Q4 2024 Earnings Summary
- Brookfield Corporation has increased its internal view of intrinsic value per share to approximately $100 from $84 in late September, driven by broad-based growth across the business, including strong performance of BAM in capital markets and scaling earnings on the Wealth Solutions platform.
- The company targets a 17% growth in distributable earnings (DE) from existing operations, with potential to reach 25% over the next five years through monetization activity and cash reinvestment, indicating a strong growth profile and positioning.
- Brookfield's Wealth Solutions business is experiencing strong growth and momentum, with expanding distribution channels, diversified products, and significant annuity sales, including $2 billion of annuities written in January alone, signalling robust future earnings growth in this segment.
- Carried interest realizations are expected to remain minimal in 2025, with significant pickups not expected until 2026 and 2027. This delay could impact near-term earnings growth and reliance on monetizations to achieve growth targets. Nicholas Goodman stated, "As it relates to 2025, it looks like it will be another sort of bridge year, similar to last year, maybe a bit higher. But then we expect a significant pickup to really come in '26 and '27".
- Rising interest rates may impact real estate monetization plans. Concerns about the recent uplift in the 10-year treasury yield could affect the timing and valuations of asset sales in their real estate portfolio. Analyst Michael Cyprys asked about potential risks from rising yields, and while management remains optimistic, there is acknowledgment that market conditions could affect monetizations.
- Conservative approach in the private wealth market may impact competitiveness. Brookfield's strategy of modulating intake to stay disciplined could potentially lead to losing market share to more aggressive peers. Analyst Cherilyn Radbourne asked, "Does that give you any concern from a competitive perspective?" and there is a recognition that mistakes by others could taint the market for everyone.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Distributable Earnings Growth | FY 2025 | "Expectation of continued growth in results over the remainder of 2024 and into 2025" | "Continued growth in distributable earnings driven by strong operating performance" | no change |
Carried Interest Realization | FY 2025 | "Small step-up in realized carried interest expected in 2025" | "Carried interest realizations for 2025 are expected to be similar to 2024" | lowered |
Wealth Solutions – Spread Earnings | FY 2025 | "Spread earnings target of 200 basis points" | "Spread earnings expected to increase to approximately 2%" | no change |
Wealth Solutions – Annualized DE | FY 2025 | "Heading towards $2 billion of annualized distributable earnings (DE)" | "Growing annualized earnings from $1.6 billion today to $2 billion" | no change |
Capital Deployment | FY 2025 | no prior guidance | "$160 billion in deployable capital expected to support deployment and earnings growth in 2025" | no prior guidance |
Dividend Growth | FY 2025 | no prior guidance | "Quarterly dividend increased by 15% to approximately $0.44 per share" | no prior guidance |
Intrinsic Value Per Share | FY 2025 | no prior guidance | "Intrinsic value per share estimated at $100" | no prior guidance |
Real Estate Business | FY 2025 | "Expectation of a strong recovery in real estate markets over the next couple of years" | "Strengthening earnings and valuations supported by high occupancy levels (96% in retail) and robust leasing activity" | no change |
Share Repurchases | FY 2025 | no prior guidance | "Continued opportunistic share repurchases, with $200 million worth of shares already repurchased in early 2025" | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Wealth Solutions Business Growth | Consistently highlighted across Q1–Q3 through the AEL acquisition, rapid annuity origination, retail capital raising, and doubling operating earnings. | Emphasized further with significant annualized growth, expanded product mix including retail and institutional annuities, and new markets in the U.K. and Japan. | Steady acceleration and geographic expansion – The discussion remains consistently positive with enhanced scope and scale, and evolving market opportunities. |
Carried Interest Realization Timing | Initially discussed with front‐loaded realizations in Q1, tempered pace in Q2, and forecasts of a modest step-up in 2025 with major increases in 2026+ in Q3. | Focus on recognizing approximately $5 billion over the next 5 years, with expectations for further increases in later years. | Maintained structure with incremental increases – The timing remains structured for gradual recognition while outlook improves in the mid‐to‐long term. |
Real Estate Monetization and Asset Valuation | Q1 highlighted active asset sales at or near carrying values and a robust sales pipeline; Q2 noted rising transaction activity; Q3 reported over $17 billion in asset sales and consistent discount rate approaches. | Q4 expresses optimism with improved liquidity, compressing cost of capital, and strong demand supporting continued monetization efforts. | Consistent focus amid improving conditions – The narrative remains centered on active monetization with enhanced sentiment in Q4 thanks to better market fundamentals. |
