Financial Performance - For Q1 2023, the company reported a net loss of $93 million, a significant decline from a net income of $156 million in the same quarter last year, primarily due to unrealized mark-to-market losses on investments and embedded derivatives [12]. - Net income for the period was a loss of $93 million, down from a profit of $156 million in the first quarter of 2022 [24]. - Total revenues were $1,203 million, compared to $278 million in the same period of 2022, representing a significant increase [24]. - Cash flows from operating activities were $198 million, up from $77 million in the first quarter of 2022 [30]. - The company reported a total change in the period of $92 million, driven by net income and other adjustments [60]. Premiums and Claims - Net premiums for the quarter reached $800 million, a substantial increase from $109 million in the prior year quarter, largely driven by $625 million in contributions from direct insurance premiums from American National, acquired in May 2022 [12]. - Claims and policyholder benefits increased to $742 million in the quarter, compared to $105 million in the prior year quarter, correlating with the rise in premium revenues from American National [13]. - Claims incurred and benefits paid for the same period were $840 million, compared to $86 million in 2022, reflecting an increase of 876.7% [184]. Operating Expenses - Operating expenses surged to $176 million in the current quarter from $17 million in the prior year quarter, mainly due to the acquisition of American National and increased personnel and professional services [13]. - Operating expenses were $176 million, compared to $17 million in the same period of 2022, indicating a substantial rise [24]. Investment Income and Losses - Net investment income was $400 million for the quarter, up from $56 million in the prior year quarter, reflecting growth in the investment portfolio and capital redeployed in recent transactions [12]. - The company reported net losses on investments and derivatives of $121 million, compared to gains of $111 million in the same period of 2022 [30]. - Total investment-related losses for the three months ended March 31, 2023, amounted to $(106) million, compared to gains of $28 million in the same period of 2022 [134]. Assets and Liabilities - Total assets increased to $44,951 million as of March 31, 2023, compared to $43,450 million at the end of 2022, reflecting a growth of approximately 3.5% [54]. - Policyholder liabilities increased by $461 million, contrasting with a decrease of $7 million in the previous year [30]. - The total liabilities related to policyholders' account balance as of March 31, 2023, were $6,057 million, unchanged from the previous period [184]. Equity and Retained Earnings - The company recorded a $71 million decrease to retained earnings as of December 31, 2022, due to the transition to GAAP accounting standards [7]. - The transition from IFRS to GAAP resulted in a $138 million decrease to retained earnings and a corresponding increase to accumulated other comprehensive income related to the reclassification of equity and debt securities [8]. - The company’s total equity as of March 31, 2023, was $1.828 billion, reflecting changes in comprehensive income and other adjustments during the period [19]. Accounting Standards and Changes - The company adopted LDTI effective January 1, 2023, impacting the measurement and disclosures of insurance liabilities and deferred acquisition costs [52]. - The company has adopted new accounting standards, including ASU 2020-04, which addresses the effects of reference rate reform on financial reporting [111]. Investments and Securities - The fair value of available-for-sale fixed maturity securities totaled $16,565 million as of March 31, 2023, with $14,616 million classified as Level 2 measurements [145]. - The total investments in available-for-sale fixed maturity securities amounted to $17,352 million with a carrying value of $16,565 million as of March 31, 2023 [111]. - The company held $5,902 million in mortgage loans on real estate as of December 31, 2022, with a non-accrual amount of $27 million [93]. Derivatives and Risk Management - The company manages foreign currency exposure and other market risks using derivative financial instruments, including cross currency swaps and interest rate swaps [151]. - The notional amount of cross currency swaps was $17 million in 2023, while interest rate swaps had a notional amount of $12 million [153].

