Brookfield Corporation

Hello, and welcome to the Brookfield Corporation third 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 11 on your telephone. I would now like to hand the conference call over to our first speaker, Ms. Angela Yulo, vice president. Please go ahead.

Thank you, operator, and good morning. Welcome to Brookfield Corporation's third quarter 2023 conference call. On the call today are Bruce Flatt, our Chief Executive Officer, and Nick Goodman, President of Brookfield Corporation. Bruce will start off by giving a business update, followed by Nick, who will discuss our financial and operating results for the quarter. 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 take 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 US and the information available on our website. And with that, I'll turn the call over to Bruce.

Thank you, Angela, and welcome everyone on the call. Results for the third quarter were strong, as our business continues to generate growing cash flows and resilient earnings. Distributable earnings before realizations were $1.1 billion in the quarter and $4.2 billion for the last 12 months, representing an increase of 11% per share year over year on a comparable basis. We continue to benefit from our leading position in the fastest growing asset management classes in alternatives today. Across both our asset management business and our scaling insurance solutions business, the franchise is capturing increasing allocations from institutions, pension plans, sovereigns, and individuals towards real assets and private credit. And the increasing allocation alternatives is coinciding with our growing retail and wealth distribution channels, which today are raising approximately $800 million a month and should grow to $1.5 billion a month by mid-next year from retail and wealth distribution only. Our asset management business had an active quarter overall and has now raised $61 billion of total capital year-to-date, with further closes expected on our flagship funds through the remainder of the year in early 2024. Our successful fundraising efforts include include the closing of our largest ever private equity fund in the quarter at $12 billion and the largest ever private infrastructure debt fund at $6 billion shortly after quarter end. We expect to put the finishing touches on raising the market's largest ever closed end infrastructure fund and have large closes for next vintages of transition, opportunistic credit, and opportunistic real estate in the coming quarters. and we remain on track to achieve our $150 billion capital raising target. Our insurance solutions business is also experiencing strong growth and is set to more than double its assets to over $100 billion, increasing annualized earnings to over $1.2 billion, with the anticipated closings of the previously announced acquisition of Argo Group and American Equity Life. Lastly, our operating businesses continue to deliver stable and growing cash flows supported by resilient earnings and solid fundamentals of the underlying businesses. Turning to markets, central banks have made good headway in lowering headline inflation. While economic activity has been resilient and the labor market has remained tight, particularly in the U.S., we expect rates to remain stable before going lower in the medium term. Stability in interest rates has led to improved liquidity in capital markets, and with significant sums of capital sitting on the sideline around the world, we expect that transaction activity will pick up significantly through the end of 2024. We do, however, recognize that geopolitics, as is often the case, is a wild card. Despite that, we do not expect that this will impact the long-term outlook for the global economy or us specifically. We have found that in all markets, owning businesses and assets that form the backbone of the global economy, maintaining high levels of liquidity and having a scale perpetual capital base is a safe place to be. With that backdrop, the business has performed well over the past 12 months with strong operating results, $65 billion of capital deployment, and over $35 billion in monetization. But we expect the next 12 months should even be better. It is worth re-emphasizing that underpinning our success is the significant levels of liquidity that we have across our business and our continued access to capital. Our liquidity today is significant at nearly $120 billion and should grow to over a record $150 billion around the end of the year and into next year. Our access to capital also remains strong. At a time when many are finding it harder to find capital, our franchise continues to successfully finance our existing assets and businesses and raise fresh capital for growth. Nick will speak to that in his remarks. Our ability to execute buyouts, partner, and lend at scale across a wide range of real assets is differentiating us now more than ever. And as the economic picture becomes clearer and our significant liquidity grows even further, we expect 2024 to be another strong investment year. One of the areas where we're seeing very exciting partnership opportunities surrounds artificial intelligence or AI. Much of the broader discussion today on AI is about how it's going to change the world and who will win and who will lose. Less discussed and more important to us is the significant impact that AI is having on the backbone of the global economy and the substantial amount of capital that is required to launch us into this next AI generation. The digitalization investment, which is all powered by renewables, requires tens of trillions of dollars. As AI increasingly becomes more vital, growing, and a valuable segment for many large corporates around the world, the ability to execute global scale solutions for green data centers is becoming more critical. And we expect that a few global solution providers like Brookfield will emerge as winners. By leveraging Brookfield's ecosystem, we are providing turnkey solutions for green data centers on a global basis with a large portfolio today that can provide unique and flexible options for customers. Our data center, renewables, and real estate businesses are leaders in their respective sectors. However, we believe that the big opportunity here lies in what we can achieve by having these businesses work together to provide unique, integrated solutions to some of the largest global players in AI. We believe that Brookfield is uniquely positioned as a partner of choice to capture the tremendous opportunities ahead and expect AI to be highly additive for our business for many years to come. Before I pass the call to Nick, I wanted to briefly talk about our infrastructure and renewables businesses. Given the impact that interest rates and broader sector challenges have had on the trading prices of all dividend yield securities of late, I wanted to reiterate that we expect to continue to earn very attractive returns on the capital we have invested in our renewable security, BEP, and our infrastructure security, BIP, for a very long time. We have for over 20 years, and our businesses are better positioned today than they've ever been. Today, these businesses are in excellent shape with a strong foundation for growth, Each are well positioned around global secular trends and benefit from being part of the broader Brookfield ecosystem. Providing them with access to scale capital, deep operating investment expertise, and global proprietary deal flow makes them different. So while many in the renewables and utilities sectors are on the defensive and looking inward, our businesses are well positioned with significant institutional capital along beside them. to continue to strengthen their franchises. We expect that the recent volatility in the markets will provide the opportunity to deploy significant amounts of capital for value and to these businesses to each emerge more dominant than they even are today. Given the current trading prices of Brookfield Renewable Partners and Brookfield Infrastructure Partners, Alongside our strong conviction in the intrinsic value of the businesses, we've begun allocating capital to buy further BEP and BIP shares in the open market, similar to what we've been doing with Brookfield Business Partners earlier this year. This use of capital will, of course, be weighed against buying back our own stock, where we've invested approximately $750 million over the past 12 months, and also investing in some of the great investment opportunities which we are seeing. I will close by noting for you that our significant competitive advantages of scale capital global footprint and deep investment and operating expertise, as well as our reputation as a superior partner, continue to differentiate our franchise and are more important today than ever. Thank you for your continued support and interest in Brookfield. With that, I'll turn it over to Nick to continue.