Earnings Call: Q2 2021

Aug 12, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the Brookfield Asset Management Second Quarter 2021 Results Conference Call. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Ms. Suzanne Fleming, Managing Partner. Please go ahead. Thank you, operator, and good morning. Welcome to Brookfield's Q2 2021 conference call. On the call today are Bruce Flat, our Chief Executive Nick Goodman, our Chief Financial Officer and Sachin Shah, Chief Investment Officer for Brookfield and CEO of our Insurance 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, Sachin will give an update on our insurance business. After our formal remarks, we'll turn the call over to the operator and take analyst questions. I'd like to remind you that in today's comments, including in responding 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 share 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, Suzanne, and welcome everyone on the call. Nick Goodman will walk you through our financial results in a moment, but I am pleased to say they're good on almost every front. The market environment has been strong and continues to get stronger in most, if not almost all of our key markets we operate in. While a total reopening will not be without challenges, we seem to be on a good path and GDP growth remains strong. We are seeing this in almost all of our operating businesses. Just to give you a few examples, in our infrastructure business, New connections doubled this quarter within our U. K. Regulated distribution business where we install and After that own household connections for water, gas, electricity and fiber. In our U. S. Real estate business, Tenant sales per square foot on average have now increased to higher than 2019 levels, not 2020, 2019 levels across our retail centers. In our private equity business, we saw our residential mortgage insurance Company benefit from higher premiums earned supported by the continued strength of the housing market. These are just a few examples of which there are countless Capital Markets remain very strong with Strong levels of global liquidity and a search for yield driving demand. 10 year treasury as most of you know is in the low 1% range. It appears certain that interest rates will remain lowish for some time. Overall, with a strong GDP growth Backdrop and lower for longer interest rates, this leaves us well positioned to execute on our growth plans as we push further to assist our clients with capital and fixed income investment options. To that end, we recently announced the transaction to acquire 100 percent of American National, which will add a great base to our insurance businesses. Sachin Shah, as Suzanne mentioned, is here with us today and will discuss what our plans are with regards to reinsurance, Insurance and Dispent Transaction specifically. More broadly across all of our businesses our teams have been busy. While valuations are generally high, we continue to find assets for value. This is because we often find ourselves as a buyer of choice given our operational capabilities, our bench strength across a number of industries, Our access to large scale capital and we can therefore execute on transactions swiftly and also our proven and long term track record. So while the market is competitive right now, we're still very confident that we can Moving to fundraising efforts, We've made significant progress with $24,000,000,000 of private capital raised since we last spoke to you, including 3 of our flagship funds, The capital rate so far includes the 7,000,000,000 dollars of our founders closed for our inaugural Global Transition Fund and capital raised as part of our initial close for our 4th flagship real estate fund of just over $9,000,000,000 to date. Compared to the first close of its prior vintage, Our latest private equity fund signed agreements for a couple of transactions recently. Our latest private equity fund has passed the commitment threshold to start fundraising for its next vintage and we expect that launch to happen soon. Deployment with our infrastructure fund, Large infrastructure fund is progressing well and we're confident we will shortly complete the acquisition of IPL. This acquisition sets us up well to be in the market with the next vintage of our flagship infrastructure fund early next And should be an excellent investment for our listed entity Brookfield Infrastructure Partners. We also expect to have a final close on our opportunistic credit flagship fund in the coming months with the final closeout of our $15,000,000,000 fund, the largest in Oaktree's history. And while we continue to scale up our flagship funds, we're also focused on Planning our client base and growing our product offering, designing and innovating new products that cater to our clients' needs, in particular in this low interest rate environment. As an example of this, in July, we announced the creation of our private non traded REIT, which will merge with an existing Oaktree REIT, which will assist us getting to market quicker and it will be rebranded as Brookfield REIT. This private wealth product is geared towards private income oriented investors and the focus in the United States and we expect