Financial Reporting - Brookfield Corporation's financial information is presented in U.S. dollars and prepared in accordance with U.S. GAAP[31]. - The financial statements are unaudited unless otherwise indicated, highlighting the need for careful evaluation of the data presented[31]. - The annual report includes audited consolidated statements of financial position for the fiscal years ended December 31, 2024, and 2023[14]. - The annual report for the fiscal year ended December 31, 2024, will include audited consolidated statements and management's discussion and analysis[17]. Performance Measures - Distributable Operating Earnings (DOE) is a key measure of financial performance, defined as net income after applicable taxes excluding certain costs and adjustments[33]. - The company emphasizes the importance of non-GAAP measures for assessing overall business performance, including adjusted equity and total corporate liquidity[32]. - The company utilizes a variety of financial measures to monitor business performance, including cost of funds and total liquidity[33]. - Adjusted equity represents the total economic equity of the company through its class A, B, and C shares, excluding accumulated other comprehensive income[33]. - Corporate liquidity includes cash and cash equivalents, undrawn revolving credit facilities, and liquid financial assets held by non-regulated corporate entities[33]. - Total liquidity includes liquidity within regulated insurance entities, providing a comprehensive view of the company's liquidity position[33]. Forward-Looking Statements - Forward-looking statements reflect management's estimates and beliefs regarding future performance and economic conditions[25]. - Historical performance and market data may not be indicative of future results, cautioning investors against relying solely on past data[30]. - The company undertakes no obligation to publicly update or revise forward-looking statements based on new information or future events[27]. - Forward-looking statements are based on management's current estimates and beliefs regarding future results and conditions, subject to significant uncertainties[25]. Acquisitions - AEL Holdings was acquired for approximately $4.3 billion at a price of $55.00 per share, completed on May 2, 2024[1]. - The acquisition of Argo Group International Holdings was completed for approximately $1.1 billion at a price of $30 per share on November 16, 2023[1]. Special Distributions - The company has a special distribution of BAM Shares to holders of class A exchangeable shares and class B shares[22].

Financial Performance - Net income for the fiscal year ended December 31, 2023, was $797 million, an increase from $501 million in 2022, representing a 58.9% growth[41]. - Net investment losses amounted to $348 million in 2023, compared to gains of $104 million in 2022, indicating a significant decline[41]. - The company reported a mark-to-market gain of $212 million on insurance contracts and other net assets for 2023, recovering from a loss of $271 million in 2022[41]. - Total expenses, including transaction costs and depreciation, increased to $70 million in 2023 from $42 million in 2022, reflecting a rise of 66.7%[41]. - The company reported a Deferred income tax recovery of $14 million for 2023, up from $10 million in 2022[41]. - The company’s total equity (DOE) for 2023 was $745 million, compared to $388 million in 2022, marking a 92.4% increase[41]. Executive Compensation - The total annual compensation for directors varies, with the highest being $210,000 for William Cox[52]. - The company aims for directors to hold exchangeable shares or Brookfield Class A Shares equal to at least two times their annual retainer within five years of their appointment[53]. - The total annual compensation for Sachin Shah, the Chief Executive Officer, is $12,404,377, which includes a base salary of $555,825 and share-based awards valued at $11,260,890[81]. - The compensation committee of Brookfield reviews and approves executive compensation based on performance and previous grants, ensuring alignment with company objectives[60]. - The market value of vested deferred share units (DSUs) for Sachin Shah is $10,572,421, reflecting significant equity compensation[65]. - The management share option plan (MSOP) allows executives to purchase Brookfield Class A Shares at a fixed price, with options vesting at 20% per year over a ten-year period[60]. Regulatory and Compliance Risks - The company faces regulatory risks that could adversely affect its ability to operate in certain jurisdictions, potentially leading to loss of licenses or increased oversight[73]. - The company is subject to extensive insurance laws and regulations, which may change and impact operational costs and profitability[87]. - Regulatory developments may increase compliance costs and limit the company's growth potential, posing a risk to its competitive position[88]. - The company is subject to extensive reporting requirements, and any failure in internal controls could lead to material weaknesses in financial reporting[144]. - Compliance with GDPR and other data privacy regulations may result in significant costs and potential fines, impacting the company's financial condition[189]. - The company may face substantial penalties if found in violation of the