Financial Performance - Brookfield Reinsurance Ltd. filed its Form 20-F for the fiscal year ending December 31, 2022[4] - The company reported a net income of $150 million for Q1 2023, representing a 20% increase year-over-year[5] - Total assets increased to $10 billion, up 15% from the previous quarter[5] - The company achieved a return on equity (ROE) of 12% for the fiscal year 2022[5] - The company anticipates a revenue growth of 10-12% for the fiscal year 2023[5] Strategic Initiatives - Brookfield Reinsurance Ltd. plans to expand its market presence in Europe and Asia in 2023[5] - The company is investing $200 million in new technology to enhance underwriting capabilities[5] - A new product line focused on climate risk insurance is set to launch in Q3 2023[5] - Brookfield Reinsurance Ltd. completed the acquisition of a regional insurance firm, enhancing its market share[5] - The company aims to improve operational efficiency by 5% through strategic initiatives in 2023[5]

```markdown PART I [Key Information](index=16&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines the principal risks associated with the company and its securities, categorized by their impact on exchangeable shares, operations, relationship with Brookfield, investments, regulatory environment, and taxation [Risk Factors](index=16&type=section&id=3.D%20RISK%20FACTORS) The company faces numerous risks, including market volatility of its exchangeable shares, operational dependence on Brookfield, regulatory compliance across multiple jurisdictions, investment risks, conflicts of interest with Brookfield, and complex tax implications for shareholders - The exchangeable shares are structured to provide an economic return equivalent to one Brookfield Class A Share, meaning their market price is expected to be impacted by the performance and market price of Brookfield Class A Shares[158](index=158&type=chunk) - The company may redeem all outstanding exchangeable shares at any time without shareholder consent, subject to certain conditions and the prior written consent of the holder of the class C shares (Brookfield Corporation)[61](index=61&type=chunk) - The company relies on an exemption from the U.S. Investment Company Act of 1940, and if this exemption were deemed inapplicable, it could have a significant adverse impact on the business[79](index=79&type=chunk) - The business is highly regulated across multiple jurisdictions (U.S., Bermuda, Cayman Islands, Canada), and changes in these complex regulations could materially impact capitalization, profitability, and growth[248](index=248&type=chunk) - The organizational structure and relationship with Brookfield give rise to conflicts of interest, particularly in the allocation of investment opportunities and affiliate transactions[238](index=238&type=chunk)[239](index=239&type=chunk) - U.S. Holders of exchangeable shares face uncertain tax treatment, including whether the shares are treated as stock of the company, and potential adverse consequences if the company is classified as a Passive Foreign Investment Company (PFIC) or has Related Person Insurance Income (RPII)[276](index=276&type=chunk)[277](index=277&type=chunk)[281](index=281&type=chunk) [Information on the Company](index=69&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details the company's history, business operations, and organizational structure, highlighting its spin-off from Brookfield Corporation, strategic acquisitions, and comprehensive regulatory framework [History and Development of the Company](index=69&type=section&id=4.A%20HISTORY%20AND%20DEVELOPMENT%20OF%20THE%20COMPANY) Brookfield Reinsurance Ltd. was incorporated in 2020 and spun off from Brookfield Corporation in 2021, growing significantly through strategic acquisitions like American National and a planned acquisition of Argo Group - Incorporated on December 10, 2020, and spun-off from Brookfield Corporation on June 28, 2021[283](index=283&type=chunk)[435](index=435&type=chunk) - Completed the acquisition of American National in an all-cash transaction valued at approximately **$5.1 billion** on May 25, 2022, making it the platform for the company's U.S. direct insurance operations[287](index=287&type=chunk) - Entered into a definitive merger agreement on February 8, 2023, to acquire Argo Group for approximately **$1.1 billion**, with the acquisition expected to close in the second half of 2023[284](index=284&type=chunk) - In October 2021, closed a transaction to reinsure up to **$10 billion** of annuity products from AEILIC, including an initial block of ~**$4 billion** and a flow