it will be very attractive in this wealth channel. Brookfield REIT will own high occupancy de risked Assets with recurring cash flows of course which has been long a specialty of our real estate business. We hope to fully launch the strategy by the end of 2021. The flexibility provided by the privatization of BPY will be instrumental to this launch and the forward business plan for this product. Lastly, we completed or progressed a number of our key initiatives that we previously laid out for the business including the spin off of Brookfield Reinsurance partners to you by way of a special dividend at the end of June and the privatization of BPY, which closed in July. Thank you all for your continued support and I'll turn it over to Nick to discuss the financial performance. Thank you, Bruce, and good morning, everyone. Performance for the Q2 was very strong. We recorded $1,200,000,000 of distributable earnings supported by growth in our asset management business and steady distributions from our principal investments. Momentum in our Asset Management business continues to grow, supported by a very constructive economic backdrop. Our flagship funds are growing in size. We're developing new products that are being well received by the market and we are investing in our distribution capabilities to reach and serve More clients. In addition, the current environment is very supportive of our asset sales program, enabling us to surface profits for our clients, Return capital to them and realize carried interest in the process. Inflows during the quarter totaled $8,000,000,000 across several of our perpetual and long term fund strategies, including a first close for our latest real estate debt fund and further capital raises for our special investment strategy. Subsequent to quarter end, we held successful initial closes for inaugural Global Transition Fund and our 4th flagship real estate funds for a total of $16,000,000,000 and expect them to grow significantly with further closes Together with the successful fundraising of our latest flagship opportunistic credit fund, we are on track to meet our fundraising goals outlined in our 2020 Investor Day. We completed the privatization of BPY on July 26 and now 100% of the business. We expect the privatization to be accretive to our distributable earnings and over time through asset monetizations the portfolio will provide us with capital to fuel the next phase of our growth. Turning to quarterly results. Total funds from operations of $1,600,000,000 Operating FFO of $813,000,000 and net income of $2,400,000,000 were all up meaningfully from the prior year period. At our Asset Management business, fee bearing capital increased by $6,000,000,000 to $325,000,000,000 atquarterend and is up by $48,000,000,000 over the last 12 months. This led to strong growth in fee related earnings, which was $483,000,000 for the 3 month period and totaled $1,700,000,000 over the last 12 months, an increase of 25% from the prior period. We have $32,000,000,000 of additional committed capital that will become fee bearing once invested, translating to approximately $320,000,000 of incremental annual fee revenues. We've continued to execute on capital recycling initiatives at favorable prices. We generated $8,000,000,000 of proceeds from monetizations during the quarter allowing us to return $6,000,000,000 to our clients and realized $335,000,000 of carried interest into income. Year to date, we have now realized over $1,000,000,000 of gross carried interest meeting our 2021 full year target well ahead of schedule and we expect more to come over the balance of the year. Our investments performed very well during the quarter. We generated over $1,000,000,000 of unrealized carried interest, increasing the total accumulated carried interest by 20% to over $6,000,000,000 We expect to recognize this into income over time we continue to execute on asset sales. We should want to remind everyone that much of our accumulated unrealized carried interest In our earlier vintage funds, which are much smaller than the current vintages. And if we do our jobs right, we expect to realize carried interest to scale meaningfully as we create value for our investors. As for our invested capital, our operating businesses continue to perform very well. And as Bruce mentioned, Some are specifically benefiting from the relaxing restrictions and continued reopening of the global economy. This contributed to FFO for the quarter of 3.30 $1,000,000 with the strong earnings being offset by a decrease in FFO contribution from our renewables and infrastructure businesses following secondary sales of Some of our shares in these companies over the last 12 months and the sale of our majority interest in West Fraser. Distributable earnings or DE before realizations increased 35% over the last 12 month period. The increase was largely driven by the continued growth in our asset management franchise as well as increased distributions across our listed affiliates. Including realizations, DE doubled for the 12 month period to $6,300,000,000 Our liquidity continues to remain very strong. Including close to $9,000,000,000 directly at the BAM level. All of this adds to a total of $78,000,000,000 of deployable capital. Following the quarter, we further bolstered our liquidity with an $850,000,000 debt issuance, taking advantage of an attractive rate environment. Proceeds from the offering will be used to finance eligible green projects and for general corporate purposes. Our balance sheet remains conservatively capitalized with 94% of our debt having no recourse to the corporation and a debt to market capitalization ratio of around 10%. When combined with our corporate balance sheet that has over $9,000,000,000 of core liquidity, dollars 60,000,000,000 of investments and the $3,000,000,000 of DE that we generate on an annual basis, we have a strong foundation to fund strategic acquisitions such as American National, which will be highly accretive or use the capital to continue to buy back shares. Before I hand the call over to Sachin, I'm pleased to confirm that our Board of Directors has declared a $0.13 per share dividend payable at the end of September. Sachin? Thank you, Nick, and good morning, everyone. I'm pleased to be here today to provide you an update on the activities taking place across Brookfield's growing insurance solutions platform, Brookfield Reinsurance. Over the past 2 decades, We have transformed Brookfield into a leading alternative asset manager with access to scale amounts of capital, including our own strong capital base, Global presence and investment expertise across real estate, infrastructure, renewable power, private equity and more laterally credit. These businesses have enabled us to deploy large amounts of capital at attractive risk adjusted returns for us and our clients. Increasingly over the last decade as rates have come down, many of our clients have been insurance companies around the world looking for low volatility, higher returning investment opportunities backed by high quality assets. Our businesses and our expertise in particular in real estate, infrastructure, power and private credit match up very nicely against the needs of Asset Intensive Life and Annuity Insurance. As our insurance client capital has grown, So has the desire from insurers to look more broadly for partners like us who can offer diverse capital solutions such as block or future flow reinsurance capital, investment management and partnership opportunities. All of these skills are well suited to Brookfield's investment franchise given our deployable capital, investment expertise and ability to partner with counterparties over the long term. To focus our efforts at the end of June, We completed the spin off of Brookfield Reinsurance Partners, a separate public company that was established to own and operate insurance companies and conduct reinsurance. Since the spin off, we have been actively progressing our previously announced deals such as our cornerstone investment in American Equity Life and we have been working on a robust pipeline of new opportunities. To be clear and before I speak about our recent activities, the opportunity has always existed to be in insurance and reinsurance. It helps that our franchise is now bigger and our credit platform is much broader to ensure that we can put the capital to work effectively. But the real change over the last couple of years is that interest rates are as close to 0 as they have ever been. Therefore, the risk profile of losing money on annuity life products is lower than it has ever been. Accordingly, the opportunity for us to out earn and generate a substantial return on equity is excellent. Bottom line, when rates were at 5%, annuities needed to earn to out earn that 5%. As rates have fallen to 1%, The losses on the liabilities for those who took on policies to pay that circa 5% rate has been significant. But now with rates at 1% and with it unlikely that nominal yields will go negative for any long period of time, The risk on the liability side of the business is far less. We believe therefore that this is the ideal time to enter the business in a large way And therefore, we have been working on this plan for the last year. Cutting through it all, we're always trying to find ways to invest money In businesses which have good returns, but low risk, we think that annuities as long as you have a strong investment franchise to put money to work into offers that today. With that backdrop, earlier this week, we announced that Brookfield Reinsurance entered into an agreement to acquire a 100 percent interest in American National Group, a U. S. Based insurance company founded in Texas Nearly 100 years ago, American National is predominantly focused on life and annuities products with a smaller P and C business. We believe the acquisition will significantly enhance our capabilities in the U. S. And provide us with a scale platform for future growth. Today, the company manages approximately $30,000,000,000 of assets and has a net asset value of just over $6,000,000,000 We are acquiring the company for $5,100,000,000 funded with $1,500,000,000 of non recourse debt with the balance coming from equity. We believe we can grow the net asset value of the business meaningfully over the next 5 years through asset optimization and expanding into new lines of business. Accordingly, for Brookfield Reinsurance, this represents an attractive and value oriented entry into the U. S. Insurance market. To elaborate on these themes, I will describe some of the key features of the business. First, The company has an excellent management team with decades of experience, a conservative and prudent underwriting culture and a long track record of stable earnings and Capital Management. 