Brookfield leaves insurance company board over Josh Harris’ company dispute

A key financier of billionaire Josh Harris’ new wealth management company has received a rare public reprimand from Brookfield Asset Management, which complained that AEL, a life insurance company, should not provide funding to a start-up.

Shares of the Iowa-based bond seller plunged 21 percent after Brookfield, its largest shareholder, expressed dissatisfaction with investing in a vehicle Harris launched earlier this year after leaving Apollo Global Management in a succession dispute would have.

In announcing his resignation from AEL’s Board of Directors, Brookfield Chief Investment Officer Sachin Shah wrote: “Recent events make it clear that there has been a fundamental shift in AEL’s strategic direction [AEL].”

“As previously communicated, neither I nor Brookfield Reinsurance can support this change in strategy as it is in the best interests of the company, its policyholders or its shareholders,” Shah added in a letter filed Tuesday.

Brookfield executives protested that AEL, whose full name is American Equity Investment Life Holding Company, is using its resources to support Harris’ 26North Partners, a company they view as a new and unproven investment firm, one with the matter said familiar person.

In a statement to the Financial Times, AEL dismissed those criticisms, saying 26North’s investment was “similar to arrangements we have with several other value-generating asset managers” and “consistent with our . . . Strategy that we first announced in October 2020.”

“We are also disappointed in Brookfield’s decision not to immediately appoint a new director,” the company added.

Anant Bhalla, CEO of AEL, announced a “modest” investment in 26North during a earnings conference call on Tuesday, calling Harris, a co-founder of Apollo, “one of the leading private equity investors of his generation.”

“AEL hopes future assets from . . . “North,” he said. “[It has] many talents flock there.”

Brookfield first took a stake in AEL in 2020, shortly after the insurer fended off an unsolicited takeover bid from Apollo’s pensions subsidiary, Athene Holding. The Canadian group also formed a reinsurance subsidiary to initially manage $5 billion of the company’s Iowa pension liabilities and now owns 18 percent of the insurer.

AEL has invested more aggressively in private wealth in recent years, at a time when alternative investment managers like Apollo, Blackstone, KKR and Carlyle have partnered with insurance companies to build their credit investing units.

AEL announced on Monday that 18 per cent of its investment portfolio is now being deployed in “higher yielding, privately sourced assets”. Before Tuesday’s plunge, the company’s shares were up nearly a tenth for the year.

Brookfield said it also invoked a contractual right to compel the insurer to file paperwork that would allow the Canadian group to sell nearly 60 percent of its AEL shares.

Harris stepped down from the Apollo board earlier this year after a 30-year career with the group. He had been a contender to replace Leon Black as chief executive last year, but the job went to Marc Rowan, the architect of the company’s insurance companies.

Representatives from 26North, Harris and Brookfield declined to comment.

https://www.ft.com/content/a8304cc6-7a29-41b7-9584-30cd8c1f0049 Brookfield leaves insurance company board over Josh Harris’ company dispute

Adam Bradshaw

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