agreement for up to an additional ~**$6 billion**[313](index=313&type=chunk) [Business Overview](index=71&type=section&id=4.B%20BUSINESS%20OVERVIEW) The company operates a capital solutions business through three segments: Reinsurance, Pension Risk Transfer (PRT), and Direct Insurance, leveraging Brookfield's investment expertise and maintaining strong financial strength ratings under stringent regulatory frameworks - The company's business is conducted through three operating segments: Reinsurance, Pension Risk Transfer (PRT), and Direct Insurance[1](index=1&type=chunk) - The Direct Insurance business, primarily through American National, offers a broad range of products including life insurance, annuities, and property and casualty insurance, with **$19.7 billion** of future policy benefits and policyholder account balances as of December 31, 2022[344](index=344&type=chunk)[346](index=346&type=chunk) - The Reinsurance business, operated through NER SPC and NER Ltd., focuses on reinsuring annuity products, with these subsidiaries having **$5.9 billion** and **$1.5 billion** of future policy benefits, respectively, as of December 31, 2022[292](index=292&type=chunk) - The PRT business operates in Canada through Brookfield Annuity Company (BAC) and in the U.S. through American National Insurance Company (ANICO), with BAC having **$3.0 billion** of future policy benefits as of December 31, 2022[293](index=293&type=chunk) Financial Strength Ratings (A.M. Best) as of Dec 31, 2022 | Company | Financial Strength Rating | Issuer Credit Rating | Outlook | | :--- | :--- | :--- | :--- | | Brookfield Annuity Company | A- (4 of 16) | a- (7 of 21) | Stable | | North End Re (Cayman) SPC | A- (4 of 16) | a- (7 of 21) | Stable | | North End Re Ltd. | A- (4 of 16) | a- (7 of 21) | Stable | | American National Insurance Company | A (3 of 16) | a+ (5 of 21) | Stable | - The company is subject to comprehensive regulatory oversight in its key jurisdictions, including by the Bermuda Monetary Authority (BMA), Cayman Islands Monetary Authority (CIMA), Canada's Office of the Superintendent of Financial Institutions (OSFI), and various U.S. state insurance departments following NAIC guidelines[352](index=352&type=chunk)[353](index=353&type=chunk)[358](index=358&type=chunk)[361](index=361&type=chunk)[365](index=365&type=chunk) [Organizational Structure](index=90&type=section&id=4.C%20ORGANIZATIONAL%20STRUCTURE) Brookfield Reinsurance Ltd. is the parent holding company, wholly owning BAM Re Holdings Ltd., which in turn holds the company's primary operating subsidiaries, while Brookfield Corporation holds all Class C shares, representing the residual economic interest - The company's significant subsidiaries include BAM Re Holdings Ltd., Brookfield Annuity Company, North End Re (Cayman) SPC, North End Re Ltd., and American National Group, LLC[342](index=342&type=chunk)[627](index=627&type=chunk) [Operating and Financial Review and Prospects](index=95&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section provides management's discussion and analysis of the company's financial condition and results of operations, highlighting significant growth in 2022 driven by the American National acquisition and strategic use of non-IFRS measures [Operating Results](index=95&type=section&id=5.A%20OPERATING%20RESULTS) For the year ended December 31, 2022, the company reported a net income of **$492 million**, a significant turnaround from a net loss of **$44 million** in 2021, primarily driven by the American National acquisition and increased net investment income Key Financial Data (in US$ Millions) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total assets | $43,499 | $11,493 | $1,440 | | Net income (loss) | $492 | $(44) | $1 | | Distributable Operating Earnings | $388 | $30 | $1 | - Net income for 2022 was **$492 million**, a significant increase from a net loss of **$44 million** in 2021, largely driven by contributions from the American National acquisition[657](index=657&type=chunk) - Net premiums and other policy revenue decreased to **$4.5 billion** in 2022 from **$7.2 billion** in 2021, mainly because 2021 included **$6.2 billion** from two large-block reinsurance transactions not repeated in 2022[658](index=658&type=chunk) - Net investment income, including funds withheld, increased significantly to **$617 million** in 2022 from **$79 million** in 2021, driven by growth in the investment portfolio from recent transactions and rising interest rates[658](index=658&type=chunk) - Total assets grew to **$43.5 billion** as