2nd, the operational base of the company, its employees, its distribution partners is very strong. This gives us tremendous confidence to manage the existing business while pursuing growth. As a result, We will focus our efforts on enhancing profitability and lowering risk through our investment capabilities. We believe this is achievable Due to the significant credit products we have within Brookfield that as I previously mentioned are ideally suited to the broader insurance community due to their low volatility, stable returns and capital efficiency. These are typically our credit strategies across real estate, infrastructure And Renewable Power, where we have a depth of operating and investment origination expertise and have been further enhanced through our partnership with Oaktree. Today, we already have more than 100 insurers in North America and Europe as clients in these strategies. We also believe we can add new lines of business such as pension risk transfer and third party reinsurance to the American National Business given these services match up nicely with the investment products I just referenced. All of these factors give us conviction that the business has strong downside protection and substantial upside potential through asset optimization, growth and capital efficiency initiatives. We look forward to working with all stakeholders over the next decade. We expect the transaction to generate strong risk adjusted returns and are currently targeting to close the transaction in the first half of twenty twenty two. Once the American National transaction is closed, Brookfield Reinsurance We'll manage over $40,000,000,000 of reinsurance assets through a combination of our pension business and the reinsurance transactions signed to date with several U. S. Domestic insurers. We look forward to providing you an update on the progress of these initiatives in coming quarters. With that, I will pass the call over to the operator for any questions. Thank you. Our first question comes from the line of Cherilyn Radbourne from TD Securities. Your question please. Thanks very much and good morning. I was hoping you could give a bit more color on Brookfield Oaktree Wealth Solutions and how that compares versus how the company was accessing the wealth channel previously, Including whether that team is global or primarily focused on North America for now? Hi, Cherilyn. Yes, the team, I would say, used to be in 3 different spots. We did an Oaktree team, we did team in Brookfield and we had a team in our public Securities Group all doing a job of kind of accessing and penetrating different parts of the channel with different products. And so putting it together will be immensely powerful. And there are people, I would say, focused on this predominantly in the U. S, but also we have some people in Europe and we'll broaden the team. And we have been accessing channels and it's really a combination of all of what we were doing before. So the RIAs, the bank wealth channels, the high net worth, the family office and putting it together with the right products So we think we'll give it tremendous scale and a product like the non traded REIT is a perfect example of that. And so just as a follow-up, beyond that non traded REIT, would you anticipate creating other products specifically for the wealth channel? And just what would be the interplay between those products and your listed affiliates? Yes, we would. I think there will be new products and I think whatever we look to do, obviously, there are certain I have return requirements in these different kinds of products and some might work for the listed affiliates and like the private funds if that's the case, we can work out They were to invest alongside each other, but some of these are products like in our Super Core Infrastructure Fund and have different risk return attributes than we sometimes Look for in the Western Affiliates, but either they invest alongside each other or they're tailored specifically for that channel. That's my 2. Thank you. Thank you. Our next question comes from the line of Bill Katz from Citigroup. Your question please. You may have covered this, so I apologize. Sort of shareholder that read very favorably to me around asset gathering across a broadening platform at scale and sort of reinforced, reiterated the $100,000,000,000 goal and well With a good track record into the 3rd quarter ready. Stepping back a little bit, Bruce, many of your peers have had similar type of bogeys and have significantly ramped The opportunity set on the other side of that. So as you look now today at that $100,000,000,000 more or less confident, where could that ultimately get to you think in terms of sort of ultimate raise for the cycle? Thank you. Yes. Look, I'd just say, if you look more broadly across the business Those numbers aren't