Interest Rate Environment Impact | Q1 described normalization and cooling inflation , Q2 reported declining rates boosting credit spreads and favorable refinancing , and Q3 noted improved liquidity and refinancing conditions. | Q4 emphasizes stabilization of short-term rates, compressed cost of capital, and a constructive macro backdrop for financing and asset sales. | Uniformly positive with normalized conditions – The evolving discussion indicates that improved and stable interest rate conditions continue to benefit financing and investment strategies. |
Capital Markets and Financing Conditions | Q1 pointed to strong liquidity with robust CMBS activity ; Q2 observed narrowing credit spreads and solid bond issuance, with significant financing volumes ; Q3 featured oversubscribed financings and robust debt execution. | Q4 reports exceptional financing activity with approximately $135 billion raised, demonstrating investor confidence and further market depth. | Sustained strength with further expansion – The trend shows consistent robust capital market activity with escalating financing volumes and improved terms. |
Renewable Energy and Clean Power Transition | Q1 underlined strong renewable asset sales, a major Microsoft deal, and a robust pipeline ; Q2 detailed expansion via acquisitions (e.g., Newen) and transactions aligning with AI demand ; Q3 highlighted successful asset monetizations and a focus on long‐term energy transition strategies. | Q4 reported record proceeds from asset monetizations, improved operating cash flows, and continued momentum in clean power initiatives. | Steady strategic push with record outcomes – The focus on renewable energy remains robust, with growing monetizations and strategic investments reinforcing long-term growth potential. |
Regulatory and Political Risks | Q1 and Q2 had minimal direct discussion; Q3 mentioned that underlying asset fundamentals and the reliable demand for renewables insulated operations from political shifts. | Q4 acknowledges some volatility from potential policy shifts and geopolitical risks yet stresses that domestic operations remain largely insulated. | Emerging focus amid cautious optimism – While not a dominant theme earlier, some increased attention in Q4 reflects awareness of external uncertainties without altering the overall confident sentiment. |
Intrinsic Value Reassessment | Q1 stressed conviction in intrinsic value with a wide discount that was narrowing over time ; Q2 noted that the market discount still lagged intrinsic value estimates ; Q3 discussion was limited to related valuation adjustments. | Q4 highlighted a significant increase in intrinsic value per share (from $84 to $100) and linked this improvement to robust underlying performance, supporting an active repurchase strategy. | Marked improvement and narrowing discount – Intrinsic value is now viewed more favorably, prompting aggressive share repurchases as the gap between market price and underlying value continues to close. |
Decline in Pension Risk Transfer Focus | Q1 and Q3 emphasized growth in pension risk transfer markets with expanding U.S. and U.K. opportunities ; Q2 had no specific mention. | Q4 did not mention any decline, effectively maintaining the previous focus without a negative shift. | No decline evident – There is no signal of a reduced focus; despite the topic not being mentioned in Q4, previous discussions indicate ongoing growth potential in this area. |
Insurance Business Leverage and Spread Pressure | Q1 provided initial remarks on aligning capital and long-duration profiles ; Q2 detailed efforts to improve spreads from a lower baseline (1.5% for new acquisitions) toward a target of 2%, alongside ROE goals ; Q3 mentioned modest quarter-over-quarter spread improvements and geographic expansion. | Q4 continues to discuss stable investment yields above cost (5.4% vs. 1.8% differential) and reinforces strategies to incrementally uplift spreads and scale operations in new markets. | Ongoing focus with gradual improvement – The subject maintains continuity with consistent strategic adjustments, and sentiment remains upbeat about achieving target spread levels over time. |
NAV Discount and Market Valuation Concerns | Q1 acknowledged a wide discount to NAV that had been narrowing ; Q2 noted that despite strong share price moves the discount still lagged intrinsic value ; Q3 discussed misperceptions across business segments with a call for execution to bridge the gap. | Q4 highlighted a notable intrinsic value increase and repurchase activity driven by an attractive discount, reinforcing confidence in the valuation and future returns. | Gradual narrowing with proactive measures – Management remains focused on leveraging valuation gaps through robust buyback programs, indicative of improved market sentiment toward intrinsic value. |
Active Share Repurchase Program | Q1 reported over $700 million in repurchases generating about $0.50 per share value enhancement ; Q2 noted repurchases around $800 million enhancing value by ~$0.55 per share ; Q3 detailed approximately $1 billion repurchased, adding roughly $0.80 per share. | Q4 indicates the continuation of share repurchase initiatives, with additional $200 million already executed in early 2025 complementing previous significant buybacks. | Consistent capital discipline and confidence – The repurchase program has been a continuous theme, reflecting management’s conviction and commitment to enhancing shareholder value through active buybacks. |
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Carried Interest Realizations
Q: How will carried interest be realized over next years?