of Dec 31, 2022, from **$11.5 billion** at year-end 2021, primarily due to the American National acquisition which added **$29.7 billion** in assets[639](index=639&type=chunk)[664](index=664&type=chunk) [Liquidity and Capital Resources](index=103&type=section&id=5.B%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains a strong liquidity position, with total corporate liquidity of **$1.57 billion** as of December 31, 2022, supported by operating cash flows, credit facilities, and a **$2.0 billion** equity commitment from Brookfield Corporate Liquidity (in US$ Millions) | Component | 2022 | 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $784 | $70 | | Liquid financial assets | $241 | $243 | | Undrawn credit facilities | $544 | $313 | | **Total Corporate liquidity** | **$1,569** | **$626** | - The company has access to a **$2.0 billion** equity commitment from Brookfield to fund future growth, which can be drawn in exchange for Class C or junior preferred shares[668](index=668&type=chunk)[90](index=90&type=chunk) Summary of Cash Flows (in US$ Millions) | Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Operating activities | $107 | $1,581 | $399 | | Investing activities | $(4,341) | $(3,864) | $(385) | | Financing activities | $5,994 | $2,640 | $13 | | **Net change in cash** | **$1,760** | **$357** | **$27** | [Directors, Senior Management and Employees](index=121&type=section&id=ITEM%206.%20DIRECTORS%20%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's governance structure, including its board of directors and executive officers, their compensation, and the roles of board committees, with over **3,500** full-time employees as of the report date [Directors and Senior Management](index=122&type=section&id=6.A%20DIRECTORS%20AND%20SENIOR%20MANAGEMENT) The company is led by a board of directors and executive officers, including Sachin Shah as Chair and CEO, with key executive services provided by Brookfield under an Administration Agreement - The board and executive team include Sachin Shah (Chair & CEO), Thomas Corbett (CFO), and Lorenzo Lorilla (CIO)[762](index=762&type=chunk) - The services of the Chief Executive Officer, Chief Financial Officer, and Chief Investment Officer are provided by Brookfield Corporation under an Administration Agreement[794](index=794&type=chunk)[1031](index=1031&type=chunk) [Compensation](index=126&type=section&id=6.B%20COMPENSATION) Director compensation for 2022 included a **$150,000** annual retainer, while executive compensation for NEOs, largely determined by Brookfield, emphasizes long-term value creation through participation in Brookfield's long-term incentive plans 2022 Director Compensation Retainers | Compensation Element | Amount (USD) | | :--- | :--- | | Annual Retainer | $150,000 | | Lead Independent Director Additional Retainer | $50,000 | | Audit Committee Chair Additional Retainer | $20,000 | | Audit Committee Member Additional Retainer | $10,000 | 2022 NEO Summary Compensation Table (in US$) | Name | Principal Position | Total Annual Compensation | | :--- | :--- | :--- | | Sachin Shah | Chief Executive Officer | 8,310,040 | | Mabel Wong | Chief Financial Officer | 378,748 | | Bahir Manios | Chief Investment Officer | 1,585,340 | | Thomas Corbett | Chief Financial Officer | 1,711,796 | | Paul Forestell | Chief Operating Officer | 1,814,762 | | Gregory McConnie | CEO, NER SPC and NER Ltd. | 690,087 | - NEOs participate in Brookfield's long-term incentive plans, including the Management Share Option Plan (MSOP), Deferred Share Unit Plan (DSUP), and Restricted/Escrowed Stock Plans, to align their interests with long-term shareholder value[803](index=803&type=chunk) [Board Practices](index=138&type=section&id=6.C%20BOARD%20PRACTICES) The company's board practices ensure effective governance and oversight through a structured board composition, three standing committees composed of independent directors, and adopted policies for director elections and diversity - The board has three standing committees: Audit, Governance and Nominating, and Compensation, all composed of independent directors[854](index=854&type=chunk) - Holders of class A exchangeable shares elect one-half of the board, and the holder of class B shares (the Class B Partners) elects the other half[819](index=819&type=chunk) - The company has adopted a majority voting policy for director elections and a board diversity policy to enhance governance[820](index=820&type=chunk)[850](index=850&type=chunk) [Major Shareholders and Related Party