included. What's not included in them is our insurance Accumulation of assets. I think our private funds can be much larger. I think our perpetual funds can get bigger. The only thing I would say is and we said in the letter that our goal is to get each of our private flagship funds to 25,000,000,000 They will probably after that point in time, they won't get that much bigger than that. They may split and we'll do ones in Asia or Europe, But that's sort of a size where institutions are comfortable. But I think there's lots of room on the sides to keep growing. Years ago, I wouldn't have thought we'd have 5 flagship funds, we had 3 and we keep expanding the business. Okay. Just a quick follow-up. So in terms of BPY, I guess I was reading some of the footnotes there that you expect to keep some of the 15 plus 1,000,000,000 Potentially forever on the balance sheet. I'm just sort of wondering just conceptually why such a strong statement and what would cause you to potentially Maybe liquidate that capital and redeploy the proceeds elsewhere. Bill, maybe I'll start. I would probably answer it a different way Maybe to ask the question, we have about $30,000,000,000 of equity in real estate today and we think that that will continue To generate strong returns in cash flow, but over the next 5 to 7 years, we outlined that we could surface $25,000,000,000 up to $25,000,000,000 of cash Against that $30,000,000,000 today, now that will continue to compound in value that maybe gets you to your hold, but that's a significant amount of capital that we think we can raise. And if the market is even more constructive than we think it will be then maybe we can accelerate it. And by having new products in the business such Our non traded REIT, other private funds and insurance business, maybe there's another path to accelerate. But I would focus on the fact that against $30,000,000,000 of equity today, There's potential to raise up to $25,000,000,000 of cash. Okay. Thank you, both. Thank you. Our next question comes from the line of Alex Blostein from Goldman Sachs. Your question please. Hi, good morning. This is actually Ryan Bailey on behalf of Alex. I also had a question on BPY. I was wondering if we could walk through some of the Economic implications, now that the deal is closed and this is a little bit of a nested question, but I guess how have Economics change related to FRE, now that you are in BPY, How do you expect it to change over time? And then also in terms of valuing the assets on the balance sheet, how do you expect that to happen Going forward as well as the assets, appreciate. So I'll answer the second question first. There is no change to the way the assets will be valued on the balance They were always fair valued on our balance sheet and consolidated and that won't change going forward. On the first part, I think we've talked about this in the past. BPY, the entity continues to exist. It continues to Final financial statements because it has public press and debt. It's a sort of the standalone entity now just private as opposed to public and it will pay Fees more in line with a private perpetual real estate vehicle and basis points on equity. And we expect the fees to be not too different than they are today. And as that portfolio changes over time, fees will change. But at the same time, we will be Creating new fee streams with some of the moves that we outlined on the call. So I'd say in the short term, no change, but over time, we'll surface capital, create fee streams And the portfolio value, we'll just move along with that. Okay, got it. And then maybe one on Brookfield REIT. In terms of some of the distribution dynamics, which platforms are you on at the moment? Which ones do you expect to be on? I guess, what are you seeing in terms of competition? And as you think about some of those distribution partners, how do you think about them sort of Prioritizing your product relative to some of the other ones out there, in terms of getting it in front of financial advisors and clients. So the we're to accelerate as Bruce mentioned, we are taking over the Oaktree REIT which will accelerate things and we Expect to be approved and launched in the Q4. It is already on one of the bank platforms and we are working with the other banks, The major banks say 3 or 4 others to have it on their platform later this year, early next year. And I think given the our scale and reputation in the real estate business and our track record and what we can deliver, I think that we are well positioned to get on the platform and to get the attention of investors. Got it. Thank you. Thank you. Our next question comes from the line of Ken Worthington from JPMorgan. Your question please. Thanks for taking the question. With regard to BPY, first, how are you thinking about selling and migrating BPY assets to other existing or newly created In your prepared remarks, you mentioned that the privatization of BTY being instrumental, I think, to the launch of Your non traded REIT, so help me make the connection there. And do you see leveraging BPY assets in other Brookfield funds or initiatives, including an insurance and how might that work? Listen, I think now Ken, it's a great question. And I