $100 million of Brookfield Corporation shares in the open market since the distribution of our manager. This should tell you something. All opportunities that I highlight have the potential to accelerate the growth of each of our businesses. They could also lead to new investment verticals for Brookfield that will further diversify and globalize the business, but also provide innovative ways for clients and partners to invest with us. We have a long history of successfully investing through many cycles, and our deep resources mean that we should be able to capitalize on the investment opportunities that may inevitably present themselves during this period of time. As always, thank you for your continued support and interest in overall Brookfield. I will now turn the call over to Nick.