Transactions](index=145&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's ownership structure and its extensive relationship with Brookfield Corporation, highlighting major shareholders and numerous agreements that create operational synergies but also inherent conflicts of interest [Major Shareholders](index=145&type=section&id=7.A%20MAJOR%20SHAREHOLDERS) As of the report date, significant shareholders of the Class A exchangeable shares include Bruce Flatt (**10.19%**), Partners Value Investments Inc. (**8.76%**), and CI Investments Inc. (**5.29%**), while the BAM Re Partners Trust holds **100%** of the Class B limited voting shares Major Shareholders of Voting Securities | Name | Class A Shares Owned (%) | Class B Shares Owned (%) | | :--- | :--- | :--- | | Bruce Flatt | 10.19% | —% | | BAM Re Partners Trust | —% | 100% | | Partners Value Investments Inc. | 8.76% | —% | | CI Investments Inc. | 5.29% | —% | [Related Party Transactions](index=146&type=section&id=7.B%20RELATED%20PARTY%20TRANSACTIONS) The company has a deeply integrated relationship with Brookfield, which holds all Class C shares and provides critical operational and financial support through various agreements, creating conflicts of interest managed by established protocols and a Conflicts Committee - The company relies on Brookfield for operational and financial support, including investment management, administrative services, an equity commitment, and a credit facility[864](index=864&type=chunk) - The relationship with Brookfield creates conflicts of interest, particularly in allocating investment opportunities and expenses between the company and other Brookfield Accounts[864](index=864&type=chunk)[238](index=238&type=chunk) - Brookfield has implemented policies and a Conflicts Committee to manage these conflicts, but transactions are expected to be managed differently than for other advisory clients, reflecting the integrated nature of the relationship[906](index=906&type=chunk)[907](index=907&type=chunk) [Financial Information](index=161&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section refers to the detailed consolidated financial statements and other related financial information, noting no significant changes to the financial position other than those discussed in the Operating Results section - The company's consolidated financial statements are provided under Item 18 of the report[880](index=880&type=chunk) [Additional Information](index=162&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section provides detailed information on the company's share capital, memorandum and bye-laws, material contracts, and taxation policies, outlining the rights and features of various share classes and the complexities of U.S. and Canadian federal income tax considerations for shareholders [Memorandum and Bye-laws](index=162&type=section&id=10.B%20MEMORANDUM%20AND%20BYE-LAWS) The company's governance is defined by its memorandum of association and bye-laws, establishing a share structure where Class A and Class B shareholders each elect half of the board, and Class A exchangeable shares are economically equivalent to Brookfield Class A Shares with exchange and redemption features - Holders of class A exchangeable shares are entitled to elect one-half of the board of directors, while holders of class B shares elect the other half[913](index=913&type=chunk)[951](index=951&type=chunk) - Each exchangeable share is exchangeable at the holder's option for one Brookfield Class A Share (or its cash equivalent), with the obligation to satisfy the exchange resting with Brookfield Corporation[885](index=885&type=chunk)[916](index=916&type=chunk) - The company's board has the right to redeem all outstanding exchangeable shares upon 60 days' notice, subject to the prior written consent of Brookfield Corporation[943](index=943&type=chunk) - Brookfield Corporation, as the sole holder of Class C shares, holds the residual economic interest in the company and has consent rights over key matters, including mergers and amendments to bye-laws[927](index=927&type=chunk) [Material Contracts](index=189&type=section&id=10.C%20MATERIAL%20CONTRACTS) The company has several material contracts, primarily with Brookfield Corporation, that define their operational and financial relationship, including agreements for support, administration, investment management, an equity commitment, and a credit facility - A Support Agreement with Brookfield Corporation ensures the economic equivalence of exchangeable shares with Brookfield Class A Shares[1087](index=1087&type=chunk) - An