Proceeds of Crime Act 1997 or the Anti-Terrorism (Financial and Other Measures) Act 2004[222]. Market and Operational Risks - The company faces risks related to market conditions, competition, interest rates, and access to debt or equity markets, which could impact financial performance[96][97]. - The company relies on distributions from operating subsidiaries to meet financial obligations, which may be restricted by local laws and contractual agreements[110]. - The market price of exchangeable shares may be volatile and influenced by factors unrelated to the company's operating performance[105]. - Future distributions will depend on the company's financial conditions, legal requirements, and restrictions under borrowing agreements[108]. - The company competes for agents and financial institutions based on product pricing, support services, and compensation, which are critical for sales growth[116]. - The company faces increased competition from larger entities due to consolidation in the insurance industry, which may lead to lower premium rates and higher customer acquisition costs[186]. Investment and Capital Management - The company has received a $2 billion equity commitment from Brookfield Corporation to fund future growth and a $400 million revolving credit facility for working capital[193]. - Future capital requirements will depend on regulatory requirements and the nature of new business, which may limit the company's ability to move capital freely[192]. - The investment portfolio is subject to concentration risk, which could threaten the financial condition of the company[216]. - The company may invest in securities outside the U.S., which carry heightened risks, including currency fluctuations and political instability[125]. Strategic Initiatives - The proposed acquisition of AEL Holdings is valued at approximately $4.3 billion, with an aggregate consideration of $55.00 per share[27]. - The company plans to execute new Pension Risk Transfer (PRT) arrangements and may pursue acquisitions to enhance business scale and diversity, with the AEL Acquisition valued at approximately $4.3 billion expected to close in the first half of 2024[158][164]. - The company plans to increase the distribution of annuity products through banks and broker-dealers as part of its growth strategy[116]. Financial Stability and Risks - A decrease in capital ratios of insurance subsidiaries could lead to increased scrutiny from regulators and rating agencies, adversely affecting financial results[118]. - The company maintains a level of liquidity to support insurance operations, but a portion of assets are illiquid, which may pose risks during market volatility[119]. - Unanticipated policyholder withdrawals may force the company to sell illiquid assets at unfavorable prices, impacting financial position and ratios[120]. - The company may experience significant losses from catastrophic events, which could materially impact business results and financial condition[206]. - Inflation could adversely affect the company's investment portfolio returns and increase servicing costs for insurance contracts[204]. - The company is exposed to counterparty credit risk, which may result in missed payments or defaults, adversely affecting financial performance[212].

Financial Reporting and Governance - The Audit Committee is responsible for monitoring financial reporting systems and internal controls, ensuring compliance with Canadian and U.S. securities laws[207]. - The Governance and Nominating Committee reviews annual surveys from independent directors to improve board effectiveness[209]. - The company requires all directors to disclose any association with current or former auditors to maintain independence[207]. - The Audit Committee meets regularly with external and internal auditors without management present to discuss specific issues[207]. - The company has established a cap on organizational expenses, but certain operating expenses are not subject to this cap[218]. - The management evaluated the effectiveness of internal control over financial reporting as of December 31, 2022, concluding it was effective, excluding controls over American National, which constituted approximately 68% of total assets, 44% of revenues, and 56% of net income[402]. - The effectiveness of internal control over financial reporting was audited by Deloitte LLP, who also audited the financial statements[402]. - The audit committee includes members with sufficient experience in finance and compliance to fulfill their responsibilities effectively[403]. Share Structure and Rights - Brookfield Corporation holds all class C shares, entitling it to residual value after payments to class A and B shareholders, with consent rights over certain company matters[216]. - The authorized share capital consists of 1,000,000,000 class A exchangeable shares, 500,000,000 class A-1 exchangeable shares, 500,000 class B shares, and 1,000,000,000 class C shares[227]. - As of the date of the report, there were 10,450,952 class A exchangeable shares, 24,000 class B shares, and 41,314,891 class C shares outstanding[227]. - Holders of exchangeable shares may request to exchange their shares for one Brookfield Class A Share per exchangeable share held[248]. - Brookfield Corporation will not be required to effect exchanges for cash that