think now that BPY is private, executing what you just outlined becomes a lot easier Because there are those conflicts perceived conflicts don't exist anymore. And I think we launched the NTR. There were a few seed assets from the portfolio that are going in there. That's an illustration of what could happen in the future. Obviously, we balance value, Creating the new product and wanting to get best value, but there's definitely a path for some of the assets to go in there. Some of the assets as we It could be sold outright and that capital gets reinvested elsewhere in the business maybe into something like reinsurance which creates Fees and return on capital. So we will optimize the portfolio as we move forward, but there's definitely potential for these assets We used to create and grow new and existing products. Okay. And then I believe the thought initially was something like A third of the assets BPY assets might be sold, a third might find their way into other Brookfield products and a third might remain on balance sheet For longer than the 5 to 6 years, does that sort of at least roughly reconcile with how you're thinking about things today? It feels like that $10,000,000,000 that remains on the balance sheet for a long time or permanently It's with what you were thinking. Does the rest sort of fall in line as well or do the pieces change a bit based on what you know today? Listen, I think it falls in line. And the only thing I would say, Ken, is what the piece we see we're holding. These are fantastic assets, the best assets with great cash flow and They'll compound the great value, but they represent a sort of liquidity on the balance sheet. Should we want, Should we should it be attractive? Should there be a need for capital? They'll be available to raise more capital over time. So I'd say in line, but it could be accelerated if there's some talented use for that capital and these are great assets that will appreciate value over the long term. Okay, great. Well, thank you very much. Thank you. Our next question comes from the line of Sohrab Movahenny from BMO Capital Markets. Your question please. Thank you. First, just for Sachin. Sachin, thanks for the discussion on the reinsurance. I Thank you. You noted that you are at around circa $40,000,000,000 At the Investor Day, you had talked about an opportunity For insurance in the $100,000,000,000 to $200,000,000,000 So I was, first of all, wanting to just confirm that the opportunity Set of 100 to 200 is still a good guidepost. And then secondarily, if you think To be able to realize on that, maybe at the upper end of that, if you think you will still have to do some, I'll call it, business acquisition as opposed to reinsurance portfolio purchases? Hi, Saurabh. Sure. First of all, Look, the $100,000,000 to $200,000,000 that Bruce set out last year is the right guidepost. I don't think we have any reason to Change it. I would not have expected that we would have made as much progress as we have this quickly. And It is a function of where rates are and how much activity this space is seeing because of the difficulty for insurers to earn A proper return. So I think you can take from that that the higher end of that guidepost It is possible. And therefore, if you're trying to figure out where this is all going, I think we can get to the scale and likely on the higher end. In terms of business acquisitions versus reinsurance, I think you should expect that reinsurance is our focus. It was important for us to have all the tools available to be a good partner to insurance companies to have a domestic U. S. Platform And American National fits that bill. Its diversity, its people and its systems and operations and distribution partners Just gives us tremendous flexibility to be a good partner to the insurance community more broadly. And I think with that in place, we can then accelerate our reinsurance activities. So you should assume that that's our path forward. Okay. Thank you. And maybe I can get one in for Bruce as well. I mean, Bruce, when you kind of zoom out, obviously lots happening around the world Since the pandemic was declared, I don't know, a year and a half ago, when you think about all the puts and takes, how has your business Fair. Would you say BAM has been a COVID winner here? Do you think the acceleration of maybe dispositions Is the biggest net positive over here or how should we be thinking about the key drivers of your business and how they were impacted over the last year and Look, I think there's 2 backdrops that Have helped our business for a long time and the last year and a half has accelerated both of them. The first one is Interest rates were going down and they went to 0. And it appears like They're going to stay low for a long period of time. The question was whether they were going to go up before and I don't I think there's that many people that think they're going to go up. And when people think they're going up, if you test them, what they say is they think rates on the 10 year treasury will go to 3%. That's an incredibly positive thing for our business. As a result of that, Institutional investors and individual investors globally are trying to find alternative places to put their