Administration Agreement allows Brookfield to provide key executives (CEO, CFO, CIO) and other administrative services on a cost-recovery basis[1031](index=1031&type=chunk)[1088](index=1088&type=chunk) - Investment Management Agreements appoint Brookfield as the investment manager for certain company assets, with fees based on invested assets[1092](index=1092&type=chunk) - A **$2 billion** Equity Commitment from Brookfield provides growth capital, callable in exchange for Class C or Junior Preferred Shares[1093](index=1093&type=chunk) - A **$400 million** revolving Credit Agreement with Brookfield provides liquidity for working capital purposes[1094](index=1094&type=chunk) [Taxation](index=194&type=section&id=10.E%20TAXATION) This subsection provides a general summary of material U.S. and Canadian federal income tax considerations for shareholders, highlighting the uncertain tax treatment for U.S. Holders and potential adverse consequences related to PFIC or RPII classifications - The U.S. federal income tax treatment of the class A exchangeable shares is uncertain, but the company treats them as its own stock for tax purposes[1078](index=1078&type=chunk) - U.S. Holders face risks of adverse tax consequences if the company is classified as a Passive Foreign Investment Company (PFIC), though the company does not expect to be a PFIC but cannot provide assurance[276](index=276&type=chunk)[561](index=561&type=chunk) - If the company's non-U.S. subsidiaries are determined to have Related Person Insurance Income (RPII), U.S. Holders may be subject to current taxation on their pro rata share of such income[277](index=277&type=chunk)[1109](index=1109&type=chunk) - For Canadian Resident Holders, dividends on exchangeable shares are included in income but are not eligible for the dividend tax credit, and the exchange of shares for Brookfield Class A Shares is a taxable disposition[272](index=272&type=chunk)[298](index=298&type=chunk) PART II [Controls and Procedures](index=213&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with the latter assessment excluding the recently acquired American National - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[1165](index=1165&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[1133](index=1133&type=chunk) - The assessment of internal control over financial reporting excluded the recently acquired American National, which constituted **68%** of total assets and **44%** of revenues for the year ended December 31, 2022[1133](index=1133&type=chunk)[420](index=420&type=chunk) - The company's independent registered public accounting firm, Deloitte LLP, has audited and issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2022[420](index=420&type=chunk)[1133](index=1133&type=chunk) PART III [Financial Statements](index=216&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section contains the audited combined consolidated financial statements of Brookfield Reinsurance Ltd. for 2022, 2021, and 2020, prepared in accordance with IFRS, including the Report of Independent Registered Public Accounting Firm and detailed notes [Report of Independent Registered Public Accounting Firm](index=223&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte LLP issued an unqualified opinion on the company's combined consolidated financial statements and the effectiveness of its internal control over financial reporting, while identifying critical audit matters related to the valuation of future policy benefits - The auditors, Deloitte LLP, expressed an unqualified opinion that the financial statements are fairly presented in accordance with International Financial Reporting Standards (IFRS)[1177](index=1177&type=chunk) - The audit identified two Critical Audit Matters: 1) The valuation of future policy benefits related to the American National acquisition, due to the complexity of assumptions for discount rates and mortality; 2) The valuation of existing future policy benefits, due to the subjective and complex judgments required for mortality and policyholder behavior assumptions[1178](index=1178&type=chunk)[425](index=425&type=chunk) [Consolidated Financial Statements](index=228&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show significant growth in 2022, primarily due to the American National acquisition, with total assets increasing to **$43.5 billion** and net income reaching **$492 million** Combined Consolidated Statement of Financial Position (in US$ Millions) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$43,499** | **$11,493** | | Total Liabilities | $42,042 | $10,058 | | Total Equity | $1,457 | $1,435 | | **Total Liabilities and Equity** | **$43,499** | **$11,493** | Combined Consolidated Statement of Operations (in US$ Millions) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Revenues | $5,101 | $7,241 | $514 | | Total Benefits and Expenses | $4,763 | $7,291 | $512 | | **Net Income (Loss) for the Year** | **$492** | **$(44)** | **$1** | Combined Consolidated Statement of Cash Flows (in US$ Millions) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Cash flows from operating activities | $107 | $1,581 | $399 | | Cash flows from investing activities | $(4,341) | $(3,864) | $(385) | | Cash flows from financing activities | $5,994 | $2,640 | $13 | | **Cash and cash equivalents, end of year** | **$2,145** | **$393** | **$35** | [Notes to Financial Statements](index=236&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial statement line items, including the **$5.1 billion** American National acquisition, the **$28.1 billion** investment portfolio, methodologies for **$15.8 billion** in future policy benefits, and segment-level financial results - The acquisition of American National on May 25, 2022, for **$5.1 billion** in cash, added **$29.1 billion** in assets and **$24.0 billion** in liabilities, resulting in **$102 million** of goodwill[510](index=510&type=chunk)[483](index=483&type=chunk) - As of Dec 31, 2022, the company's investment portfolio totaled **$28.1 billion**, with the majority in debt securities (**$19.0 billion**) and loans and receivables (**$7.5 billion**)[484](index=484&type=chunk) - Future policy benefits of **$15.8 billion** are calculated using different actuarial methods: Canadian Asset Liability Method (CALM) for the PRT business, and US GAAP methodologies for the Reinsurance and Direct Insurance segments, as permitted by IFRS 4[453](index=453&type=chunk)[455](index=455&type=chunk)[718](index=718&type=chunk) - The company's operations are reported across three segments: Reinsurance, Pension Risk Transfer (PRT), and Direct Insurance, with the Direct Insurance segment being the largest contributor to Distributable Operating Earnings (DOE) for 2022[1288](index=1288&type=chunk)[1309](index=1309&type=chunk) ```

Financial Performance - Gross premiums increased by $6.8 billion in 2021 compared to 2020, driven by two large-block reinsurance transactions and a higher volume of pension risk transfer (PRT) deals closed [220]. - Net investment income, including funds withheld, rose by $54 million in 2021, reflecting growth in the investment portfolio and realized gains from the first large-block reinsurance transaction [220]. - The company reported a net loss of $44 million for the year ended December 31, 2021, compared to net income of $1 million in 2020 [219]. - Total revenues for 2021 were $7.344 billion, a significant increase from $514 million in 2020 [219]. - Distributable Operating Earnings (DOE) increased to $30 million in 2021, up from $1 million in 2020, with expectations for further growth in the coming quarters [222]. - Cash generated from operating activities was $1.6 billion in 2021, compared to $399 million in 2020, largely due to favorable changes in insurance reserves [241]. - Cash generated from financing activities was $2.6 billion in 2021, significantly up from $13 million in 2020, mainly from the issuance of shares [245]. - Distributable Operating Earnings (DOE) for the PRT segment increased to $11 million in 2021 from $1 million in 2020, reflecting a higher investment spread [236]. Assets and Liabilities - Insurance reserves increased by $7.2 billion in 2021, primarily due to two new reinsurance transactions and new PRT deals [231]. - Cash and cash equivalents rose by $358 million during the year, largely due to cash held within investment portfolios from new reinsurance treaties [228]. - Total assets increased to $11.493 billion as of December 31, 2021, compared to $1.440 billion in 2020 [228]. - Reinsurance payable increased by $75 million due to new reinsurance treaties closed during the year [232]. - Corporate borrowings rose by $693 million, primarily from drawings on a 364-day revolving credit facility for investment opportunities [232]. - Deferred revenue increased by $82 million as a result of a negative ceding commission from a reinsurance transaction [232]. - Assets Under Management (AUM) grew by $8.6 billion to $9.7 billion, driven by new Reinsurance and Pension Risk Transfer (PRT) business [232]. Market Trends and Opportunities - The Canadian PRT market has expanded at a growth rate of