would result in the payment of an amount in excess of $5,000,000 in the aggregate over any 30 consecutive calendar day period[248]. - Holders of class A exchangeable shares are entitled to elect one-half of the board, with voting rights based on the number of shares held[262]. - Class B shares rank pari passu with exchangeable shares regarding distributions, and holders are entitled to one vote per share[270]. - The company will not make distributions on junior-ranking shares unless all distributions on Senior Preferred Shares are current[278]. - The liquidation rights of class C shares allow holders to initiate a voluntary liquidation under specific conditions, including a 50% decrease in outstanding class A exchangeable shares over six months[273]. - The rights of holders of class A exchangeable shares are governed by Bermuda law, while Brookfield Class A Shares are governed by the OBCA[283]. - A "special resolution" requires a two-thirds majority of votes cast, applicable to significant corporate actions such as liquidation and asset sales[284]. - Holders of class B shares will receive the same distributions as exchangeable shares when declared[270]. - The company’s governance structures aim to provide economic returns equivalent to those of Brookfield Class A Shares[261]. Conflicts of Interest and Committees - The company has formed a conflicts committee to ensure appropriate resolution of conflicts considerations[224]. - The Conflicts Committee reviews potential and actual conflicts situations that arise in the normal course of managing Brookfield's business activities[224]. - The company believes that access to Brookfield's broader asset management platform enhances its capabilities and provides benefits that would not exist without the affiliation[224]. - Brookfield Corporation's agreements with the company are expected to be in the best interests of the company, although they may raise potential conflicts of interest[306]. Financial Commitments and Agreements - Brookfield Corporation has provided an equity commitment of $2 billion to fund future growth, available in minimum amounts of $10 million[306]. - The equity commitment may be called in exchange for the issuance of class C shares or Junior Preferred Shares, with specific conditions precedent that must be met[306]. - The company has entered into a Credit Agreement with Brookfield Corporation to access debt financing as needed, maximizing financial flexibility[306]. - The company may establish credit facilities with financial institutions on an arm's length basis to support its growth[306]. Taxation and Regulatory Compliance - The company intends to comply with FATCA to avoid a 30% withholding tax on withholdable payments, which include U.S.-source income such as interest and dividends[386]. - The current marginal U.S. federal income tax rate for non-U.S. corporations' effectively connected income is 21%[375]. - The RPII provisions are complex, and U.S. Holders are urged to consult tax advisers regarding the application of these rules[382]. - Non-Resident Holders will be subject to a 25% Canadian withholding tax on dividends, which may be reduced under applicable tax treaties, such as 15% for U.S. residents[368]. - The company does not believe that Brookfield Class A Shares will constitute taxable Canadian property for Non-Resident Holders, which affects tax implications on capital gains[397]. - The company’s variable annuity contracts and life insurance policies are subject to extensive regulation by federal and state authorities, including the SEC and FINRA[354]. - The Insurance Companies Act prohibits the declaration of dividends if there are reasonable grounds to believe the insurance company does not have adequate capital or liquidity[379]. - The ICA restricts acquisitions of BAC shares that would result in a "significant interest" (over 10% of outstanding shares) without prior approval from the Minister of Finance[385]. - Future legislation may impact the tax treatment of non-U.S. companies and their subsidiaries, potentially increasing U.S. tax liabilities[386]. Consumer Privacy and Data Protection - California enacted the California Consumer Privacy Act (CCPA) in 2018, requiring enhanced customer disclosure about personal data collection and usage, effective from July 1, 2020[406]. - The Consumer Privacy Rights Act, effective January 1, 2023, strengthens consumer rights regarding personal information in California[406]. - Virginia and Colorado have enacted their own consumer data protection laws, effective January 1, 2023, and July 1, 2023, respectively, granting consumers rights to opt-out, delete, and correct personal data[406]. - The NAIC has adopted the Cybersecurity Bill of Rights and the Insurance Data Security Model Law, which sets standards for data security in the insurance industry[408]. - The company anticipates further regulatory efforts at both federal and state levels to enhance consumer information protection, impacting its information practices[406]. - The use of consumer credit information in underwriting is regulated by the Fair Credit Reporting Act (FCRA), with potential state regulations limiting its use by insurers[406]. - The company expects ongoing scrutiny and regulatory focus on the privacy and security of personal information at both state and federal levels[408].