money. And the alternative places are alternatives. So our skills in offering our products are more sought after today than they ever were. And the last point maybe just to make is that We're out raising $24,000,000,000 in private funds plus all the other things we raised this quarter. There's many people that they can't go visit people in their offices and they can't start new funds. So anybody that has a brand, 1, over the last 18 months in Financial Alternatives because they Are familiar with the institutional investors and therefore they got all the money and they continue to. So, I'd say the franchise is Much deeper, much stronger, today than it ever was. And we're not the only one, but there's a few of those Thank you. Our next question comes from the line of Dean Wilkinson from CIBC. Your question please. Thank you. Good morning. Just a question on the reinsurance. Post this acquisition, it will be a $40,000,000,000 business potentially going to 200. Have you given any thought as to what size that business needs to be before you could consider decoupling it from BAM? And perhaps what would the funding mechanism be to get to that size? Hey, Dean, it's Sachin. Look, I think we're a ways away from that at this stage. We really need to just build up Scale and our operational capabilities and work with management on American National To close the transaction and also to execute our business plan, I think the idea of decoupling it We'll really come down to is it a good product for shareholders in the marketplace as a separate Entity where the security can create a lot of value for our shareholders that we spun it out to. On the other hand, the way it's set up today gives our existing shareholders tremendous visibility into the business, but also all the upside as we build it out, because it's impaired securities. So I think retaining that optionality is a good thing. And the decoupling discussions, I think there's still time to be had on that and we're going to be patient in that regard. Okay, Dean. Dean, it's Nick here. I'd probably just add that if there comes a point where, and if it's sooner or not where external capital, we think about external capital, There's just as good a chance that we think about raising private capital to come alongside us to support the growth of the insurance business versus necessarily spinning out into the public. So there's a decision point to be made when we decide external capital makes sense. It may be that we go down the private capital route, Which gives this product to be very attractive to our clients. That would seem to be the path of least resistance for that for sure. Thanks guys. Thank you. Our next question comes from the line of Andrew Kuske from Credit Suisse. Your question please. Thanks. Good morning. I think it's a question for Sachin and it really revolves around just an evolution of insurance regulation. Given insurance regulation as far as their investments goes, can tend to be quite prescriptive at times. And so do you see an evolution of that to really benefit Product offerings and then I guess related to that, are you targeting the equity sleeves or really fixed income alternatives at this stage? Hi, Andrew. I'll start with the regs. First of all, they have been evolving in the U. S. And very recently, they continue to evolve in particular in the favor of 2 things. 1 is private Alternatives and 2 is real estate. And both are areas where we obviously have a depth of capabilities. And when I say they're evolving in a favorable way, the NAIC rules in the U. S. And the Centimeters rules in the U. S. Have all recently evolved with a broader and a deeper rating set and a more favorable capital treatment For private credit, alternative credit and in particular real estate oriented credit. So I think all of that plays Really well to our strengths, both obviously on the real estate side, but more broadly on the private side, long duration Infrastructure credit is an emerging asset class and again because of our infrastructure franchise, it plays well to our strength. So I think with that, we're really well positioned to grow the business out. And then in terms of Designing products and getting into equities, I'd say there, you really need to have A meaningful amount of capital in your insurance business and excess capital in your insurance business, if you want to start to Broaden out the investment portfolio into equities and given our balance sheet strength and the amount of permanent capital we have Up at Brookfield, we have the flexibility and the optionality to invest in the business, have excess capital And over time, if we want to invest in equities, we can. So I think that again positions us quite uniquely relative to our peers. Thank you for that. And then the follow-up and then somewhat related question and really it goes to Bruce. Quite a few years ago, you made a comment about the Infrastructure business being the most exciting in the overall Brookfield portfolio. And I think at the time, BAFE was Maybe just shy of the $3,000,000,000 raise. And how do you think about the business positioning now? Are you equally excited about the Energy transition business and the insurance activities, at this point