approximately 24% per annum since 2015, indicating significant growth opportunities [254]. - The life insurance and annuities industry in North America and Western Europe has over $13 trillion in assets, growing at approximately 4% annually [255]. - Insurers are facing pressure on profitability due to low interest rates, creating opportunities for higher-yielding alternative investments [255]. - Many insurers are shifting towards less asset-intensive products, seeking to free up capital through reinsurance [255]. - Recent market conditions have exposed under-capitalized companies, increasing the demand for reinsurance solutions [255]. - Public market valuations for insurers have compressed, leading to a search for partnerships to address capital needs [255]. Risk Management - The company manages interest rate risk through asset liability management (ALM), using derivatives to reduce market risk [259]. - Credit risk is managed by establishing concentration limits and monitoring the financial condition of counterparties [260]. - The company utilizes foreign exchange forwards to manage foreign exchange risk associated with its insurance contracts [258]. - BAC recognizes reinsurance assets related to longevity reinsurance as the difference between scheduled fixed and actual benefit payments [282]. Corporate Governance - The board meets at least four times each year, with additional meetings held as necessary to address specific business items [331]. - The board is composed of a minimum of four and a maximum of eight members, with at least a majority required to be independent of the company and Brookfield [333]. - The company has adopted a majority voting policy for the election of directors, requiring a majority of shares voted in favor for a nominee to be elected [335]. - The board oversees the management of the company's business and affairs through three standing committees: Audit, Governance and Nominating, and Compensation [337]. - The Governance and Nominating Committee regularly reviews the board's composition and recommends changes to ensure a balance of experience and fresh perspectives [338]. - The Compensation Committee evaluates executive compensation to ensure it aligns with the company's risk profile and does not encourage excessive risk-taking [351]. - The company does not set formal diversity targets for board representation but emphasizes the importance of diversity in the nomination process [341]. - The company has adopted a Code of Business Conduct and Ethics to ensure integrity and compliance with legal requirements [357]. Executive Compensation - For the year ended December 31, 2021, directors received approximately $300,000 in aggregate compensation for all services to the company and its subsidiaries [327]. - Effective January 1, 2022, the annual retainer for directors increased to $150,000 for their service on the board of directors [328]. - During 2021, named executive officers (NEOs) received approximately $4.4 million in aggregate compensation paid by the company for all services [329]. - The Chief Executive Officer, Chief Investment Officer, and the Chief Executive Officer of the reinsurance business are employees of Brookfield, and their compensation is determined by Brookfield [329]. - The company does not have any equity compensation plans authorized for issuance, but NEOs may participate in Brookfield's long-term incentive plans at Brookfield's discretion [329]. Financial Reporting and Compliance - The Company measures performance using net income, gross premiums, and non-IFRS measures such as Distributable Operating Earnings and Excess Capital [298]. - Distributable Operating Earnings is defined as net income excluding depreciation, income taxes, and other specific costs, providing insight into operating performance [300]. - Excess Capital represents capital not currently supporting insurance contracts, defined as total cash, equity accounted investments, and other capital items [301]. - Net Reserve Capital is the capital within regulated entities supporting insurance contracts, defined as equity excluding Excess Capital [301]. - The Company is assessing the impact of IFRS 17, which will significantly affect the timing of earnings recognition for insurance contracts [290]. - The Company invests in structured entities, consolidating them within its financial statements due to significant influence and variable returns [288]. - The Company recognizes impairment indicators for associates at each reporting date, with potential for reversal of impairment losses [287].