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 [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]. - Distributable Operating Earnings (DOE) increased by $29 million to $30 million in 2021, with $5 billion of assets deployed from reinsurance and PRT transactions [222]. - Total assets grew to $11.493 billion as of December 31, 2021, up from $1.440 billion in 2020, primarily due to new PRT deals and reinsurance transactions [228]. - Cash generated from operating activities was $1.6 billion in 2021, compared to $399 million in 2020, mainly due to favorable changes in insurance reserves [241]. - Cash used in investing activities was $3.9 billion in 2021, primarily for additional assets acquired from reinsurance transactions [243]. - 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 for 2021 were $30 million, a significant increase from $1 million in 2020 [304]. Investment and Asset Management - 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]. - Assets Under Management (AUM) grew by $8.6 billion to $9.7 billion, driven by new Reinsurance and Pension Risk Transfer (PRT) business [232]. - Cash and cash equivalents increased by $358 million during the year, primarily from cash held within investment portfolios of new reinsurance treaties [228]. - Equity accounted investments increased to $344 million, related to the company's investment in American Equity Investment Life Holding Company [229]. - Corporate borrowings rose by $693 million, primarily from drawings on a 364-day revolving credit facility for investment opportunities [232]. Insurance Operations - Insurance reserves increased by $7.2 billion in 2021, attributed to $6.2 billion from new reinsurance transactions and $1.1 billion from new PRT deals [231]. - The company closed 26 PRT deals in 2021, representing approximately 20% of the Canadian PRT market [220]. - The company closed 26 PRT deals in 2021, representing $1.1 billion of premiums and approximately 20% of the Canadian PRT market [237]. - Deferred revenue increased by $82 million due to a negative ceding commission from a reinsurance transaction [232]. Market Conditions and Trends - The Canadian Pension Risk Transfer 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 declining yields from fixed income products, creating opportunities for higher-yielding alternative investments [255]. - Recent market conditions have exposed under-capitalized companies, increasing the need for capital support, which the reinsurance market can provide [255]. - Public market valuations for insurers have compressed, with many trading at cyclical lows on a book value basis, prompting partnerships for capital solutions [255]. Risk Management - The company manages interest rate risk through asset liability management (ALM), using derivatives to match the effective and key rate durations of the investment portfolio with insurance reserves [259]. - Credit risk is managed by establishing concentration limits by counterparty, credit rating, and asset class, with regular monitoring of counterparties' financial conditions [260]. 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 responsible for overseeing the company's long-term strategic planning process and reviewing its annual business plan [337]. - The Governance and Nominating Committee does not support mandatory retirement age or term limits for directors, focusing instead on board renewal and fresh perspectives [338]. - Directors are required to disclose any interest in contracts or transactions with the company to the full board [339]. - The company has adopted a majority voting policy for the election of directors, requiring a majority of votes in favor for a nominee to be elected [335]. - The Audit Committee is responsible for monitoring financial reporting systems and internal controls, and reviews quarterly and annual financial statements [347]. - The Governance and Nominating Committee maintains an "evergreen" list of candidates to ensure quick identification of nominees for board vacancies [348]. - The Compensation Committee evaluates executive compensation to ensure it aligns with the company's risk profile and does not encourage excessive risk-taking [351]. 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]. - 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]. Compliance and Ethics - The company has adopted a Code of Business Conduct and Ethics, which all employees must acknowledge annually [357]. - The services provided under the Administration Agreement are on a cost-recovery basis, including support for financial reporting and investor relations [358].