is there a good parallel there? For you and others that know me, I'm excited about all of our businesses. But look, I think the alternative area of investments If interest rates stay low, are all unbelievably positive. I think the transition business is at a very low base and it can grow for the next 25 years. Decarbonization is not happening in full. There won't be a bell rung for 40 years. And therefore, we're in the very, very early And we're just seeing it today and dealing with some major corporations and helping them achieve some of their goals and we think it's going to be really exciting. So I would say all the businesses have a lot of growth in them, but that one just because it's brand new, has a lot of runway, I think. Okay. Thank you. Thank you. Our next question comes from the line of Geoff Kwan from RBC Capital Markets. Your question please. On the Global Transition Fund, just I wanted to see what types of opportunities you're seeing in the near term To start making new investments, but also too is how the competitive environment for winning those deals and how it may be different or may be not versus the other types of deals you would do in your other platforms? In other words, is there less competition? Are you seeing more proprietary situations that sort of thing. Hi, it's Sachin again. I will answer this just in light of our power our renewable power business that really underpins our decarbonization and transition efforts. I would say the opportunity set is very broad. I think what we're seeing in the marketplace is that Every institution of size and substance today is targeting some form of decarbonization and It really starts with electricity, because that's the easiest place and the low hanging fruit is to decarbonize first your electricity demand And that involves investing in renewables, signing renewable PPAs and we have a depth of expertise In that regard, across Brookfield, but in particular in our renewable business, we would have Over 500 corporate clients in the United States. If we include LatAm and Europe, that number It gets close to 1,000 corporate clients, where we sell power. And that can include corporations, but also utilities. And therefore, it gives us an amazing access point to talk to these companies about their broader needs beyond just electricity, carbon capture, ensuring that they can electrify their industrial output, so dealing with automotive companies, technology companies with data center needs, Our Renewable Power business and our transition fund just announced a global partnership with Amazon to help provide green data centers And data centers are very large consumers of electricity, and therefore it's critically important to source that electricity from renewables. So as Bruce said, I think the runway here, we're really in the early stages, but it's a 25 to 40 year runway to electrify industry, electrify transportation and ultimately drive CO2 levels down and we have a leading business in that regard. Great. Thanks for that. And then my second question was, one of the key messages this year has been we should expect to see a lot of monetization activity and So far that's been the case. And in that, I've got 2 part questions. First off, of the assets that you've monetized, How would you describe the realized sale values versus what you expected? And then secondly, the assets you had planned to monetize in 2021, Kind of ballpark, like how much have you monetized so far? Hey, Jeff. It's Nick. So listen, I think we've talked a lot about the demand for real assets, high quality assets, assets that generate stable cash And as you know, we like to buy assets where we can enhance the operations and turn them into kind of stabilized assets that are very attractive to the broader market. And those are the assets that we've been bringing to market. And given the interest rate environment, The values that we have been obtaining are probably higher than what we'd have expected 12 months to 18 months ago. And so I'd say that the assets are the sales are going very well. The assets are incredibly attractive. These are very, very high quality assets. And so to global investors, they're very attractive. So the values have been very strong And we've been pleased with the outcome. And as we look forward to the rest of the year, I don't it's hard to say where we are in the ballpark. Maybe we have Half of what we expect to do, we got a bunch more. We are at that point in the franchise and in the business that we've talked about where the earlier vintage funds Have a lot of high quality assets and then where the business plan has been executed, the assets have been stabilized and now is the right time given the market environment to look at Transacting, so whether it happens in Q3, Q4 or just into Q1 or Q2 of next year, the pipeline is very full and we have a number of assets that we're looking at monetizing in the next little while. Okay, great. Thank you. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Suzanne Fleming for any further remarks. Thank you, operator. And with that, we will end the call. Thank you all for joining us, and we look forward to seeing as many of you Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.