A: We expect carried interest to significantly pick up in 2026 and 2027, with 2025 being another bridge year slightly higher than last year. We laid out at Investor Day a $5 billion realization over the next five years and $20 billion over ten years. This timing is due to the life cycle of our funds, and strong underlying investment performance supports this outlook. -
Real Estate Monetizations
Q: What are your expectations for real estate monetizations this year?
A: We are optimistic about an active year for monetizations in real estate. Globally, real estate markets continue to improve due to stronger underlying fundamentals and increasing liquidity in capital markets. Spreads are tightening, and the demand for our assets is the most robust we've seen. We expect to bring assets across our franchise to market this year. -
Intrinsic Value Increase
Q: What drove the increase in intrinsic value to $100 from $84?
A: The increase is due to broad-based growth across the business. Notably, BAM has performed incredibly well in capital markets, and we've scaled earnings on the Wealth Solutions platform. It's a result of continued execution and earnings from our underlying operations. -
Earnings Growth Outlook
Q: Can you exceed the 25% DE growth target in the short term?
A: We target 17% growth from our existing platform pre-monetization, which is within our control. There's potential for outperformance through monetization activity and cash reinvestment, which would be highly accretive. Over five years, achieving 25% growth remains an attractive and achievable earnings profile. -
Share Buybacks and Growth Drivers
Q: Will you set a share buyback target for 2025, and what's the most exciting near-term growth driver?
A: We don't need to set a specific buyback target, but we'll continue to repurchase shares opportunistically due to the attractive discount. We've repurchased over $200 million already this year and will remain active. The Wealth Solutions platform is performing exceptionally well, exceeding our expectations, and the Asset Management business is poised for a strong year, contributing to broad-based strength. -
Investment Outlook Amid Uncertainty
Q: How are you approaching investment opportunities amid current uncertainties?
A: Opportunities are broad-based, and the underlying fundamentals of our businesses haven't changed. Our operations are largely insulated from current events, and market volatility can create better entry points. We remain as optimistic today as we were six months ago about deployment and monetization prospects for 2025. -
Wealth Solutions Growth
Q: What's driving growth in Wealth Solutions, and plans for 2025?
A: We see strong sales and demand, with momentum continuing. We've expanded distribution channels, partners, and product lineup, including new proprietary products. In January alone, we wrote $2 billion in annuities. We've completed the largest PRT deal ever in Canada and our first large transaction in the UK. The business is heavily overcapitalized and well-positioned for continued growth. -
Monetization vs. Investment Strategy
Q: Is there a preference to monetize assets before investing?
A: We remain opportunistic and are not dependent on monetizations to make acquisitions. We have significant scale capital and liquidity with many levers to pull. We believe there are many interesting opportunities ahead, regardless of executing sales first. -
Listed Affiliates Valuations
Q: Given listed affiliates' valuation struggles, any strategy changes?
A: We're focused on the underlying value creation in these businesses, not short-term price movements. They continue to invest for excellent value and deliver strong returns, which will be realized over time. We believe the value we're creating is significant, and market prices will eventually reflect that. -
Competitiveness in Private Wealth Market
Q: Are you concerned about competitiveness in the private wealth market?
A: Not really; we've raised significant amounts, about $5 billion across 2024, and expect that to accelerate. We're focused on building sustainable products that deliver attractive returns long-term. We'll scale as appropriate, and we're well set up to grow significantly in coming years. -
Insurance Growth Strategy
Q: Will large insurance deals still make sense, or focus on organic growth?
A: It will be a combination of both. We build platforms for organic growth but also pursue M&A for step-change growth, including geographic and product diversification. You'll see continued strong organic growth along with potential bolt-on M&A.